Online Casino Gambling

In a recent announcement by German officials, the prime ministers of the 16 federal states have declared to defer any decision on creating a State Gambling Treaty until October 2011. This statement was communicated by the prime minister of the Saxony-Anhalt region as a representative for all prime ministers. However, he did express his intent by declaring the country is well on its way.

The Proposal

On April 15^th, 2011, 15 for the German states forwarded a single proposal to be considered by the European Commission. The proposal delivered the opening of online sports betting within the country on a limited basis. This would be based on a 16.66 percent tax. At this point the group received flak from the gambling industry due to the high tax rate. The European Commission is expected to publicize its ruling on July 18^th.

Deferment by the Prime Ministers

The deferment will give the German states extra time to study the various implication of the potential verdict of the European Commission. One private operator that has considerable interest in the German market is Betfair. The company has commissioned research by German law professor Bernd Grzeszick of the University of Heidelberg. The Professor gave his opinion about the current proposal stating that they would be turned down.

A Violation within the Proposal

He came to this conclusion because the draft violates Articles 49 and 56 of the European Union Treaty. Also, H2 Gambling Capital, a leading online gaming data company, indicated that if Germany continues with the proposal, it would only capture 7 percent of the market due to citizens preferring to access offshore sites.

A Statement from Betfair Representatives

Betfair representatives released a statement confirming that they are hopeful the prime ministers utilize their time to agree upon an airtight treaty allowing reputable private companies a fair chance at the market which will help protect citizens against black market operations. At the same time, the proposal was applauded by the gambling industry as it was viewed as being less restrictive toward private casino operators.

The drafted proposal aimed at issuing licenses to private operators for all online casino products. The proposal also originally called for a 20 percent gross tax profit. This draft was received by the European Commission in May 2011. The Betfair representative hopes to see this proposal adopted by all states in Germany. The decision made by the European Commission could be a major advancement of hindrance to the online gambling industry.

A press release was given on May 20^th, 2011 from Atlantic City, New Jersey regarding the details of the 15^th Annual East Coast Gaming Congress. This event was held on May 23^rd and May 24^th at the Atlantic City Convention Center. The Congress is produced by the Spectrum Gaming Group, a research firm, SOSH Architects and Cooper Levenson Attorneys. The focal point of the conference was the implementation of online gambling in the United States.

The Inevitability of Online Gambling in the U.S.

Although several online poker rooms were seized by U.S. authorities, the majority of Americans believe that online gaming is inevitable. The primary issue in question is whether online gaming will be regulated at the federal or state level. Many experts opine that the regulation will involve both bodies.

Internet Gambling: The Game Changer Discussion

Sponsored by the Global Gaming Business and the Senior Associate of Market Research at the Spectrum Gaming Group, the East Coast Gaming Congress included a discussion entitled, “Internet Gambling: The Game Changer.” Four nationally-recognized experts on the subject addressed a variety of questions related to the popular activity.

The Speakers included; Melanie Brenner, President of the U.S. Online Gaming Association; Honorable John Burzichelli, New Jersey State Assembly; Richard “Skip” Bronson, Chairman of U.S. Digital Gaming and Jan Jones, Senior Vice President of Communications/Government Relations of Caesars Entertainment. The selected speakers offered well-rounded expertise in gaming and government.

The East Coast Gaming Congress

The Congress has always been a popular even for the online gambling industry with over 600 gaming operators, regulators, attorneys, architects, public officials, analysts, investors, equipment manufacturers and other related professionals in attendance. The event began with a reception at The Pool at Harrah’s Resort Atlantic City.

Land-Based Casino Discussions

Although the focal point of the Congress was online gambling, several land-based gambling issues were also discussed. For instance, the economic condition of the land casinos in Atlantic City was an important topic. The entire conference schedule is available at the East Coast Gaming Congress website.

New Jersey was selected as the location for the Congress due to the chance (until late 2010) that the state could be the first jurisdiction to legalize and regulate online gambling. Unfortunately, Governor Christie vetoed the bill on the final day. The Congress was an excellent chance for many citizens and law-makers to learn more about the positive and negative effects of online gambling. This will perhaps allow them to make a more informed decision.

The two Scandinavian countries that have state-owned online gambling monopolies are Norway and Sweden. According to local press, both nations are facing problems of varying nature. In Norway, it has been reported that 4 percent of the gaming population over 18 years of age gamble at foreign websites. On the other hand, Sweden has reported a decline in the net revenues from online gambling for the second straight year.

In July 2010, Norwegian legislature placed a block on financial transactions to and from foreign gaming sites. The Culture Minister Anniken Huitfeldt has publicly stated that tougher measures will be developed to punish those engaging in unregulated online gambling. The strongest measure the government plans to enact is ISP filtering to block foreign internet gambling operators which include poker rooms and online gaming sites. This has been successful in other European Union countries.

The proposal for ISP filtering is not popular among the liberal political segment and the media. Ove Vanebo, a liberal leader, opposes the idea stating that citizens cannot be shut out of overseas gambling sites by politicians. The publication, Liberalen, indicated that such an act is Internet censorship which breaks the bipartisan consensus in Norway.

In Sweden, the acting CEO of the online and land gambling monopoly confirms the decline in gaming revenue is a result of the measures implemented to alleviate problem gambling in the country. The processes to curb problem gambling essentially limit the amount of gaming in Sweden. The CEO has suggested that in order to remain competitive, a broader range of games should be offered at casinos which would bring new licenses for new games in demand.

Some of these measures enacted by Sweden in 2010 include:

• Responsible gaming awareness and education
• The acquisition of responsible gaming company Playscan AB
• Imposing an age limit of 18 to purchase lottery tickets

However, it is clear these same measures used to help those with a gambling addiction or who are developing a problem is decreasing the amount of gaming revenue earned by the country. Sweden is in the midst of finding the correct balance between expanding revenues from online and land-based gaming and enacting measures to help those with gambling problems.

To limit the access of foreign online gambling sites, Norway must find a creative way to please all parties. Unfortunately this is typically a difficult task. The measures enforced by Sweden to minimize problem gaming are doing exactly that, decreasing the number of players at online and land-based casinos. However it is performing a necessary function. Both countries need to find the same balance other European nations have between the government and their players.

In all casino games, when the player places a wager it is deducted from their account balance. Adversely, when the player wins virtual chips their account balance increases. This is a consistency found in both online gaming as well as live play. However, in online gambling, different software developers utilize different mechanisms to fulfill these transactions.

Standard Banking Methods

Microgaming and Playtech use the standard version found in some casino games. The player’s balance is temporarily based on the game in which they are playing. Once the player selects the specific betting amount, those chips are deducted from their in-game balance. Meanwhile, the total casino amount remains the same because the chips for each game are deducted once the game begins.

If the player closes out a game, the amount left in their temporary account appears back in the casino account. Therefore if it is less than the amount they began with, the player has lost; if it is more the player has won. However, once a bet is submitted within the game, that money cannot be refunded. The only way is to win or break even (only in some games).

Realtime Gaming Banking Methods

On the other hand, Realtime Gaming using a mechanism commonly found in live slot machines. The player’s balance is displayed on the screen but cannot be used to place wagers. Instead, players must purchase coins or credits and add them into the video poker game. For instance, if the player purchases $25 worth of tokens within the game, the casino balance decreases by $25. If the credits are worth $0.01 the player will receive 2500.

If the player decides not to play this game, they can cash out. Since 2500 credits is equal to $25, that money is transferred back into their account. The betting during the game has no effect on the overall casino balance only the in-game balance. When a player loses all credits or coins, they must transfer more from the casino balance in order to continue playing. If the casino balance is empty, the player must redeposit into their casino account then transfer that into their in-game account.

Financial management for all games is consistent within the specific casino. Although there are different methods, they all make it easy to deposit, withdraw and transfer money within the casino platform. Online gaming sites strive to make these transactions as easy as possible to all players.

Since the passage of the Unlawful Internet Gambling Enforcement Act in 2006, U.S. crackdowns on online casino operators catering to American citizens have become somewhat commonplace. That said, with two big regulation bills currently under scrutiny in Congress, many online gambling enthusiasts were hopeful that such events were a thing of the past. Hope again American gambling fans, because we’ve got some bad news.

House Resolutions 2266 and 2267 proposing the reversal of the UIGEA simultaneous to the legalization and regulation of online gambling in the U.S. were on the agenda for a House Committee meeting on April 16, but the bills were pushed off the agenda in lieu of what committee members deemed to be more pressing economy-related matters.

The UIGEA is scheduled to go into effect on June 1 of this year. The act was originally scheduled to go into effect in 2009 but the implementation was delayed to give the necessary government bodies time to review HR 2266 and HR 2267. With the new deadline rapidly approaching and no new hearing yet scheduled, many proponents of online gambling are concerned that the U.S. will return to its restrictive online gambling policies.

Until the UIGEA is implemented, the U.S. government has no official stance on online gambling, but many state and federal offices have used the preexisting Wire Act to prosecute casino operators and funds transfer service companies for sending and receiving money to and from American residents for the purpose of gambling online. In fact, on April 16 an Australian payment facilitator named Daniel Tzvetkoff was arrested in Las Vegas amidst allegations of processing almost half a billion dollars in illegal online gambling payments.

If the BetOnSports case which just wrapped in January is any indication of how the U.S. legal system plans to treat such operators, then Tzvetkoff could be in big trouble. BetOnSports founder Gary Kaplan and CEO David Carruthers received four years and three years respectively for encouraging their company to accept payments from American banks. Both men were likewise fined a combined total of more than $70 million.

What do the legislation delays and operator crackdowns mean to the common player? If you’re not American, then neither scenario will affect you. If you are an American gambler, you cannot be prosecuted for playing real-money games online, but funds that are in transit to or from an online casino could be seized by a government body. That’s what happened to hundreds of American players when the Southern District of New York seized more than $30 million last year. None of the funds have as yet been returned to the account holders.

When it comes to the latest in online gambling regulations and legislation, all eyes are currently on France. While various members of the EU have been at odds for over a year with their dramatically different laws regarding online gambling, France – which had been straddling the fence for over a year with its highly restrictive gambling legislation – has finally come over on the side of full online gambling legalization.

Earlier this week, in a relatively close vote of 299 to 223, France’s National Assembly passed a new bill which will pave the way for popular online gambling activities like cash poker and sports betting. The bill is now on its way to the European Commission where it is expected to be approved in April. From there the bill will move on to the French Minister who is likely to sign off on the new laws in May, allowing near-immediate implementation nationwide.

It would be nice to say that French legislators finally saw the light, but it’s more likely that what they saw was green. With one of the most popular sports betting events – the World Cup – fast approaching in June, the National Assembly seemed all too eager to push through the once-controversial legislation which should coincidentally be in place just in time to allow the country to profit from remote betting for the event.

In the past, France has only allowed online gambling through approved national operators. Though this new legislation will ideally open the market to more outside operators, finally giving French players their choice of online poker rooms and casinos, many private companies still fear that France will cling to its national interests by continuing to openly favor French-owned operations. These concerns aren’t entirely unfounded, especially since the French-based Mangas Gaming group was the first to profit from new advertising deals.

Reuters released a comprehensive French online gambling market overview on the heels of the National Assembly’s positive decision, and by all accounts the potential profit margin for operators based outside of France are grim, what with continuing restrictions on popular games like roulette and blackjack. Still, such operators remain optimistic about their prospects in France. Leading bookmaker bwin – which only four years ago faced legal action in France for illegal gambling charges – is only days of away from relaunching French access to their sites.