24 March 2010
Since our last update, there have been some interesting developments in major non-European territories. This article looks at recent events in the US and China.
Discussions on regulating online gambling in the US continue
January saw the sentencing of UK citizen David Carruthers, former CEO of BetOnSports.com. As covered in a previous update, Carruthers entered a revised guilty plea in May 2009 to charges of racketeering conspiracy. Carruthers has been sentenced to 33 months in prison, which was the sentence recommended by the United States Attorney Office in exchange for his guilty plea, his cooperation against other defendants and his agreement to assist the US Government in forfeiting any seized property.
The first few months of 2010 saw further discussion on the legalisation and regulation of online gambling at a federal level, as well as more proposed bills to legalise online gambling at state level.
There has been a strong negative response from America's wealthiest Indian gaming tribes to the federals bills proposed by Representative Barney Frank and Senator Robert Menendez (click here for our previous update on these bills). All eyes will be on the National Indian Gaming Association convention, which will be held in San Diego at the beginning of April, as some commentators have suggested that if the tribes reach a consensus on the issue of internet gambling their decision may affect Congress' decision on whether or not to overturn the Unlawful Internet Gambling Enforcement Act 2006.
At the state level, bills in relation to the regulation of online gambling were proposed in the first couple of months of 2010 in Florida, Iowa and New Jersey. The reception to these bills has reportedly been lukewarm and the prospect of any of them being passed this year appears remote. Florida is seen as the most likely state to get some kind of bill passed as there seems to be a general concession that the regulation of online gambling is inevitable and the revenue it will generate will go some way to replenishing the state's $3.2 billion deficit.
In contrast, the bill proposed in Iowa by Brian Quirk has apparently been experiencing resistance from Quirk's colleagues in the Iowa House of Representatives, who are said to consider it inappropriate to encourage gambling in a time of recession, despite the revenue that it could generate for the state.
Democrat State Senator Raymond Lesniak is not experiencing a warmer reception in New Jersey, where the bill he proposed in early January was indirectly criticised in late January by newly-inaugurated Republican State Governor Chris Christie in his ‘Gaming, Sports and Entertainments’ transition paper, in which it was suggested that New Jersey “should not waste state money to pursue intra-state internet wagering or sports betting until federal laws change".
However, Lesniak had better luck at the end of February when the New Jersey Senate resolved to join a lawsuit that the State Senator had filed in March 2009, which sought to declare unconstitutional the Professional and Amateur Sports Protection Act 1992 ("PASPA"), which prohibits sport betting in all American states except Delaware, Montana, Nevada and Oregon. The New Jersey Senate stated that it recognised the financial significance of legalising sports betting in New Jersey and stated that the ban was discriminatory in allowing the afore-mentioned four states to reap tax revenue from sports betting while New Jersey is unable to. It is reported that, since the filing of the lawsuit last March, legislators in Missouri, Rhode Island and Illinois have also introduced resolutions for Congress to repeal PASPA.
A crackdown on online gambling in China
Online gambling is prohibited in China. However, a large and burgeoning (and illegal) online gambling industry does exist, with the involvement of both local and overseas operators. This proliferation of illegal online gambling websites was subject to a government crackdown announced in February. Over 900 arrests have reportedly been made so far of persons said to be suspected of being directly involved in these illegal gambling sites. As a result of these arrests, it has been reported that over 200 Chinese-run online gambling sites have been shut down. This is a seven-month initiative designed to eradicate online gambling in China and involves eight ruling party departments, government ministries and financial regulatory bodies. However, this crackdown has resulted in a potential gap in the market, which has apparently encouraged gambling operators from outside China to target Chinese consumers.
