Gaming Guru

Ill-Advised Sting Operation by Feds Could Backfire as Victims Retaliate

The concerted effort by U.S. government agencies to take down leading online sports books is not a figment of anyone's imagination. Why any government in possession of its faculties would want to preclude participation by its citizens in a thriving area of commerce which has gained global acceptance, except in the U.S., is a question that needs to be addressed by our so-called leaders.

The puritanical and moral zealotry wielded by government officials in pursuit of an anti-gaming campaign, steeped in hypocrisy and infused with attitudes left over from the Salem witch trials, is nothing short of a disgrace The strategic and profitable head start that non U.S. companies are building in a most promising business brings tears to the eyes of anyone who believes that artificial roadblocks to economic opportunities should not be imposed by government.

Since 9-11, the Beltway Boys have expanded their ruling powers through the Patriot Act under the guise of protecting the country. Unfortunately, the autocratic implementation of these new statutes in the name of security frequently causes them to be bent out of shape. Our government still adheres to an ignominious policy that insists, "We had to destroy the village to save it."

On a bad-guy scale of 1-100, terrorists are 100, gamblers are … well, you set the number.

The latest assault on the freedom of American business as well as citizens' lifestyle choices is the chilling attempt brought by federal and state authorities to halt advertising of online gaming companies.

A syndicated article in the January 13, 2004, Las Vegas Review-Journal noted that the Department of Justice had issued three waves of subpoenas, intended to "intimidate and discourage publishers and broadcasters from accepting advertising from online gaming sites." The papers were served between September and the end of December, demanding all records involving ads by offshore gaming companies since 1997.

In a country where individual rights and freedom of the press are guaranteed by law, these tactics are outrageous and disgusting. American Civil Liberties Union, Nevada, general counsel Allen Lichtenstein was quoted as calling the DOJ's action an "intimidation tactic to go after the messenger."

Rather than try to expose this ill-conceived campaign on a grand scale, which would require more verbosity than we are comfortable with, let's take a look at a single example – one in which we have personal experience.

The Department of Justice, IRS and Post Office are investigating employees of Carib Sports for alleged money laundering activities and ownership of the offshore sportsbook.

Right here let us state that Carib Sports is alive and well. Several months ago it experienced some website problems because it is a complex system, we are told. Experts were called in to change key configurations and the site was quickly restored to normal with the capacity to handle even greater traffic.

Carib originated and operated out of Antigua in the early 1990s, where it was regulated by the Government of Antigua and Barbuda which enforced stringent requirements for its licensees. The book was one of the offshore pioneers which persevered as the industry early on was tarnished by fly-by-night operators.

It took Antigua a while to tighten up licensing regulations, but the island finally got it right. Strict laws dealing with that problem as well as money laundering have been put into effect and are enforced.

In 2001, Carib relocated to Belize, where it again was operating legally in a jurisdiction which licensed gaming operations.

Carib has earned an exalted position as one of the most prosperous shops in the industry due to the efforts of a small group of savvy advisors and consultants. These men are well versed in the subtleties and nuances that separate successful bookmakers from the also-rans.

Most visible among them is Jon Rogers, with a long history of various bookmaking efforts, who handled marketing and also contributed day-to-day operational expertise.

Dealing with sports bettors is a labor-intensive business and the best stores are those that keep all clients -- from wiseguys to recreational players -- satisfied. Carib's instinctive understanding of this principle, along with its policy of prompt payments allowed it to enjoy extraordinary growth every year.

However, due to what is perceived as a vendetta by the feds against Carib, last year was the first time the sportsbook did not maintain its previous rate of growth. Based on recent activity, that is seen as a "temporary glitch," we were told.

So why did the feds focus on Carib as a target? Simple. The book has always been actively marketed. Rogers was instrumental in building the company's volume and helped it achieve and maintain a sold gold reputation among the offshore books.

So Carib got noticed.

But a lot more than high visibility contributed to Carib's being targeted for action by the feds. It appears the U.S. embarked on a sting-like strategy to ensnare Carib, along with other Antiguan gaming companies.

Upon being brought to light, this nefarious activity gives off the stench of a decaying fish, and is an embarrassment to the feds rather than a badge of investigative honor.

According to information we obtained, the U.S. Government is accused of falsely representing itself as wanting to be a partner to Antigua, using a cover story that alleged the U.S. would help Antigua regulate its burgeoning online gaming industry.

The rationale for offering such "assistance" was phony U.S. concern over protecting players and an interest in helping the industry evolve. C'mon, when was the last time Big Brother exhibited even the slightest interest in providing bettors with recourse to being scammed?

So, it turns out that the dirty reality and the feds' true purpose was to infiltrate the industry to obtain information heretofore unavailable. That enabled them to prosecute U.S. citizens who were lawfully engaging in the very business the feds were helping "regulate."

Based on an examination of documents which reveal what transpired, it is clear the U.S. never intended to be helpful to Antigua, but instead used duplicity and double-talk to burrow its way into data is had no right to see.

By the time the plot was uncovered, the feds had begun prosecuting operators from Antigua, wreaking havoc on what had been a well established and regulated industry.

Essentially, the U.S. government's motive in unleashing its legal tsunami against Antigua is to prevent millions of dollars in wagers from leaving the U.S.

Antigua retaliated by taking the U.S. to the grievance committee of the World Trade Organization. It charged the U.S. with unlawful restraint and interference with the jurisdiction's profitable and fast-growing online gaming industry. According to Antiguan Prime Minister Lester Bird, 75 percent of the islands' gaming organizations left the jurisdiction.

The WTO has heard the case and deliberations are underway. A decision is expected in March. It is worth noting that testimony from other nations was instrumental in supporting Antigua's complaint vs. the U.S.

Meanwhile, back at Carib, Jon Rogers continues his efforts to recover more than $1.6 million confiscated by the government which, incidentally, still has not charged him with anything, and simply says he is the target of an investigation. Presumably, they are awaiting a decision in the WTO case.

Earlier in the column we cited a personal interest in this story. Here it is. We were visited by two IRS agents and a postal department investigator who are involved in building the argument against Carib.

To their credit, they did not come off as Gestapo-like agents. They were cordial, pleasant and inquisitive. The focus of their inquiries was related to financial activity between our publications and Carib Sportsbook. Particularly advertising payments to Players Choice and Players Guide, the magazine we published from 1994 to 2001.

We answered all their questions to the best of our ability, noting that Carib generally paid by check. Moreover, although we don't have check stubs, we don't remember ever getting a check from Carib drawn on an American bank.

They wanted to know about when we visited Carib and whom we met with. All of our visits to Carib, both on Antigua and in Belize, are well documented in our Sportsbook Scene column coverage of same.

We provided the agents with old copies of Players Guide, and a few issues of Players Choice, the tabloid newspaper of which we suspended publication in September but have resumed as a weekly magazine.

The investigators asked us who owns Carib, and we responded that we didn't know, since we have never been privy to any official documents which would reveal that info.

The impromptu visit did not upset us, or leave a bad taste in our mouth. We realize the folks who questioned us have a job to do. But we did offer the observation that going after Carib seems to be a waste and misuse of government resources.

Given an unfriendly world that views America as a blundering giant with a bull's eye painted on the Stars and Stripes, we would rather see agents pursuing terrorists and their ilk. That would be more productive than harassing enterprising Americans who are trying to give our country at least a toehold in a burgeoning industry that promises to get even bigger, with or without U.S. participation.

To quantify the size of the offshore gaming market, revenue from online gaming last year exceeded $5 billion, according to published estimates by Bear, Stearns & Co. More than 70 percent of that money was wagered by Americans. The General Accounting Office estimates there are in excess of 1,500 gaming sites in cyberspace.

To suggest that our government's bizarre agenda of obsessing over online gaming is utterly cuckoo, is a polite way of saying the inmates are running the asylum. Certainly there is no outcry by the citizenry that this ludicrous waste of time and effort should be in place.

When Iraq is safe for our GIs, and the anti-American actions of our adversaries are limited to rhetoric and demonstrations, rather than horrific violence, that might be a more appropriate time to devote resources to dealing with relatively lower priority issues.

Our government needs to make a more intelligent and realistic assessment of its enemies. There are forces in today's world with the motivation and resources to destroy the U.S. And they ain't bookmakers!

Bah, Humbug. Once again the mainstream press covers a gambling-oriented story and skews it with such doom and gloom, it might have been written by Chicken Little.

A story reprinted locally that originated in "The Tennessean" got our attention with this dire warning: "Online Gamblers Face Addiction Risk."

Without repeating the story's woefully superficial assumptions and statements, we'll summarize its essence: According to certain critics, gambling in general, and Internet gaming in particular, is potentially very damaging to our nation, especially its youth.

Stated one do-gooder who takes exception with point spreads being printed in newspapers, as well as objecting to gaming in cyberspace: "I don't think you are printing the price of hookers or crack cocaine …Maybe papers can at least print a help line too."

Equating gambling with prostitution and drug addiction is a shabby but standard technique and tells us more about its practitioners and their agenda than it does about the problems that exist.

Make no mistake, we are not wearing blinders. No thinking person would deny that gambling poses real risks, both to individuals as well as society at large. But for arguments sake, let's acknowledge that a minority of drinkers also experience problems. In fact, addiction to everything from sex to fatty foods seems to be a problem for some people.

But we don't ban, eradicate or otherwise eliminate a lifestyle choice simply because a few folks can't handle it.

It would be encouraging to see a gambling story covered by the national press in an intelligent, balanced fashion. But that is wishful thinking, since agenda-driven, anti-gaming zealots seem to be the squeaky wheel that gets the grease.

The Light Touch. With all the acrimonious coverage of college football's flawed system for determining its national champion, it was heartening to see one major retailer having some good-natured fun with it.

Recently, in both the Las Vegas Review-Journal and the Las Vegas Sun, the full page ad for 99¢ Only Stores included this item. "99¢ Only Stores will sponsor the 99¢ Only Discount Bowl between #1 USC and #? LSU."

Athletic directors of both schools were asked to contact Jocelyn at the Los Angeles-based company ASAP. Unfortunately, it appears this proposal to sponsor a true national championship contest will not be consummated.

A spokesman for 99¢ Only Stores said they had been advised the game could not be sanctioned because it would violate NCAA rules.

It may have been only a tongue-in-cheek offer, but 99¢ Only Stores made a better effort at deciding who's the number one college football team than the NCAA and BCS combined.