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September 17, 2014

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jon ralston:

Poker company indictments further cloud legislative debate

On March 10, two apparently unrelated events occurred thousands of miles apart.

In the Southern District of New York, a federal grand jury indicted three leading Web poker companies for laundering billions of dollars through sham companies meant to conceal their true purpose: to circumvent the Unlawful Internet Gambling Enforcement Act. The indictment against PokerStars, Full Tilt and Absolute was sealed.

That same day, in the Northern District of Nevada, Assembly Judiciary Chairman William Horne introduced a bill on behalf of PokerStars designed to circumvent the act by legalizing Web poker in the state. Horne carried the company’s agenda a few months after being hosted by PokerStars in London for two days.

Even in a capital where the sleaze so obviously oozes, where lobbyists and legislators look alike in that “Animal Farm” way, even Orwell would have had trouble conceiving of a story this slippery.

And now, with that indictment unsealed Friday and two major Nevada gaming companies having announced deals with the tarnished Web poker giants, this story has the potential to embarrass many people and darken the cloud over Nevada’s legislative process.

Perhaps the March 10 bill introduction was a coincidence, especially because the PokerStars folks, led by lobbyist and former Assembly Speaker Richard Perkins, were so dismissive of any federal problems, legal or legislative. Indeed, on March 24, in response to a question from freshman Assemblyman Ira Hansen, Perkins assured the committee that PokerStars boss Isai Scheinberg, who had been indicted two weeks earlier, was not wanted by authorities. Perkins told the panel he wanted to remove that “sort of potentially very damaging statement hanging out there,” and Horne closed the hearing by saying despite assertions Internet poker is illegal, nobody has been arrested by the Justice Department.

That statement, as they say, is no longer operative.

This is inescapable: Horne and his pal, Commerce Chairman Kelvin Atkinson, as well as state Senate Majority Leader Steven Horsford, went on trips sponsored by a company that was under federal investigation and has been and is again accused of operating illegally. Not to put too fine a point on it, but the government says the money used to buy plane tickets, meals and who knows what else for those lawmakers was the fruits of a massive, illegal conspiracy.

It would be easy to ridicule Horne and Perkins for saying Friday that the indictments don’t affect their legislation. But in this sense they are correct: The Nevada Resort Association so gutted their original bill that what could pass, unless the cloud of suspicion kills it, essentially does nothing.

How prescient Gov. Brian Sandoval looks now after releasing a letter essentially opposing Horne’s bill: “While there may be some disagreement about the scope of the ban, it is important that we not unintentionally expose the citizens of our state to civil and criminal liability.”

In a sense, Horne is fortunate the Resort Association eviscerated his bill for him because if it had passed in the form PokerStars wanted it, this would look even worse. Imagine that.

It also doesn’t look so hot for Wynn Resorts, coincidentally represented by Perkins, too, which signed a deal March 25 with the online poker behemoth. Or for Station Casinos, which partnered with Full Tilt less than a week later. Both, shockingly, ended those deals Friday.

Both deals were predicated on the federal government legalizing Web poker, which Senate Majority Leader Harry Reid has said should occur first. But the usual industry gymnastics — we hate other kinds of gaming until we think we can profit from them — ensnared both Nevada casino companies as they announced deals, surely unbeknown to them, after the indictments had occurred.

Remember, too, how much worse this looks because of those PokerStars junkets for the lawmakers Perkins arranged — trips Horne and Atkinson went out of their way not to disclose, claiming they had permission from legislative lawyers. How they could believe the public is not entitled to know companies paid for such trips is astonishing. But now that the companies are under indictment, imagine if we did not know what they had done.

Before you conclude I am one of those anti-Web poker zealots, the reverse is true: I used to play online before President George W. Bush signed the Internet Gambling Act, and I wish it were legal.

But this story has little to do with the merits of Internet poker. It is a story of good old-fashioned power politics undone first by greater power politics (the Resort Association, Reid and Sandoval) and now by a scathing indictment with a timeline that should embarrass legislators and gamers alike.

The neutered Horne/Perkins bill may yet pass the Legislature. But from the hosted trips to the bill introduction to the indictment, this does not pass the smell test.

(The indictment and a news release from the Manhattan U.S. attorney are on Ralston’s Flash on LasVegasSun.com.)

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  1. There was a big deal about brewing one's own beer in the 70's. It was made legal in some states, and then most people didn't care about it, they would rather buy it.

    Could Internet activities go the way of the CB radio? Another 70's fad.

    Already, they are marketing a cellphone as an "anti-phone."

    There are people that look for coin slot machines.

    I wonder if by the time they get it up and legally running if Internet Poker would have fizzled out?

  2. ONLINE GAMBLING---JOB KILLER!!!

    The bottom line, online gambling is illegal in the USA. For a very good reason, online gambling is non-productive. Online gambling is a productivity killer. Online gambling is a JOB KILLER for Nevada. Online gambling is a JOB KILLER for any state that has legalized casinos. Online gambling will reduce land base casinos, and in many states will halt and eliminate land base casinos altogether. Online gambling will place the casino in the bedrooms and living rooms of all Americans, young and old. Online gambling will corrupt the minds of our youth, devert attention from college student(who already have a hard time staying focused).

    Online gambling is the gateway to illicit attivity on the internet, will promote pronography and say to americans youth you can do whatever you like on the internet. You can bet many more american families with have financial troubles if online gambling is legalized. If one wants to stop the productivity of a city, a county, a state, a country---introduce online gambling, we will surely see a severe drop across the board in all forms of meaningful productivity.

    The lawmakers in the State of Nevada and across the USA have a duty, per their sworn oath, to uphold the laws of the state and USA. Entertaining unlawful acts, of online gambling is a violation of the law!!! How can the Nevada regulators consider online gambling when the Federal Government says this is illegal? How can the Nevada Gaming Commission and the Gaming Control Board even consider online poker? This is illegal! Is the Nevada Gaming Commission and Control Board trying to KILL JOBS here in Nevada and other State? Why consider businesses that are considered illegal by the US Government?

    Online gambling is a nation killer! A JOBS KILLER! A Youth Killer! If your for online gambling in any from your supporting the obove summary!

  3. The Nevada Secretary of State says, PokerStars political action committee made $272,000 in contributions to 68 legislative candidates, constitutional officers, and legislative caucuses.

    "Business friendly" means the owners, investors, etc. get nearly all the profits, and good number of the employees train their replacements every 3-4 years.

    PokerStars, a company based on the Isle of Man, a British territory, has been a very large donor to political campaigns in Nevada which are 'business friendly'.

    PokerStars profits will ALL BE OFFSHORE so they won't pay a cent of taxes and tourists can gamble from their homes. They hired Richard Perkins, former speaker of the Nevada Assembly, to lobby for passage of AB258.

    Ex-politicos go to into politics to learn the ropes, then go private and GUT THE STATE TREASURY from the outside by using their friends inside to prepare nice bundles of cash through legislation.

    Good Luck.

  4. Where was the due diligence in the Wynn and Fertitta deals? These are reputable gaming figures and they didn't think it was OK to deal with companies that were violating U.S. law??? Even before the indictment, there was no question that these companies were outlaws. When you have to leave the country to meet their CEOs, that's a pretty good hint. But Wynn and Fertitta didn't get the hints. Maybe Gaming should look into that.....

  5. There have been several articles of Fraud in the On-Line Poker community where it seemed a player had access to view the cards the other players held. Other than sports betting I would urge Extreme caution in online Gambling where No Rules and Global Hackers run the day. If on-line Gaming ever were legitimate, you could outsource Nevada.

  6. @m2mnelson,

    Hey thanks for being involved. Your right my online gammar is hideous:) However, my point is right on the mark, a bulls eye. And this is why online gambling will not be legalized. This whole process was not done right, not in the open, behind closed doors with an illegal enterprise taking the lead. The cartoon caption says it all with the poker promoters stuffing cash into the mouths of the politicians.

    You cannot legalized, then control online gambling..Period. Online poker is a trojan horse to destroy the American household. This takes all the stops out to do anything online. The buck stops here my friend, with any form of legalized online gambling--it not going to happen. That is why we have Las Vegas and other states that have invested millions to build a regulatory system to monitor gambling.

    You cannot, I repeat you cannot regulate online gambling..Period We have a reasonable Attorney General the feels the same way.

  7. ...and Online Gambling is a JOB KILLER for NEVADANS!!!

  8. There is one aspect of online gaming that must be considered: It is impossible to know with certainty the identity, and hence the age, of a person making a purchase.

    This more than any other factor is what gives me pause, even though I would probably be in full support of online poker otherwise.

  9. On-line gambling is sure profitable for our Speaker and Majority Leader. Obviously, the campaign donations do not suffer during economic downturn and certainly plenty of very poor judgment on the part of the recipients of these pennies from heaven. Keep up the good work boys and keep those donations coming.