5 March 2008

Ottawa Targets Gaming

I don't usually do this, but today I will take an article and give my opinion paragraph by paragraph.


Native reserve hosts illegal online poker sites

John Ivison, National Post Published: Wednesday, March 05, 2008

OTTAWA - The federal government said yesterday it is considering new measures to stamp out Internet gaming sites based on a native reserve in Quebec, in a move that could spark conflict between Ottawa and Canada's First Nations ahead of a second national "day of action" this summer.
I've never been a fan of Indians getting tax free revenues. If they are in Canada, they should be subject to the same taxes as companies like WEG.

The government deems the 400 or so poker and sports-betting sites operating from the Kahnawake reserve near Montreal to be illegal, but neither federal not provincial governments have attempted to enforce the law. Now Ottawa is reviewing that position.
I'm not sure what is legal and what is illegal when it comes to internet betting. I don't think the government knows either. I'm pretty sure that phone betting and internet betting that WEG utilizes is still in a legal grey area.

"Following recent concerns surrounding Internet gambling in Canada, the Minister of Justice [Rob Nicholson] has asked his officials to examine whether the enforcement of the Criminal Code provisions could be assisted with other measures," said Genevieve Breton, Mr. Nicholson's director of communications.
Either something is legal or it is illegal. End of story. I have my doubts that what the Indians are doing is illegal under the Criminal Code right now.

The "other measures" are understood to be moves to restrict banks and credit card companies from conducting financial transactions with illegal Internet operators. Similar legislation was enacted in the United States two years ago.
That law was a disgrace to America, a push by the Christian Right, a slap in the face to capitalism. Again, what is an illegal internet operator when it comes to Canada's law?

The Mohawks of Kahnawake say these laws do not apply to them since they are a sovereign nation. They also cite section 35 of the Constitution, which was inserted to protect native culture. The Mohawks say that gaming has been central to their culture as a means of settling disputes through competition, not violence. Other native groups, such as the Alexander First Nation in Alberta, have said they plan to emulate Kahnawake.
Sounds like the Indians have an airtight case to me.

Owners of horse-racing tracks, such as Great Canadian Gaming Corp., say they pay $1-billion in tax receipts every year to various levels of governments and incur huge expenses putting on the races. "These offshore operations just poach horse-racing and no one can do anything about it. They're parasites on the butt of Canada," said Ross McLeod, chief executive of Great Canadian Gaming, which owns four tracks in Canada.
Actually, the betting public pays Great Canadian Gaming who pays the government. If Great Canadian Gaming wants to stop the "parasites," they should compete with them, not whine about them. McLeod doesn't mind stealing from the race fans by having grotesque track takeouts that make it impossible for a patron, no matter how good a handicapper he or she is to beat the game. Yet he is crying about others stealing from him.

The track owners have also suggested that governments force Internet service providers to block the sites from Canadian bandwidth. "I expect the government to do the right thing and protect our country's interests," Mr. McLeod said.
How about protecting the PUBLIC INTEREST? Doesn't the public count more than a corporation? The government should do the right thing by forcing Great Canadian Gaming and WEG to compete with offshore betting shops. The Competitions Bureau should investigate and penalize WEG for collusive practices that play against the consumer's interest.

Chuck Barnett, who is a member of the board of supervisors for Mohawk Internet Technologies, a utility company that provides connectivity services for the site owners at Kahnawake, sees Ottawa as a foreign government that has no business regulating activity on Mohawk territory. "However, if I were a Canadian, I might instead be more interested in how explicit legislation could serve as the catalyst for a potential source of economic development, employment and revenue through taxation," he said.
Yes! The government should allow Canadian corporations to book sports action and to set up betting exchanges. They should get the tax money that gambling companies outside Canada are avoiding by competing with them. Most gamblers I know would rather bet with a Canadian company than say Betfair, Pinnacle, etc.

This view was echoed by Michael Lipton, a Toronto lawyer who specializes in gaming law. He said the horse-racing industry has had a monopoly on gambling in Canada for years, with Woodbine Entertainment currently holding a lock on government-sanctioned online horse betting.
Woodbine ABUSES the privilege of being Canada's number one gambling portal by acting like a spoiled baby, illegal collusion, and complete lack of regard of their suckers/patrons.

"I guess if I had a monopoly, I wouldn't want anyone to compete against me either," Mr. Lipton said.
You got that right Mr. Lipton. Unfortunately, the government is either being paid off by Woodbine, or unaware of Woodbine's practices.

He said the United States has faced serious technical difficulties implementing restrictions on the payment system. "They are completely bogged down on how to block this system."
And I hope it gets worse. The US is nuts for implementing the anti-capitalist laws. All they have to do is hub all gambling from Vegas, and rake in the tax dough from the Vegas companies. The public only has so much money to lose on gambling, the idea is to keep all the money within the domestic country, but the only way that will happen is by competing fairly. The largest bettors will do their darnedest to get the best deal for themselves.

He acknowledged the Mohawks have had some problems with fraud. The Kahnawake Gaming Commission, which regulates Web sites operating from the reserve, fined one popular Web site -- Absolute Poker --$500,000 after players complained of irregular betting that was traced back to someone associated with the site. But he said most operations are transparent and credible.
Someone just got nailed for fraud at Turfway Park. Big deal. The government should just step in and regulate sites devoted to internet poker, etc.

Rather than attempting prohibition, Mr. Lipton said the government should bring the Kahnawake sites into the system and regulate them. He said this would protect the vulnerable, guard against money laundering, bring in tax revenue and provide a competitive edge in the gaming software market in terms of international trade.
Preaching to the choir Mr. Lipton.

"I think [Ottawa] should embrace this and recognize that people don't want to be in a position where the government tells them what they can or can't do in the peace of their own home," he said.
You left off choice when it comes to getting the best deal for the consumer. The government has no business telling me if I want to bet on horses, I have to bet into a ridiculously high track takeout. All this will do is get people to try to beat the system offshore, or quit altogether. In the US betting numbers on horse racing dropped last year despite the government's attempt to make offshore internet betting illegal.

For more background read Proposed Amendments to the Criminal Code to Expand Sports Betting Options Lipton correctly points out that the government has historically taken advantage of the gambler whenever given the opportunity.

According to the following it is legal for a non Canadian online gambling company to accept bets from Canadians:

While there have been few significant developments in Canada’s conventional gaming
sector in recent years, the Canadian gaming industry has witnessed the emergence, and
rapid rise, of the E-gaming sector. As with conventional gaming, Canadian case-law has held that all internet related gaming activity falls under the exclusive domain of the Provinces and cannot be undertaken by private parties. This was the holding in Reference Re: Earth Future Lottery4, where the court ruled that, by virtue of section 207 (4) (c) of the Criminal Code of Canada, the Provinces have the exclusive right to carry out gaming activity through a computer. As a result, all computer related gaming activity, especially internet gaming, remains the exclusive domain of the Provincial governments and private enterprises are excluded from taking part in this type of activity. Despite the official exclusion of the private sector from E-gaming activity, online gaming companies are able to offer their services to the Canadian public by strictly complying with the principles set forth in the Earth Lottery case. The first step in understanding this is the principle that for an activity which is illegal under the Criminal Code to be subject to prosecution in Canada, a certain degree of connectivity with Canada must be in evidence. The Supreme Court of Canada addressed this important issue in R. v. Libman (1985)5, where it held that an offence is subject to criminal prosecution in Canada if “a significant portion of the activities constituting the offence” took place in Canada, thereby establishing a “real and substantive” link between the offence and Canada. This ruling represents the principle that, if it operated in some substantive manner from Canadian territory, such as money changing hands in Canada, or direct contact with an online internet gaming client, a company would be vulnerable to being prosecuted under Canadian criminal law. Accordingly, E-gaming companies offering their services to Canadians are able to do so because they structure their operations in such a way as to avoid connections to Canada which would render their activity subject to Canadian gaming prohibitions.

Toronto Star article on the issue
Current laws prohibit all forms of Internet gambling in Canada, with three exceptions: lotteries in provinces that allow online ticket sales; bettors who have telephone accounts at horse-racing tracks; and private bets between individuals.

Gamblers that have telephone accounts are allowed to gamble on the internet? I don't think that is how the law works. I don't think internet gambling has been dealt with properly in Canada law.

"They take a lower commission on the bet because they don't have infrastructure costs and pay purses. How many jobs are they creating here? None," Jane Holmes, vice-president of corporate affairs for Woodbine Entertainment Group said. "If we tried to do what they're doing, we would lose our licences. It provides them with an unfair competitive advantage."

This is nonsense. Anyone who knows how offshore houses work, knows Ms. Holmes is not telling the whole story, not even close.
First off, Woodbine didn't lose their licence when they dropped takeout on Win 4's a few years back. Secondly, Woodbine sells their signal for 4 or 5% to other hubs across America. In other words, they take 5% of each bet on their tracks by non HPI customers, but they take an average of over 23% commission from their own customers.
Rebate shops simply give back part of the difference between the 5% and 23% to their clientele in order to entice them to bet with them. This is what capitalism is all about. The fact that Woodbine can charge 28.2% on triactors is unfair to the customers as people in Canada are painted in a corner because WEG is a semi-monopoly.
Customers in Canada have a choice, bet through WEG and HPI or take their business offshore in order to get a fair bang for their buck. People are hesitant to begin with when it comes to betting offshore, but WEG has driven them away.
Woodbine would lose their licence if they tried to compete...NOW THAT IS FUNNY

1 comment:

Pull the Pocket said...

That's a very good, well thought out post.