Feature: Is the US finally ready to liberalise online gaming?

Regardless of the Interactive Media Entertainment & Gaming Association iMEGA's success or failure fighting America's UIGEA egaming ban in court, a consensus is emerging that egaming is to be legalised anyway...

THE INTERACTIVE Media Entertainment & Gaming Association (iMEGA) told EGRmagazine.com last month that its legal battle against the Unlawful Internet Gambling Enforcement Act was making progress. But regardless of iMEGA’s success or otherwise fighting the US egaming ban in court, a consensus is emerging that UIGEA will be repealed anyway.

That view was expounded recently both by the chief executive of Harrah’s new online gaming arm, Harrah’s Interactive Entertainment, Mitch Garber, who told eGaming Review that he could see an egaming world in which Americans were free to gamble online legally (see the interview with Mitch Garber for more), and by giant investment bank Goldman Sachs, which predicted that the US would soon legalise online gaming to create an egaming market worth US$12bn.

And the view was given further weight this month by PartyGaming “ well, kind of. Coinciding with the release of its second-quarter trading update, PartyGaming said it was upping marketing spend to take advantage of the US authorities freeze on the payment channels of poker sites that take US bets, such as Full Tilt and PokerStars.

Party’s official line on this, of course, was that it was simply positioning itself to be the natural alternative for European players of Stars and Tilt to turn to should the US authorities squeeze on their payment channels continue and their liquidity suffer.

PartyGaming has been forced to compete harder as US-facing poker sites reinvested their huge profits into marketing in Europe, chief executive Jim Ryan told EGRmagazine.com this month “ so the US payment freeze presents a welcome opportunity to hit back.

But if the marketing push also lends weight to the brand ahead of possible US liberalisation, that can only be a good thing, and as Ryan also said this month, PartyGaming’s biggest threat would not come from existing rivals but from brand-buster media giants and monopolies moving into egaming when markets, including the US, do eventually open up. And if Party didn’t expect the US to liberalise, it’s a fair bet that they wouldn’t have spent US$105m settling with the US authorities earlier this year.

Speaking of US liberalisation, Gigi Levy, head of rival 888, which has not yet followed PartyGaming in settling with the US authorities, this month said that 888 believes that the US will remain protectionist even if it does legalise online gaming. Which arguably means it considers any settlement in the US not much of an investment. Levy has so far remained tight-lipped on that particular question.

Kaplan on trial

Those hoping to reach a settlement of a different kind, meanwhile, include BetOnSports founder Gary Kaplan, who was left last month as the only executive of the British sportsbook facing trial in the US; both his brother and sister pleaded guilty to criminal charges yesterday in a move likely to precede a plea by Kaplan himself.

Neil Kaplan and sister Lori Kaplan Multz pleaded guilty to racketeering, conspiracy and the illegal transmission of bets, while former colleague Penelope Tucker, who managed the sportsbook’s payment processing systems and helped Gary Kaplan conceal some of the proceeds, according to papers filed by prosecutors in the case, also pleaded guilty to one count of aiding and abetting wire wager act violations.

Former employee Tim Brown had already pleaded guilty, as have four members of the family that owned a Florida-based marketing company that promoted BetOnSports in the US; while former BetOnSports chief executive David Carruthers entered into a plea agreement in a St Louis court the month before last, admitting to racketeering and agreeing to take part in prosecutions of his former colleagues in exchange for a maximum jail term of 33 months.

The question all this begs is just what Gary Kaplan, who faces trial on 21 September on the same charges of racketeering conspiracy, mail fraud and wire fraud his brother and sister have just admitted, is holding out for. A source close to the trial confirmed: “I think this is a prelude to a deal, as the ‘family’ would not plead guilty without Gary’s approval.”

Sources suggested that he was willing to pay the US$100m prosecutors are said to be seeking for his crime, but that he is hoping to slash the 10-year sentence they are also pursuing to just five. “It might sound corny, but he genuinely is a family guy,” the source said. “He’s prepared to lose some money, but not a decade of seeing his kids grow up.”

The answer came on the 17th of August, when Gary Kaplan submitted a guilty plea deal in exchange for a fine of more than £43m and a prison sentance of between 41 and 51 months.

This article first appeared in the August edition of eGaming Review.

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Feature: Is the US finally ready to liberalise online gaming?

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