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Best of Liz Benston

Gaming Guru

Liz Benston
 

Regulators Eye Charity Event Sponsored By Online Casino

22 July 2005

and Richard N. Velotta

LAS VEGAS -- This weekend, thousands of military troops stationed in Hawaii are expected to participate in a charity event involving a meet-and-greet with Hollywood stars and a concert by rapper Snoop Dogg.

The sponsor of the event, an Internet casino company called Bodog, is raising some eyebrows among regulators because it is one of many online casinos the Justice Department says is doing business illegally in the United States.

The event, which received approval from the Defense Department and was organized with the help of the military's Morale, Welfare and Recreation Department, involves troops stationed at various military bases in Hawaii including Hickam Air Force Base, the U.S. Army's Schofield Barracks, the naval base at Pearl Harbor and the Marine Corps base at Kaneohe Bay.

Called "Salute to the Troops," the event kicked off Thursday and includes a concert, comedy show and a poker tournament with troops playing against celebrities.

Phil Strub, special assistant for entertainment media for the Defense Department, said he and his staff were not informed or aware of the legal status of Internet gambling when the military signed off on the event.

"Nobody raised the issue," Strub said. "I'm not a legal expert but I would have thought that someone ... would have raised this if we thought it was a radioactive thing.

"I'm not saying we are in any shape or form endorsing Internet gambling or are at cross-purposes with the Department of Justice," he added.

He said there was some initial concern that the event could be promoting gambling. But officials felt assured that there wouldn't be any "proselytizing" going on and wanted to give troops the opportunity to enjoy a concert and meet celebrities, Strub said.

The poker tournament, like the other events taking place over the weekend, isn't located on a military base and doesn't involve any money changing hands, he said.

Strub said the military evaluates all events with commercial sponsors to make sure that soldiers aren't exploited or that the military isn't used to elevate the stature of an entertainment event, like a concert or television show.

"We have a lot of concerns when people want to do events with soldiers," he said.

Bodog.com, based in Costa Rica, says its business is regulated by that government and in the United Kingdom, where the British government is in the process of formalizing online gambling regulations.

Such arguments don't sway the Justice Department, which has Bodog.com on its radar screen.

A few months ago, the Department of Justice sent a subpoena to Esquire magazine suggesting that the publication -- which ran a poker ad from Bodog.com -- could be promoting an illegal enterprise.

The DOJ cites a 1961 law known as the Wire Act as the primary basis for the ban.

It's the latest of several warning letters sent to various media companies over the past couple of years. In a separate letter sent to the National Association of Broadcasters in 2003, the deputy assistant attorney general for the DOJ's Criminal Division noted that "broadcasters and other media outlets should know of the illegality of offshore sportsbook and Internet gambling operations since, presumably, they would not run advertisements for illegal narcotics sales, prostitution, child pornography or other prohibited activities."

Bodog officials say the company has recently dropped ads for its online casino and replaced it with ads for Bodog.net, the play-money site and the entity under which the company is promoting the charity event in Hawaii. Bodog.net, which doesn't link to Bodog.com, is operating within the law, the company argues.

Ultimately, all of the company's advertising is protected by the First Amendment, Bodog Chief Executive Calvin Ayre said.

"According to Bodog.com legal experts, media outlets running ads for international gaming companies are protected under the Constitution of the United States, until such time as a U.S. judge of competent authority rules otherwise," Ayre said in a statement.

Like Bodog, most online casinos are thumbing their nose at the Department of Justice and taking bets from Americans on the premise that the Wire Act -- intended to fight telephone betting by organized crime in the 1960s -- is little enforced and predates the Internet. They also argue that the Wire Act, which specifically mentions sports betting, doesn't include other casino games like poker.

"You probably have a better chance of being hit by lightning than the feds going after you," said Joseph Kelly, an Internet gambling expert and law professor at State University of New York College at Buffalo. "And I don't mean getting a letter."

The government subpoenas have done little to dampen the growth of the Internet gambling business in the United States, he said.

Toni Cowan, senior deputy attorney general for the Nevada attorney general's office, said Bodog appears to have done what's necessary to steer clear of authorities.

"I find it interesting that this is taking place in a state that is one of the two states in the union that does not allow gaming," said Cowan, one of the attorneys who advises the state Gaming Control Board.

Bodog is "not a part of the gaming establishment that works within the state and federal law and they're drawing attention to themselves by having this event in Hawaii," she said. "The question is, are they trying to be good corporate citizens or are they just trying to make a point that they can pull off a high-profile charity event in a state that doesn't allow gambling?"

Hawaiian law enforcement officials say the event itself is probably legal because there's no buy-in fee for the poker tournament.

Online casinos are flourishing while regulators stand by without the ability or manpower to rein in the industry, casino consultant and former Chairman of the Nevada Gaming Control Board Steve DuCharme said.

"It's hard for one local police department and one state attorney general to be the police force for the whole country," DuCharme said. "It would tax their resources."

DuCharme, a former police officer who helped chase down telemarketing companies, said one state attorney general eventually "took the bull by the horns" and began indicting companies for telemarking fraud.

Regulators may have "bigger fish to fry" then to go after gambling sites, he said. Internet gambling "doesn't involve a sympathetic victim and some would say there's no victim."

Bodog, one of the oldest online casinos, is also one of the industry's most aggressive advertisers.

In April, the company sponsored a celebrity poker event in Los Angeles to benefit the Los Angeles Lakers Youth Foundation, the first time an online gambling site had partnered with a major U.S. sports team. The company is making a name for itself on the celebrity circuit, sponsoring a pre-Academy Awards party in Los Angeles and the Genesis Awards, an annual awards contest in Hollywood for animal-friendly films.

The list of celebrities scheduled to attend the Hawaii event is long and includes singer Bif Naked, MTV host Carson Daly, "American Pie" actress Shannon Elizabeth and comedians Wanda Sykes and Paul Rodriguez.

Some experts say online casinos are using free-play sites as a way to avoid scrutiny from the Department of Justice. Most online casinos already offered a play-money option prior to establishing separate, free-play sites.

Charity events are a clever way for online casinos to dodge advertising restrictions in the United States while improving their image, said marketing consultant Dennis Conrad of Reno-based Raving Consulting Co.

"The charity is going to say 'yes' and it gives them legitimacy ... this has a public service aspect to it," he said.

Online casinos that host a lot of community events will probably be questioned less about the legal status of their business, DuCharme said.

"Someday you're going to wake up and say, 'We've always had online gaming,' " he said.

Another unusual element of the event was a planned appearance by Pittsburgh Steelers quarterback Ben Roethlisberger. A press release listed the star athlete among several celebrities scheduled to show up.

The National Football League frowns upon its current players associating themselves with gambling.

A Steelers spokesman said Roethlisberger is not planning to attend the event.

"He's not going to that event," said Steelers spokesman Dave Lockett, who said the event was presented to the player as an opportunity to greet military troops.

"The decision was all Ben's," Lockett said. "The team had nothing to do with it. He doesn't even play poker. I do not know when he made the decision, but I know he did not intend to participate in any gambling-related activities."

Roethlisberger, a frequent visitor to Las Vegas, has been reported as having a personal relationship with professional golfer Natalie Gulbis, a Lake Las Vegas resident.

Regulators Eye Charity Event Sponsored By Online Casino is republished from Online.CasinoCity.com.