Will the US Leave $40 Billion in Tax Revenues On the Table?

According to the Safe and Secure Internet Gambling Initiative, a new tax revenue analysis announced by Representative Jim McDermott (D-WA), pictured left, estimates that regulating Internet gambling would generate between $8.7 billion to $42.8 billion in federal revenues over its first ten years. The findings of the analysis, prepared by PricewaterhouseCoopers, were provided to all Members of Congress by McDermott earlier this week.

“Before us is a tremendous opportunity to protect consumers and recoup billions of dollars that should be collected by the Internal Revenue Service,” said Representative McDermott. “These are revenues that are desperately needed, given that we are at war and face difficulty financing the nation’s priorities.”

Representative McDermott introduced the Internet Gambling Regulation and Tax Enforcement Act (H.R. 2607), which would tax regulated Internet gambling. According to McDermott,

the current approach, prohibiting Internet gambling through the Unlawful Internet Gambling Enforcement Act (UIGEA), has proved to be a failure. “Instead of this ineffective attempt to prevent adults from gambling over the Internet, we need a more sensible approach to protect consumers and ensure that revenues that now flow offshore stay here in the U.S. and are therefore subject to taxation.”

McDermott’s bill is a companion to the Internet Gambling Regulation and Enforcement Act (H.R. 2046), legislation introduced by Representative Barney Frank (D-MA) that would establish a licensing and enforcement framework for regulated Internet gambling in the U.S. The legislation would allow States to retain full control over the regulation of Internet gambling within their borders, applying additional taxes, protections and limitations as determined necessary and appropriate.

”By prohibiting a popular, recreational activity that many millions enjoy in the comfort of their own homes, the U.S. is forfeiting billions of dollars in revenue needed for critical government programs,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “It is time for Congress to regulate and tax Internet gambling to ensure security controls are in place to protect consumers and capture billions in revenue.”

GPSTS founder Charles Nesson Proposes Presidential Candidates Play Poker to See If They Understand Strategy

Charles Nesson, Harvard law professor and founder of the Global Poker Strategic Thinking Society (GPSTS) was a guest on Comedy Central’s The Colbert Report.

I’ve blogged about Nesson before. Back on August 14 I wrote about his plan to organize poker strategic thinking societies at universities and secondary schools. At an international conference called State of Play held in Singapore last summer, Nesson advanced the idea that poker can teach everything from basic life skills to war games at military colleges.

Students at several top universities formed poker clubs as part of Nesson’s Global Poker Strategic Thinking Society (GPSTS) in preparation for a national collegiate team poker tournament and conference next year that’s aimed at promoting poker’s educational benefits.Nesson hopes that poker societies will reach the point where they have an NCAA-style championship in team poker for American universities and envisions an open online curriculum centered on poker that will draw the brightest minds together to promote open education and Internet democracy.

He chatted with the sarcastic and cynical Stephen Colbert about the strategic benefits of playing poker and talked about some of his goals for the GPSTS—and how online poker can help people learn skills that transfer seamlessly into real life. He proposed that all of the presidential candidates get together and play poker on The Colbert Report to see how well they understand strategy.

I’d love to see that, but somehow I doubt it would ever come about.

A video of the interview is posted to Comedy Central’s website: http://www.comedycentral.com/

Antigua Close to Approval for "Whitelisting" in UK

The government of Antigua announced that it may yet achieve whitelist status in the United Kingdom. If they achieve this coveted status, they’ll be able to advertise there.

Antigua expressed confidence that their application for whitelisting under the UK gambling law will be approved following a meeting between UK Minister for Sport Gerry Sutcliffe MP, and Antiguan Minister of Finance and the Economy Dr. L. Errol Cort (pictured right).

Only a precious few applicants have been accepted for whitelisting, and includes Alderney, and the Isle of Man. Because Antigua's application has yet to be approved, Errol Cort met with Sutcliffe to ensure him that all information required to complete its review and approve Antigua's application was on hand.

"I was happy to learn that very little stands in the way of our approval for whitelisting,” said Dr. Cort, “and I think I can express confidence that this issue will be resolved favorably in the very near future."

Antigua’s Director of Gaming Kaye McDonald added, "We are acknowledged global leaders in the regulation of this industry. Our standards are the highest in the world and we view the whitelisting as important to demonstrate our commitment to the highest standards in the supervision and oversight of this dynamic industry."

Cort viewed the mission an unqualified success, saying "This meeting shows what governments can accomplish by working cooperatively and openly to resolve issues between them. We appreciate Minister Sutcliffe's interest in this matter and look forward to concluding this matter shortly."

More Upsetting Thoughts About the Absolute Poker Scandal

With a bit of time to think about the Kahnawake Gaming Commission’s lengthy investigation of Absolute Poker, I have a few thoughts and some unanswered questions. Maybe you do too.

How did the data file detailing the entire tournament history get sent out in the first place?

It was supposedly “sent out in error.” But for that to happen, security must have been so lax as to allow a customer service representative—a relatively low paid cog in Absolute’s wheel—to have access to this kind of information. Whether it was sent out inadvertently, or as a “signal” to the poker playing community, there is no security whatsoever if a customer service representative can access this kind of information. It’s sort of like a customer service representative at your local bank having the ability to wire transfer funds out of your account without proper safeguards. It just doesn’t happen. Or it shouldn’t!

Why doesn’t the report name names?
We’ve all heard that Scott Tom and Alan John Grimard—or A.J. Green, his chosen alias—were allegedly the guilty parties who perpetrated the scam, so why aren’t they identified in the audit. The online site Gambling911 even uncovered Grimard’s (Green’s) home address, although they didn’t released it out of concern for his safety. I emailed Grimard (Green) at his email address: peptona@hotmail.com, asking him to come on my radio show to tell his side of the story, but of course he didn’t reply. If A.J. Green and Scott Tom are the guilty parties who perpetrated the scam, why aren’t they identified in the audit? According to the audit report, “Beginning on August 14 for a period of six weeks, the accounts listed below were used to compromise AP’s systems by using software that enabled users to view hole cards of other players, resulting in unfair play.”

The players in question are:

GRAYCAT

PAYUP

STEAMROLLER

POTRIPPER

XXCASHMONEYXX, also known as SUPERCARDSMSS

DOUBLEDRAGRONFALDOXXB also known as ROMNALDO

Who are these players? Please identify them. The entire poker playing world wants to know.

Why was the fine levied against Absolute Poker so very small?
The fine of $500,000 was very small, compared to the seriousness of the offenses and the money Absolute makes. At most, it amounts to a slap on the wrist. I’m not sure how large the fine should have been, but it needs to be a lot larger than a mere half a mil.

Who deleted the logs and records?
If logs and records were deleted, how did the Kahnawake Gaming Commission conduct its investigation in the absence of this information, and more importantly, how were these records deleted? And who deleted them? Did they delete them before or after the investigation began? Are Grimard (Green) and Tom suspected of destruction of evidence in addition to the fraud they perpetrated, or were others involved too?

Why haven’t arrests been made?
Suspects have been identified. At least one (Grimard/Green) is reportedly back in Canada, where he could be indicted for fraud, for the destruction of evidence, and probably a few other crimes too.

The fact that this took place in the Kahnawake Territories shouldn’t mitigate against Canadian authorities taking action. In any event, the perpetrators committed crimes in Canada, the Kahnawake Territories, Costa Rica, and possibly other jurisdictions too.

The bottom line
So far no one has been arrested and brought to justice. As a result, Absolute Poker paid a small fine of $500,000 which amounts to a licensing fee to steal who knows how much, while the guys who did the crime are walking around, free as you and me, with their pockets lined in ill-gotten gains and—apparently—no fear of prosecution, trial, and punishment.

Something really stinks here. The stink has been with us since Day One. It's just getting worse.

The White List

The UK Gambling Commission allows a firm to advertise only if they have been vetted, approved, and placed on what’s commonly called the “White List.” And getting white listed is a big deal, since it allows a firm to advertise and presumably have a big market edge over other firms.

Everyone wants to be white listed. But only a few have made it. Tasmania recently joined Alderney and the Isle of Man as the only jurisdictions that have been approved for the white list by the Gambling Commission. As a result, online casinos with Tasmanian licenses can advertise in the U.K. beginning January 31.

Only firms licensed in the UK, Tasmania, Alderney, and the Isle of Man, can now advertise in the UK.
The Commission rejected white list applications from the Kahnawake Territory (Mohawk Nation) in Canada, as well as the Caribbean nation of Antigua. In announcing this, they offered no explanation.

This may send a wave of online gaming organizations now located in other areas to locales that are white listed, in order to enter the UK market. We'll see.

Mohawk's Displeased by Exclusion from UK's "White List"

Mohawk Council of Kahnawake Grand Chief Michael Ahríhrhon Delisle, Jr. announced his disappointment with a decision made by the United Kingdom’s Department of Culture, Media and Sport that failed to include Kahnawake on it’s so called white list of jurisdictions whose Internet gaming permit holders are allowed to advertise in the UK.

“Despite having been the first jurisdiction to accept and implement the world-recognized eCOGRA standard, the implementation of a mandatory continuous compliance policy, and our consistent enforcement of what may very well be the world’s most stringent due diligence program, our name has not been added to the U.K.’s exclusive white list,” Delisle said.

He added, “We are keenly disappointed in the UK’s decision, which ignores the long-standing alliance between our Nations. We also find it deeply troubling that the actions of our old friends directly conflict with the commitments they made in the United Nations Declaration on the Rights of Indigenous Peoples, to which the UK was a signatory in September, 2007 … Despite this setback, the Mohawks of Kahnawake will remain committed to our established leadership role on the front lines of regulatory enforcement of the Internet gaming industry. We will continue to ensure an environment where fairness, integrity and player protection are paramount.”

This can't be good news for those among the hundreds of online sites, which run the gamut from ABC Bingo to Zodiac Casino, that are licensed by the Kahnawake Gaming Commission and were hoping to be able to advertise in the UK.

Take the Money and Run

Everyone’s talking about online poker network Digital Gaming Solutions (DGS), an online poker network that includes Wingows Poker and others has cut and run, folding their tents in the dead of night and scarpering with nary a word or announcement.

If the Shoe Fits, Steal it!

Sports Book Review reported that DGS closed with licensee funds as well as poker player account balances, and comments on public forums have been saying that several poker rooms on this network withheld payments from poker account holders for several weeks.

How Wingows Gave Me $300...

I have my own funny, Wingows story. Some time ago, when they were talking about having me represent their site, they put $300 in an account so that I could try out their software—which I did. The deal never came to fruition, and I’d forgotten about it entirely.

...Then Snatched it Away From Me

A couple of weeks ago I was noodling around my computer desktop and saw a Wingows shortcut that I’d stuck in a file of seldom-used shortcuts and decided to play at the site for an hour or two, then withdraw the balance of the account. To my surprise, Wingows beat me to the punch. They snatched the money ostensibly given to me right out from under my nose. I don’t know when they did that. It could have been any time in the last year.

So all I have from my short flirtation with Wingows is a nice, collared polo shirt with their logo on it. I used to like wearing it; in fact, it was one of my favorite poker shirts. But as of today it’s been relegated to one I wear when I degrease, clean, and lubricate my bike.

Nothing Ventured, Nothing Gained

Easy come, easy go, and I'm a polo shirt to the good in my Wingows account balance.

Absolute Poker Investigation Report is Released

Earlier today the Kahnawake Gaming Commission (KGC) released the results of their investigation into Absolute Poker.

* As a result of AP’s breach of KGC regulations, all aspects of Absolute Poker’s operations will be subject to random audits conducted by the Commission or its agents over the next two years. If AP is found to have breached and provisions of Kahnawake gaming law, Absolute Poker’s Client Provider Authorization—it’s license to operate—may be suspended or revoked.
* Absolute Poker is required to implement a continuous compliance program, along with other remedial measures directed by KGC.
* Those persons responsible for the activities will be permanently removed from playing any role in AP’s operations. * AP is fined $500,000, to be paid in full within 60 days.
* AP must post a security deposit that will be held by KGC for two years and used to offset costs associated with any future breaches of Kahnawake gaming law, including any work performed as a result of the audit and the decision.
* AP will pay all costs associated with KGC’s investigation.

KGC, on October 17, 2007, directed Gaming Associates to “… carry out the necessary inquiries, audits and reviews of AP’s systems and personnel.” Based on the audit conducted by Gaming Associates, the Kahnawake Gaming Commission made the following findings of fact:

* Beginning on August 14 for a period of six weeks, the accounts listed below were used to compromise AP’s systems by using software that enabled users to view hole cards of other players, resulting in unfair play. The players in question are:

GRAYCAT
PAYUP
STEAMROLLER
POTRIPPER
XXCASHMONEYXX, also known as SUPERCARDSMSS
DOUBLEDRAG
RONFALDOXXB also known as ROMNALDO

* After these activities took place, persons associated with AP’s operations deleted certain gaming program logs and records that hampered the Commission’s investigation.
* AP failed to contact the Commission within 24 hours after they became aware these activities occurred.
* Shortly after these activities became known, AP “…made expeditious efforts to appropriately reimburse all players who had participated in games in which the impugned activities occurred, with interest.”
* AP has taken action to address the vulnerability in its systems that allowed these activities to take place and to prevent their systems from being compromised again. their systems from being compromised again.

Here’s the entire report: http://www.kahnawake.com/gamingcommission/KGC-AP-0111.pdf

Weekly Poker Blogger Tournament at BoDog

Actual poker content—that’s unusual!

In between the Absolute Poker scandal, the goings on at the World Trade Organization, the usual rants about UIGEA, and my moving Keep Flopping Aces, my internet radio show to http://www.roundersradio.com/, where it can be heard live every Thursday night at 9 p.m. EST (6 p.m. PST) there’s been precious little real poker-related content here, so I figured I’d change all of that, at least for this post.

Bodog has been running a Weekly Online Poker Blogger Tournament. The event has been under attended recently, so there have been overlays, and the cost to play is a bargain at $10 + $1 entry fee.

It’s a good value so here's the info for the tourney.

Tournament Details

* Dates: Every Tuesday, 9:05 p.m. ET

* Tournament Name: “Online Poker Blogger Tournament” at Bodog

* Entry Password: bodogblogger

* Buy-in + fee: $10 + $1

* Starting Chips: 3,000 (Double Stack)

* Payout: Standard Bodog payout structure

I heard rumors that BoDog might be setting this up as an ongoing league, with some very generous overlays(tournament $) included.

Is the Absolute Poker Scandal Nearing Conclusion?

My first show, after moving Keep Flopping Aces from holdemradio.com to http://www.roundersradio.com/ was an unbridled success. Jennifer Newell was my guest and we discussed her continuing series of articles about the Absolute Poker scandal that’s been appearing in Poker Player Newspaper (http://www.pokerplayernewspaper.com/articles.php?sort=author&id=75).

Highly Placed Source Says the Audit Report Will be Released Soon

Rounder’s Radio offers is the ability for listeners to call in on toll free lines, and one of our callers was a senior level guy at Mohawk Internet Technologies, the data center that provides hosting for Absolute Poker and other online casinos.

While Jennifer and I had been wondering when the long-awaited audit report would be complete and when Absolute Poker would comment on it—see my posts dated December 29 and January 3 for more details—our caller told us that the audit is, in fact, now finished, and will be released soon.

Who is Joe Norton, and Why Should That Name be Important to You?

He also clarified some of the ownership issues regarding Absolute Poker, pointing out that Joe Norton (pictured left), former Grand Chief of the Mohawk Territory of Kahnawake is the owner of Tokwiro Enterprises, which holds a 100 percent interest in Absolute Poker. Our caller told us that the tribe itself does not own any online poker room, that Absolute is certified (licensed) by the Kahnawake Gaming Commission, and that if their license were to be suspended or revoked, Mohawk Internet Technologies would not be allowed to continue to host them.

On the other hand, it’s important to understand that Mohawk Internet Technologies was founded by Joe Norton, and that he still holds considerable influence in the firm.

This puzzle still remains to be solved, and it won’t be solved until Absolute Poker’s response to the audit report is made public, along with their plans to ensure that this kind of cheating scandal can never happen again.

We may never see the perps arrested, tried, convicted, and sentenced, but from the perspective of poker players what matters most is what happens going forward—whether Absolute Poker constructs security systems that cannot be gaffed, and does provide the internal security that precludes episodes like this from cropping up again in the future.

The oversight—or at least the credibility—provided by Kahnawake Gaming Commission is on the line too. A few more scandals like this will cost them dearly, because other online poker sites they now host will be reluctant to locate on server farms that have had a history of “issues.”

My Internet Radio Show Moves to Rounder's Radio

Tomorrow is moving day. Not for me personally, but for my internet radio show, Keep Flopping Aces. With uncertainty surrounding Hold'em Radio’s continued viability, Keep Flopping Aces has moved to Rounder's Radio.

The show will air in the same time slot, at 9 p.m. EST (6 p.m. Pacific Time) every Thursday night, and we’ll be on tomorrow night, Thursday January 10 with special guest, poker journalist Jennifer Newell (pictured right) . To listen in, just point your browser to http://www.roundersradio.com/ and click on the "Listen Now" button. It's that easy.

Jennifer just finished an in-depth, six part series for Poker Player Newspaper about the Absolute Poker Scandal and she is incredibly well versed on the subject. So we’ll talk about the scandal, what might happen next, and both of us will probably rant a bit about what we think should happen—even though it probably won’t.

If you can’t listen live, the show will also be available to hear in the station’s archives, or as a podcast through i-Tunes. For our European listeners, the show is rebroadcast the next day in prime time so you don’t have to listen live in what’s the middle of the night your time.

For anyone listening live, you can call in and fire your questions to me or Jennifer. Those call-in numbers are:
USA 1.810.496.3428
Canada: 1.519.913.2250
London: 02 07 993 6143

Please tune in and catch the first Keep Flopping Aces show on Rounder’s Radio.

Is This the End For the Tao of Pauly?

One of poker’s best and favorite bloggers, Paul “Dr. Pauly” McGuire (pictured left), whose blog, The Tao of Pauly at http://taopoker.blogspot.com/ is always worth a read, and whose poker tournament reports are terrific is grappling with the possibility of quitting the poker scene entirely. At least he is today.

On his blog, he writes, “After a long and intense three years covering the poker scene, I am more than burnt out. The novelty of spanning the globe has worn out and I waste weeks of my life standing in airport security lines or waiting for another delayed flight or finding myself getting issued another bad beat by JetBlue when I get seated next to another crying baby on my flight from JFK to Burbank. I have been living the majority of the last 1,000 days of my life in hotels and hate having to worry if a horde of illegal immigrant maids with sticky fingers will steal my iPod or a wad of $100 bills that I have hidden somewhere in the room. Or worse, a maid will burst into my hotel room at 8 a.m. (even though I have the "Do Not Disturb" sign in full view) just so she can refold my toilet paper into that nifty little triangle.

"My worst fears have become a reality. My immersion into poker is no longer cool and exciting. It has become a job instead of a lifestyle choice, and by definition, all jobs suck ... It's time for a break ... if I had any advice to give you... it's this... enjoy the Tao of Poker while you can. It might not be here in 2009.

"Maybe I should walk away from poker right now? Cash out. Sell the Tao. I have a big stack in life thanks to my tremendous good luck in poker. I should quit while I'm ahead and use the money I earned to fund my personal projects. I have seen poker's ugly side and many of my friends have gotten their collective asses kicked by poker. They have left empty-handed.

"Maybe I should just quit after the 2008 WSOP?

"At the end of the 2008 WSOP, I'll make that tough decision. If I choose to walk away from poker entirely, well then that's what's going to happen.”

Most of us have been there, done that, and let’s face it—living on the road is a horrible existence; in fact it’s no real existence at all. Long ago in another time and place I was a management consultant living out of a suitcase, wearing a suit and tie each day and skilled in the tricks of the trade—like putting on a good dog-and-pony show to impress our clients while convincing them to extend and renew their contracts with us. I had an epiphany of sorts one day that occurred when I awakened in a hotel room and could not remember where I was that morning. I had to pull on a pair of pants, go down to the lobby and pick up a newspaper to tell me what day it was and what city I was in.

That’s about the time I decided to get out of consulting, which was lucrative, and do something saner with my life, like playing poker and writing about it.

I don’t have any words of advice to offer Pauly. He’ll have to work this one out by himself and I know he will. All I can say is that I really enjoy his work and like having him in the poker world. I hope he stays. But I’ll understand it if he goes.

Update, of sorts, on the Absolute Poker scandal.

On November 22, The Kahnawake Gaming Commission, posted on their web site that the “… investigation into the Absolute Poker situation is active and on-going. The Commission's agents, Gaming Associates, are in the process of finalizing its audit of AP's operations and will be submitting a report to the Commission of its findings. The Commission will review this report and decide the appropriate course of action. To avoid the possibility of jeopardizing its investigation, the Commission will not comment on this matter until such time as it has reached a decision. The Commission expects to receive a final copy of the audit report by December 7, 2007.”

They missed their self-imposed deadline, and on December 12 they posted the following message: “The Kahnawake Gaming Commission has received a report from Gaming Associates which it is now in the process of reviewing. The Commission hopes to complete its review and render a decision in this matter within the next two weeks.”

They missed that deadline too. It’s now about three weeks overdue.

What’s happening? I dunno. Your guess is as good as mine. Perhaps this little scandal is much too involved and complex to have ever hoped that the audit and review would be complete by the timeline originally suggested.

On the other hand, there’s always the odd chance that Absolute Poker is simply hoping that time puts them at a distance from this scandal—that everyone who was initially concerned eventually forgets—and that all recedes into dormant memories and disappears like a bad dream.

But I don’t want that to happen and neither should you. Poker can only thrive in an atmosphere of honesty and trust. Without that, it cannot succeed. For the sake of poker, for the sake of poker players everywhere, we need to keep a light shining in dark places. And right now the entire poker community is awaiting the results of that audit report, eager to learn what Absolute Poker plans to do to correct their myriad issues and prevent this sort of thing from happening ever again.

Can we expect the Kahnawake Gaming Commission and Absolute Poker to render their decision anytime soon?