Cryptologic is claiming it's the opening of the US market, and Starnet is saying that for legal reasons they have to move out of the US.
Cryptologic is getting desperate to quickly pump up the value of its falling shares and they issued a misleading press release claiming the opening of the US market.
Starnet is desperate to buy time, and they claim that by moving out of the US it will be the magic solution to all their problems.
Both are lying and misleading their shareholders. The US market is not more open today than it was last month, or last year. We don't know where Cryptologic got that idea from? Not from any change in US legislation, but more likely from a desire to mislead the investors into believing that a new law passed allowing Internet gambling.
Starnet is telling the opposite story, and they want their shareholders to believe that all their problems are caused by the US legislation. They are also lying and misleading their shareholders, because they don't operate in the US, they are based in Canada and Antigua and there is very little the US can do to stop them from operating offshore.
If the US does open its market to online gambling, it will probably be bad news for the existing operators because the US land based casinos have certainly more credibility than companies like Cryptologic that can't even supply figures to its licensees or pay them on time. Gambling Magazine received a complaint yesterday from one of them, saying that apparently Cryptologic stopped paying them. They were many weeks behind. A warning signal of troubles ahead.
CRYPTOLOGIC'S MISLEADING COMMENTS ABOUT THE US MARKET
A few days ago, Cryptologic's share price was losing support at the critical $12 level and heading south. A close below $12, or worse still, below $11 would have broken through an important resistance level, indicating continuing lack of support for their shares, making a further drop to $10 and below more likely. To counteract this, Cryptologic issued an upbeat press release. The share price responded by jumping 20 percent on the day. However, a closer reading of the press release revealed a misleading statement.
The press release noted that because the Kyl/Goodlatte Bill to ban Internet Gaming had died in Congress, it was an important day for those who believed in "a regulated environment for Internet gaming." That may be true, but have a look at this:
"As a leader on the global stage, the opening of the US market to Internet gaming represents significant new growth opportunities for CryptoLogic as the supplier of choice to premier gaming brands at home and abroad."
The "opening of the US market to Internet gaming" hasn't happened yet, so where is it?
http://biz.yahoo.com/bw/001218/cryptologi.html
The fact that the proposed bill didn't pass Congress in this session doesn't mean a similar bill won't pass in the next session. But most important, even without these new bills, Internet gambling is still illegal in the US right now with the wire act. These new proposed bills were only meant to re-enforce the current legislation but even if they don't pass, it's still illegal in the US.
BACKGROUND TO THE KYL/GOODLATTE BILL
For the past two years, two republicans have been trying to amend the scope of the wire act to include a prohibition on Internet wagering.
H.R. 3125, "The Internet Gambling Prohibition Act", the bill sponsored by republicans Bob Goodlatte from Virginia and Senator Jon Kyl from Arizona failed to pass this session for a number of good reasons. Even those who supported the bill had serious misgivings.
The fact is that the House recognized the difficulties and decided the issue was best dealt with in the next session of Congress. There would be more time to explore better and more effective methods of control. Someone decided it was too important to rush the issue, it could be safely left "on hold" until next year, when opponents of online gambling would have time to sharpen their teeth. Passing a bad bill weakens any chance of making effective changes later. They will just retool the bill.
FACTIONS COMPETE FOR NET INFLUENCE
Countless factions are now jockeying for the best positions. There's the horseracing industry, Native American gambling interests, state lotteries (who'd pay a king's ransom to be allowed to operate online), and land-based casinos are also poised to move in. Casino giants MGM Mirage and Harrah's, for example, are developing play-for-free casino games on their Web sites. They just can't wait to "flip a switch" and offer real-money games if their sites ever become legal through a change in the regulatory climate in the US. There are also the anti-gambling forces and people opposed to any regulation of the Internet.
The "carve-outs" in the bill, the pari-mutuel activities, that is wagers on dog racing and horse racing, etc., proved to be a major obstacle. It was believed that the exemptions would have allowed people to bet from home on horse and dog races, even though on a "closed-loop system," and unsupervised children might gain access. It was also looking as if some forms of Internet gambling would be protected, and other forms encouraged to expand.
Some observers were concerned that Internet service providers (ISPs) were not sufficiently protected from liability in the event that illegal gambling appeared to be passing through their servers because of their subscribers.
Under the language in the Kyl bill, an interstate bet is legal if it is legal in the state where it is received. Online wagering would be permitted as long as it is part of a "closed-loop, subscriber-based system." This is essentially the way racing operates now, so the Kyl bill would not expand gambling, as some critics have charged.
Allowing an exemption for horse racing would have made it legal to make bets across state lines. State attorneys have been in trouble, trying to enforce Internet gaming because of the interstate nature of the Internet. In other words, the attorney general of one particular state cannot prosecute Internet gaming sites based in another state. However, if bets made across state lines suddenly became legal, it would set a landmark precedent and open the floodgates of change.
WIRE ACT ALREADY MAKES INTERNET GAMBLING IN US ILLEGAL
A combination of state laws and the Federal Interstate Wire Act of 1960 ban most Internet gambling. However, the wire act deals largely with interstate wagering on horse races and other sports and does not specifically address casino gambling. Nevertheless, the fear of losing their state gambling licenses is keeping US casino companies from going online.
Some 52 countries sanction Internet gambling, so you could say that the US is out on a limb. Assemblywoman Merle Berman, a Las Vegas republican, has said she wants to legalize and regulate Internet gambling sites based in Nevada, and has requested a bill be drafted for the upcoming legislative session. She says:
NEW CREDIT CARD RESTRICTIONS
One way to stop the explosion of online gambling sites would be to block or restrict the use of credit cards, which account for 85 percent of Internet wagers (and also bring in a compulsory system of bet limits). The banks and credit card companies have already instigated tighter controls and new regulations. Some online sites have seen business drop by as much as 40 percent (where a credit card is the only way to open up an account) while others have seen little change.
MasterCard has made it harder for a client's winnings to be credited back to the holder's credit card. For example, if you opened an account with $250, but had $150 left when you stopped, you could arrange for that $150 to be credited back to your MasterCard account. Now, that $150, plus any winnings, must be sent to you using another method of payment.
Visa and some other banks have followed suit. The new policy is that an online merchant now has to identify what type of business it is before a bank will approve a credit card transaction online. If it's an online casino, the bank could refuse to approve the transaction.
Some banks that issue the credit cards on MasterCard's and Visa's behalf -- Wells Fargo -- have recently warned their customers explicitly not to use their credit cards for gambling via the Internet. (The only solution so far suggested is to use another card.)
Online casinos and sports books that accept funds by other methods (Western Union, Federal Express, bank wire) have so far seen little impact on their business. One comment was: "If a customer wants to open an account with us and can't use his credit card, he can send funds to us via Western Union or bank wire and we can send him his winnings the same way. If somebody really wants to gamble with us, he'll manage to get his money here somehow."
The moves by financial institutions to curb credit card use for Internet gambling might in any event turn out to be unnecessary. Opponents of online gambling in the U.S. Congress have introduced legislation that would make it illegal to use credit cards for that purpose.
Republican James Leach was the first person to sponsor a bill to "ban the use of certain bank instruments for Internet gambling."
http://techlawjournal.com/cong106/gambling/hr4419ih.htm
The bill applies only "where such bet or wager is unlawful under any applicable Federal or State law in the State in which the bet or wager is initiated, received, or otherwise made".
CRYPTOLOGIC STILL LEFT WITH MAJOR PROBLEMS
It may be all very nice to read in Cryptologic's press release the apparent good news of the demise of the Internet gambling bill but there are other problems that need clearing up.
They need to explain what happened to Intercasino, their own online casino that "disappeared." from their books.
What will they do if the credit card companies decide to stop processing the cards of US citizens who want to gamble at online casinos? All game developers will be affected.
Gambling Magazine has received a serious complaint about apparent non-payment to a licensee. This could be a signal of worse to follow.
There are also some further points to highlight from the recent press release:
Andrew Rivkin: "This is an important day for everyone who believes in a regulated environment for Internet gaming."
We agree but if you believe in a regulated environment so much, how about starting by supplying the figures to the licensee who's been requesting them for 18 months? You cannot have a regulated environment if you don't pay the bills properly. One licensee wants to be paid on time. Why don't you pay up?
Andrew Rivkin: "Cryptologic has been a leader in enabling safe and responsible gaming through self-regulation…"
Translation for self-regulation: "We make our own rules, and break them too (if we feel like it) as we go along."
Andrew Rivkin: "In addition, the company continues to advance its software certification in Australia…"
That's a good one. Australia has put a hold on everything until next May with a moratorium while they decide how to take things a stage further.
Cryptologic meanwhile continues. It makes Cryptologic look less like a credible software developer and more like a magician with a boxful of tricks, bending the facts like Uri Geller bends his spoons!
Source of this article: http://GamblingMagazine.com and http://CasinoMagazine.com
