Gaming Law International

Mastermind behind casino card cheating scheme sentenced in US

Van Thu Tran, the mastermind behind one of the largest casino cheating rings in Canada and the US, was sentenced today in San Diego to 26 months in prison. For several years, Ms. Tran, together with several others, cheated the casinos out of US$7 million by various card false shuffling methods during blackjack and mini-Baccarat. Court documents also show that members of her organization bribed casino card dealers and supervisors to perform false shuffles, thereby creating “slugs,” or groups of unshuffled cards. After tracking the order of cards dealt in a card game, a member of the group would signal to the card dealer to perform a “false shuffle,” and other members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, they repeatedly won millions of dollars. They also used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games. Tran was sentenced for, amon gother things, racketeering and money laundering. See earlier post here.

American poker players said to be immigrating to Canada - 10 tips on doing it right for poker players

According to a report posted on a popular Internet based poker website, several prominent American poker players are relocating to Canada from the United States including Olivier Busquet, Daniel Negreanu, Phil Galfond and Daniel Cates following the U.S. indictment of 11 people associated with PokerStars, Full Tilt Poker and Absolute Poker in April.

Apparently, Canada is viewed as a more secure location for online gambling. The report also indicated that one of the players, Daniel Cates, was previously denied entry to Canada. He apparently tweeted before arriving at the U.S.- Canada border that he intended to immigrate here without taking any of the legal steps required in advance to apply for a work permit, or as an investor to Canada. 

For those of you contemplating a similar move to Canada to pursue an online gambling career, here are some tips for doing it right:

1. Hire a lawyer located in the city in which you wish to relocate - consider engaging a lawyer who understands the online nature your work because ultimately that lawyer will have to prepare your submission to Citizenship and Immgration Canada and they should understand the business (e.g. where the funds originate, how you get paid, etc.);
2. With your lawyer, explore the immgration category that best applies to your special set of poker playing skills. The likely categories will be business class and provincial nominee program; 
3. If your partner or spouse is likely to be a stronger immigrant applicant, have your partner be the primary applicant for immigration purposes; 
4. Visit Canada as a business visitor a few times to meet with your lawyer and familiarize yourself with the culture and your future working environment. If you are setting up a business, it's a good time to come here and look into incorporation and tax options to maximize those structures at the incorporation phase; 
5. A criminal record will have to be dealt with long before you immigrate to Canada - if it involves a DUI, get it resolved in conjunction with your immigration process;
6. Do not misrepresent any facts on your immigration application or at any time while entering Canada to visit;
7. Do not publicly comment about your intended immigration to Canada at any time;
8. Do not negatively comment about U.S. and Canadian laws that criminalize the online poker sites that offer their services to American or Canadian residents. Immigration officials will conduct an online search of you and any indication that you do not respect the rule of law will not be well received;
9. Make sure you understand tax advice you receive for your prospective activities in Canada. Generally speaking, gambling wins in Canada are tax-free unless the wins are professional income. The distinction appears to be whether you are a casual player or whether you play as your primary occupation; and
10. Do not tweet that you are immigrating to Canada and without applying in advance, show up at the border expecting to receive a green light to enter. Unless you qualify as a refugee, you must apply to enter Canada in advance if you wish to work, relocate or immigrate here. 

3 Canadians affiliated with PokerStars, Full Tilt Poker and Absolute Poker indicted in U.S. on illegal gambling and anti-money laundering charges

The U.S. Attorney and the FBI today unsealed an indictment today charging 3 Canadians with money laundering, bank fraud and illegal gambling in connection with the operation of Internet gambling websites that provide online gambling services to U.S. residents. Eight other individuals, mostly residents of the U.S., were also indicted. The defendants include the founders of three of the largest Internet gambling sites - PokerStars, Full Tilt Poker and Absolute Poker.

The 3 Canadians indicted are:

• Isai Scheinberg, currently living in the Isle of Man;
• Nelson Burtnick, currently living in Ireland; and
• Ryan Lang, currently living in Canada.

The U.S. has sought the assistance of foreign law enforcement agencies for the arrests of Lang, Burtnick and Scheinberg.

The indictment alleges that the defendants fraudulently circumvented anti-money laundering laws and the Unlawful Internet Gambling Enforcement Act (UIGEA) by disguising payments from U.S. gamblers as payments to fictitious online merchants selling other goods and services, lied to banks about the nature of their businesses and set up fictitious corporations, in order to open bank accounts to accept bets from U.S. players. Scheinberg, one of the founders of PokerStars, is alleged to have acquired a 30% interest in a small bank in Utah called SunFirst Bank in exchange for the Bank agreeing to process payments for PokerStars.

The U.S. also filed a civil complaint against the individual defendants and the poker companies to recover US$3 billion in civil penalties for money laundering. Asset restraining orders were issued against more than 76 bank accounts in 14 countries, including Canada, to freeze the accounts on the basis that the funds are proceeds of crime.

Five Internet domain names used by the poker companies to host the online gambling sites were also seized.

The indictment by the U.S. Attorney General on anti-money laundering law violations is a clever legal manoeuvre that will allow them to prosecute the defendants, secure the extradition of foreign defendants and retain frozen assets with much greater success than if the indictment was based solely on violations of the UIGEA. Most foreign Internet gambling site operators have little to no understanding of international anti-money laundering laws.

The defendants face up to 20 years in prison on the money laundering charges alone.

Woman pleads guilty to cheating casinos in Canada and U.S.

The co-founder of a group known as the Tran Organization, Van Thru Tran, pleaded guilty in San Diego today to conspiring to cheat 29 casinos in the U.S. and Canada out of US$7 million, including Casino Rama in Ontario and the Monte Carlo in Las Vegas. Members of the organizations are alleged to have bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating “slugs” or groups of unshuffled cards. After tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a “false shuffle,” and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy repeatedly won thousands of dollars during card games, including winning several hundred thousand dollars on one occasion. The members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games. Tran faces a maximum penalty of 20 years in prison, a $250,000 fine, forfeiture of certain assets, and payment of restitution to the victims.

Canada increases severity of gambling offences

Canada has introduced amendments to the Criminal Code regulations to re-categorize certain gambling offences as "serious offences" that carry a longer term of imprisonment. The gambling offences that are now "serious" include:

• keeping a common gaming house (a place kept or used for gambling);
• permitting a place to be used for gambling;
• allowing a place to be used for betting or selling a pool;
• importing, making, buying, keeping or allowing to be kept any device for gambling, betting or pool making;
• controlling any money or property related to a gambling offence;
• recording or registering bets;
• engaging in book making or pool selling;
• entering into an agreement for gambling privileges or for information for assisting gambling;
• printing or providing information (such as on the Internet) for any type of gambling in or outside Canada;
• importing into Canada information that promotes gambling whether the gambling is inside or outside Canada;
• advertising, publishing, offering, inducing or inviting the results of a contest or any contingency; and
• transmitting or receiving messages that convey information related to gambling.

The amendments are touted as necessary for countering organized crime, however, those related to gambling have no specific application to organized crime and are of much more general application.

The starting point under Canadian law is that gambling is a common and public nuisance, contrary to public policy, inherently criminal in nature and prohibited under the Criminal Code. The Criminal Code provides for certain exemptions, making lawful certain gaming activities where prescribed conditions are met. Gambling activities that do not fall clearly within the permitted exemptions contravene the Criminal Code prohibition and are illegal.  The Criminal Code permits four categories of groups or individuals to legally operate gambling in Canada: provincial governments; charitable and religious organizations; agricultural fairs; and the federal government in respect of pari-mutuel betting on horse races.

The amendments, above, are significant because they increase the severity of the general aiding and abetting of illegal gambling offences and capture a broad range of prohibited conduct, including gambling activity conducted over the Internet by foreign-based operators that target, market or provide gambling-related services to persons in Canada without authorization.

Legalized Internet gambling starts in France

France opened up its online sports betting and horse racing industry a few weeks ago in time to coincide with the World Cup. Thus far, 17 licences have been issued to 11 operators including Bwin Interactive Entertainment AG from Austria and BetClic Enterprises Ltd. from Malta. Internet poker is in the process of being approved as well in France and may be available by the end of June. In France, the government taxes the total amount of money gambled at 8.8% and there are predictions that with such a high tax rate, the new online gambling sites may not be economically viable. By contrast, in Canada the government does not tax money gambled or gambling wins from legalized gambling, except in the case of professional gamblers. The only forms of legalized gambling in Canada are those that are licensed, registered and regulated by governments in Canada.     

Survey says Canadians unaware Internet gambling from foreign sites is illegal

According to a survey conducted by Ipsos Reid, only 23% of Canadians and 37% of Americans, respectively, know that Internet gambling from foreign sites is illegal. Ipsos Reid said the survey shows that authorities are doing a poor job of informing citizens that Internet gambling provided by foreign operators is illegal. The difference among Canadian and American responses can be explained by the fact that the U.S., unlike Canada, has actively prosecuted foreign Internet gambling operators for several years. By way of clarification, it should be noted that in Canada, it is the provision of Internet gambling by non-government entities that renders the activity illegal in Canada.

Class action problem gambling lawsuit not certified

Ontario Superior Court Justice Maurice Cullity ruled against certification of a $3.5 billion class action lawsuit against the Ontario Lottery & Gaming Corporation this week that had been filed on behalf of a class of Ontario problem gamblers. The litigation alleged that the OLGC failed in its duty to prevent persons who had signed self-exclusion forms from continuing to gamble in Ontario. The Court heard that the OLGC has paid out an average of $167,000 per case to settle nine lawsuits with problem gamblers. Counsel for the class intends to appeal the ruling.

German national arrested in Florida for money laundering in connection with Internet gambling site

A German national, Michael Olaf Schuett, residing in Florida, was arrested today in connection with operating an unlicensed money transmitting business that received and disbursed Internet gambling funds to Canadians and Americans. Schuett, also known as Michael and Olaf Schütt, appears not to have known Internet gambling was illegal in the United States. According to a criminal complaint filed on February 17, 2010 in the United States District Court, Fort Myers Division, Schuett:

• set up at least nine corporate entities to conduct wire transfers including MI Global Inc., MCM Capital Management Inc., US AG 24 Inc., Woodhouse Systems Inc., and Internet Payment Services Group Inc.;
• received and transferred out approximately US$70 million from various financial institutions; and
• facilitated the distribution of gambling proceeds to Canadians and Americans, including from an online gambling site called ultimatebet.com.

Schuett is alleged to have operated an unregistered and unlicensed money transmitting business, failing to register with FinCEN, file appropriate money laundering reports and establish a money laundering program. He is also alleged to have laundered the proceeds from his activities. 

Employees at Shamrock Bank, Wachovia Bank and Federal Express became suspicious of Schuett's activities in the Fall of 2009. FedEx employees reported that Schuett couriered about 150 packages a week to various addresses in the US. Employees opened several of the packages and determined Schuett was sending cheques. 

Two former Neteller executives arrested in U.S.

The two Canadian founders and former directors of Neteller PLC, the Internet payment processing company, were arrested in the United States today. John David Lefebre and Stephen Eric Lawrence, both originally from Calgary, Alberta, were charged with allegedly laundering billions of dollars in gambling proceeds. Lefebre was arrested yesterday in Malibu, California and Lawrence was arrested in the U.S. Virgin Islands. The criminal complaints against them were unsealed in U.S. District Court in Manhattan yesterday. The press release from the United States Attorney General's Office is available here.

Download ag_statement.pdf

Ontario plans to ban advertising of foreign Internet gambling sites

The Ontario provincial government is considering amending its Consumer Protection Act, 2002, to prohibit the advertising of Internet sites that operate an "Internet gaming business" contrary to the Criminal Code of Canada. An "Internet gaming business" means a supplier that accepts or offers to accept wagers or bets over the Internet as part of the playing of or participation in any game of chance or mixed chance and skill outside Canada or on any contingency or on any event inside or outside of Canada including a casino game, card game, horse race, fight match, sporting event or contest. Advertising includes promotion by print, publication, broadcast, telecommunications, self-promotion and a website link if it is intended to promote the use of an Internet gaming business.

The proposed bill, Bill 152, also prohibits persons, other than Internet service providers, from arranging for or otherwise facilitating the advertising of foreign Internet gambling sites.

Bill 152 is supported by Ontario's horseracing industry which has lobbied the government for several years to take action to ban the people of Ontario from gambling over the Internet, a move they say will ensure the economic viability of the industry.

Biting the bullet for Internet gambling in Canada

This post is about the law, politics and economics – and how all three are grappling with one of British Columbia's fastest growing businesses.

The business is Internet gambling, and it’s a tidal wave. Assisted by the popularity of sports wagering and the resurgence of poker as a mainstream recreation, Internet gambling is one of the fastest growing activities of British Columbia consumers. The problem? The actual businesses aren’t in British Columbia. They’re located offshore with foreign companies (some of them publicly listed on foreign stock exchanges) that are draining gamblers’ money out of the province and leaving too little behind in the way of benefits.

Anti-Internet gambling advertising bill proposed in Ontario

A private member's bill (Bill 60) was introduced in the Ontario Legislature last week, which if passed, would amend the Consumer Protection Act to prohibit the distribution or advertising of Internet gambling or gambling web addresses in Ontario unless the Internet gambling business is authorized to provide Internet gambling services in accordance with Ontario and Canadian law. The amendment would apply whether the "game" occurs inside or outside of Canada. The  Bill is aimed at preventing the promotion of foreign Internet gambling sites in Ontario in an attempt to reduce the amount of illegal Internet gambling that occurs in Ontario from foreign Internet gambling sites. 

Gaming Law International

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