Gaming Law International

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. 

Details of indictment against principals of PokerStars, Full Tilt Poker and Absolute Poker

The indictment in the U.S. against eleven persons associated with PokerStars, Full Tilt Poker and Absolute Poker, including Canadians Isai Scheinberg, Nelson Burtnick and Ryan Lang, has been made public. The indictment alleges as follows:

• The principals of PokerStars (Isai Scheinberg and Paul Tate), Absolute Poker (Scott Tom and Brent Beckley) and Full Tilt Poker (Raymond Bitar and Nelson Burtnick) deceived or directed others to deceive U.S. banks into processing billions of dollars in payments by disguising the funds as payments to fictitious merchants;
• Scheinberg, Bitar, Beckley, Burtnick and Tate paid certain payment processors, including Canadian Ryan Lang, to lie to U.S. banks about the nature of their business and the transactions processed through the U.S. financial system and to disguise the payments as non-gambling related proceeds;
• In order to continue to accept Visa and MasterCard payments from U.S. customers for online gambling, the defendants set up phony entities to be able to have credit card merchant numbers assigned to those entities that were not associated with online gambling to circumvent regulations implemented by Visa and MasterCard to deny all authorization requests from online gambling merchants. Because the risk control and anti-money laundering systems at the banks could frequently detect the activity associated with the phony merchants as illegal gambling activity, different phony entities were continually being created to obtain merchant codes to process payments;
• The defendants developed stored value cards (also called prepaid access) such as prepaid debit and phone cards that could be loaded with funds from a U.S. customer's Visa or MasterCard unassociated with a merchant code so that the cards could be used to transfer funds to the online poker sites and they also arranged for false e-check processing to facilitate gambling from U.S. customers; and
• The defendants invested in small local banks in the U.S. that were facing financial difficulty so that they could control their decisions with respect to the processing of gambling proceeds. In exchange, the banks or their officers, were given certain kick-backs from the funds processed.

Under U.S. anti-money laundering legislation, a person who launders proceeds of crime or participates in a money laundering transaction greater than US$10,000, is liable on conviction to a sentence of up to 20 years and a fine of twice the value of the funds laundered. The U.S. government estimates that billions of dollars were processed in the U.S. by PokerStars, Full Tilt Poker and Absolute Poker as described above between November 2006 and March 2011. The defendants are charged with, among other crimes, laundering proceeds of crime and participating in financial transactions knowing that the transactions involved criminal proceeds. A total of US$4.5 billion is being sought by civil forfeiture.  

Christine Mingie Duhaime is a gaming lawyer based in Vancouver, Canada and is a Certified Anti-Money Laundering Specialist. She advises gaming corporations and other corporate reporting entities on compliance with gambling and anti-money laundering legislation.

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.

Christine Mingie Duhaime is a gaming lawyer based in Vancouver, Canada and is a Certified Anti-Money Laundering Specialist.

Las Vegas Sands Corp. being investigated under Foreign Corrupt Practices Act

The Las Vegas Sands Corp. has announced that it received a subpoena from the Securities and Exchange Commission requesting that the it produce documents related to its compliance with the Foreign Corrupt Practices Act. The Department of Justice and the FBI have also advised the corporation that they are conducting similar investigations. 

Woman wanted on human trafficking charges arrested in casino

An Soon Kim, a suspected human trafficker, was arrested at the Mohegan Sun Casino in Connecticut following an anonymous tip to America's Most Wanted, which had recently featured Kim. Kim was wanted on charges that she operated a wide-ranging human trafficking ring in the northeast U.S. that brought in young girls from Korea and forced them to work as sex slaves in massage parlours.

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.

Former NBA Antoine Walker to face trial over casino debts

Former three-time NBA All-Star Antoine Walker was ordered to face trial on felony charges this week in Las Vegas for writing bad cheques to repay gambling debts. Walker allegedly owes nearly US$1 million to Planet Hollywood, Caesars Palace and Red Rock Resort in Las Vegas. The casinos gave him credit during a six month period last year. Walker filed for Chapter 7 bankruptcy in Miami, Florida. According to his bankruptcy court filings, he has liabilities of US$12,737,534 and assets of US$4,279,275. If convicted, Walker faces up to 12 years in prison. 

 

Parents charged with child endangerment for allegedly leaving 1-year-old in car while they gambled

The parents of a 1-year-old and a 10-year-old were charged with child endangerment in Connecticut after police say they left their children alone in a car while they gambled at the Foxwoods Resort Casino for about an hour. Police said the couple's children were turned over to the Massachusetts Department of Children and Families. Almost every land-based casino reports a handful of similar incidents every year in which parents, grandparents or other caregivers, leave children in vehicles unattended while they gamble. Most gambling jurisdictions in Canada and the U.S. require surveillance cameras be installed in casino parking garages and entrances to monitor this type of activity. 

Pharmaceutical companies sued over drug allegedly tied to compulsive gambling

More than 100 people who claim they developed a gambling habit after taking drugs used to treat Parkinson’s disease have filed a class action lawsuit in Australia against Pfizer and Aspen Pharmacare. The claimants allege they lost hundreds of thousands of dollars and suffered family breakdowns because of compulsive gambling behaviour caused by the drugs. The drugs implicated are Cabaser, sold by Pfizer, and Permax, sold by Aspen. The class action suit claims Pfizer and Aspen failed to warn of increased risk of compulsive disorders. In 2008, a jury in Minnesota awarded US$8.2 million to a man who became a compulsive gambler after using Mirapex, a drug sold by Boehringer Ingelheim, to treat Parkinson’s disease.

European Court upholds Internet gambling ban in member states

The Court of Justice of the European Union has ruled that an EU member can ban a foreign Internet gambling company based in another member state from operating within its border to protect its citizens against fraud and other crime associated with Internet gambling. The ruling follows a court adviser's March opinion which stated that recognition of gambling licenses across member states is not viable under the EU's current system. 

In the decision, the Court held that "because of the lack of direct contact between consumer and operator, games of chance accessible via the Internet involve different and more substantial risks of fraud by operators against consumers compared with the traditional markets for such games".

The decision confirms that the Netherlands has jurisdiction to prohibit Internet gambling sites based in the UK from offering Internet gambling services to its citizens. The Court stated that: "A member state is entitled to take the view that the mere fact than an operator ...lawfully offers services via the Internet in another member state is not a sufficient assurance that national consumers will be protected."

The ruling is not unexpected. Foreign Internet gambling companies that offer Internet gambling in countries where they are not legally authorized to operate are essentially unregulated and unsupervised in those jurisdictions. 

Possibly the world's worst gambling addiction

Terrance Watanabe, the Omaha businessman who ran the Oriental Trading Company for many years, is in court defending criminal charges over a US$14.75 million gambling debt Harrah's alleges he owes them. In one year, Watanabe spent US$204 million gambling at the Rio and Caesars Palace - both Harrah's properties in Las Vegas. Watanabe paid back at least US$112 million. By all accounts, he likely holds the world's record for the largest sum of money ever gambled and lost in a commercial casino in a year. 

Canadian payment processor pleads guilty in U.S.

Douglas Rennick, the Alberta man who was accused of laundering US$350 million in illegal Internet gambling proceeds in the United States last year, pleaded guilty in a federal court in Manhattan to a lesser charge of one count of transmitting wagering information in the U.S. From 2007 to 2009, Rennick opened a number of bank accounts in the U.S. under various corporate entities to receive funds from foreign Internet gambling companies and disburse the funds to U.S. residents. Rennick received about US$350 million from bank accounts in Cyprus used by the offshore Internet gambling companies that he did business with. 

U.S. casino revenues fell 5.5% in 2009

Commercial casino industry revenues in the U.S. dropped for the second year in a row according to statistics released today by the American Gaming Association in its annual State of the States Report. Gambling revenue in 2009 was US$30.74 billion - a 5.5% decline from 2008. Some of the highlights from the AGA report - in 2009:

 

• consumer spending in Nevada declined 10.4% to US$10.393 billion
• consumer spending in New Jersey declined 13.3%
• Las Vegas remains the top gambling market in the U.S. with revenue of US$5.5 billion
• casino employment dropped 8.1% across the U.S.

The report also tracked gambling preferences and indicates that the popularity of poker continues to decline. Only 7% of gamblers in the U.S. ranked poker as their favourite game. Slot machines was the favourite game, preferred by 59% of U.S. gamblers. 

 

Portland man accused of gambling mother's life savings away

Richard Stone, a 52-year-old Portland, Oregon man, was charged this week with stealing his elderly mother's life savings to gamble. Stone's mother suffers from dementia and is in an adult foster home. Stone is alleged to have sold her house and used the proceeds to gamble, take trips and pay his bills. He is charged with criminal mistreatment and theft. You can read the story here. 

Casino formerly owned by Frank Sinatra may be closing for good

The Cal Neva Casino, formerly owned by Frank Sinatra, may be closing permanently because of plunging numbers of gamblers. The Cal Neva was owned by Sinatra in the 1960s and flourished as a popular casino resort destination for Hollywood stars like Marilyn Monroe, Dean Martin and Sammy Davis Jr. It was where Marilyn Monroe spent her last weekend before her death from a drug overdose in Los Angeles in 1962. Sinatra lost the casino license in 1963 when FBI agents spotted mobster Sam Giancana on the premises. The Cal Neva Casino is owned by a real estate firm that is currently in discussions with several gambling operators to consider re-opening later this year. Gaming revenues for the past year were apparently about half what they were in the mid-1990s. The Cal Neva opened in 1928 and straddles the Nevada-California border on the north shore of Lake Tahoe.

French to permit (and regulate) Internet gambling

The French government has ended a long-standing ban prohibiting Internet gambling in France and has approved regulations that will grant licenses to foreign companies seeking to offer Internet gambling services to French citizens. Under the new regulations, companies will have to establish separate sites for French customers and provide permanent records on players to the government. There does not appear to be any discussion occurring about which companies can provide online gambling services to French citizens under the new regulations or whether proposed service providers will be subject to investigations to ensure the integrity of the gaming industry as is customary for land based casino operators in Canada and the US.

Popular online gambling domains in jeopardy

Kentucky is one step closer to blocking online gambling activities in that state. The Kentucky Supreme Court ruled today that two groups purporting to represent several offshore Internet gambling sites whose domains were the subject of a state seizure in September 2008, did not have standing in the litigation. The domains that Kentucky is seeking to seize include absolutepoker.com, bodoglife.com, goldencasino.com, sportsbook.com, playersonly.com, sportsinteraction.com, mysportsbook.com, linesmaker.com and vicsbingo.com.

Alcohol beverage sales boost Vegas casino revenue

 Gaming and hotel revenue may be down in Las Vegas but sales of alcoholic beverages showed increases in revenue and profit last year at the 38 largest casinos along the Las Vegas strip according to the Nevada Gaming Control Board's annual review of Nevada casinos' financial performance. In the last year, beverage department revenue rose 5% while income in the gambling, rooms and food departments fell 32%, 23% and 12% respectively. The increase in alcoholic beverages convinced Wynn Las Vegas to build a new nightclub and daytime beach club for $67 million, scheduled to open in May. 

Foreign Internet gambling executive detained in U.S.

David Carruthers, the CEO of the foreign Internet gambling company, BetonSports Plc, was detained last night by U.S. authorities while changing flights in the U.S. en route from the UK to Costa Rica. He is being held in Fort Worth, Texas, along with four others. The U.S. Department of Justice released a statement that a grand jury in Missouri returned a 22-count indictment charging 11 individuals and four corporations, including BetonSports Plc and three companies based in Florida, on various charges of racketeering, conspiracy, tax evasion and fraud. The indictment was returned by the grand jury on June 1, 2006 but was kept under seal because many of the defendants were out of the United States.

The United States has also filed a civil complaint to obtain an order requiring BetonSports Plc to stop taking sports bets from the U.S. and to return money held in wagering accounts to account holders in the U.S. To view the press release from the Department of Justice explaining the indictment, Download here.pdf.

World Cup gambling rings busted in China

According to the China Post, over the past few weeks, Chinese police have raided nine groups in Beijing and in the southwest of China and arrested 77 people alleged to have participated in Internet-based gambling rings that took millions of dollars worth of World Cup bets from thousands of gamblers. One of the gambling rings in Chengdu, a city in the southwest, apparently handled US$120 million in bets.