Arthur's Column

How We Got Here & Where We’re Going

            The United States is about to join Canada and the rest of the world on the greatest expansion of legal gambling since New Hampshire rediscovered the state lottery.  But this time, it is going to be online.

We are in the middle of what I call the Third Wave of legal gambling.  This is the third time that legal gaming has swept across both Canada and the U.S.

The First Wave started before either country existed.  Lotteries in England helped finance the first settlements.  In the colonies, government-approved and private lotteries were actively encouraged.  But great scandals–mostly privately run lotteries where the operators absconded with the loot–led to lotteries being banned by most state and provincial constitutions.

The Second Wave began with the opening of the Western frontier, where gambling was tolerated, and often expressly authorized.  The Civil War devastated the South, and legal gambling is seen as a painless tax.  But by the 1890s scandals and a reawakened morality once again led to a crackdown.  The Louisiana Lottery, “The Serpent,” led to the first strong U.S. federal anti-lottery laws.  By the turn of the 20^th century, all state lotteries had been shut down.  Casinos and racetracks soon followed.  Even Nevada outlawed casino gambling in 1909.

The Third Wave started with the Depression.  In 1931 Nevada re-legalized casinos.  Every year since, there has been an expansion of legal gambling.  Racetracks reopened in the 1930s; low-stakes charity bingo spread in the ‘40s; social games in the ‘50s.  Then, in 1963, New Hampshire Legislature authorized the first state lottery of the century, labeled a “Sweepstakes” and tied to horseraces to avoid 70 year-old federal anti-lottery statutes.

U.S. federal laws are designed to help the states enforce their public policies toward gambling.  The federal anti-lottery laws were enacted in the 1890s to help states like New York keep out The Serpent.  But the prohibitions were so great, states had to ask for exemptions once they started running their own state lotteries.

In 1961, Congress enacted the Wire Act, designed to cut “The Wire,” the telegraph that illegal bookies used to get the results of horseraces before their patrons.  Betting on horseraces is obviously legal in many states, so, like the federal anti-lottery statutes, the Wire Act applied to state-legal gambling that crossed state lines.

As with state lotteries, when states started authorizing remote wagering on horseraces, the federal laws had to be changed.  Congress first enacted an Interstate Horseracing Act.  In December 2000, it amended that Act to expressly allow states to decide for themselves whether they would let their residents bet on races by phone and computer.

There is only one other federal statute that could apply to state-legal gambling.  When the State Lotteries of Delaware and Oregon began taking bets on National Football League games, Congress passed the Professional and Amateur Sports Protection Act (“PASPA”), preventing new state-authorized sports betting.

The history of the Unlawful Internet Gambling Enforcement Act (“UIGEA”) is well known:  A failing politician, Bill Frist (R.-TN), used his position as Majority Leader of the U.S. Senate to ram through a bill that he hoped would boost his chances to become President.  This was in October 2006.

The largest publicly traded company taking online bets from the U.S., PartyGaming, home of Party Poker, believed the UIGEA made their activities illegal.  The announcement that it was cutting off its major customer base resulted in a 60% drop in the price of the company’s stock.  Other publicly traded online gaming operators were hit as hard:  The UIGEA was like a terrorist attack, instantly wiping out more than $7 billion on the London Stock Exchange.

The UIGEA did not actually change any substantive state or federal anti-gambling laws.  It did create a new federal crime, but only for operators who were already violating American anti-gambling laws.  And it called for new regulations on payment processors.

Those regulations actually turned out to be quite useful for legal businesses, such as skill games, fantasy sports, free alternative means of entry poker and pure intra-state gaming.  The last turned out to be the most important.

The federal Department of Justice (“DoJ”) has been waging a war of intimidation against all Internet gambling, but especially Internet poker.  But the DoJ is missing the two essentials for a successful prosecution: a statute that clearly makes the activity illegal and a defendant who can be brought to trial in the U.S.

For a statute, the DoJ has been relying upon the Wire Act.  Using a law designed for telegraph wires on horseraces against Internet poker is like using stone tools to perform brain surgery:  It might work, but it is awfully messy.

The DoJ took the position that the Wire Act covered all forms of gambling, even state-legal gaming, so long as a wire crosses even temporarily into another state.  But courts, including a federal Court of Appeal hearing consolidated class actions brought by losing players against MasterCard, ruled that the Wire Act applies only to sports events.  And now a new federal statute, the UIGEA, expressly stated that intra-state online gambling is legal under that statute, even if wires cross temporarily into other states.

After the MasterCard decision, Nevada and the American Virgin Islands passed legislation to allow Internet casinos.  Nevada regulators went so far as to begin holding hearings.  But the DoJ wrote them letters, threatening to arrest any licensee who took a bet online.

At least six states began taking orders for subscription tickets for their state lotteries online.  Illinois and New York asked the DoJ whether they could use out of state payment processors.  The UIGEA would allow that, since the customer and operator were in the same state.  But the DoJ’s interpretation of the Wire Act would not.

In early 2011, state-legal Internet gambling looked like it was going to explode, despite the DoJ and the Wire Act.  Caesars Entertainment received permission from Nevada gaming regulators to team up with 888, which had taken poker bets from the U.S.  The District of Columbia legalized Internet poker and other games.  So, Harry Reid (D.-NV), the majority leader of the U.S. Senate, and Jon Kyl (R.-AZ) the minority whip, wrote the DoJ, asking it to reaffirm its position that the Wire Act made everything illegal.

Two days before Christmas, the DoJ issued a formal announcement that it was reversing its position on the Wire Act.  To reconcile the apparent conflict with the UIGEA, prosecutors would from now on limit the Wire Act to sports bets.  It therefore would not be a problem for state lotteries to use out-of-state payment processors.

The DoJ had to also know that this reversal meant Reid and Kyl got their answer: There is no federal law preventing any state from authorizing almost any form of intra-state gambling.  PASPA still prevents new sports betting, but that is being challenged in the courts by New Jersey.

The gambling must be legal under state law.  On April 15, 2011, the DoJ announced the indictment of the principals of the five largest poker sites then taking real money bets from America.  But the Wire Act was never mentioned.  Instead, the UIGEA and federal organized crime charges were based on violations of New York state anti-gambling laws.

Once a state decides to legalize Internet gambling, there is almost no limit to what it can do.  Small states should be able to compact together to create player pools in the millions.  Even without a compact, a state could authorize its licensees to accept bets from foreign nations where the betting is legal, such as England.

In March, the Illinois Lottery starting selling individual tickets online: more than $1.14 million the first week.  Every lottery is now looking to see whether it can join the three Canadian Lotteries that are already operating Internet poker games.  More than half the states allow at-home betting on races.  Nevada has two online sports operators, one accepting credit cards, and will start issuing its first Internet poker licenses this summer.  Landbased operators are paying outrageous amounts for Internet expertise, while social game companies, like Zynga, are openly saying they want to join.

The question is no longer whether Internet gambling will be made legal, or even when.  The question is who is going to ride the Third Wave.

© 2012, I. Nelson Rose.  Prof. Rose is recognized as one of the world’s leading experts on gambling law, and is a consultant and expert witness for governments and industry.  His latest books, Internet Gaming Law (1^st and 2^nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.

This article is reprinted with permission from Rene Carayol – a friend and inspirational business thinker.

“IT CAN ONLY BE A QUESTION OF LEADERSHIP”

The media is in its usual frenzy as Roman Abramovich seeks his eighth manager in his eight year reign as the owner of Chelsea Football Club.

“It was a player’s cabal”

“The ugly excess of player power”

“He was only given eight months, surely that’s not long enough?”

We see this situation far too often in the world of business.  The new incumbent leader has brilliant credentials, has a strong intellect and it looks like the dream ticket, but something’s clearly wrong.

The top team they have inherited is clearly unsettled and we start to see some resignations, some firings, and a wholesale drop in morale.

The new leader is adamant that they have the correct blueprint, and more importantly the backing of the Board of Directors.  They will not be denied.

We would say that perhaps the most underestimated competency that a new leader needs to bring to the party is perhaps the aura of being ‘easy to do business with’, not intellect or strategy!

Think culture not strategy.

The ten things that AVB perhaps got wrong:

1.   Far too many of his press conferences were all about him and HIS project – it would have served him better if he talked about the great players, the great fans and the great club.  It doesn’t help to alienate your stakeholders at every opportunity you get.

You need them more than they need you.

2.   He should know better than anyone that age doesn’t matter, its talent that counts.  Paul Scholes and Ryan Giggs are 5/6 years older than any of Chelsea’s stalwarts but are still contributing magnificently.  And Abramovich was prepared to give AVB a chance despite being only 33 years old.

In the final analysis the elder statesmen he severely alienated were the same people he became dependent on to save his career.

3.   Every player who made a genuine mistake on the pitch was summarily dropped.  From Lampard, Anelka, Alex, Romeu, Torres, Essien, Malouda, Kalou and even his own recent signing, Cahill.  Some never came back; others sat festering, not even making the bench.  This is no way to build team spirit and it was obvious they felt isolated and humiliated.

4.   Standing on the side-lines at every game, whistling and shouting at all the players with sharp instructions and feedback, which clearly should have been communicated long before the game started.

It is clear he was a micro-manager who wanted to make every decision, and call every tactic and this was never going to work given his lack of people skills and a lack of exposure/experience at the senior levels of the game.

5.   He was certainly a radical moderniser but as we all know the four most powerful words in any organisation are ‘what do you think?’

Just by being human and humble enough to elicit the opinions of those around him would have gone a long way into keeping many on board. Instead, he lost all ‘corporate memory’ and any goodwill, whilst attempting to stamp his authority.

6.   The moment he declared publicly that he didn’t need ‘the backing or favour of his players’, he was clearly sunk.  He certainly didn’t need their approval, but he needed to get them ‘on the bus’ but he either didn’t care or didn’t know how.

7.   Some recent outbursts against the media highlighted his inexperience, his naivety and his hubris. By starting to blame the media, they helped create a feeling of ‘death row’ and he became ‘dead man walking’.  It became only a matter of time.

8.   The petulant and harsh dropping of three of his star players, in probably the most important and public match of his reign against Napoli in the Champions League backfired spectacularly.

It felt like he was ‘stamping his feet’, and staring down the very people who could deliver his salvation.

He would later call them back into the team – and win, and drop them again!

9.   He ‘rode into town’ declaring for all to hear that everything his mentor and previous boss, José Mourinho had achieved at Chelsea was now outdated and wrong. In one fell swoop he was making a huge statement, and ensured there would be many eyes watching and waiting to see what he could deliver or not.

10.  Finally, ‘never bite the hand that feeds you’.  It was obvious that Roman Abramovich was trying to give him as much support as he possibly could.  It would never be vocal, and it would never be public, but it was certainly there.  Once AVB started to pine for public backing it was clear that even he had lost belief in himself.

Never follow a tough act into a leadership role, unless you are prepared for the toughest of rides. Charm, listening skills and honouring the past are key ingredients of success.

His predecessor Carlo Ancellotti was revered and loved by all, but AVB never mentioned his name or paid homage to the great legacy he inherited. It was far too much about his inherent ability. He ‘made his bed’.

Having recently had lunch with Dr Adrian Atkinson, Chairman of Human Factors International and my favourite business psychologist one of his many telling insights was “emotional intelligence is really not much more than great interpersonal skills.”

Now many may argue at the margins but he makes a terrific point.

“Good leaders create followers, great leaders create leaders”.

Time to ask ourselves the straight and unavoidable question –

“Why should anyone be led by you?”

This report from my good friend Geoff on the antics of the last few days. Notice how this page seems to change about once a year at the moment? Far cry from the weekly missives of old! Now – Geoff – take it away!

Arthur Meets Miami

by your Guest Author, Geoff

Luckily I didn’t have to work last Friday, as Arthur wuz in town. In cooperation with the nation’s enemies, he arrived on a 6:00am flight on Thursday morning, which really is the best time to invade any sleepy state. Arthur decided that the best place to attack Miami is from the south, so in a rented red Mustang he “sallied forth” (his words) to the Keys, originally aiming for Key West, but ending up just south of Marathon. I worked. Arthur stopped for lunch and a beer, and I stayed at work. He lay on the beach in the sun while I worked, and even swam in the Atlantic while I worked. I worked some more while he enjoyed the sunshine in the convertible on the way back. But then revenge, we (Jade and I) ambled across the road to Monty’s for a beer while Arthur drove back up to our apartment in Coconut Grove. Let that be a lesson to you all.

Check out this page about this. Thanks also to Funtastik

After we rendezvoused at Monty’s, the executive committee decided we should go to SoBe (South Beach) for dinner before dropping off the red beast. After a short drive past several valet parking attendants, a short phone call to Henry (whom I hope has put the cat out) lead us to Delanos Hotel, apparently the birthplace of Roman style decadence. Or least they spiked our drinks with hallucigens so as to make us believe that Salvador Dali lived and worked there recently. Very good dinner, Jade got offered a large sum for certain services (declined :-), and Arthur and I proved that we can still get lucky by finding some people less competent than ourselves at the pool table. Later, after dropping off the car and finding a taxi back here, we rounded out the evening at Murphy’s and the Tigertail. Whooof.

On Friday morning Arthur and I went swimming at the Venetian Pool. This public pool was built back during a building boom in the 1920’s and is more like a Grecian Spa than anything else. A few laps helped clear the head before lunch at Texas Tacos with some Mexican beer.

Check out Venetian Pool

Later, while Jade cooked one of her amazing curries, Arthur and I ambled down to Scotty’s bar down by the yacht club, for a few beers and watched rich people have their boats dropped in the water by large fork-lifts. Back to eat the curry, yummo, then across to Monty’s again for Pain Killers (if you want to know what painkillers are, please come visit us and we’ll introduce you to this Miami invention). I danced while Arthur maintained a steady supply of Pain Killers. This might have been fatal, and on Saturday morning there was certainly some timidity amongst the troops.

Thanks to Montys Restaurants

Then some real fun – Arthur rented a motor boat for Saturday morning and we sallied forth (again, don’t ask me why) into Key Biscayne, up under the Rickenbacker Causway, past Bayshore, on out the harbour mouth, a short ride past the beaches of SoBe, and then south to the northern tip of the Keys. The first thing we saw living in the water were a couple of sharks chasing fish, so we decided to go swimming (a bit later, really). We saw lots of nice soft corals, and two lighthouses. Back to return the boat just after midday, I retired hurt (an old war wound started to play up) while Jade and Arthur had lunch and wine at Monty’s. By that stage it was getting perilously close to Arthur’s birthday, so he sensibly decided to spend it on an aeroplane, flying back to Europe. Elian’s gonna miss you Arthur – come back soon!

S T O P P R E S S

The story Miami was talking about at this time

Footnote

Thanks, Geoff, for a wonderful time. I could live in Miami! Recommended visiting.

Cheers!

Arthur

By Gabriel Hopkins

My second trip away from London in as many weekends began in good fashion last Friday. Destined towards Newcastle, for a real escape from the big city, I had two priorities on setting off:

• Sleeping through the journey (three and half hours on a fast train)
• Not getting into trouble with the locals (a rough lot)

Solution to first problem, a few beers. Problem with solution: remaining sober enough to avoid aforementioned trouble once in the North. It transpired that reaching Newcastle, and waking up just in time to get off the train to avoid ending up in Edinburgh, which is not a wise idea late on a Friday night, I had rather overdone it.

The locals are nicknamed Geordies. They speak in an almost indecipherable accent, wear t-shirts on the coldest nights, and often have a fetish for fighting. So, head down and walking in as straight a line as possible I headed off to find a taxi. It is not unknown for taxi drivers to also hold a rather alarming level of hatred towards “Bloody Southerners”. All went well, however. Cab no. 48 was driven by a northern convert who had spent a couple years south of the Watford Gap, and he forgave me my heritage.

Once out of the city centre, the atmosphere became much more relaxed. Relaxed prices are equally notable. I thought the cabbie was joking when he charged me less than a fiver for what had been a reasonably extensive journey. Later, I learnt the error of my ways. A really decent pint measured in at a little over a pound – no wonder the city is famous for its alcoholism!

Most of the best pubs are run by Scottish and Newcastle Breweries who make McEwans’ beers, Newcastle Brown Ale, Theakstons and the strange tasting 80 shilling. Very few drink anything but Scottish and Newcastle Drinks. Understandably – all of them are good beers and seem to suit the climate – overcast and windy. My favourite of the S&N portfolio is McEwans Exhibition. The Best Scotch (half Ale, half Lager, no whisky) also ranks highly.

My first night was spent in The Lonsdale, a perfect local. Two bars divide the oldies – the flat cap brigade of twenty years ago and what in term time is a large student mass. The quiet room, which has no jukebox, a television, darts and a surprisingly noisy fruit machine was only too resistable. The other was very pleasant – Juke box, fewer hacking coughs, women (and even a few girls) and nicer seats. A lovely night out in the suburbs.

Saturday night proved to be time to hit the town, or ‘toon’ as they Northeners pronounce it. The tradition is that the boys and girls go shopping during the afternoon on a street called High Bridge for a new outfit, designer and expensive, every week. They then wear the outfit out that night, usually to a selection of pubs and clubs in the adjoining Bigg Market.

The Bigg Market was, several years ago, rated the most dangerous street in England. Not that there are any muggers or murderers, but more simply because if you haven’t got muscles like Sylvester Stallone, you risk getting involved in a fight. If you have got muscles like Stallone, you’ll definitely end up being challenged. Not a nice area and as soon as the sun started going down, I stayed well clear.

Not to far away from the Bigg Market, but far enough, is Newcastle’s quayside. We started off at the Offshore 44, which sits almost directly underneath the Tyne Bridge (pictured above). The Geordies would tell you that at £1.90 per pint this place was extortionate. After a while, I started agreeing with them, but I think that was just because they looked violent. A couple of pints of McEwans later on, I felt less intimidated and almost began to try a bit of Geordie vocabularly. All in all, the extortion was well worthwhile the opportunity to sit in a comfortable chair and look out at the beautifully lit river.

Soon we had moved to a cheaper place, the Bridge Hotel. From that point onwards things become a bit mingled in my memory. I remember that I worked out that it must be possible to obtain eight pints for a tenner and then tried to find out whether it was also possible to drink them. At some point later in the evening, I remember a night club with lots of very muscley young girls and even more muscley young boys holding very titghtly onto one or more of them. I was relieved the following morning to also note that I had incurred no bruising whatsoever!

By Gabriel Hopkins

Very possibly the only good thing to come out of “European Union” is English Sunday Opening. Yesterday for the first time in over fifty years, it was possible to drink throughout the Sabbath. About time too.

Bridge

A fortnight ago, heading back from a little holiday in Cornwall, a friend and I had reached Bristol and decided to go for a well-deserved drink. It was on of those balmy summer days which have made the traditional silly season very laid-back indeed. All we wanted that early afternoon was a refreshing pint, so we went to a pub I know well from previous trips to Bristol, the Albion. As I got the barman’s attention and started to request the urgently-required two pints, we were sourly disappointed to hear “Sorry lads, we’re closed.”

Yesterday, things were different – strolling into the same pub at 4 pm, drinks were in ready circulation and the four traditional hours of closing were finally vanquished.

Whether or not the change in the law is really a good thing in a wider sense is far more difficult to discern. Remembering that the old closing hours were the only reason many men returned home before darkness set in, there must be many wives and children (or even husbands and parents) of hardened boozers who would like to revoke the law already.

Personally, my only complaint is that the powers-that-be didn’t decide to change pub legislation a few weeks earlier, when a coke or an orange juice really didn’t hit the spot and we were ready to raid an insecure-looking off-license just to get hold of a couple cans of even the worst lager.

Bristol in the sun, a relatively unusual predicament, is certainly one of the best places in the country to enjoy a slow afternoon. This weekend, I had the pleasure of staying with my brother in an area of the city called “Clifton”, the Kensington of the West. The most notable features of the suburb are beautiful architecture and a relaxed atmosphere.

Saturday night started at “The Mall”, which is unsurprisingly on The Mall. Best features included a quiet jukebox and comfortable seats. Worst features were definitely the two thick bouncers who came on duty towards the end of our time there and promptly asked everyone I was with for proof of age, even though there were enough empties in front of us to prove that their colleagues hadn’t been quite as fussy.

Decided in “The Mall” that prolonged afternoon drinking most definitely demands lager rather than anything heavier. My brother resisted the advice and stubbornly kept to his Tetley’s which he regretted later on.

Dinner was accompanied with the National Lottery and my next recommendation, Carlsberg Ice. I didn’t like the look of this stuff, as it seemed to be a rip-off of Fosters Ice. The Carlsberg version is equally nice to the Fosters, maybe more so and another good afternoon beer.

The rest of the evening was passed at the Albion, which I mentioned before. A really nice pub, if not a bit young. We were lucky enough to see one of the funniest things in Bristol that night. On the next table, a group of about eight friends, every single one with buck teeth. Maybe they are in a club! Truly bizarre.

By Gabriel Hopkins

Don’t worry, times aren’t getting tough. I say that in advance because this week I have been travelling far afield to North London, home of dodgy drunks, drugs and even more which doesn’t bear thinking about.

One thing to remember when you’re spending time in the deep North is dress down, so I scrapped the suit and put on some suitably worn atire for the journey (generally East to West) along Holloway Road, starting at an old favourite, the dubiously-entitled Fat Harry’s. Harry it appeared wasn’t around, but there were lots of men with their various terriers and pitbulls sitting around the bar and playing pool. Fat Harry’s is a friendly pub, and reasonably inexpensive too, I remember a hysterical New Year’s Eve there, but I shouldn’t digress.

Further up towards Finsbury Park, but generally heading west is the George Robey, one of these intensely cool places where the young bands play. Luckily, a reasonable escape can be found away from the sound of bawling guitars and funny-looking chaps playing synthesizers. There are two rooms. One with the loud music and late-drinking, the other a rather dark and dingy pub. Memorable was the de rigeur pint of Guinness and pack of cheesey crisps combination. Best not too stay in the Robey too long, as the locals often appear to be getting peaky.

Next, after a quick hike down Seven Sisters Road, where there seem to be enough Kebab and Fish and Chip shops to feed a developing nation, the Hog and Hound. The landlord of the Hog and Hound obviously believes that his pub is deeply cool, and the people who were posing there thought the same. How wrong they were. When you pay for your water and beer combination, you get the eery feeling that you’re subsidisng all those ‘period’ bits of nonsense nailed unselectively to the walls. During term time, this is the only student pub in the North end I know of. As Rick Mayall said, “Nobody likes students, not even students like students.”

Opposite is the Nag’s Head, which is worth a quick glimpse. Rather too legendary, the Nag’s Head is always full to the brim and so after a quick but good pint, it’s off to my favourite pub on Holloway Road, the Hercules.

Many people who I have taken to the Hercules have found the experience rather unsurprising. For a relaxed drink in an unrelaxed area, I find the Barras & Co. pub a great relief. You can always find a comfortable seat and although the view is less than scenic out the windows, inside the architecture and the surrounding are also pleasant. Nice beer too.

The Irish pubs along Holloway Road, that is to say the ones that appear to sell nothing but Guinness and Murphy’s are to be avoided, unless your family have been drinking there for sometime and you once lived in Ireland. The punters in these places and there are thousands, including the Mulberry and the Half Moon, have a peculiar addiction to all things connected to line dancing and other Irish Institutions.

After being so negative about Holloway and Archway’s less English drinking establishment’s it’s only fair to also recommend one of the Irish Pubs. I would like to be more exact, but by the point we got there, memory was not strictly on my side. I can tell you that it is adjacent to Archway tube, but there the recollection ends. For argument’s sake I shall refer to the mysterious pub as the Eire. A less than accurate concordance with drinking regulations is the first thing to strike you about the Eire as you enter at 12.30 and find it still full of young lads drinking and buying beer. The sheer illegality of the place is rather striking throughout one’s stay there. A pleasant pub, especially for Alcoholics.