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.  

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.

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 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.

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.

Maryland company charged with money laundering for alleged illegal gambling

The U.S. Attorney's Office in Maryland has charged Nick's Amusement Inc. with money laundering arising from an alleged illegal gambling business. The criminal charge comes three months after U.S. prosecutors settled a civil forfeiture action against Nick's Amusement Inc. for US$1 million that involved allegations of illegal gambling at bars and restaurants in Maryland. You can read more here. 

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.

Murder suspect van der Sloot met victim in casino in Peru

According to this story on Fox News, murder suspect Joran van der Sloot met the woman he is alleged to have confessed to killing at a casino in Lima, Peru. Casino surveillance cameras recorded van der Sloot meeting 22-year-old Stephanie Flores at a card table at the Atlantic City Casino. The pair stayed at the casino for some time then left for van der Sloot's hotel where, according to van der Sloot's apparent confession, he killed her. Van der Sloot fled to Chile and was arrested and extradited to Peru. Stephanie Flores' father owns the casino in Lima where the pair met. He also owns the Miraflores Park Hotel near Lima. You can watch the surveillance footage of the meeting of van der Sloot and Stephanie Flores here. Van der Sloot is suspected of murdering American teen Natalee Holloway in Aruba several years ago.

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. 

 

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.     

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. 

When gambling regulation works - how Macau casino operations are affecting American gaming regulators

The Las Vegas Sun has an excellent story that captures the connection between gambling operations in different jurisdiction by the same casino operator and the role of gambling regulators here. Reporter Liz Benston reports that the sometimes shady way in which casino VIP rooms are operated with the use of junkets in Macau will impact Atlantic City casino operators who also operate, or hope to operate, in Macau. That's because in order to maintain a U.S. state gaming registration, casino operators have to operate their casinos in a way that will not negatively affect the integrity of the gaming industry in that state. The smallest link to criminality with a casino operator will affect its integrity, and therefore the integrity of the state's control over the industry. The FATF has repeatedly expressed its concern over casino junkets as a potential vehicle for money laundering in Asia. 

Australian indicted for laundering US$500 million in Internet gambling proceeds

The US Attorney's Office announced today that an Australian foreign national, Daniel Tzvetkoff, was arrested in Las Vegas today on charges that he assisted illegal Internet gambling companies process about US$500 million in transactions for American gamblers. Tzvetkoff operated a payment processing company called Intabill Inc. Tzvetkoff was charged with gambling conspiracy, bank fraud conspiracy, money laundering conspiracy and one count of money laundering. The indictment was unsealed in Manhattan federal court today. It alleges that Tzvetkoff convinced banks to provide services through the Automated Clearing House System to offshore online gambling companies and that he disguised the recipients so banks would not know they were online gambling companies. 

In an e-mail, one of Tzvetkoff's alleged co-conspirators told him he had hired programmers to develop "unique" websites for the shell companies so that if someone was "checking the companies out there is absolutely no way to tie the companies together." Tzvetkoff replied that it was "perfect." If convicted, Tzvetkoff faces a term of imprisonment of up to 75 years.