Legal gaming news direct from the Catania Consulting Group
A Catania Consulting Group Client Newsletter December, 2008
Integrity, Leadership, Experience
Frank Catania, Esq. President, former Assistant Attorney General, Director NJ Division of Gaming Enforcement, VP Compliance Players International. email@example.com
Gary Ehrlich, Esq. VP, former Assistant Attorney General, Deputy Director NJ Division of Gaming Enforcement. firstname.lastname@example.org
Keith Furlong, VP, former public information officer & legislative liaison NJ Division of Gaming Enforcement. email@example.com
Joseph Kelly, Esq. Associate, Professor of Business Law, SUNY College, Buffalo. firstname.lastname@example.org
Everyone at Catania Gaming Consultants would like to wish you all Happy Holidays
PartyGaming Founder Settles with U.S. Department of Justice
Anurag Dikshit, one of the founders of the successful online gaming company PartyGaming, settled an investigation by the U.S. Department of Justice (DOJ) by pleading guilty in December to violations of the Wire Act in federal court in New York. Dikshit faces a maximum of two years in prison, but the court deferred sentencing for two years, during which Dikshit is required to cooperate with the DOJ in their continuing investigation. Dikshit will also forfeit a total of $300 million.
Most observers believe that this plea makes it more likely that other high-profile targets of DOJ investigations based on their acceptance of business from the United States in the past, will try to negotiate their own settlements. What is unclear is whether such settlements represent a “winding down” of the DOJ investigations, or merely a transition into the next phase, fueled by information secured from cooperating defendants.
Major League Baseball Loses One to Fantasy Sports
In 2007, fantasy sports groups won a major victory against the major league baseball industry whereby baseball player statistics were judged to be in the public domain (C.B.C. Distribution v. Major League Baseball Advanced Media, 505 F.3d 818 (8th Cir. 2007)). The issue of player statistics is still before federal courts. On Sept. 3, 2008, CBS Interactive filed a complaint in federal court in Minnesota asking for a declaratory judgment and other relief concerning football player statistics (CBS Interactive v. National Football League Players Association). The NFL has attempted to have the case moved to Miami. Preliminary matters should be resolved in early 2009.
Joe Kelly, of Catania Gaming, has been quoted by the media as an authority that these statistics are part of the public domain. Kelly has agreed to speak on the CBS case, as well as other topics related to fantasy sports, at the Fantasy Sports Trade Association conference in late January 2009 in Florida
NJ Supreme Court Upholds Tropicana License Denial; Paves Way for Sale
In October, the New Jersey Supreme Court unexpectedly agreed to hear the appeal of the Atlantic City Tropicana Casino from the denial of its casino license by the Casino Control Commission last year. That decision had been upheld by an appeals court, and a Conservator was in the process of attempting to sell the facility. One potential buyer had been the Cordish Company, a Baltimore developer, for $700 million.
On October 30, the Commission extended the sale deadline until January 21, 2009, while a legal battle over the fate of the facility raged on several fronts. The Tropicana parent company had requested that the Commission return control of the casino to it. There was also the potential for involvement by the U.S. Bankruptcy Court in Delaware handling the overall Tropicana bankruptcy.
Tropicana’s appeal was argued before the Supreme Court and, on November 25, the Court upheld the license denial, thus paving the way for resumption of efforts to sell the casino. Toward that end, the Commission authorized the Conservator to retain legal advisors to request the Bankruptcy Court to hold an auction for the property under Section 363 of the U.S. Bankruptcy Code.
Huge Budget Deficit Spawns Proposals for Expanded Gambling in New York
As has become commonplace in recent years, state budget deficits result in proposals for expanded gambling (in addition to spending cuts and tax increases). Thus, in the face of a $15 billion deficit, New York’s Democratic Governor has proposed that the state authorize slot machines at the Belmont Park race track. The move is projected to raise $370 million through a one-time franchise fee from the company selected to operate the facility.
At the same time, the New York Senate Republican majority is also proposing the authorization of casino-like electronic games such as blackjack to be added to race tracks statewide, including a Catskills resort. Video slot machines are already at harness track "racinos" around the state. This proposal, which is projected to bring $175 million in revenue, would include any game of chance in an electronic or computer form. Many traditional casino games are unconstitutional in New York outside Indian-owned land.
Trump Entity Sues Pennsylvania Gaming Control Board
On December 17, 2008, Trump Entertainment Resorts, Inc. filed suit in the United States District Court in Harrisburg against the Pennsylvania Gaming Control Board, citing the Board’s denial of a casino license to Trump in 2006. Trump claims its rights were violated when, in making its decision, the Board suggested that Trump might push Pennsylvania players to Atlantic City to help his Atlantic City casinos because of New Jersey’s more favorable tax rate (NJ 8.5%; PA over 50%). Trump Hotel and Casinos was in bankruptcy at that time. Joseph Kelly, of Catania Gaming, was quoted, “The Keystone suit takes as its jurisdictional peg the 42-USC Civil Rights Act which is based on an 1871 anti-Ku Klux Klan law- it is a catch all law that says lawmakers cannot under color of civil law deprive people of their civil rights.” The Pennsylvania Gaming Control Board has been the subject of widespread criticism both for its overall structure and operation and for its decisions in certain specific matters.
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