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July-07-2009,
An Interview with Professor I. Nelson Rose...By Hartley Henderson

Ever since the first online gambling website went live, Professor I. Nelson Rose has been front and center offering legal opinions and presenting papers at gambling conferences. Furthermore, Professor Rose has always been willing to offer advice to media and individuals seeking legal opinions on anything related to gambling. Professor Rose's biography is indeed impressive. A graduate from Harvard Law School, I. Nelson Rose is now a Distinguished Senior Professor at Whittier Law School in California and has been a visiting professor at the University of Macau. Furthermore, he has been asked to consult and provide expert testimony in trials for the government and the gambling industry. Professor Rose's website, www.gamblingandthelaw.com, is also considered by many as an important resource for legal opinions.

Many in the industry, including me, would consider Professor Rose an industry advocate. But when I suggested that to Professor Rose his response was rather humble:

I don't consider myself an advocate so much as an objective observer and commentator. I am primarily a professor of law, writer, consultant and expert witness -- all of which require, in my opinion, that I state clearly and accurately how the world is, rather than how the opponents, and supporters, of Internet gambling think it is or would like it to be. So, when I say that the U.S. Department of Justice is running a war of intimidation by doing such things as seizing the money of poker players, this is what I actually believe is happening.

I asked Professor Rose if he would be open to an interview so that readers could get to know the man that the industry turns to for expert advice and also to get his opinions on the future of the industry. He graciously accepted.

My first question to Professor Rose was to ask precisely who uses his services, aside from Clarion Gaming and other conference providers.

My clients include operators, including some of the world's largest, and governments: states, tribes and the federal governments of the U.S., Canada and Mexico. I also do a lot of work for start-up companies and people who simply have a good idea and want to know if it is legal, or how to lessen their risks. A lot of my work is reviewing proposals and having conferences by phone and in person with entrepreneurs. Once we have worked out the legal problems, I write a formal legal opinion, which allows the operator to raise money from investors and win over credit card companies.

My next question to Professor Rose asked whether his colleagues ever criticized him for his choice of work. After all, gambling law is hardly a career choice many would expect from a Harvard Graduate and Senior Professor at a Law School.

I am sometimes criticized, but usually by advocates who feel I am hurting their position. For example, I was asked by the Florida State Senate whether anything could be done about the Seminoles continuing to operate casinos after their tribal-state compacts had been ruled invalid by the Florida Supreme Court. I gave a legal opinion that concluded that the state could not go onto Indian land, but it could enforce its own anti-gambling laws on its own land, including against suppliers. The tribe's lawyer, who represented George W. Bush in the 2000 election case against Al Gore, could not dispute my legal analysis, so he attacked me personally in the press.

My questioning then turned to the industry itself and what he has observed as the major changes in the industry since its inception, and what he saw as the opportunities and threats. After all, while most believe the internet has existed for decades, in fact the first gambling website only went live 13 years ago.

I [had] worked with Internet gambling before there really was an Internet. I wrote a legal opinion for Ruth Parasol, who created PartyPoker, in 1993. So I have seen all of the changes. The most important [changes] have been technological as well as legal. In the beginning gaming on the Internet was painful, such as watching cards appear with 100-Baud dial-up modems and constant disruptions. Legally, online gaming has gone from having a feeling like the Wild West to becoming a large, respectable and regulated business. And the regulation is important. The greatest danger the industry faces is not over-eager law enforcement, but scandal leading to public rejection.

I also questioned Mr. Rose about the Wire Act. While the UIGEA is the law most industry writers focus on when questioning the legal status of online wagering, it's the Wire Act which the Department of Justice chooses to charge operators with. So I asked Professor Rose if he believes the Wire Act was really intended for bets over the internet, and furthermore whether it applies to non-sports bets.

We know what the Wire Act was designed for: the telegraph wire that bookies used to get horserace results before bettors did. Prosecutors are lucky that it was written broadly enough to cover sports bets.

While not stating it specifically, Professor Rose implied that he didn't feel the Wire Act applied to non-sports bets such as poker or casinos.

As well, Professor Rose stated his opinion about the judgement against Jay Cohen in 2001:

The Court was probably correct (in convicting Jay), although Cohen raised the interesting question of why didn't the bets from New York fall into the express exception under the Wire Act for wagers that were legal, since the bets were legal in Antigua and there is no New York state law against making bets. I had warned Cohen personally that the feds were not going to accept his position that since he was licensed in Antigua they could not touch him.

My next question asked Professor Rose's opinion on the United States' decision to ignore the WTO ruling and instead rewrite its gambling commitments.

The WTO issue is a mess. The Bush administration fouled this up so thoroughly that it is hard to see how it can be unwound, other than by allowing licensed foreign operators to take the same type of remote wagering bets that states allow their own residents to make.

I then asked his opinions on the recent seizure of money from players at Pokerstars and Full Tilt Poker.

Professor Rose pointed me to an article he recently wrote titled, "The DOJ Goes All-In with a Very Weak Hand." The article begins:

The U.S. Department of Justice recently made an astonishingly bad $34 million bet. The size of the cash isn't the issue - $34 million is peanuts for the federal government. The DoJ is betting that it can scare Americans out of playing poker online. But prosecutors don't seem to realize that they will probably lose this bet. And when they do, the decision will be read that Internet poker is legal.

The article concludes with:

It is even remotely possible that the DoJ knew how silly it was to seize the money of poker players. And it wanted to send the message to Congress to pass the pending bills that would set up a federal licensing system for Internet poker.

I then turned my questioning to the future of the industry. First, I asked Professor Rose if he could foresee any new payment options for Americans in the near future.

Under the [current] regulations, Americans using credit cards issued by foreign banks would not seem to be subject to any scrutiny.

I also asked Professor Rose if Americans needed to worry about betting online, particularly given that wagering online in Washington State is a felony.

No. Prosecutors remember the bad old days of being "revenuers" who went after everyone during Prohibition, and, as they put it, they do not want to be knocking on bedroom doors and going after $5 bettors.

I then asked Professor Rose what he believed the future of the Industry was in the U.S. and Canada.

The U.S., and to a lesser extent Canada, have gotten themselves isolated from the rest of the world. Almost no one in Congress cares about Internet gambling, with two extremely important exceptions: Barney Frank, a very powerful member of the House, and Harry Reid, the Majority Leader of the Senate, who represents Nevada. I think this unusual political coincidence, combined with having a Democratic president who won't veto a bill from the Democratic Congress, means that the federal government will be getting out of the prohibition business and will be going back to the traditional rule that gambling is a state issue and the states can decide for themselves whether they want to allow their residents to bet online.

My final question to Professor Rose was whether or not he had any regrets over the last decade representing the online gambling industry.

I have three clients who actually made over a billion dollars each. I haven't. On the other hand, I like helping people and have gotten to teach gaming law in China, France, Spain and to the F.B.I. So all in all it's been a great ride.

Professor Rose may not view himself as an industry advocate, but his legal advice has been appreciated by many in the industry, and his presentations at conferences have always been well anticipated and received. Hopefully Professor Rose will also be correct that the future of the industry in the United States will someday be solely a state decision and the federal government will step out of the way.

07-07-2009
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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