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July-20-2010,
A Reflection of My Time Writing About the Industry and a Prediction for the Future...By Hartley Henderson

(Part 1)

This will be my last month writing articles for MajorWager. I've been studying online gambling since the first legitimate website (Intertops) went live from Austria in 1996 and have been writing about the industry ever since. When I meet people from the industry the questions I'm asked most often are: which interviews I valued the most, what I believe were the highs and lows of the industry since I've covered it, and what I believe is the likely future of the industry. I have decided to make my last article for MajorWager a three part piece that addresses those questions. The first part will revolve around my 4 favorite interviews.

While I have chosen 4 interviews to cover in depth, I appreciate everyone who has been willing to devote their time to provide their overviews and answers to my questions on the industry.

Without doubt first hand interviews have provided the most intriguing articles and it hasn't gone unnoticed. Gambling lawyers Martin Owens, Larry Walters, Mark Mendel and Michael Lipton have always been willing to give their valuable time to answer questions and Chuck Barnett from Mohawk Internet Technologies has made himself available anytime I had questions regarding the Kanawake Gaming Commission. As well my contact at the WTO has always been willing to answer questions regarding Antigua and other WTO issues, he just ask I not use his name in any articles since it apparently is against WTO rules. Plus there are numerous others who have provided me their time for which I am grateful. That being said, there were 4 interviews that to me were most intriguing for various reasons.

The strangest interview I ever had occurred in 1999 prior to my time at MajorWager. Even though I was writing about the industry for over a year I had never met any of the people I wrote about face to face. In 1999 River City Group ran a gaming exposition (GiGse) at the Delta Hotel in Montreal. River City Group has since sold to Clarion Gaming based in England, but 1999 was the first year for such an exhibition and gaming conference and I felt I had to be there. Not only were the big names of the industry in attendance (not to mention numerous undercover FBI agents) but up and coming companies like Cryptologic, NETeller, Boss Media along with several companies promoting a newfangled idea called online poker networks were exhibitors as well. When I let people know I was planning to attend I had several interviews lined up but one interview I wasn't prepared for was interesting to say the least. After I arrived at the hotel and grabbed my name tag, a large man in a dark suit came to me and said his partner wanted me to interview him about a new product idea he founded that would make it easier for players to deposit, withdraw and maintain offshore accounts. I wasn't familiar with the person at all but I agreed to the interview. I won't mention the interviewee's name in this article for reasons that will become evident in a minute but I will refer to him as Harry (not his real name) for the purposes of this article. We met at the hotel bar and sitting before me was a man who seemed to be a character straight out of the Sopranos. I asked Harry what his new idea for a product was and he said "I'll get to that later but first I want to discuss a colleague of yours." I was a bit confused because even though my 'colleague' was writing for the same website I was I really had no other interaction with him. Apparently my 'colleague'wrote a negative article about Harry at some point and needless to say he wasn't impressed. After giving me some background on the situation Harry then stated "so the first thing I did after I got myself together from reading the article was I found out where your colleague lives. It didn't take long and I was able to figure out his home address easily. My plan was then to show up at his house, knock on his door and say "hey look it's me Harry. Are you surprised? I know where you live. And then I was going to break his f*cking legs." But my partner stepped in and said "no, no, you don't do that any more. You're an honest business guy now." After a brief pause he then started to discuss his product. It was clear to me that he wanted me to pass on the message thinking I was a good friend of my 'colleague' but I also took it as a warning not to disrespect him in any of my articles either. The message was well taken and I wrote a very complimentary article about his new product idea even though I really couldn't see how it could be successful. Not surprisingly I didn't want my f*cking legs broken either. That was my first real introduction to the industry but I'm glad to say it didn't deter me and most of the people I met afterwards were good, hard working businessmen who just wanted to see a thriving industry similar to the way it is in England. In fact some people like Simon Noble previously from Intertops and Pinnacle Sports and Russ from MajorWager are two of the kindest and most generous people I've met. And my experiences with almost everyone that run online gambling establishments have been nothing but positive. I won't mention them here as I'm not sure they'd want to be identified at this time. In fact most of the negative elements have left the industry. It also provided me a good lesson not to be personal in articles unless I was ready to face the consequences. Consequently I tried to remain very objective and stayed clear of personal attacks other than against the likes of Bill Frist, Spencer Bachus and John Kyl who provided reasons for harsh criticism. Readers will also be happy to know that Harry and my colleague apparently made up at some point and no limbs were damaged, to the best of my knowledge.

The second most intriguing interview I had was with Wayne Allen Root in 2007. Running for the Libertarian nomination in the last election I asked Root if he was interested in providing an interview for readers of MajorWager regarding his campaign plans. His response was classic "It would be my pleasure and honor to tell my fellow Americans (especially gambling enthusiasts and poker players) about my campaign." I knew right then and there I was in for an interesting interview and I wasn't disappointed. We agreed to a web interview, which is always preferred since all comments are in writing, and the first question I asked him was why a professional gambler wanted to run for President of the United States. His answer was classic:

"Gambling and gamblers are often demonized as being anti-family. No one can do that to me. I'm living proof that gambling is an all-American past-time. I have an Ivy League degree; I'm a professional; a family man; a high-profile corporate CEO; a TV personality quoted on CNBC, MSNBC, Fox News, CNN, The Wall Street Journal, etc. I could have chosen any business or career in the world- and I chose gambling. I'm living the American Dream because gambling has been good to me. Risk is at the heart of all success in America. If you?re afraid of gambling; if you?re unwilling to risk; if you see gambling as evil- you're probably an underachiever (at least financially). Risk-taking is the key ingredient to becoming successful and financially independent in any capitalist society. You must risk your money to beat the rate of inflation. If you invest in real estate, you are a gambler. If you invest in stocks, you are a gambler. If you invest in gold and oil, you are a gambler. If you invest your money in new business ideas (venture capital) you're a gambler. If you own your own business, you are a serious gambler. In all these cases, instead of keeping your money safely in a bank account or money market, you are taking great risks to increase your wealth. That makes you a gambler or as they call it on Wall Street, a "financial gunslinger."

Sadly, if you're afraid of taking risks, you're probably working for someone else, collecting a safe weekly paycheck, and your money is safely in the bank (failing to overcome inflation). If that's the case, you're probably going to be forced to depend on Social Security to survive during retirement (if you can ever afford to retire). You're a survivor instead of a thriver. That's not what we should be encouraging in this country. It all comes down to the famous saying, "Only those who dare to fail greatly, can ever succeed greatly." Who said it? President John F. Kennedy. Or another way to say it might be "To the victor go the spoils." Gamblers are rewarded in our capitalist society. We should be teaching our citizens to value risk-taking. We are doing a great disservice to our people by teaching them to fear or dislike gambling.

To succeed big in America, you must risk big. From the pilgrims, to the American Revolution, to taming the Wild West, to inventing the automobile and the computer, to creating the Internet (the new Wild West), to investing venture capital in Silicon Valley- we are a nation of big-time gamblers. A risk-taking mentality is a good thing for society. Heck, there wouldn't be a United States without gambling- a Lottery helped to fund the American Revolution. Who gambled in that lottery? George Washington and Benjamin Franklin did. So much for demonizing gamblers."

Every question I asked Root resulted in a similar response oozing with self assurance and self promotion and when I asked about the other candidates his responses were well thought out. He said he would deal with other Senators and Congressmen by just vetoing everything they sent forward until they got on board and went on to say "I love the smell of vetoes in the morning." As for other candidates his comment about Obama was probably the most complimentary for what that was worth.

"What does Barack Obama (my college classmate) know about creating jobs? He calls himself a 'community activist'? What's that? A professional protestor? Just what America needs. If the people who spend their lives complaining and protesting would spend a little more time actually working for a living- they'd have nothing to protest about. Obama has never risked a dime of his own money to create a job, never made a payroll, never paid anyone else's health insurance. Those should be job requirements for the position of President of the United States. Obama fails on all counts.?

As I read Root's interview answers it occurred to me that while Root is certainly arrogant he is also right. And moreover he is exactly what this industry needs as a spokesman. Too many times we have seen gambling activists who have run when challenged by the Feds or who were unwilling to speak up for what they believe in but it's clear Root won't take crap from anyone and is willing to do what he must in order to further the industry. Unfortunately Root lost as a candidate but he provided an interview to be remembered and no doubt he will run for office in the future again.

The third interview that I remember well was my discussion with Alan Dershowitz. I recall having read somewhere that Dershowitz, who gained notoriety by representing people like Claus von Bulow, Patricia Hearst, Mike Tyson, O.J. Simpson and others, was preparing to defend Gary Kaplan on RICO charges filed by the Missouri State Attorney. His defense was unique indeed, suggesting that sports betting was a skill game and hence exempt from prosecution. I found his e-mail address in the Harvard Law School Directory and asked him if he was willing to discuss his defense. To my surprise he agreed. I spoke to him for over 30 minutes and his defense was fairly simple. In his view, and probably the view of most readers of MajorWager, to be successful at sports betting one requires skill. Bookies make their money by using their skill set to set lines they believe will generate 2 way action and bettors use their skill set to try and figure out the value. Dershowitz equated it to poker and said that he has a group of 4 players he plays poker with regularly and everyone can label from 1 to 5 who are the best, second best etc. And in sports the skilled gamblers win and the unskilled gamblers lose. Not surprising the defense was unsuccessful and Kaplan went to jail but the interview proved that gamblers come in all shapes and forms. While many in the U.S. government want to paint gamblers as the dregs of society the truth is that there are far more people who gamble than don't. The Republicans have made it their mission to demonize the activity but if high priced lawyers and athletes, celebrities and average Joes can all have a good time and try to profit from using their skill sets in sports and poker then what business does the U.S. government have intervening? The Dershowitz article was also linked to and mentioned in other newspaper articles more than any of the others.

The last interview I want to mention was the first one with Joe Brennan Jr., the CEO of iMEGA. At one of the Clarion Gaming conferences in Montreal in 2007 I was met by some people whom I'd never seen before with name tags that read "iMEGA." Most attendees just stared at them confused and I decided to ask one of them what iMEGA was. I scheduled an interview with Joe and Ed Leyden (who has since left iMEGA) to discuss the organization and discovered they were a trade association that were going to lobby for gambling efforts and also challenge the legitimacy of the UIGEA on the grounds it was unconstitutional. The trade association represented numerous individuals and companies involved in the online gambling industry that didn't want to come forward on their own for obvious reasons. At first I was reluctant to take the group seriously and many at the conference believed that anyone who would join the group were foolhardy because eventually they would have to be named. Nevertheless I scheduled an interview and Brennan and Leyden were heartfelt and believed in their cause. Moreover they provided great fodder for an article. Brennan stated to me "the UIGEA was a cynically crafted law devised to provide red meat for social conservatives for the 2006 mid term elections. The law is completely unjust and has to be overturned."

Leyden added "The Internet is not going away but is rather the future of industry and the engine for prosperity around the globe. The UIGEA, however, has the very real potential of placing the United States and, especially, our extraordinarily efficient financial markets, in an uncompetitive and, ultimately, untenable position, which, in turn, will unquestionably stifle economic growth throughout the rest of the world."

Their comments seem to have been verified somewhat as the banks have struggled mightily with implementing UIGEA rules and it appears many who backed the UIGEA are looking now at getting it overturned by backing Barney Frank's new bills. Furthermore, iMEGA has become one of the few pro gambling forces that is making an impact. iMEGA is representing the state of New Jersey in their appeal of PASPA and has represented websites in their fight against the domain name seizure. It's clear iMEGA is and will continue to be an important spokesman for the industry in the future.

In part 2, I'll look at the highlights and lows of the industry since its inception.

07-20-2010
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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