Closing time in Alabama gambling corruption trial

February 29, 2012 10:15 am

Defense attorneys are wrapping up their closing argument in the gambling corruption in Alabama involving lawmakers, lobbyists and casino owners.

Six defendants are on trial for the alleged scheme that involved bribing state lawmakers in return for pro-gambling votes. The first trial ended in a hung jury last summer and two defendants were acquitted.

In his closing argument, a federal prosecutor told jurors that casino owner Milton McGregor bribed lawmakers to protect his millions in gambling profits, while a trio of state senators were willing to put their votes on the auction block for campaign contributions, according to the Birmingham News.

“These defendants are guilty. They corrupted the Alabama Legislature. They robbed each and every Alabama citizen of the right to honest government,” prosecutor Edward T. Kang said as he concluded his closing argument.

Meanwhile, a defense attorney for McGregor told jurors that the case “reeks of political motivation.”

Gambling away welfare checks

February 28, 2012 2:46 pm

What’s wrong with this picture? A state government issues thousands of welfare checks that then get spent at casinos. The government taxes the casinos at a higher rate than most business, and uses the revenue to fund government services, including welfare.

That’s exactly what is going on in Colorado, according to an investigation by a local Denver television station. The investigation underscores several points:

1. Many casino customers are poor and struggling to make ends meet. Rather than getting ahead, many are throwing away their money on the useless and unproductive activity of gambling. Money that should go to for rent, food and child support is often getting spent at casinos.

2. Taxpayers that don’t gamble still pay to support the casino industry, which makes a large chunk of its profits from problem and repeat gamblers. Beyond the welfare dollars spent at casinos, taxpayers also pick up the tab for the increased social and economic costs that come with gambling, including increased crime, divorce and bankruptcy.

3. Casinos are a misguided public policy that amounts to a regressive tax on those who can least afford it, often the poor, elderly and working class. Elected officials are sworn to protect citizens not implement a public policy that legalizes casinos that strip wealth from residents.

4. If Colorado residents are spending welfare checks in casinos (and strip clubs), the chances are the same thing is happening in other states that have legalized casinos.

Feds crackdown on Internet gambling

February 28, 2012 11:51 am

A Canadian billionaire who owned one of the world’s largest online gambling companies was indicted today by federal prosecutors in Baltimore. The move is part of a broader crackdown of illegal online gambling by the federal government that began last year.

Calvin Ayre, the founder of Bodog, is accused of operating an illegal gambling business involving sports betting and conspiring to commit money laundering. Ayre was the subject of a cover story in Forbes a few years back.

The U.S. Attorney in Baltimore, Rod Rosenstein, indicted Ayre and three other Canadian men, James Philip, David Ferguson and Derrick Maloney. The men were not arrested and are believed to be in Canada. Ayre’s company, Bodog Entertainment Group, was also indicted and its domain name has been seized by federal prosecutors.

The indictment unsealed Tuesday is part of a broader crackdown of online gambling by federal prosecutors. The move to take out illegal online gambling sites comes as some federal lawmakers and sates are considering measures to legalize online gambling.

The move also comes as the Justice Department has reversed its opposition to many forms of online gambling, clearing the way for states and the federal government to get in on the Internet gambling racket. That ruling was quietly released the day before Christmas Eve – even though the legal opinion was written in September.

Gambling lobbyists lose a few

February 28, 2012 10:08 am

South Carolina is the latest example that shows the push to legalize casinos and expand gambling in states stems from well-paid lobbyists and not the public at large.

A report in the Charlotte Observer says South Carolina is being “targeted” by powerful lobbyists pushing a wave of gambling proposals. In particular, the cockroaches, er, lobbyists are pushing for a casino on an Indian reservation as well as new “sweepstakes” machines in convenience stores statewide and Internet cafes in Charleston.

More access to gambling would strip more wealth from South Carolina residents, in particular the poor, elderly and minority. That would be a terrible public policy in a state with so many low income residents. Fortunately, a spokesman for Gov. Nikki Haley said the governor has no interest in supporting more legalized gambling.

That’s another victory for smart public policy. State lawmakers that try to balance their budgets by stripping wealth from residents they are sworn to protect are being short sighted, given that gambling adds so little to the economy and often leads to increased social and economic costs, including more crime, divorce and bankruptcy.

Haley’s opposition to more gambling in South Carolina is also part of a mini win streak for anti-gambling forces. Efforts – pushed by gambling lobbyists – to legalize casinos in Florida and Kentucky were recently turned away. Likewise, efforts to legalize casinos in Hawaii – which has no gambling – are gaining little support. But that doesn’t mean the gambling lobbyists won’t be back.

Closing arguments in Alabama casino corruption trial

February 27, 2012 1:05 pm

Defense attorneys have decided not to call any witnesses in the federal corruption trial involving casino operators, lobbyists and Alabama lawmakers.

As such, the closing arguments are expected to begin on Tuesday and the jury is expected to begin deliberations on Wednesday. Meanwhile, the judge approved a request by federal prosecutors to drop some of the charges against the defendants.

Six defendants are accused of buying and selling votes for pro-gambling legislation designed to protect keep open two casinos that former Gov. Bob Riley wanted to close.

This is the second time the defendants have been on trial in the sweeping case involving alleged bribes paid to lawmakers in return for pro-gambling votes. A jury deadlocked on the charges in August, and two other defendants were acquitted. In that case, defense attorneys only called one witness.

The reporting of both trials has been pretty thin and unsophisticated, making it hard to gauge the strength of the case. However, it seems like this time – based on the reporting – that the prosecutors have put on a case that is more compelling, clear and concise.

Gambling revenue doesn’t meet expectations

February 27, 2012 11:09 am

State lawmakers tout the tax revenue that comes from legalized casinos and lotteries. But the predictions rarely live up to the reality, a new study found.

A Stateline analysis found: “Of 13 states that have legalized casinos, racetrack casinos, known as racinos, or lotteries in the past 10 years found that more than two-thirds of them failed to live up to the initial promises or projections made by political and industry champions of legalizing gambling. That doesn’t account for inflation or the cost of any of the potential negative consequences of gambling, such as increased addiction or crime, that are often cited by opponents of legalization.”

States rarely factor in such costs, which impact the real bottom line. In fact, some studies found every $1 spent on gambling actually costs states $3.

Pennsylvania’s 2004 entrance into the casino rackets is held up as a success story by gambling backers. But even in Pennsylvania, casino revenue has failed to deliver the $1 billion in property tax relief that was touted by then-Gov. Ed Rendell, the godfather of gambling in Pennsylvania. The state was about $200 million short of Rendell’s estimate.

Of course, Pennsylvania’s gambling success is all relative. If the state reaps $800 million in gambling profits that just equals how much wealth was stripped from taxpayers. It’s also money that wasn’t spent on other businesses and entertainment, not to mention food, rent and child support for some problem gamblers.

Kentucky casino bill gets derailed

February 24, 2012 9:50 am

Every once in a while the good guys win.

State senators in Kentucky voted down a fast-track measure that would have paved the way to changing the state Constitution to legalize casinos. Casino backers tried to tie the measure to helping the horse racing industry in Kentucky. But even that wasn’t enough to convince enough lawmakers that funding the government by enticing residents to gamble away their money was a good public policy.

Indeed, the senators who voted against the casino bill cited “moral, economic and ethical issues.” Others also pointed to the corrupting influence gambling has on government. That about covers the many problems with gambling, which adds little to the economy and strips wealth from residents. It also leads to increased crime, divorce, bankruptcy and suicide, which costs every taxpayer.

But lawmakers in many states overlook the economic and social costs in their zeal to find new ways to generate revenue for state coffers. Many lawmakers are also influenced by gambling lobbyists, who have poured millions into state houses across the country in effort to legalize casinos. This time, the casino forces were turned away in Kentucky. But they will likely be back.

Sheldon Adelson up close

February 23, 2012 11:52 am

Just three years ago, Sheldon Adelson’s casino empire was deep in debt and facing default. But the Sands owner has bounced back, largely by investing in casinos in Macau, the booming casino market in China.

Now Adelson is reshaping the presidential race by giving $21 million to a Super PAC that is supporting Newt Gingrich and threatening to spend as much as $100 million in campaign contributions to try and unseat President Obama.

Not many people had even heard of Adelson until recently. He has largely operated behind the scenes. But at 78 years old, the billionaire has stepped into the spotlight with large campaign donations. Forbes magazine has a largely positive profile of Adelson that is worth reading to see how he operates.

Steve Wynn goes to the mattresses

February 23, 2012 10:50 am

Casino mogul Steve Wynn has gone to war with his former friend and major investor, Kazuo Okada. Wynn has put Okada on the defensive by moving to buy him out and remove him as a director from his casino company. But it is unclear if Wynn will win the battle but lose the war.

Indeed, the falling-out between the two tycoons could impact their respective multibillion-dollar gambling empires. (Okada made his fortune in pachinko machines, a Japanese gambling device that is a combination of pinball and a slot machine.) Each claims the other made improper payments to win favor in their respective Macau and Philippines casino markets. The dueling lawsuits has caught the attention of federal authorities, prompting the Securities and Exchange Commission to open a probe.

Reuters has a good take here. Meanwhile, The Wall Street Journal reports that Wynn was prompted to act to appease Nevada gaming regulators after learning that Okada allegedly made improper payments to officials in the Phillipines. Details of the payments are part of an internal report Wynn commissioned that was done by Former FBI director Louis Freeh. Read Freeh’s report here.

Of course, Okada fired the first shot by questioning $135 million in donations that Wynn made to a university in Macau, a booming casino market. After Okada’s suit was filed, an analyst invoked The Godfather by asking Wynn if he going to make Okada “an offer he can’t refuse.” Well, it looks like Wynn has decided to “go to the mattresses.”

Is it just a coincidence that such ganster phrases seem to pop up when discussing casino moguls?

The price of poker in Massachusetts

February 21, 2012 10:26 am

Elected officials often cite public demand for gambling as a reason for legalizing casinos. In reality, lawmakers are really just responding to the will of the lobbyists. Not the will of the people.

That was the case in Massachusetts, where a small army of lobbyists helped get casinos legalized. A review by the Associated Press found the gambling industry spent $11.4 million on lobbying on Beacon Hill over the past five years. The amount of spending grew as the gambling legislation got close to passing. 

Some of the biggest spenders are now vying for a casino license, including Steve Wynn, Penn National and MGM Resorts International. That’s why they say you have to pay to play.