Zynga to face legal challenges if they leave Facebook and pursue online gambling

Casino Watch Focus reported that online social media giant Facebook was looking into online gambling.  Their partnerships with other developers like Zynga has provided an infrastructure for dealing with payments that could translate to real money gambling.  Casino Watch Focus then reported that developer Zynga was seriously considering entering the online gambling arena as well given they have a similar infrastructure and already offer free versions of gambling games like Poker.  Now, a online legal source is reporting that such a move will be met with serious legal hurdles:

Zynga Inc. is thinking about making a big bet on gambling, a step that analysts say could help end its dependence on Facebook Inc. It certainly won’t end its dependence on legal counsel. The technology may be simple, but lawyers say the company probably isn’t prepared for the intricate maze of regulations it will have to navigate to cash in on the action. Add to that the exhaustive financial and background checks Zynga executives and some shareholders might have to endure, and the company’s legal department is facing a huge undertaking.

I think they may be underestimating the difficulties they are going to face,” said Whittier Law School professor I. Nelson Rose, an expert on gambling law. “I know even European gaming operators are always surprised when they find out how invasive the U.S. regulators are in trying to find out everything.”

And if and when Zynga does start offering online gambling, dealing with compliance related to issues such as money laundering will have to become a top priority for its legal department, and that will likely mean hiring more in-house counsel. Many regulated gaming companies have substantial internal legal departments, Dayanim said. But whatever route Zynga decides to take, it will be new territory for all involved. “We haven’t seen a situation anywhere where a social gaming company has moved into the gambling space,” Dayanim said. “I can’t think of any company that has done it.”

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Zynga Looks to Use Facebook and Social Media Gaming to Incorporate Online Gambling

Casino Watch Focus reported that  Facebook was looking into online gambling in markets where online gambling is legal.  The tie into gambling stems from Facebook utilizing an online monetary system in the form of credits.  Those credits are usable in games or other various items from developers.  One of Facebook’s larger developers, Zynga, who also develops for various mobile platforms, has taken note of the possibilities of a recent Obama Administration ruling, that allows online gambling. An online source explains:

Zynga Inc. (ZNGA) Chief Executive Mark Pincus said Wednesday he sees “mind blowing” possibilities for weaving real-money gambling into social games pending regulatory changes in the U.S., and suggested the company may partner with a traditional casino company before the end of this year.

“We’re definitely talking to all of the players that you would suspect,” Pincus said, adding, “We have incredible respect and admiration for brands and groups like the Wynn… I would expect that you’ll see a lot of these players kind of figure out their go-to-market partnerships for sure before the end of this year.”

Pincus noted that real money gaming would be a natural fit for Zynga, which already draws tens of millions of players to its Zynga Poker game.  Unlike current games such as Zynga Poker, real money gambling games would involve more than just virtual currency that cannot be converted into cash.

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Alex Rodriguez Comes Under Investigation because of more illegal Gambling Allegations

Casino Watch Focus recently reported that several star NLF athletes, including Terrell Owens and Santana Moss, were under investigation for violating NFL gaming operation rules.  Now it appears that Major League Baseball is suffering from a similar potentially embarrassing gambling investigation.  One of baseball’s biggest starts, Alex Rodriguez, is under investigation for alleged evolvement in illegal high-end poker games.  The Wall Street Journal explains:

Yankees star Alex Rodriguez will be interviewed by Major League Baseball as part of its investigation of his involvement in illegal poker games.  Star Magazine reported last month that several people saw A-Rod playing in games hosted at Hollywood hotels and residences. His publicist denied that Rodriguez participated.

Rodriguez’s name is not mentioned in any court filings in relation to the games.  MLB said at the time that the report was the first the commissioner’s office had heard about the accusation and baseball officials would look into the matter.

However, this is not the first time A-Rod has been under fire due to his gambling.  The Wall Street Journal explains:

Rodriguez also faced questions about his gambling habits in 2005, when the Daily News reported he attended games at an underground poker club in New York. The slugging third baseman later acknowledged “it wasn’t the right thing to do,” and checked with MLB before holding a charity poker tournament the following year.    

Rodriguez is possibly facing a suspension from baseball if these allegations are proven.  ESPN  explains why his gambling past may catch up with him on a disciplinary level:

An MLB executive, speaking to ESPNNewYork.com on condition of anonymity, indicated that Rodriguez could miss games if the investigation proves he was at the poker games. “Because he had been warned about this before, I would say a possible suspension would be very much in play.”

Although baseball’s investigation centers on Rodriguez’s card-playing, and he is not thought to have gambled on the outcome of any baseball games, the fact that he may have disregarded Selig’s warning is said to have angered the commissioner.

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Washington DC to allow online poker in September

Casino Watch Focus reported  that several states were in a race to be the first to legalize online poker.  New Jersey was the first to pass a bill to legalize it, but then the Governor vetoed the bill.  California considered full online gambling, but as an online source reported, California decided to partner with  PlayTech to provide online gaming, but it will only allow people to play for free, not for actual money.  They are laying the foundation for a possible change in federal policy that has effectively made online gaming illegal. Washington D.C. joined the mix and passed a measure to allow online gambling back in April.  Now, a different online source, is now reporting that they plan to go live with their online poker bill in September, but there is a catch:

Washington, D.C. will begin allowing poker players to play with real cash online beginning in September.  There’s one catch.  They’ll have to be in Washington, D.C. to play.

The District of Columbia is in the midst of rolling out the first legalized online poker room in the US.  It will be overseen by the D.C. Lottery and is considered a precursor to other states such as California and Florida jumping into the fray.  Nevada’s Governor signed a bill into law allowing Web poker in his state but the law only kicks into effect when similar legislation is passed on the federal level.

Congress did not object to the District’s efforts during its 30-day review period of the law, though legality issues remain unclear especially in light of recent federal crackdowns. 

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UPDATE: Florida Senate Committee stops efforts to legalize local online poker rooms

Casino Watch Focus reported that  a bill had been introduced to allow online poker rooms at horse and dog tracks and other pari-mutuel locations.  The idea was to contract with three online poker companies to run the rooms and take a cut of each poker pot, know as a rake.  Now, an online source is reporting that the bill has been stopped in committee:

An attempt to regulate the burgeoning internet poker empire and start collecting state taxes from it died Tuesday when the Senate Criminal Justice Committee killed the bill with a 2-2 tie vote.

“This is really the ultimate convenience gambling,” said Frank Messersmith, lobbyist for the Florida Sheriff’s Association. “It provides anonynmity in your home with no peer pressure, no social interaction.” He called it “internet crack” that is particularly enticing to young males and will not stop the offshore gambling.

“This is a form of digital escape to the anti-social people and it just opens all types of doors that we think is too opportune for people to be caught up in gambling,” he said.

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Washington DC joins the race to be the first to legalize Online Poker

Casino Watch Focus reported that the New Jersey legislature was the first to pass a measure to legalize online poker.  Many States waited to see if the bill would be vetoed or be passed and face numerous legal hurdles.  That question was answered when New Jersey Gov. Christie vetoed the bill, leaving the legal questions and the race to be the first open.  Now, the Wall Street Journal is reporting that Washington DC has joined the discussion:

Washington, D.C., is poised to become the first place in the U.S. to allow online poker, challenging the federal government’s effective ban on the practice in its own backyard.

The city council approved a budget last year allowing the district’s lottery to operate a poker website accessible only inside district boundaries. City officials say the window for Congress to raise objections to the law was due to expire Thursday, allowing it to take effect.

Opening the district to online gambling could make the nation’s capital the  first test case for “intrastate” online poker, which allows only players within a state—or the district—to gamble on a site.

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Possible online gambling in Florida

Casino Watch Focus Reported that New Jersey’s Legislature passed regulations to legalize online gambling.  The move is contingent on the Governor approving the legislation, but it was a step that many believe will encourage other states into adopting similar regulations. An online source is reporting Florida might be one of those state to follow New Jersey’s lead:

While some Florida legislators talk of setting up Las Vegas-style casinos in a few years, others suggest there’s a way to immediately raise gambling revenues with a click of a mouse. They want to allow horse and dog tracks and jai-alai frontons to have portals to online poker rooms, with the state getting a cut of the revenues.

Under the proposal, up to three poker sites would contract with the state as hubs, with the websites of Florida’s 23 pari-mutuels’ card rooms each acting as a portal. To participate, players would click on a pari-mutuel site and go into a pool of other Florida players. The hubs would pull a small piece for each poker pot, called “the rake” in poker parlance, and pass it on to the card rooms. The state would get 10 percent of each card room’s rake, as it does now in brick-and-mortar poker rooms.

If the Florida legislature did push a proposal forward, there would be far reaching gambling expansion implications given the compact with the Seminole Tribe.  Any gambling legalized and allowed by the state, becomes legalized gambling for the Seminole Tribe.

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New Jersey to regulate online gambling; a legal battle is sure to ensue

Casino Watch Focus last reported that online gambling would remain illegal, as lame-duck session efforts by Senate Majority Leader Harry Ried’s gambling bill never materialized.  However, the focus has been on the federal level and several state legislatures have been debating legalizing state online gambling bills.  An online gambling website is reporting that New Jersey has become the first state to pass legislation attempting to regulate state online gambling:

In the race to become the first state to regulate online gambling, New Jersey has won. Lawmakers in both the Senate and the Assembly overwhelmingly passed legislation Monday that will bring poker, blackjack, and other popular casino games to the Internet.

In a rare show of solidarity, Democrats and Republicans came together to pass the online gambling bill. The Senate passed the bill 34-2, while it passed the Assembly by a 63-11 vote. Now, all that is left between Atlantic City casinos and their customers at home will be the signature of Governor Chris Christie.

There is a chance that the bill will be rejected, as Gov. Christie is a Republican and will most likely face political pressure to uphold the Republican lead efforts to keep online gambling illegal at the federal level.  However, he has been vocal about his support for expanded gambling and if the bill gets signed into law, they will almost definitely be facing an uphill battle:

The federal laws will create a stumbling block for New Jersey. While states have the right to create their own laws, New Jersey will have to be careful of how they regulate the Internet gaming industry. One key factor will be monitoring to ensure that only New Jersey residents gamble at the online sites.

This legislation will influence the way other state legislatures’ approach the issue.  Keep reading for updates on this situation, and for more information on the dangers of gambling, please visit CASINO WATCH, & CASINO WATCH FOUNDATION.