NHL's defence of Sundin's PokerStars promotion is on shaky ground, By David Baines - Vancouver Sun - 14th February 2009

For several months now, hockey star Mats Sundin has been promoting a free, strictly-for-fun gambling website called PokerStars.net.

A television commercial shows him playing hockey, enthusiastically shooting the puck and decking opponents, interspersed with shots of him playing poker, enthusiastically trumping his opponents with aces and scooping up the spoils.

"Same buzz, different game," the commercial states, suggesting that playing poker can be as much fun as playing hockey.

When the commercial was made, Sundin was not signed with any NHL team. But he has since joined the Vancouver Canucks, and despite his return to professional hockey, the commercial is still playing.

Is there anything wrong with this?

Offering online gambling services for real cash is illegal in Canada and the United States. The U.S. Justice Department, in particular, has been waging war against companies that offer such services to U.S. citizens.

But PokerStars.net doesn't use real cash. It's strictly for fun. So technically speaking, it's legal. This is the argument the National Hockey League uses to defend Sundin's promotion of PokerStars.net.

"The NHL has no objection with Mats having a relationship with and endorsing the free, educational website PokerStars.net," NHL deputy commissioner Bill Daly told me in an e-mail this week.

He added that "many of our Clubs have similar relationships." (The Toronto Maple Leafs, for one, have a sponsorship arrangement with PokerStars.net.)

On the other hand, he said, "We do not allow endorsement or sponsorship relationships with 'for money' gaming websites of any kind."

In my view, this is a specious argument. Industry experts agree the real purpose of these free "dot-net" gambling sites (nearly all the major online gambling companies have them) is to groom players for their "dot-com" cash gambling sites.

In this case, PokerStars.net serves as the introductory site for PokerStars.com, where the real business is transacted.

"Obviously, it makes a lot of sense," says Chris Costigan, founder and editor of Gambling911.com, a Miami-based firm that provides news about the online gambling industry. "Once people are on their dot-net site, the operators hope they can pull them into the real-cash poker site and get them to deposit real money."

For Costigan, there's nothing ambiguous about the link between the two: "These guys don't make money on free sites, they make money on the real cash sites. They wouldn't be in business if they just relied on their free websites."

Keep in mind that Costigan has nothing against online gambling, whether it's for free or for cash. In fact, he is in favour of legalizing it. All he is doing is stating the obvious, that the free sites are there to promote the cash sites.

So what we essentially have here is an NHL hockey player promoting for-cash Internet gambling, an activity that is illegal in both Canada and the United States, and the NHL turning a blind eye to it. (Where the Canucks stand is not clear. They did not return my calls on Thursday or Friday.)

Gambling is a regulated activity in most major countries for good reason. First, governments want to ensure the games are fair. Second, they want to ensure the people running the businesses are of good character, so that the companies aren't being used for illicit purposes such as laundering drug money. Third, they want to ensure that these businesses pay taxes, just like any other business.

In Canada, several land-based casino operators have sponsorship arrangements with NHL teams. The Canucks, for example, have a sponsorship arrangement with Richmond-based Great Canadian Gaming Corp. But these companies are fully licensed and regulated to do business in Canada.

At present, neither Canada nor the U.S. has licensed any private "for-cash" Internet gambling firms. That means anybody who offers such services in either country is acting illegally.

Still, PokerStars.com, like many other online gambling firms, continues to offer for-cash games to Canadian citizens. To date, the government has been loathe to intervene, mainly because many of these operators are located in the Kahnawake Reserve in Quebec, which native leaders consider to be sovereign soil. The government is not anxious to walk into another Oka-type confrontation.

All other operators are located in offshore tax and secrecy havens, such as Antigua and Costa Rica, which make prosecution problematic. (PokerStars -- both the dot-net and dot-com versions -- is located on the Isle of Man, and the majority owner is Isai Scheinberg of Israel.)

In the United States, however, it's been a different story. The U.S. Justice Department has been aggressively pursuing offshore operators that take bets from U.S. residents.

In July 2006, FBI agents arrested David Carruthers, chief executive officer of BetonSports Plc, a publicly traded British company that owns several Internet sportsbooks and casinos, at the Ft. Worth, Tex., airport. He was changing planes en route to Costa Rica, where BetonSports has operations. Ten other individuals and four companies were similarly indicted on 22 counts of racketeering, conspiracy and fraud.

In October 2006, the U.S. Congress, aiming to attack online gambling at its roots, passed legislation prohibiting U.S. financial institutions from processing credit card, cheque or electronic fund transfers for online betting.

In January 2007, John Lefebvre of Saltspring Island, founder of online money processor NETeller Inc., was arrested in Malibu by FBI agents and charged with conspiring to promote illegal gambling. His partner, Stephen Lawrence, was similarly charged.

Bodog, an Antigua-based online gambling empire formerly run by ex-Vancouver resident Calvin Ayre, has been under similar pressure. The U.S. Internal Revenue Service has seized $24 million of Bodog's funds from U.S. payment processors and is pressing for more. Concerned about possible indictment, Ayre does not dare step foot on U.S. soil.

In December, Anurag Dikshit, one of the founders of London-based Party Gaming PLC, entered into a plea bargain with the U.S. Justice Department for his participation in taking wagers from U.S. citizens. He agreed to pay a fine of $300 million, and still faces a possible jail sentence. His firm no longer takes bets from U.S. citizens.

Despite this strong response, PokerStars.com still takes bets from U.S. residents. In doing so, it is essentially thumbing its nose at U.S. authorities. (It also takes bets from Canadian residents, although authorities here have not publicly raised any concerns.)

This is the legal context in which our hockey star, Mats Sundin, is promoting this seemingly benign "educational" website. As in all forms of gambling -- whether based on land or in cyberspace, whether licensed or unlicensed -- there is also a moral context.

As Costigan notes, gambling for free naturally leads to gambling for cash, which can be a nasty business. It can take over people's lives. It can financially ruin people. It can wreck entire homes.

Why the NHL and apparently the Canucks allow Sundin, who is supposedly a role model for young people, to promote this potentially ruinous activity is beyond me. (Credit:
The Vancouver Sun)

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