Gaming Report: Lottery King Santiago Martin Comes Under IT Scanner, 9 Arrested in Houston Poker Club Raids & More

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  • Namita Ghosh May 4, 2019
  • 4 Minutes Read

The gaming industry has been a hotbed of significant developments and occupying the headlines this week has been India’s ‘Lottery King’ Santiago Martin. Martin was recently detained at Kolkata airport and taken in for questioning by the Income Tax (IT) Department. IT officials also conducted searches at Martin’s 70 properties spread across various cities in India.

Another report in the limelight comes to us from Texas, where police raided two poker clubs in Houston and arrested nine people, investigating them on charges of organized criminal activities and a multi-million dollar money laundering plot.

The Australian-listed Silver Heritage Group has announced an improvement in revenues from its two operations in Nepal and is reportedly looking for strategic partners.

The U.S. Department of Justice`s revised opinion on the Wire Act continues to be crucial for the legal proceedings in New Hampshire. Gaming attorney Jeff Ifrah while representing the iDEA Growth Trade Association in its lawsuit against the DOJ has now raised a new argument suggesting that an interpretation of the Wire Act allows for state-authorized internet gaming, even if data crosses state lines.

In other updates, Zynga posted robust gaming revenue in the Q1 of 2019 but a record low poker gaming revenue.

A mobile-only sports betting bill was approved by the Tennessee lawmakers, and the same has now gone to the governor for approval.

Kenya has this week, imposed strict new restrictions on gambling advertising, saying that gambling is becoming a big problem for the country’s young and the poor.


IT Department Searches 70 Properties of ‘Lottery King’ Santiago Martin

The investigation arm of the Income Tax (IT) department has this week, begun to conduct searches on the 70 premises that belong to businessman Santiago Martin aka ‘Lottery King.’ On Tuesday, Martin was detained for questioning at the Kolkata airport when he was on his way to Chennai.

Santiago Martin
Santiago Martin

Image Courtesy: The Hindu

According to a Times of India report, senior IT officials got information that Martin has unaccounted money. Apart from the 10 premises belonging to Martin in Chennai, 22 of Martin’s properties in Coimbatore, 18 in Kolkata, five in Mumbai, three in Delhi and two each in Hyderabad, Guwahati, Ranchi, Ludhiana, Gangtok, and Siliguri are being searched.

An IT official is reported to have told TOI, “As of now, we have seized Rs 40 lakh cash from one of his premises. There are more seizures, but it would take some time to collate the information trickling from various places.”

According to a report by The New Indian Express, the IT officials have not yet been able to find evidence of tax evasion. “Martin had also contributed huge amounts of money for various disaster management efforts in the state last year. He also ranks among the top taxpayers in the country and belongs to the Super Tax Payer group.”

Martin primarily operates as a marketing agent for state governments run lotteries after entering agreements with them. A significant chunk of his business is focussed on Kerala, West Bengal and the North-eastern states where lotteries are still legal. The lottery businessman has been a cross sword with the law before and has been named in several charge sheets filed by the Central Bureau of Investigation (CBI) in lottery fraud cases involving the Kerala government.

In 2016, Martin’s firms that were official lottery distributors for the government of Sikkim were investigated after the government lottery faced a loss of a whopping ₹4,500 Crores. Following this, the Enforcement Directorate (ED) attached ₹122 Crores worth of assets belonging to Martin and his business associates.

Texas Police Raids 2 Poker Rooms to Investigate Organized Criminal Activity & Money Laundering Allegations

A two-year police investigation in Texas led to the arrest of nine people accused of a multi-million dollar laundering plot. Raiding two poker rooms – the Prime Social Club and Post Oak Poker Club located in west Houston on Wednesday, law enforcement officials arrested nine people. This includes the owner of the Prime Social Club Dean Maddox, his general manager Brent Pollack, AGM Steven Farshid and comptroller Mary Switzer, among others.

Texas Poker Clubs

Image Courtesy: Cardschat

Co-owners of Post Oak Poker Club Daniel Kebort, William Heuer, Alan Chodrow, Kevid Chodrow, and Sergio Cabrera were also arrested. The arrested were charged with money laundering and engaging in organized criminal activities.

Police later said that cops had posed as poker patrons at Prime Social after receiving several service calls for incidents of ‘theft and terroristic threats’. The Harris County Attorney’s office has filed a civil suit against the club alleging that these incidents were linked to possible laundering.

In a statement, District Attorney Kim Ogg later said, “Poker rooms are illegal in Texas. We are changing the paradigm regarding illegal gambling by moving up the criminal chain and pursuing felony money laundering and engaging in organized crime charges against owners and operators.”

The raid occurred minutes before a $580 NLHE Tournament carrying a $150,000 prize pool guarantee was to begin.

Officials seized computers and hard drives from the clubs. While none of the players present were taken into custody, the authorities later froze the bank accounts and assets of the two clubs. On reviewing the records, the district attorney’s office found that the operators had opened four bank accounts between October 2017 and January 31 and accrued $6 Million in them, although a large portion of the transactions was in cash.

Houston police chief Art Acevedo was quoted by local media as stating that the raids were just the beginning of a major crackdown on poker rooms in the area.

“We’re not going to tolerate it. We got two of the bigger ones today and this is just the beginning. We need to shut them down. If you want to have these kind of establishments, the legislature needs to authorize it. Otherwise, we’re going to do our jobs and shut them down.”

Clearly, law enforcement officers believe that the clubs are breaking the state’s gambling laws. However, the operators feel that since they run as private clubs, don’t collect rake and only charge membership fee, they are not flouting the state law.

One of the five owners of the Post Oak Poker Club arrested, Daniel Kebort said, “We’re just facilitating the play between the players.”


Silver Heritage Group Says Nepal Casino Revenues Have Improved, Looking For Strategic Partners

Gaming operator Silver Heritage Group Ltd has announced that it is searching for potential strategic partners or purchasers for its Nepal operations.

Silver Heritage

Image Courtesy: Asia Gaming Brief

The Australian-listed firm runs its flagship casino property, Tiger Palace Resort Bhairahawa that is located near the border and is close to Uttar Pradesh. The company also manages gaming operations in the Millionaire’ Club casino at the Shangri-La hotel in Kathmandu.

According to a GGR Asia report, in a regulatory filing to the Australian stock exchange on Tuesday, Silver Heritage said that business had improved at both of its Nepal operations and that the feedback for the VIP gaming rooms in Tiger Palace was overwhelmingly positive.

At the same time, Silver Heritage disclosed that it has hired boutique investment bank and advisory firm Union Gaming to help the firm search for potential investors. “The company has undertaken a number of initiatives to release capital out of its asset base, including the appointment of Union Gaming as its exclusive adviser in relation to locating potential strategic partners or purchasers of the company’s Nepal operations,” the company statement read.

Tiger Palace received its gaming license in December 2017 and had a grand opening in March 2018. In a business update last year, the firm had mentioned that it was looking into the possibility of selling some land, among other things.

While exact figures were not provided by Silver Heritage, the gross gaming revenue generated in March 2019 was in the range of $700,000 (~₹4.84 Crores), almost double of the revenue generated in the same period last year.

“The company continues to see stronger performance also at its operations in Kathmandu, with increasing contributions from Chinese players in addition to the usual Indian players.”


iDEA Argues New Wire Act Interpretation May Allow Interstate Online Poker, New Hampshire Lottery Vendor Says DOJ ‘Charade’ Must End

The revision by the U.S. Department of Justice (DOJ) of its earlier interpretation of the Wire Act 1961 has met with immense opposition. After the DOJ opined that the Wire Act applied to all forms of interstate gaming, the New Hampshire Lottery Commission (NHLC) filed a lawsuit against the DOJ opinion. The DOJ was reported to have sought a dismissal of the lawsuit.

DOJ Wire Act

Image Courtesy: Gambling Sites

The new DOJ opinion then found a new challenger in the form of iDEA Growth Trade Association, an online gambling trading group that in February 2019, filed a legal challenge in the New Hampshire Federal Court. Representing iDEA in the pending legal battle, veteran gaming attorney Jeff Ifrah has now raised a new argument, suggesting that an interpretation of the Wire Act allows for state-authorized internet gaming, even if data crosses state lines.

During the April 11 hearing before Judge Paul Barbadoro, the iDEA attorney put forth the possibility that the Wire Act does not apply to states and their vendors, such as NHLC’s vendor NeoPollard. Ifrah repeatedly reminded the court that state-licensed businesses like iDEA’s members and others are not legally equivalent to state vendors and that consequently they remained threatened by the DOJ’s new interpretation.

Former Solicitor-General Theodore Olson who was representing NeoPollard during the hearing supported iDEA’s intervention in the issue. He said, “Allowing iDEA to intervene would ensure that future gambits by the Department cannot manipulate the Article III jurisdiction over this crucial pre-enforcement challenge.”

Judge Barbadoro asked the parties to submit their briefs addressing whether the Wire Act exempted states and their vendors. The NHLC and DOJ filed their briefs last week, and the briefing is slated to conclude in early May.

The NHLC vendor NeoPollard has also submitted a strongly worded brief, summarising the DOJ’s revised opinion as “This charade must end.”


Zynga Posts Record Low Online Poker Revenue in Q1 of 2019

A social gaming powerhouse, Zynga is the largest play money poker operator in the world. Over the past year-and-half, Zynga’s top offering, Zynga Poker has been hit by a steady decline in profits, its troubles propounded by a massive bot invasion. Not that Zynga has not endeavored to get the situation under control. In February this year, the company entered a partnership with World Poker Tour (WPT) that resulted in Zynga offering WPT-themed tournaments on its poker platform.

Zynga Poker

Image Courtesy: Zynga

Coming out with its financial report for Q1 of 2019, the company reported that it saw a 23% rise in its total online gaming revenue that came to $200 Million – its best on record. The positive growth is primarily due to Merge Dragons, a game that was acquired by the company last year for $250 Million.

However, the results were mixed with lousy news from Zynga’s poker franchise that generated only 15% of the $200 Million online gaming revenue in Q1 of 2019. This is by far the lowest share of group revenue in the past fourteen quarters.

A 15% revenue translates to $30 Million which is a drop of 19.6% year-on-year if compared to the revenue for the same quarter last year. While this is the third year in a row that the revenue has been low in Q1 year-on-year, they are also the lowest for the company’s poker segment over the past two years.

Compared to Zynga Poker, Merge Dragons contributed a healthy $28 Million, i.e., 14% of the group revenue.


Tennessee Mobile-Only Sports Betting Bill Just a Step Away From Approval

Tennessee doesn’t have a single casino operational in its boundaries but that hasn’t stopped the U.S. state from seeking to bring in legalized sports betting. On April 30, the Tennessee Senate passed SB 16, a bill that will legally permit online sports betting in the state.


Image Courtesy: Knoxville News Sentinel

SB 16 was originally a House Bill that was amended later by the Senate. The House approved the amendments quickly and voted by a 58-to-37 margin. The bill now heads to Governor Bill Lee for approval.

Tennessee is the fourth U.S. state currently on the way to approve sports betting bill through its legislature. Montana, Iowa, and Indiana have passed sports betting bills this month. Incidentally, this is the first legislation in the U.S. that would facilitate setup for allowing mobile-only and online sports betting. Lee is reported to be in favor of the bill so once the bill reaches him, it could become law within 10 days of his approval.

As per the provisions of the bill, the state will create the Tennessee Gaming Commission and the regulator will charge operators $750,000 as annual license fee. The government will tax the revenue at 20%.


Kenya Clamps Down on Gambling Ads

Kenya introduced a whole new and majorly restrictive set of gambling regulations on Thursday. In addition to prohibiting advertising outdoors and on social media, the country has placed a complete ban on any gambling endorsement by celebrities and advertising of gambling from 6 AM to 10 PM.

Fred Matiangi
Fred Matiangi

Image Courtesy: Kenya Today

Announcing this in a statement, Kenya’s Interior Minister Fred Matiangi said that gambling has become a problem for the country’s young and poor. “Rogue behaviour in the betting and lotteries industry is endangering the lives of our young people. This clean up has just started and we will carry it through no matter what it takes, because young Kenyan lives are worth saving,” Matiangi averred.

The move comes close on the heels of the Kenya gaming industry figures that were released by the Interior Ministry. Over the past five years, the ministry said, the country’s gaming segment has increased from 2 Billion Shillings to 200 Billion Shillings ($1.98 Billion) and provided employment to around 5,000 people.

But Matiangi pointed out that betting had become a problem in Kenya and 54% of Kenyans involved in betting were low-income earners. He added, “76 percent of youth in Kenya are bettors – this is the highest figure in Africa, while half a million have been blacklisted by lenders because they borrowed to bet and failed to pay back.”

The new rules require pre-approval of any gambling advertising by the regulator, and one-third of any gambling ads flashed henceforth has to constitute a warning message. Investors and betting companies will have to ensure compliance with these new rules or risk closure.

Following Matiangi’s statement, Kenya’s Betting Control and Licensing Board (BCLB) also issued a notice with details of the new restrictions. It announced a drastic curtailment of licensees’ ability to market their offerings on traditional broadcast machinery, social media, and billboards.

Acting Director of BCLB, Liti Wambua said that the regulator “has a duty to protect its customers, members of the public, the young and vulnerable” from addiction “as well as some disorder.

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