Caesars ‘paid off hackers’
Caesars payoff, Florida decision, Michigan sweepstakes move, Brazil amendments, Underdog Fantasy bites back +More
Good morning. On today’s agenda:
Report suggests Caesars paid off hackers.
It looks like sports betting is back on the menu in Florida.
Michigan moves against Golden Hearts.
iCasino is the surprise inclusion in Brazil’s amended legislation.
Underdog Fantasy hits back at its fantasy sports critics.
I know about you and I'm gonna tell.
Caesars payoff?
Caesars is reported to have paid off hackers as MGM struggles to recover from its own cyberattack.
Caesars Entertainment paid a hacking group tens of millions of dollars a matter of weeks before rival MGM suffered a major hack, which brought down many of its systems in Las Vegas and elsewhere, according to a report from Bloomberg.
The shares fell almost 3% on the day after Bloomberg said that a hacking group called Scattered Spider or UNC 3944 held Caesars to ransom.
Bloomberg said the group first breached Caesars systems via an outside IT vendor before gaining access to the company’s network.
It said members of the group are believed to be young adults residing in the US and the UK.
The hackers reportedly threatened a data release if the ransom wasn’t paid.
Recovery position: MGM Resorts is still attempting to recover from a ransomware hack earlier this week. After posting an 8-K with the SEC, the company confirmed to CNBC the ongoing disruption, which includes its websites, its online reservation system and slots across its casino estate being down. It said the results of the hack constituted a “material risk”.
A Russian ransomware group known as ALPHV or BlackCat is taking credit for the cyberattack.
In a brief press release on Tuesday, MGM said it had engaged with external cybersecurity experts and had informed law enforcement.
It added that the company had taken steps to protect its systems and data, including some shutdowns.
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Reputation Matters
After the White Paper: +More Media’s Reputation Matters takes place on October 26 at the Barbican Centre in London, where representatives from Entain, Playtech, Gamban, Regulus Partners and many others will convene to discuss the next steps for the sector following the publication earlier this year of the UK government’s Gambling Act Review.
Sponsored by UK law firm Wiggin, the event consists of an afternoon of panels, fireside chats and keynotes.
Tickets can be purchased for the event via the Reputation Matters 2023 Eventbrite page.
Florida re-run
Sports betting could return to Florida as soon as next week.
Rising from the grave: The DC Circuit Court of Appeals has denied West Flagler’s request for a rehearing en banc. The denial has the Seminole Tribe taking a victory lap on social media (posting Undertaker gifs). It could bring about the return of Florida sports betting as soon as next week after a brief run out for 37 days in late 2021.
“Next step: the issuance of the mandate in seven days,” attorney Daniel Wallach tweeted. “That is thought to be the green light for the relaunch of sports betting in Florida.”
“But West Flagler can file a motion to stay the issuance of the mandate to enable a SCOTUS review. It has until December 11 to file a SCOTUS petition.”
West Flagler could also take its case to the state courts in Florida.
The Seminole Tribe has not made an official statement on its plans as it is likely weighing the choice of launching before the case has legal finality or letting the process play out fully, which, if the SCOTUS accepts the case, could drag the process out for several more months.
SCOTUS is the best option: In August, Wallach wrote that the SCOTUS was West Flagler’s best avenue. “The West Flagler decision – which holds that IGRA can ‘address’ tribal-operated gaming activity outside of Indian lands – is in conflict with at least eight federal appeal court decisions declaring that IGRA has no application to off-reservation tribal gaming activities.
“These decisions – all rejecting IGRA’s application to off-reservation tribal gaming activities – are plainly in conflict with the DC Circuit’s assertion that IGRA compacts can ‘address’ or ‘discuss’ such activities.”
Alternative paths: Nelson Mullins’ attorneys also discussed the case in August, including laying out the state court options available. West Flagler or another interested party “could … challenge the Compact (and enabling statute) before the Florida state courts”.
The argument would be “the Compact’s ‘deeming’ clause is unconstitutional and so ask the court to declare the State is incorrect in deeming wagers placed off of tribal lands to have occurred on tribal lands based solely on server location”.
Nelson Mullins also noted someone could “argue that such wagers placed off of tribal lands violate the 2018 Florida constitutional amendment prohibiting the expansion of gaming in Florida without a statewide voter referendum approving it”.
Michigan’s sweepstakes move
Michigan’s Attorney General Dana Nessel announced on Tuesday that a company offering online casino games to Michigan residents illegally would stop operations in the state.
Hearts attack: Massachusetts-based Golden Hearts Games will no longer serve the state after Nessel secured an ‘Assurance of Discontinuance’ from the company. More on the action here. Here is the timeline of events:
Michigan passed a law in 2019 legalizing online casinos.
The first casinos went live in January 2021.
An investigation into Golden Hearts started in August 2021, according to the AG’s office.
Nessel’s office issued a cease-and-desist letter to Golden Hearts sometime in 2022.
Golden Hearts agreed to halt operations in Michigan at the start of the month after facing the prospect of a lawsuit from the AG for violating the 2019 law.
False flag: “Unlicensed gaming robs our schools and our government of essential funding and leaves consumers unprotected,” Nessel said in a press release. “When companies like Golden Hearts attempt to circumvent Michigan’s gaming laws, they create the false impression that their games are legal and safe for consumers.”
According to Golden Hearts’ terms and conditions, it currently serves the rest of the United States outside of Michigan, including the remaining 49 states and its territories. The platform offers online slots, blackjack and bingo.
Golden Hearts is part of a growing segment of “sweepstakes” casinos serving some or most of the United States, using sweepstakes laws at the state level as their basis for legality.
Different from most of those sweepstakes casinos, Golden Hearts also arguably operates as a “charitable” casino in some jurisdictions.
When users make an initial deposit (purchase of virtual coins), Golden Hearts allows the user to donate money to one of the charities available.
Virtual currency at the site can be converted to cash prizes, the same mechanic used by most sweepstakes casinos.
I get knocked down: No matter the justification for operating in Michigan, the state obviously was not buying the rationale. It’s unknown if Michigan is also investigating other similar operations that serve the state.
The largest sweepstakes casino in the US is Chumba Casino, which is operated by VGW, a company with offices in Malta, Canada and Australia.
US notebook
North Carolina: House Speaker Tim Moore confirmed that a plan to expand gambling doesn’t have the necessary votes to gain approval, according to Raleigh News and Observer. It now appears likely the state budget will now only pass the House if expanded gambling measures are excluded.
Governor Roy Cooper is now advocating the budget move ahead without the plan to grant licenses for four more casinos.
Brazil vote
Surprise inclusion of iCasino in amended legislation before Congress.
Passed: The Brazilian lower house has voted in favor of the amended sports-betting bill, which now includes iCasino as part of the legislation. The heavily amended government bill was introduced in the lower house by Adolfo Viana of Bahia State who has been charged with shepherding the legislation through Congress.
The bill as amended is the latest version of the Provisional Measure, which was published by the government in July.
The amended measure still includes a headline tax rate of 18% and provisions for a player tax. It also sets the licensing fee at BR30m or ~ $6m.
The government believes it can raise up to BR1.64bn (~$335m) for the 2024 budget from regulating online gambling.
The vote took place yesterday and the bill now moves on to the Senate. The bill partly replicates the Provisional Measure on sports betting published by the Brazilian government at the end of July and due to expire in November.
This version (PL 3626/2023) would maintain the main tax rate of 18% on GGR. This rises to ~30% when adding additional services and local taxes.
It would also maintain the income tax on players’ earnings (27.5%) and the cost of about USD$6m on five-year operating licenses.
Strict machine: In addition, the restrictions on advertising and marketing would be much stricter under the bill of the Chamber of Deputies than under the regulatory regime proposed by the government's interim measure.
It would be forbidden to offer any kind of bonus as an incentive to place a bet.
An important change is that licensed operators will now be able to offer bets on “virtual online gambling events” determined by random number generators, in addition to online and retail sports betting.
Now the bill is passed to the Senate, which will have 45 days to review, amend and vote on the bill.
LatAm notebook
Brazil: FIFA has moved to ban for life three players found guilty of match-fixing while eight further players have had their punishments extended. The Brazilian Football Confederation (CBF) had called for FIFA to extend the bans from national to international.
Ygor Catatau, Gabriel Tota and Matheus Gomes were found to have accepted money to fix games by a police investigation.
All eleven players were initially punished by the Brazilian Superior Court of Sports Justice (STJD).
Separately, a special investigatory commission (CPI) in Brazil's Chamber of Deputies has approved a motion to summon Lucas Paquetá, under suspicion for deliberately receiving yellow cards while playing for EPL side West Ham.
Argentina: The regulatory body of the city of Buenos Aires has signed an MoU with the International Betting Integrity Association to “contribute to the development” of a regulated sports betting market while discouraging “fraudulent practices and the manipulation of sports competitions”.
The deal established collaboration guidelines for the exchange of technical knowledge and information related to the integrity of sports and betting.
’Dog fight
The in-house counsel of Underdog Fantasy hits back at critics of fantasy sport operators’ legal thinking.
Spirited stuff: Underdog Fantasy’s fantasy offerings “comply with the letter and spirit of state and federal law everywhere that we offer them”, stated Nicholas Green, general counsel for the company.
Green said his paper is rooted in his experience of being part of the legal team at Orrick, Herrington & Sutcliffe, which developed fantasy legislation in more than two dozen states.
He said UF ”holds all licenses and governmental permissions necessary” to offer its contests “including licenses and permits for fantasy contests in every state that requires them”.
He pointed out that laws protecting fantasy sports have “never encompassed a single format of contests”.
“Legislatures drafted the definitions for fantasy sports broadly to allow myriad existing and future formats,” he added.
He said that fantasy sports had a carve-out from UiGEA and argued that “as a matter of law”, once a contest satisfies the definition of fantasy sports it “cannot be considered as sports betting”.
Biter bit: Much of the criticism of the positioning of Underdog Fantasy and others among today’s fantasy scene comes from FanDuel and DraftKings. Green suggested the two are now making “essentially the same arguments” in opposition to Underdog’s pick’em product as was made against DFS back in 2015.
“Just as those opponents were wrong then, the incumbents are wrong now,” he added.
Life through a lens: He said “regardless of whether a ‘contest’ looks like gambling”, the legal analysis works differently, ignoring the “optics” and focusing instead on the letter of the law. “Neither federal nor state law creates a black and white rule that fantasy sports are ‘peer-to-peer’ while sports betting is ‘against the house’, as opponents of Pick’em fantasy contests claim,” he argued.
“Had Congress or the states where we offer Pick’em fantasy contests intended such a result, they would have said so.”
He concluded by suggesting the idea that the “incumbents” such as FanDuel and DraftKings would have offered pick’em-style games if they were legal is “an excuse for being caught flat-footed by innovators like Underdog”.
“These are not risk-averse companies,” he said. “Without a competitive fantasy product, they have adopted convenient legal arguments that should not be immediately accepted as good-faith disagreements on the law.”
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European notebook
The Netherlands: A study undertaken on behalf of the gambling authority has found that the inability of some operators to monitor gambling behavior in real-time may put certain players at risk of suffering “major damage”.
The study found that some operators took up to 20 days to gather data and assign a corresponding risk score to newly registered players.
Further, in some cases it took more than a day before operators noticed that players had exceeded “hard” boundaries.
In some cases, operators were unable to immediately intervene at night or during weekends due to a lack of available staff.
Sweden: The National Association of Bookmakers has said its members approve of the ministry of finance’s proposal that AML fines should be pitched at the same level as fines for other gambling-related violations. Until now, fines for AML transgressions have been significantly lower than fines for other violations.
According to a court decision early last year, fines related to gambling companies must be based on GGR and not turnover.
Italy: The Communications Authority has been ordered to drop its €750,000 fine against Google’s Italian business, which was levied after AGCOM deemed the company violated provisions against promoting gambling-related content, according to SBC.
The decision followed a judgment made by the Regional Administrative Court of Lazio, which said that Google had not violated the rules of the Dignity Decree of 2018.
Australia notebook
The Australian government has tabled legislation to ban the use of credit cards for online gambling transactions. The Interactive Gambling Amendment Bill 2023 seeks to ban credit cards and other credit-related products, as well as the use of digital currencies.
Licensees could be fined up to A$234,750 for any breaches of the new law.
The new legislation will also grant the regulator, the Australian Communications and Media Authority (ACMA), powers to enforce the new and existing penalty provisions.
Calendar
Sep 19-21: SBC Summit Barcelona
Oct 9: GeoComply Challenger event
Oct 10-12: G2E Las Vegas
Oct 16: Gaming in Germany, Berlin
Oct 26: Reputation Matters, London
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