26 July 2006

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Business Today

Lupanara, Lupercalia & LGA

For the Licensing and Gaming Authority it never rains but it pours and apart from having to deal with the challenges coming from abroad to Malta’s fledgling online gambling industry, the LGA has instituted unprecedented proceedings against a casino

The Lotteries and Gaming (LGA) website shows it has notified the Casino di Venezia that there are sufficient grounds to cancel its casino licence. The rules allow the operator 21 days to present its case and say why the licence should not be cancelled.
This is the first time in the brief history of the casino industry in Malta that such a revocation of license has occurred. The media reported that 14 officials were discharged and disowned of their gaming license as a result of incidents that occurred on 9 July, the night of the World Cup final.
The incident has shamed the Malta gaming community, which has never been hit by similar circumstances that risk tarnishing the country’s reputation. Even in the socialist days of the Lebanese-run casino, then owned by the State, when call girls were reputed to be on offer, no such revocation was ever resorted to. I sincerely hope this episode does not tar the image of the island.
An Italian MP, Michele Zuin was reported alleging that there were ulterior motives behind the revocation, citing that the wild celebration in honour of the Azzurri’s World Cup victory may have been the straw that broke the LGA’s back. This accusation was swiftly denied by LGA chief executive Mario Galea. The Casino di Venezia has been mired in controversy since it opened in 2001. Back then in the midst of allegations of mismanagement there were alleged links with the Sicilian mafia. It transpired that no mafia link was established. Still, the LGA must keep its eyes and ears open. Crime knows no borders and Malta’s proximity to Sicily could make it an adequate backwater playground for mafia turncoats. A lot of investment has been put into the nascent industry only to be blown away because of the ramifications of one rotten apple.
Only recently Dr Anna Mallia was taken to task by the LGA chairman for her contribution on MaltaToday, lamenting about the unregulated proliferation of gambling debts and alleged high proportion of casinos on the island. She also accused the LGA’s chairman that a partner in his law firm is highly involved in the casino business with obvious conflict of interest. To his defence the Chairman rebutted all claims as an absolute lie saying that it is Dr Axis who is the full time lawyer employed with LGA, and that the latter is not a partner of his private firm. Dr Axisa is precluded from giving gaming legal advice in private practice. He rebutted any claim that any partner of his firm may even remotely be cited as having a conflict of interest associated with the firm’s alleged deep association with gambling clients.
Back to Casino di Venezia, one’s curiosity is definitely tempted to ask what happened on the night of the 9 July. All proceedings on table games are filmed on a daily basis and casino staff need to undergo stiff due diligence testing to be eligible as fit and proper for the job before being licensed by the LGA.
So what was the devilish ritual that caused the extreme punishment of the unilateral revocation of license and termination of employment? There is very little coverage in the public domain that can attest to the police findings on the evening of debauchery and fun. Mr Galea the LGA CEO, has access to the video recordings by virtue of his authoritative role. When asked, Mr Galea would not give details about the incidents. In his words the “party celebrating the World Cup final culminated in a wild event where excessive amounts of alcohol were consumed, inebriation was evident.”
In other words, the Casino turned overnight into a quasi bordello where about 350 glasses were broken and “indecent” acts, in the presence of clients were reported. But how could well-disciplined staff escalate their bad behaviour by getting drunk and getting filmed gallivanting down the halls drenched in liquor and champagne?
Naturally, more will be revealed when the law firm representing the Casino will present its appeal against the revocation. It is not excluded that the sacked staff will also file complaints against unjust dismissal. As reported in MaltaToday, an Italian newspaper has compared the events to an inhibited “Lupanara.”
This was rejected by LGA as an exaggeration. But for the sake of readers’ interest, one may well explain the historical background to the “Lupanara” and the associated feast of the “Lupercalia” which is an ancient Roman feast loosely associated with a fertility cult. It later developed into a festival of orgy and sexual excess. Sexually based rites would take place in which female participants would wait to be struck by goatskin thongs carried by men stripped to their waist, wrapped themselves in the still-warm skins of the sacrificed goats. It was religiously believed that being struck by these whips was considered lucky for women who desired to shed their infertility.
But dark clouds have been amassing on the horizon for the gaming industry. The remote gambling industry that has been painstakingly built over the past two years by the LGA lost its first battle when challenged by the French Authorities. The French challenged Malta because it was allowing ZeTurf, a locally licensed company, to accept horseracing bets from French citizens.
The French court ruled that this was not permitted and ordered BellMed (a leading ISP which services the gaming community) and ZeTurf to desist from its operations and imposed a heavy penalty. LGA considered that in this case it must show solidarity with the two local companies by appealing against the enforcement in the Malta courts. It lost its appeal since it was not a party to proceedings before the first court. More troubles have battered the LGA’s ship when last December the Italian Authorities banned all Malta-licensed sites from offering bets to Italian citizens on the pretext that they are considered illegal once they do not possess an Italian license. It is not known whether the LGA has filed an appeal to protect Astrabet but for sure it is biding its time to employ diplomatic measures to solve the impasse. In the meantime, Malta-registered sites which amount to more than 53, forfeited the lucrative Italian market during and after the World Cup tournament.
The stakes in this game are high for our tiny island, which has been transforming its economic base into a service industry. At this stage one notes that a large majority of the licensed companies are based on the popular game of poker. Perhaps this resulted from the participation last year by LGA at a conference organised by Michael Casselli in Las Vegas. LGA had set up a pavilion in Las Vegas and must have attracted a number of poker companies that target the American market.
The LGA also succeeded to sign a collaboration deal with Kanawayke in Canada which is an Indian Reservation with licenses exceeding 300 poker sites mainly targeting the prohibited US market. But the dark clouds over the poker industry have hit again and only last week saw the unprecedented arrest in Dallas of David Carruthers CEO of Beton Sport. BOS is a $2 billion website licensed in Costa Rica with its major client base in the US. This incarceration has prompted some swift changes in the online gambling industry’s annual programme of events.
Bodog Entertainment Group, an operator of online gaming sites, cancelled an internet gaming conference set to start in Las Vegas next month as industry CEO’s feared they could be arrested.
The European Interactive Gaming Conference in Barcelona in October which is regularly patronised by LGA may have to redraft their programmes in the light of the US embargo.
World Online Gambling Law Report moved last week to set up an emergency meeting on online gambling and the US. It will discuss the 22 charges against Scotsman Carruthers and his colleagues and perhaps more importantly for directors of other online gambling companies. The outcome of this meeting will be of paramount importance to directors of Malta-based websites who target American players.
For LGA and its erstwhile staff it never rains but it pours and we hope that it will receive the maximum cooperation by the ministry of foreign affairs to bail the industry out of its current plight.

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