May 7th, 2008
The Gazette newspaper in Montreal continues to unearth online gambling gems in its ongoing coverage of the Canadian Gaming Summit currently taking place in that city. The latest concerns an offer by the Mohawks to include the Ottawa or Quebec governments in its successful foray into Internet gambling back in 1999.
The newspaper reports that former Kahnawake Grand Chief Joe Norton told a standing-room only session at the conference on aboriginal gaming that a draft document between Quebec and Kahnawake was reluctantly rejected by the province just as the Mohawks were launching Mohawk Internet Technologies and an ultimately lucrative business.
“We offered both Canada and Quebec an opportunity to be a partner with us (in the venture) but they wouldn’t,” said Norton, who described MIT’s computer servers that host gambling sites as “the jewel” of the community’s gambling operations.
While both federal and provincial governments contend that only Quebec has jurisdiction over gambling within the province, MIT has operated unchallenged for almost a decade, The Gazette adds, claiming that pressure is growing in Canada to either stamp out online gambling or change legislation that would allow other players, such as horse-racing tracks, to compete for its profits.
At the conference, ex-chief Norton and lawyer Morden Lazarus, who has represented Kahnawake, urged that legislation “or a mechanism” be enacted to recognise gambling as a legitimate aboriginal activity under the Canadian constitution.
Norton assured delegates to the Canadian Gaming Summit that in the late 1990s, his band council was “very transparent with Canada and Quebec” about MIT, which is overseen by the Kahnawake Gaming Commission. The former chief revealed that numerous meetings were held, and that the project had been “tossed between Canada and Quebec” but ultimately left for the Quebec provincial authorities to decide.
In an interview with The Gazette, Norton said that former Native Affairs Minister Guy Chevrette told him that he was personally in favour of signing a draft document that addressed Kahnawake’s gambling ventures and “created a relationship between Quebec and Kahnawake,” but didn’t provide for revenue-sharing.
After extensive debate and delays, Norton claims that Chevrette said: “I’m sorry, I’ve been advised as a minister, that this (gambling within the Mohawk reserve) is illegal and I can’t sign it.”
The newspaper reports that although Norton declined to reveal MIT’s revenues, in 2006 MIT’s operator - Continent 8 Technologies PLC - issued a prospectus for potential investors in anticipation of going public. This apparently claimed that MIT posted an annual net profit of $17.4 million U.S. on revenue of $24.7 million U.S. that year.
March 9th, 2008
The Canadian federal government said yesterday it is considering new measures to stamp out Internet gaming sites based on a native reserve in Quebec, in a move that could spark conflict between Ottawa and Canada’s First Nations ahead of a second national “day of action” this summer.
The government deems the 400 or so poker and sports-betting sites operating from the Kahnawake reserve near Montreal to be illegal, but neither federal not provincial governments have attempted to enforce the law. Now Ottawa is reviewing that position.
“Following recent concerns surrounding Internet gambling in Canada, the Minister of Justice [Rob Nicholson] has asked his officials to examine whether the enforcement of the Criminal Code provisions could be assisted with other measures,” said Genevieve Breton, Mr. Nicholson’s director of communications.
The “other measures” are understood to be moves to restrict banks and credit card companies from conducting financial transactions with illegal Internet operators. Similar legislation was enacted in the United States two years ago.
The Mohawks of Kahnawake say these laws do not apply to them since they are a sovereign nation. They also cite section 35 of the Constitution, which was inserted to protect native culture. The Mohawks say that gaming has been central to their culture as a means of settling disputes through competition, not violence. Other native groups, such as the Alexander First Nation in Alberta, have said they plan to emulate Kahnawake.
Owners of horse-racing tracks, such as Great Canadian Gaming Corp., say they pay $1-billion in tax receipts every year to various levels of governments and incur huge expenses putting on the races. “These offshore operations just poach horse-racing and no one can do anything about it. They’re parasites on the butt of Canada,” said Ross McLeod, chief executive of Great Canadian Gaming, which owns four tracks in Canada.
The track owners have also suggested that governments force Internet service providers to block the sites from Canadian bandwidth. “I expect the government to do the right thing and protect our country’s interests,” Mr. McLeod said.
Chuck Barnett, who is a member of the board of supervisors for Mohawk Internet Technologies, a utility company that provides connectivity services for the site owners at Kahnawake, sees Ottawa as a foreign government that has no business regulating activity on Mohawk territory. “However, if I were a Canadian, I might instead be more interested in how explicit legislation could serve as the catalyst for a potential source of economic development, employment and revenue through taxation,” he said.
This view was echoed by Michael Lipton, a Toronto lawyer who specializes in gaming law. He said the horse-racing industry has had a monopoly on gambling in Canada for years, with Woodbine Entertainment currently holding a lock on government-sanctioned online horse betting.
“I guess if I had a monopoly, I wouldn’t want anyone to compete against me either,” Mr. Lipton said.
He said the United States has faced serious technical difficulties implementing restrictions on the payment system. “They are completely bogged down on how to block this system.”
He acknowledged the Mohawks have had some problems with fraud. The Kahnawake Gaming Commission, which regulates Web sites operating from the reserve, fined one popular Web site — Absolute Poker –$500,000 after players complained of irregular betting that was traced back to someone associated with the site. But he said most operations are transparent and credible.
Rather than attempting prohibition, Mr. Lipton said the government should bring the Kahnawake sites into the system and regulate them. He said this would protect the vulnerable, guard against money laundering, bring in tax revenue and provide a competitive edge in the gaming software market in terms of international trade.
“I think [Ottawa] should embrace this and recognize that people don’t want to be in a position where the government tells them what they can or can’t do in the peace of their own home,” he said.
