Firms score big payoff with online gambling

Posted: January 15, 2014

Internet gambling has generated a $50.3 million payoff for lawyers, lobbyists, and other professionals since mid-2009, according to disclosures posted Friday by the New Jersey Division of Gaming Enforcement.

The disclosures came just days before New Jersey publishes its first revenue report for online gambling, which started in late November and has been closely watched by gambling interests because New Jersey is the first major U.S. market to legalize online poker and casino gambling.

The spending reports are supposed to cover professional services including but not limited to "legal, consulting, lobbying, auditing, accounting, recruitment, and referral services provided with regard to Internet gaming," the regulations say.

It's an unusual requirement, one lawyer said.

"Many states have statutes requiring public disclosure of revenues by lobbyists, including New Jersey, but this is the first time I have ever heard of a gaming regulatory agency requiring disclosure of payments to lawyers," said Nicholas Casiello Jr., chair of the law firm Fox Rothschild's gaming group in Atlantic City.

Fox Rothschild L.L.P., which is headquartered in Philadelphia, came in fourth for legal services, collecting $764,988 from 13 clients from July 1, 2009, through December, the reports showed. The reports are required quarterly moving forward.

The leader in legal services was Brownstein Hyatt Farber Schreck, L.L.P., which was paid $1.89 million for services described as strictly legal work. The Denver firm, which has an office in Absecon, N.J., collected an additional $2.83 million from a mix of legal, lobbying, and consulting services - a total of $4.72 million.

"We are a national firm and handle both national and local issues. I'd estimate that roughly 25 percent came from our Atlantic City office," Paul O'Gara, shareholder in the New Jersey office of Brownstein Hyatt, said in an e-mail.

O'Gara's comment points to the squishy nature of the disclosures required of Internet gambling licensees and applicants.

Some of the reports include expenses related to Interent gambling in other states, and some include lump payments for lobbying, not just lobbying related to Internet gambling.

Jersey-centric lobbying firms - led by Public Strategies Impact, which received $37,500 quarterly from Caesars Entertainment Operating Co. - collected a total of $3 million since July 2009.

Certain filers, such as Amaya Gaming Group and Ultimate Gaming, seem to have reported everything, down to $19,830 for a mathematician to help with online game development.

The Borgata, by contrast, reported only its state lobbying payments of $378,000 to Capital Public Affairs from July 2009 through December 2012 and $108,000 last year to Trenton-based Cammarano & Layton Partners L.L.C.

Borgata estimated that no more than 5 percent of those amounts were spent on Internet gambling issues. The casino reported no legal or other expenses related to its online gambling partnership with Bwin.Party.

Asked about the absence of fuller disclosure by Borgata, Lisa Spengler, spokeswoman for the division of gaming enforcement, said in an e-mail: "The disclosures are posted as reported. Any questions should be directed to the companies."

Borgata had no comment.

For its part, Bwin.Party, an international online gambling company based in Gibraltar, specified that it paid Brownstein Hyatt $940,922 in 2012 and 2013 for help complying with gaming regulations in New Jersey.

Bwin.Party, which announced a sponsorship deal last week with the New Jersey Devils and the 76ers, estimated certain other marketing expenses, including payments of $100,000 to $300,000 a year to Michael Sexton, a professional poker player and "brand ambassador" for Bwin.Party.

Compliance with the requirement was patchy. Only about 40 percent of the firms required to file an "Internet Gaming Disclosure Statement" did so, according to an Inquirer analysis of companies listed on the Division of Gaming Enforcement website.

"Each of the state's 11 casinos has filed and all seven of the state's licensed Internet platform providers have filed the division's disclosure form. The division intends to follow up with licensed vendors that have not yet submitted a response," Spengler said.


INSIDE

Graphic breaks down spending on Internet gambling. A4.


hbrubaker@phillynews.com

215-854-4651

@InqBrubaker

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