Party Poker Blog

From today's New York Times:

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Gambling Dispute With a Tiny Country Puts U.S. in a Bind

With long blond hair reaching his shoulders and dozens of cloth bracelets peeking out from under his sleeves, Mark E. Mendel hardly conjures up the image of a typical lawyer.

But then there is nothing run-of-the-mill about the case that Mr. Mendel, a Texan who was born and raised in Southern California, has been waging against his own government before the World Trade Organization, the body in Geneva that sets the ground rules for global trade. It is a clash that at once challenges Washington’s effort to prohibit online gambling while simultaneously testing the ability of the W.T.O. to enforce its own standards.

The dispute stretches back to 2003, when Mr. Mendel first persuaded officials in Antigua and Barbuda, a tiny nation in the Caribbean with a population of around 70,000, to instigate a trade complaint against the United States, claiming its ban against Americans gambling over the Internet violated Antigua and Barbuda’s rights as a member of the W.T.O.

Antigua is best known to Americans for its pristine beaches and tourist attractions like historic English Harbor. But the dozens of online casinos based there are vital to the island’s economy, serving as its second-largest employer.

More than a few people in Washington initially dismissed as absurd the idea that the trade organization could claim jurisdiction over something as basic as a country’s own policies toward gambling. Various states and the federal government, after all, have been deeply engaged for decades in where and when to allow the operation of casinos, Indian gambling halls, racetracks, lotteries and the like.

But a W.T.O. panel ruled against the United States in 2004, and its appellate body upheld that decision one year later. In March, the organization upheld that ruling for a second time and declared Washington out of compliance with its rules.

That has placed the United States in a quandary, said John H. Jackson, a professor at Georgetown University Law Center who specializes in international trade law.

Complying with the W.T.O. ruling, Professor Jackson said, would require Congress and the Bush administration either to reverse course and permit Americans to place bets online legally with offshore casinos or, equally unlikely, impose an across-the-board ban on all forms of Internet gambling — including the online purchase of lottery tickets, participation in Web-based pro sports fantasy leagues and off-track wagering on horse racing.

But not complying with the decision presents big problems of its own for Washington. That’s because Mr. Mendel, who is claiming $3.4 billion in damages on behalf of Antigua, has asked the trade organization to grant a rare form of compensation if the American government refuses to accept the ruling: permission for Antiguans to violate intellectual property laws by allowing them to distribute copies of American music, movie and software products, among others.

For the W.T.O. itself, the decision is equally fraught with peril. It cannot back down because that would undermine its credibility with the rest of the world. But if it actually carries out the penalties, it risks a political backlash in the United States, the most powerful force for free-flowing global trade and the W.T.O.’s biggest backer.

“Think of this from the W.T.O.’s point of view,” said Charles R. Nesson, a professor at Harvard Law School. “They’re this fledgling organization dominated by a huge monster in the United States. People there must be scared out of their wits at the prospects of enforcing a ruling that would instantly galvanize public opinion in the United States against the W.T.O.”

In April 2005, the trade body gave the United States one year to comply with its ruling, but that deadline passed with little more than a statement from Washington that it had reviewed its laws and decided it has been in compliance all along. The case is now before an arbitration body charged with assessing damages.

“The stakes here are enormous,” Professor Nesson said.

If anything, the Bush administration raised those stakes in May when it announced it was removing gambling services from existing trade agreements. John K. Veroneau, a deputy trade representative, said that the federal government was only “clarifying our view” that it had never meant to include online gambling in any free trade agreements.

“It is truly untenable to think that we would knowingly bargain away something that has been illegal for decade upon decade in this country,” Mr. Veroneau said, adding that Washington is not defying the W.T.O. but simply pursuing its case through all legal channels.

The W.T.O. allowed that Washington probably had not intended to include online gambling when it agreed to the inclusion of “recreational services” and other similar language in agreements reached during the early 1990s, when the W.T.O. was first established. But the organization says it has no choice but to enforce the plain language of the pacts.

“Geneva is certainly buzzing about this case,” said Lode Van Den Hende, an international trade lawyer with the firm of Herbert Smith in Brussels.

One reason for all the interest is the David-and-Goliath aspect of the case. Another is that the dispute, as the trade organization’s first to deal with the Internet, is likely to serve as a major precedent in establishing rules of commerce in an online age and dealing with such prickly issues as China’s attempts to block online content it finds offensive.

Yet another reason the fraternity of trade lawyers and experts are so closely watching the case, Mr. Van Den Hende said, is “that the U.S. is not behaving as one would expect.”

“One day they’re out there saying how scandalous it is that China doesn’t respect W.T.O. decisions,” he said. “But then the next day there’s a dispute that doesn’t go their way and their attitude is: The decision is completely wrong, these judges don’t know what they’re doing, why should we comply?”

It’s not clear that Mr. Mendel knew just how much of a hornet’s nest he would stir up with this case. But he certainly seems to be enjoying the attention.

In 2002, Mr. Mendel — who does not gamble and knew little about international trade — was little more than a corporate lawyer in El Paso specializing in securities law. His law partner, though, was friends with Jay Cohen, an operator of an offshore sports betting operation in Antigua who had been sentenced to 21 months in prison for taking bets over the Internet from Americans. Mr. Cohen asked his friend to see if there was anything his firm could do.

“I had not done any trade law whatsoever, but for whatever reason this issue really struck my curiosity,” Mr. Mendel said. Beyond the intellectual challenge, the case also offered the prospect of a set of deep-pocketed clients — the online casinos doing business out of Antigua.

So Mr. Mendel, 51, who recently moved his family and his practice to Ireland to be closer to Geneva, jumped in enthusiastically.

Washington responded to Antigua’s complaint by claiming it was within its rights to seek to block online gambling on moral grounds, just as any Muslim country would be within its rights under international trade agreements to ban the import of alcoholic beverages. The W.T.O. rejected this argument as inconsistent with American policy.

The general rule in the world of international trade agreements is that a country must treat foreign goods and services in the same manner as it treats domestic ones. The United States, the trade body found, permits online wagering through sites like Youbet.com, a publicly traded company that allows visitors to place bets at horse racing tracks around the globe.

And, of course, some form of casino gambling is legal in more than 30 states, and even local governments advertise gambling services when states encourage people to buy a lottery ticket.

“This isn’t a case of forcing gambling on a population that has decided they don’t like it,” Mr. Mendel said. “This is the world’s biggest consumer and exporter of gambling services trying to prohibit a small country from developing its economy by offering these same services. And we find that deeply hypocritical.”

Indeed, despite all the obstacles Washington has imposed, including making it a crime for banks and credit card companies to handle Internet gambling payments, millions of Americans still manage to play poker and place sports bets online. Many more would certainly do so if the obstacles were removed.

The United States has exhausted its appeals, so Mr. Mendel and lawyers for the United States are arguing over the extent of damages that Antigua has suffered.

Antigua presents a particularly thorny challenge. To balance the scales, a country that wins a W.T.O. case typically demands trade penalties equal to its losses as compensation. But Antigua is so small that any ordinary trade sanctions would barely register in the United States.

“Compensation is not a check in the mail,” Professor Jackson of Georgetown said. “It’s the right to raise trade barriers against the country in violation.” Whatever trade barriers Antigua imposed, he said, “would feel like a pin prick.”

To get around that limitation, Antigua is seeking the right under international law to violate American intellectual property laws.

Only once has the trade organization done so, with Ecuador, though Ecuador never actually took advantage of that power. It was used instead as a cudgel to force Ecuador’s opponents to back down.

“This is all new territory,” said Simon Lester, who worked in the appeals unit of the W.T.O. before helping to found WorldTradeLaw.net, which provides legal analysis of trade law disputes.

Mr. Lester expects Hollywood, the music industry and software makers like Microsoft to press Washington to work things out with Antigua.

“But the question,” he said, “is whether that would be enough to make Congress do something.”

A buddy just sent me this so I had to share.

Roommate revenge.

Finally.

Been waiting for this damn day for far too long.

But today I can officially announce that UFCjunkie.com is an official content partner with Yahoo Sports.

I'll fill out the backstory when I'm freed up later tonight.

Interesting - a colleague here at work just passed along this story from yesterday's AdAge about the UFC.

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UFC Grapples for Respect
Major Marketers Show Interest as League Cleans Up Its Act, Grows Audience

LOS ANGELES -- No wonder the competition is afraid to step into the octagon. Ultimate Fighting is beating up on boxing, drawing blood from professional wrestling and even gaining on Nascar. And the sport's not even legal in all 50 states.

Big Blows: Though the days of eye gouging are gone, UFC is still brutal. Close competitions give it a leg up on boxing. That it's real gives it an edge on wrestling.

But Marc Ratner is out to change that as well.

Last year, after serving as the executive director of the Nevada State Athletic Commission for 13 years, Mr. Ratner did something akin to Wyatt Earp joining up with Jesse James: He signed on at Ultimate Fighting Championship as its government-affairs chief.

His mission: Legalize Ultimate Fighting in all 50 states.

After years of being tarred by politicians ("human cockfighting," Sen. John McCain once called it) and roundly ignored by the nation's sports pages, mixed martial arts is coming to a state near you -- if it hasn't already arrived. Thirty state athletic commissions sanction the sport. And in its push for 50, UFC has not only changed its own rules substantially, it's also changing the rules on your TV set, for rival sports and for the wider culture.

Mr. Ratner has steered a mixed-martial-arts bill through the Illinois legislature, and it awaits the governor's signature. In Michigan, he's gotten one through the House, and the Senate is likely to approve it shortly. Mr. Ratner will spend the coming weeks hopscotching through New York, South Carolina, Virginia and Tennessee.

"I may never have a fight in Iowa or Idaho," said UFC President Dana White, "but I want it legal there, too."

This isn't just about bringing UFC fights to Madison Square Garden -- though that's part of it. It's a strategic, rear-guard action to protect the sport from its barbaric past.

Spike TV deal

UFC's live-events business is small potatoes compared with its TV windfall. The "gate" from a top Las Vegas bout can amount to $4 million, often surpassing the take of a boxing championship. But a single UFC pay-per-view event can yield $20 million in revenue. A deal with Spike TV adds even more to the bottom line.

UFC's founders, Rorie Davie and Rorion Gracie, ran from regulation, operating in a shadowy world of no-holds-barred, bloody fights torn from the pages of a Chuck Palahniuk novel, and nearly bankrupted the business. Senators such as Mr. McCain wanted it banned. Even Mr. Ratner said he was "100% against it."

Under congressional and financial pressure, Mr. White eliminated the most gruesome moves -- eye gouging, groin attacks, head-butting and "fishhooking" (don't ask) -- in order to ink the deal that would catapult the televised fights out of smoky bars and into American living rooms. In 2005, Spike TV began airing "The Ultimate Fighter," a reality series in which 16 aspirant roughnecks compete for a UFC contract. It has proven catnip for young male audiences. So, too, have regularly televised matches.

'New Nascar'

"Those people looking to find the new Nascar have found it," said Brian Diamond, senior VP-sports and specials for Spike TV.

Last April, UFC's 70th televised fight, "Nations Collide," drew more men 18 to 34 than the Nascar Subway Fresh 500 on Fox, the first round of NBA playoffs on ESPN, or Major League Baseball rivalries on Fox. (UFC and Spike are in negotiations to renew and expand their deal; neither party would comment on the talks directly, though both sides confirm a deal is all but sewn up.)

A single UFC pay-per-view event can yield $20 million in revenue.

The appeal of the UFC's hard-bitten stars is spilling into popular culture. Ex-champ Chuck Liddell has appeared on HBO's "Entourage," while heavyweight champion Randy Couture stars in David Mamet's latest film, "Redbelt," set in the world of mixed martial arts. Mr. White said he's even pitching Spike a lifestyle show about the various personalities in UFC, because, as he puts it, "people love that type of shit."

Meanwhile, other testosterone-rich fare is struggling to keep up. While correlation isn't causality, the stats are nonetheless troubling for UFC competitors such as World Wrestling Entertainment. WWE's "Raw" on USA Network is down 10% among men 18 to 49 compared with last year. By comparison, UFC's "The Ultimate Fighter" saw a 6% increase among men 18 to 49. Previously out-of-reach sponsors such as Scion, Burger King and Coors Brewing have leapt into "The Ultimate Fighter," while Glaceau's Vitaminwater and Budweiser are sponsoring televised fights.

In addition, "UFC has hurt the WWE in pay per view," said Dave Meltzer, editor of the San Jose, Calif.-based Wrestling Observer. Last year, for example, the UFC took in some $223 million from pay-per-view events; WWE, $130 million, Mr. Meltzer said. To prop up its sagging domestic pay per view, WWE has been looking overseas, where it drew a robust $65 million last year.

If WWE is a bit punch-drunk, then professional boxing is definitely on the ropes. But ironically, Mr. White said, "The UFC hasn't hurt boxing; it's helped it."

'Sponsor's paradise'

Don King, reached by phone, said he hadn't slept in three days, busy nailing down a massive fight card: Felix "Tito" Trinidad vs. Roy Jones Jr., two of the modern era's greatest middleweight fighters, both coaxed out of retirement for one last dream bout. He agreed that UFC has saved the sport. "I have nothing but love for Ultimate Fighting," he said.

Mr. King said it's true boxing's become a "dumping ground for sponsors." Outlets such as HBO and Showtime forced fans to watch "cavalier, lackadaisical" fighters who'd take on only lesser opponents because they feared losing their valuable TV contracts, he said.

UFC, Mr. King said, has prodded boxing to offer better, more evenly matched bouts. Showtime in 2006 stopped offering contracts to fighters, instead returning to longtime promoters such as Mr. King to program its nights. HBO is getting away from the practice too.

As a result, Mr. King is busier than ever. Asked which sponsors he's seeking for the Trindad-Jones matchup, Mr. King erupted: "I want the oil companies. Proctor & Gamble. Stouffer's pizzas. I want the Kmarts and the Wal-Marts. This is a sponsor's paradise!"

Damnit, I'm on blog tilt. Announcement still pending. Story of my life.

Moving along, my favorite Russian immigrant, Karol, from Alarming News passed along some nifty poker info.

The basic concept is that Charles Nesson, a genius Harvard law prof, wants to teach poker to children to teach them them a variety of life skills.

Here's the Media Advisory.

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Harvard Law Profs Backing Poker As Educational Tool In Schools, Universities

Singapore -- Harvard Law School professor Charles Nesson will announce an international effort to organize "poker strategic thinking societies" at universities and secondary schools around the world that will use poker as an educational tool to teach everything from basic life skills to war games at military colleges.

Nesson will announce the formation of the Global Poker Strategic Thinking Society (GPSTS) in Singapore on August 19 during an international conference called State of Play. Chapters of the GPSTS will be organized at prominent universities on several continents, starting at Harvard.

GPSTS will offer poker strategic thinking workshops to secondary schools and community centers, particularly in underprivileged neighborhoods; sponsor team poker matches between law, business and other graduate-level programs; and conduct seminars and conferences that explore poker as a means to teach strategic thinking and related public policy issues.

"Poker is one of the best metaphors for teaching life skills across a variety of disciplines," said Nesson, a founder of Harvard's Berkman Center on Internet Law.

Part of the goal of the poker societies is to organize an NCAA-style championship in the novel game of team poker for American universities.

Press and media representatives are invited to attend both the lecture and workshop in Singapore at the State of Play conference. Professor Nesson and colleagues will be available for interviews.

About GPSTS

Founded by Harvard Law Professor Charles Nesson, the Global Poker Strategic Thinking Society views pokers as a game of skill that can be used as a teaching tool at all levels of academia and in secondary education. The concept is to use poker to teach basic life skills, strategic thinking, geopolitical analysis, risk assessment, and money management. The goal is to create an open online curriculum centered on poker that will draw the brightest minds together, both within and outside of the conventional university setting, to promote open education and Internet democracy.

For more information, please write to globalpoker@gmail.com or visit www.gpsts.com , up and live August 19, 2007.

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Feel free to check out the brand spanking new web site at Global Poker Strategic Thinking Society.

"You gotta bring ass to get ass."
Ed O'Neil

I know I've come on here and hinted at an announcement over the last, um, many months. In fact, it's been so long (been working on this deal since April) that even I don't think it's going to finally happen.

But hot damn, it looks like tomorrow is the day.

For now, allow me to post this great interview with Ed O'Neil about the great sport of MMA and the UFC.

Ed O'Neil.
Who the fuck knew?

He was arguably my favorite character in John From Cincinnati.

Stick with it - it's good the whole way through if you're a MMA fan. If not, my humble apologies for the dearth of tasty poker goodness.