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OTTAWA TARGETS GAMING
Native reserve hosts illegal online poker sites

John Ivison, National Post
Published: Wednesday, March 05, 2008

OTTAWA - The 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.