Kahnawake rakes in profit as Mohawk wins online-gambling bet
By Daniel Michaels, May 20th 2005With U.S. politicians itching to shut down the industry, long faces were the order of the day among 800 delegates at an online-gambling convention at the Palais des Congrès yesterday.
But Kahnawake grand chief Joseph Norton, standing in an exhibition hall full of computers demonstrating Internet-based betting games, was all smiles.
He's chairman of Mohawk Internet Technologies, a company that has grown quickly, thanks to the Internet-gambling boom, and is in full expansion-and-diversification mode.
The company, a sponsor of the three-day Global Interactive Gaming Summit and Expo, doesn't run betting operations.
Instead, MIT's computer servers host about 60 Internet gambling ventures from around the world.
"MIT created a heck of a lot of employment and has potential for more in the future," Norton, the company's chairman and the community's political leader, said in an interview.
MIT, owned by the band council of the South Shore reserve, has 100 workers and is responsible for another 200 spinoff jobs. Last year, revenue hit $4 million.
Another $500,000 came via licensing fees, Kahnawake being the only North American jurisdiction that issues online casino licenses.
Its rivals are offshore jurisdictions, many Caribbean.
With Kahnawake's history of confrontations with Quebec authorities, MIT had a rocky launch in 1999.
The provincial government warned it would not tolerate Internet casinos operating in Quebec, arguing only it can sanction gambling. Provincial police investigated MIT.
Nothing came of the threats.
So it has been business as usual at MIT, with 50 per cent of revenue now from such non-gambling services as Web hosting.
In fact, MIT is in expansion mode.
By August, it expects to begin work on doubling the size of its 12,000-square-foot facility.
"We have an aboriginal right to an economy and it doesn't have to be hunting, fishing, trapping, gathering," Norton said.
"We can't do that for a living any more where we live. We don't have any more natural resources. The only thing we can do is to get into mainstream economic development."
Part of the plan is to create a much bigger "technology park" focusing on electronic commerce. It could create hundreds more jobs, Norton said.
Online gambling - everything from poker to sports betting to lotteries - has exploded. From $650 million U.S. in 1998, industry revenue is expected to reach $6 billion U.S. this year, then double by 2006, said Christiansen Capital Advisors, a gaming-
industry market researcher.
Along with online pornography, it has been a cash cow.
Yet those attending this week's convention weren't celebrating.
"We're an industry under siege," said Sue Schneider, chief executive of River City Group, organizer of the event, whose attendance has fallen by 30 per cent compared with last year
Facing class-action suits by people who have lost money, some U.S. credit-card companies last year stopped letting customers use cards for Internet betting. The U.S. once accounted for up to 80 per cent of industry revenue. Credit-card restrictions have cut that in half, Schneider said, though U.S. players for now can still use other types of payments, including debit cards.
But last week, the U.S. House of Representatives approved legislation to outlaw the use of credit cards and other electronic payment methods to bet at offshore online casinos.
It's not law yet, but the bill's sponsors say it would curb wagering, particularly by chronic gamblers and youth. Other politicians link the business to the mob, terrorists and money laundering.
"Land-based" U.S. gambling giant MGM Mirage recently said it will close its online casino by month's end, citing the unclear "legal and political climate" surrounding online gambling.
"The industry's still growing, but it's not what it would have been without the credit-card squeeze," Schneider said, adding the industry is targeting new markets like Asia.
Frank Catania, a former director of New Jersey's gaming regulatory agency who helped Kahnawake set up a similar body, said no evidence has been presented of money-laundering, or terrorist or mob involvement.
"It's almost impossible to launder money through Internet gambling because you have the paper trail," he said. "If they take away credit cards, they're losing that, they're making it more susceptible to laundering. They're making it easier for the mob to make more money."
A tough U.S. law will slow growth temporarily, but players will find other ways to bet, he added. "People will use e-cash through foreign banks," he said. "It's not that difficult to do."
Online gambling is here to stay, he said, adding: "People get enjoyment out of gambling."
But Kahnawake grand chief Joseph Norton, standing in an exhibition hall full of computers demonstrating Internet-based betting games, was all smiles.
He's chairman of Mohawk Internet Technologies, a company that has grown quickly, thanks to the Internet-gambling boom, and is in full expansion-and-diversification mode.
The company, a sponsor of the three-day Global Interactive Gaming Summit and Expo, doesn't run betting operations.
Instead, MIT's computer servers host about 60 Internet gambling ventures from around the world.
"MIT created a heck of a lot of employment and has potential for more in the future," Norton, the company's chairman and the community's political leader, said in an interview.
MIT, owned by the band council of the South Shore reserve, has 100 workers and is responsible for another 200 spinoff jobs. Last year, revenue hit $4 million.
Another $500,000 came via licensing fees, Kahnawake being the only North American jurisdiction that issues online casino licenses.
Its rivals are offshore jurisdictions, many Caribbean.
With Kahnawake's history of confrontations with Quebec authorities, MIT had a rocky launch in 1999.
The provincial government warned it would not tolerate Internet casinos operating in Quebec, arguing only it can sanction gambling. Provincial police investigated MIT.
Nothing came of the threats.
So it has been business as usual at MIT, with 50 per cent of revenue now from such non-gambling services as Web hosting.
In fact, MIT is in expansion mode.
By August, it expects to begin work on doubling the size of its 12,000-square-foot facility.
"We have an aboriginal right to an economy and it doesn't have to be hunting, fishing, trapping, gathering," Norton said.
"We can't do that for a living any more where we live. We don't have any more natural resources. The only thing we can do is to get into mainstream economic development."
Part of the plan is to create a much bigger "technology park" focusing on electronic commerce. It could create hundreds more jobs, Norton said.
Online gambling - everything from poker to sports betting to lotteries - has exploded. From $650 million U.S. in 1998, industry revenue is expected to reach $6 billion U.S. this year, then double by 2006, said Christiansen Capital Advisors, a gaming-
industry market researcher.
Along with online pornography, it has been a cash cow.
Yet those attending this week's convention weren't celebrating.
"We're an industry under siege," said Sue Schneider, chief executive of River City Group, organizer of the event, whose attendance has fallen by 30 per cent compared with last year
Facing class-action suits by people who have lost money, some U.S. credit-card companies last year stopped letting customers use cards for Internet betting. The U.S. once accounted for up to 80 per cent of industry revenue. Credit-card restrictions have cut that in half, Schneider said, though U.S. players for now can still use other types of payments, including debit cards.
But last week, the U.S. House of Representatives approved legislation to outlaw the use of credit cards and other electronic payment methods to bet at offshore online casinos.
It's not law yet, but the bill's sponsors say it would curb wagering, particularly by chronic gamblers and youth. Other politicians link the business to the mob, terrorists and money laundering.
"Land-based" U.S. gambling giant MGM Mirage recently said it will close its online casino by month's end, citing the unclear "legal and political climate" surrounding online gambling.
"The industry's still growing, but it's not what it would have been without the credit-card squeeze," Schneider said, adding the industry is targeting new markets like Asia.
Frank Catania, a former director of New Jersey's gaming regulatory agency who helped Kahnawake set up a similar body, said no evidence has been presented of money-laundering, or terrorist or mob involvement.
"It's almost impossible to launder money through Internet gambling because you have the paper trail," he said. "If they take away credit cards, they're losing that, they're making it more susceptible to laundering. They're making it easier for the mob to make more money."
A tough U.S. law will slow growth temporarily, but players will find other ways to bet, he added. "People will use e-cash through foreign banks," he said. "It's not that difficult to do."
Online gambling is here to stay, he said, adding: "People get enjoyment out of gambling."
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Kahnawake rakes in profit as Mohawk wins online-gambling bet
