Editorial: The Implications of 'Jager-gate'

14 March 2003

News of Jaromir Jagr's Internet gambling problem is not exactly what the I-gaming industry needs at the moment.

For those who didn't catch the story, Jagr, a star winger for the Washington Capitals of the National Hockey League, ran up nearly $500,000 in debts betting on sports using CaribSports.com. Sports illustrated ran a story Tuesday exposing Jagr. (Incidentally, to give credit where credit is due, sports book guru Buzz Daly actually broke the story in April 2002, but it wasn't until this week that it resurfaced in the mainstream press.)

In short, it's another case of the industry shooting itself in the foot. Despite the fact that instances like "Jagr-gate" don't rationally support the argument for prohibition, this is a black eye to an industry that's already punch-drunk when it comes to bad press.

As for the bookmaker who exposed Jagr, leaking the story to the press may have been a successful means of coaxing the flashy winger to pay up, but the consequences will ultimately be damaging to a group of businesses that desperately need to stick together in the name of fighting a common enemy. (The bookmaker should be commended, however, for having the sense block Jagr from betting on NHL games.)

Now let's talk about the timing of this nasty little fiasco. The fact that this came out two days before the House Financial Services Committee was to discuss the bill and a week before prohibition was to be taken up in the Senate for the first time in three years smells awfully fishy to me.

The prohibition camp couldn't have planned such a blessing any better: A future Hall of Famer who makes his living a few miles from Capitol Hill is sucked into the downward spiral of compulsive gambling--and it never would have happened if Internet gambling was prohibited in the United States. The reactions in Camp Leach and Camp Oxley must have bordered on orgasmic.

Predictably, the prohibitionists took the ball and ran with it. Rep. Oxley opened up his statement on HR 21 with the story of the professional athlete drawn into the terrorist-ridden money laundering pit of home-wrecking havoc that is Internet gambling--a disturbing tale that led Oxley to astutely proclaim that, "No one is immune to financial ruin."


See where these escapades lead? Jager-gate was Oxley's MOAB bomb des jour, and predictably there was no one in sight to point out the massive void of logic in Oxley's opening anecdote--no one in sight to point out that Jagr, the highest paid player in the league, pulls in roughly $12 million a year and that $500,000 is well within his disposable income. To put it in perspective, Jagr's losses would equate to a person with a $50,000 annual salary losing a little over $2,000 on sports bets. Not good, but hardly "financial ruin."

But that doesn't matter; the impact was there and sound logic is not a criterion for making an emphatic statement in Washington.

No, Jagr-gate won't single-handedly close the door for I-gaming in the United States, but it does serve as a glaring example of why the industry is finding it hard to convince Washington to regulate.

The prohibition camp smells victory; the scent is so strong that Jon Kyl has come out of hiding to get back on the train. And if you've been keeping up with the news, you're aware that prohibition has more momentum in the House then ever before.

The industry's tactic of pitting the supporters of various special interests against each other has worked brilliantly for years, but steadily the prohibition camp is wising up and if the industry has an ace in the hole, it might be time play it.

History tells us that the enactment of the Leach bill is far from a sure thing. The anti-prohibition camp in the past has exploited the delicateness and intricacy of the political alliances necessary to get it done and will continue to do so.

Then there's this pending war, which tends to be considered more important than Internet gambling. It's possible that the Leach and Kyl bills could be brushed aside for pressing war-related matters--possible, but doubtful. And of course, no one in the industry wants war anyway.

There's also the remote chance of a Kyl-gate or a Leach-gate, but don't hold your breath on this one either.

Regardless, it will take something extraordinary to change the direction. Fortunately extraordinary occurrences in Washington aren't all that, well, extraordinary. Jaromir Jagr had Mario Lemiuex feeding him the puck for the better part of a decade. Perhaps I-gaming's Mario is out there somewhere too.

Mark Balestra

Mark Balestra is the Managing Director at BolaVerde Media Group. He previously worked at Clarion Gaming and the River City Group where he was the publisher of iGamingNews. He lives in St. Louis, Missouri.