It Was a Year that Was

In a haywire financial year that saw the industry smartly repackage "recession-proof" as "recession-resilient," its brightest and largest quarter on record -- the second -- was followed by a 3.6 percent decline in total gross gambling yield in the third, according to H2 Gambling Capital. Some investors got cold feet -- some market caps, in turn, took beatings void of mercy. Mark Blandford, by contrast, showed no signs of frost-nipped toes. In a bullish year, he put £1.55 million into Mfuse, made a run for Parlay Entertainment Inc. and bolstered Charles H. Gillespie's World Sports Network -- a Shanghai-based sports information portal -- with an undisclosed investment.

As ever, the dramatic tension between regulatory progress and folly was at play. The French government, for many years hostile toward foreign Internet gambling operators, promised (but, unsurprisingly, failed to deliver) draft legislation that would open France's borders to those very operators. Measurable progress -- for the French police arrested zero executives this year. California, meanwhile, made some intriguing it's-a-study-bill-no-it's-a-regulatory-bill-just-kidding-it's-a-study-bill noise, and, excitingly, the United States Internet gambling lobby threw enough weight around to have anti-Internet-gambling language temporarily removed from the Republican Party platform. But no year in the industry would be complete without a series of high-profile, juridically suspect arrests and settlements. Employees of, or associated with, Sportingbet and Victor Chandler International donned the bracelets in Istanbul, Turkey, and Kuala Lumpur, Malaysia, respectively, while ESI Entertainment Systems Inc. -- in the footsteps of Neteller -- settled with the United States Department of Justice for $9.1 million.

In the faux obituary column, one of the industry's most controversial magnates, Calvin Ayre, bade his Bodog empire adieu . . . via his blog. As brashly intriguing as I still consider Mr. Ayre to be -- his accomplishments, unadulterated self-promotional means withstanding, are to be respected -- the tenor of his exit embodied the very antithesis of the Bodog esprit à la Cole Turner. Nearly three years ago the subject of a Forbes magazine cover story titled "Catch Me If You Can," I don't expect Mr. Ayre -- probably encumbered now by sound legal advice -- will languish long in the comparatively dull afterglow of stardom.

Perhaps the year's most memorable bit of marketing -- sans Bodog -- was undertaken by Probability, and for a change, it didn't involve mainstays like direct mail, affiliates or -- snooze -- bikini-clad models. Like the imagination-deprived monsters that continue to package solitaire with PCs, Probability -- in relatively imaginative fashion -- had installed a link to its casino on two million handsets produced by Three, the United Kingdom mobile network operator. My decrepit mobile -- a Samsung MM-A900 I bought in 2006 because Jack Bauer had one -- came equipped with a Java poker demo (I'd rather not name the company behind said demo) that's never worked. I expect Probability's venture will fare better and, hopefully, usher out the era of lame but enduring timesinks like Snake and Tetris.

While a future, requisitely shady I-gaming historian might disagree with me, the climax of 2008, I think, came appropriately in its waning moments. Anurag Dikshit, the billionaire co-founder of PartyGaming whose mug made the pages of most major papers last month, cut a $300 million deal with the United States Justice Department -- presumably to avoid any future prosecution in America for his involvement with PartyGaming when it operated online poker here.

Mr. Dikshit's deal, in fashion even science might consider elegant, exposed a number of truths simultaneously. Most obviously, the deal illuminated -- for the umpteenth time -- the Justice Department's respectably zealous but clearly misguided prosecutorial end game.

Bypassing the thorny matter of whether the federal Wire Wager Act of 1961 -- which Mr. Dikshit copped to violating -- actually applies to online poker, Mr. Dikshit's deal, like those Google Inc., Yahoo Inc. and others inked before his, allows commerce (or, in Mr. Dikshit's case, life) to resume uninterrupted, but not without cost. Unwittingly, perhaps, the Internet gambling industry, by settling with the Justice Department over violations ambiguous, continues to be complicit in the propagation of bad precedent here; and the Justice Department, by promoting cash settlements with companies and their founders over violations ambiguous, damages its credibility by repeatedly placing the aboveboard administration of law second to unsound, opportunistic extortion. A chilling cycle.

Mr. Dikshit's deal in no uncertain terms shed light on the relationship between investor confidence and perceived regulatory clarity. While the deal came as a minor investment catalyst, it likely presages a period during which the I-Gaming Investment Case -- reinforced by settlements between the Justice Department and companies like Sportingbet and 888 Holdings, and the resultant prospect of M&A -- will return to vogue. The week of Mr. Dikshit's settlement, PartyGaming and 888 emerged the clear beneficiaries adding 45.59 percent and 46.23 percent to their market caps, respectively.

Most of all, Mr. Dikshit's deal served as a forceful reminder of the highly relativistic lens through which the world continues to evaluate Internet gambling. In 2008, the United Kingdom's Gambling Act 2005 achieved its first full calendar year as an active regulatory instrument while thousands were arrested in China for their alleged involvement with Internet gambling; the European Commission continued to press its case for cross-border gambling commerce while two Sportingbet employees were arrested then held, without charge, in squalid conditions in Turkey; and as real-money online poker play, in Italy, finally got underway, Mr. Dikshit paid $300 million to the United States government for his involvement in offering that very service.

Looking ahead, the 2009 calendar year, like its predecessor, is sure to bring us stories of financial success and ruin as the markets continue to seek a less volatile brand of instability than today's version -- which, we can all agree, has sown many a sleepless night. Regulators, undoubtedly, will leave us scratching our heads as the conflict between technology and law inches ever on, and sociomororeligiopsychopolitico relativity will, unfortunately and boringly, persist on all issues gambling. But expect a fresh batch of cheeky marketing ploys -- pat yourself on the back, industry, for you're quite good at conjuring these, after all. Perhaps this year, another man-made archipelago in Dubai will spring up in the form of B E T F A I R. Can't you just imagine living on the "B?" Two lakes, an eminently sensible jogging path and -- lest we forget -- the best odds.