Article on the Corrupt Internet Gambling Act

Colin Colenso

Colin Colenso

AzB Silver Member
Silver Member
For those interested in the new act that likely makes the long term success of the IPT considerably more difficult.

http://www.mises.org/story/2358

Note: People have stated that this legislation had been known about for over a year in advance, but the market obviously didn't predict the harmful nature of this 'snuck through' legislation, as gambling sites' values tumbled on the announcement.

If such an announcement had been expected, the stock values would have discounted this. Stock price drops would have been relatively minor.

Colin
 
Colin Colenso said:
For those interested in the new act that likely makes the long term success of the IPT considerably more difficult.

http://www.mises.org/story/2358

Note: People have stated that this legislation had been known about for over a year in advance, but the market obviously didn't predict the harmful nature of this 'snuck through' legislation, as gambling sites' values tumbled on the announcement.

If such an announcement had been expected, the stock values would have discounted this. Stock price drops would have been relatively minor.

Colin
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Colin,you certainly have a point about the stock price falls in relation to the expectation factor.However surely the long term success of the IPT simply depends upon it bringing in more income than it pays out.Online gambling money will never be directly in the "income" column of IPT's ledgers as IPT will never be an online gambling company.

As far as indirect effects go we should first consider what reason,other than advertising opportunities,would any online gambling company want to give hand-outs from gambling profits to a pool tour,especially to settle any old debts? People who want to bet on IPT events will do so with whichever online company offers the best deal. IPT cannot licence any company as the exclusive agents for betting on IPT events or stop anyone else betting on their events.Any online company employing the services of someone who can compile sensible odds can do what they please in that respect.Ownership or sponsorship of IPT by an online gambling company would not in itself make any punter any more likely to bet with them than with a competitor.Some of us simply don't understand what is in it for the online gambling company to own IPT in the first place,irrespective of whether it is operating under the old or the new gambling laws.Of course if we are not talking against the backdrop of an online gambling firm owning IPT then the law obviously will have zero effect.

If the bulk of IPT's future anticipated advertisers is one or several online gambling companies then any profitability of those companies might be reflected by the amount of advertising they can afford to purchase from IPt.Other than that potential effect, online gambling in general and the new laws in particular,do not seem to have much relevance at all to IPT's long term success which will surely be fundamentally dependent upon total revenue from advertising,sponsorship,product lines and services,tournament entry fees etc exceeding total prize money and operating expenditure.

You have an analytical brain that many of us admire.Can you see and explain why the new gambling laws are significant to IPT's profitable health,other than in the small way described above?
 
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Mike,
Good points.

I don't know what the actual business benefits that would have accrued to the IPT had this legislation not gone through. The whole plan may have been an afterthought.

Obviously the exposure advertising aspect is a potential benefit, but as you suggest, it may not have been possible for a gaming site to own exclusive rights.

One thing they may have gained, which may be significant is exclusive rights to the video of live events, either with gaming options directly on the IPT streaming website or with streaming on their own website. Something similar to what we see on the betting website that cooperates with the Eurotour.

As to the value of such a deal, I could only speculate, but maybe it's significantly more than simply a sponsorship / exposure type deal.

There may be other synergies that I cannot think of right now.

Anyway, I thought some might like to know a little more about this legislation as it has been discussed here.

Colin
 
Colin Colenso said:
If such an announcement had been expected, the stock values would have discounted this. Stock price drops would have been relatively minor.

Colin
Click to expand...


Judging by the article you sound like a Milton Friedman fan Mr. Colenso!


I don't think in this situation, it would have been possible for the stock price drops to have been relatively minor even under the best of circumstances. Who's to say that the stock prices didn't already reflect this possibility? Even if the existing market price of these stocks were half the value they were before these "enforcement provisions" were introduced, the result would have likely been just as devastating.

Having said that, there seems to be something seriously suspicious to me about how quickly some of these companies stopped doing business with American customers when the provisions are not even going into effect for another seven months or so. On top of that, there are still further enforcement policy details that still have to be worked out with this thing. It doesn't make sense to me that they would just cut their losses and run so quickly. You might even say they seem to have "folded out of turn".
 
Da Poet said:
Judging by the article you sound like a Milton Friedman fan Mr. Colenso!


I don't think in this situation, it would have been possible for the stock price drops to have been relatively minor even under the best of circumstances. Who's to say that the stock prices didn't already reflect this possibility? Even if the existing market price of these stocks were half the value they were before these "enforcement provisions" were introduced, the result would have likely been just as devastating.

Having said that, there seems to be something seriously suspicious to me about how quickly some of these companies stopped doing business with American customers when the provisions are not even going into effect for another seven months or so. On top of that, there are still further enforcement policy details that still have to be worked out with this thing. It doesn't make sense to me that they would just cut their losses and run so quickly. You might even say they seem to have "folded out of turn".
Click to expand...

I think Colin is also an Adam Smith and Ayn Rand fan.
 
Thanks Colin,sensible thoughts as usual.Yes that point about perhaps the exclusive live broadcast within a website has some merit but there would still be nothing to prevent punters watching it on that online company's website yet still placing their bets with another online company which was offering better odds.

However that notion actually also opens several new cans of worms which am too tired to go into today.Maybe we'll first wait for some interesting views on your original question from others,hopefully for once without anyone going on a pointless 'knocking' or 'praising' spree:)
 
memikey said:
.....there would still be nothing to prevent punters watching it on that online company's website yet still placing their bets with another online company which was offering better odds.
Click to expand...

This is a problem that the IPT would love to see. :D
 
Hate to appear dim (which I tend to be at this late hour) and am honestly not looking to disagree......but I have absolutely no idea what you mean by that.Can you humour me and explain it please Da Poet?:)
 
Da Poet said:
Judging by the article you sound like a Milton Friedman fan Mr. Colenso!


I don't think in this situation, it would have been possible for the stock price drops to have been relatively minor even under the best of circumstances. Who's to say that the stock prices didn't already reflect this possibility? Even if the existing market price of these stocks were half the value they were before these "enforcement provisions" were introduced, the result would have likely been just as devastating.

Having said that, there seems to be something seriously suspicious to me about how quickly some of these companies stopped doing business with American customers when the provisions are not even going into effect for another seven months or so. On top of that, there are still further enforcement policy details that still have to be worked out with this thing. It doesn't make sense to me that they would just cut their losses and run so quickly. You might even say they seem to have "folded out of turn".
Click to expand...

DaPoet,
Well I'm not so far from Friedman's Chicago School philosophy, I'd actually call myself an Austrian. The main difference probably being that we don't support a central bank. Maybe that's why Friedman can maintain academic respectability....he's not rocking the system too much.

Austrians range from minarchists (small state) to anarcho-capitalists (no-state). Hayek was a student of Mises who is the most prominant Austrian thinker I'd say. Now the movement is most active in the USA.

RedGuru,
You are partly right. A lot of Austrians are former Randians (Objectivists), though I'm not a huge fan of her. Also, the basic free market principles of Adam Smith are one of the central themes of both the Chicago and Austrian schools of economics.

Though Smith's Wealth of Nations written in 1776 wasn't really that revolutionary in terms of ideas. Better economists preceded him, but he won the spot in the history books, I guess mainly due to the influence he had on the losening of trading, property and business rights in England that saw in the Industrial revolution.

Colin
 
memikey said:
Thanks Colin,sensible thoughts as usual.Yes that point about perhaps the exclusive live broadcast within a website has some merit but there would still be nothing to prevent punters watching it on that online company's website yet still placing their bets with another online company which was offering better odds.
Click to expand...
True, but it will give them an advantage simply based on convenience. Also, it will be easier for them to offer instant bets on breaks / next shots etc. As they'll actually know if there is any significant delay between real time and the broadcast.

Services that try to ride their backs, are inconveniently delayed on real time activities. So they cannot offer as many bets, and not for as long. And they may have no people on the ground to know when a suspected fix is in :eek:

However that notion actually also opens several new cans of worms which am too tired to go into today.Maybe we'll first wait for some interesting views on your original question from others,hopefully for once without anyone going on a pointless 'knocking' or 'praising' spree:)
Click to expand...
I like worms....open the can!:D

btw: Another thing I was thinking, though it isn't exactly about the online gambling aspect, it the whole concept of Vertical Integration here.

One company owning the players, the products, the broadcasting and online gaming dominance of the sport. It reminds me of the very successful model that Hollywood studios had in the 40's before stupid anti-trust legislation busted them up. (The studios and the cinemas).

Also there have been pushes by sponsors in F1 to break off and run their own operation and become the property (sport) owners themselves. We've also see porperty owners such as football league try to buy out broadcasters. And there are cases like Packer's World Series of Cricket, where Packer, as a broadcaster bought the entire sport.

So there are definitely some potential advantages in Vertical Integration. (One company owning a bunch of aspects of a sport). So pehaps Ho is very focused on the possibility of expanding the reach and activity of this Interactive online TV channel for pool.

Not sure how well that would succeed though. It's getting tougher and tougher to attract viewers these days with so many options. Think of the Youtube revolution and Tv broadcasters racing to sell their content online.

Colin
 
Of course Vertical Integration can also be a negative for consumers if it turns into a monopoly. When competition is stifled then consumers are forced to accept whatever the monopoly decides to provide. Generally monopolies have been shown to provide inferior products and services at much higher prices.

It's competition that keeps things moving forward.

Perhaps the issue here is that the IPT has no competition? The question has been raised as to whether pool can ever be mainstream in today's world of 1000 channels competing for the attention of each person.

Why not float pool on the open market and let companies bid on the right to "own" professional pool or a part of it?

Surely there are investors and companies out there that think they can do a better job with a now niche sport, but one that has a grand history and famous characters. Seriously, Mosconi, Minnesota Fats, Steve Davis, Hendry, Reyes in the Phillipines, these are still household names for millions of people who don't even play the game. Surely someone wants to step up and make a ton of money on the richness of the game? Someone besides the most controversial man in business.

What would it take for pool to have it's own IPO of sorts? That a question I would like to answered and made into reality.
 
Mises.org is a fantastic website with historically accurate commentary and analysis. Perhaps one of the very few on the web.

It is a free-market website that is libertarian. If you don't like that stuff, you'll hate it.

Many of the articles are written in an academic fashion with citations and the historical articles have large excerpts from the historical figures themselves that gives full context. Some of the economic articles are not easy reading for most people.

I like that website because it blows apart the BS found in most anything these days. Not even the Neil Boortz "fair tax" is OK by them. A number of articles have covered it and its mass flaws and hypocrisy.

It is definitely not a politically correct website. Socialists and freedom haters are easily offended there. It is also highly anti-State. Not anti-government as in fight the government, but anti government power or expansion.
 
memikey said:
Hate to appear dim (which I tend to be at this late hour) and am honestly not looking to disagree......but I have absolutely no idea what you mean by that.Can you humour me and explain it please Da Poet?:)
Click to expand...

Sorry. I was joking about the current popularity of the IPT in the online gambling world. Sometimes in my business, before we know we have a job, we will talk in great length about all the potential difficulties, and then finish the discussion with, well I guess those would all be good problems, meaning if we were dealing with those problems, that meant we had a certain degree of success to get there in the first place. Ha ha......ha

It's not really the same the second time around.
 
Roadie said:
Of course Vertical Integration can also be a negative for consumers if it turns into a monopoly. When competition is stifled then consumers are forced to accept whatever the monopoly decides to provide. Generally monopolies have been shown to provide inferior products and services at much higher prices.

It's competition that keeps things moving forward.

Perhaps the issue here is that the IPT has no competition? The question has been raised as to whether pool can ever be mainstream in today's world of 1000 channels competing for the attention of each person.

Why not float pool on the open market and let companies bid on the right to "own" professional pool or a part of it?

Surely there are investors and companies out there that think they can do a better job with a now niche sport, but one that has a grand history and famous characters. Seriously, Mosconi, Minnesota Fats, Steve Davis, Hendry, Reyes in the Phillipines, these are still household names for millions of people who don't even play the game. Surely someone wants to step up and make a ton of money on the richness of the game? Someone besides the most controversial man in business.

What would it take for pool to have it's own IPO of sorts? That a question I would like to answered and made into reality.
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Roadie,
I guess pool is available to the open market at the moment to the highest bidders, if they are willing.

Regarding vertical integration, there are definitely economic incentives for certain companies to outsource (horizontally integrate) factors of their business. Such as product parts when there are many competing suppliers or distribution and retail when their are competing services.

It is taught in most economics texts that vertical integration is part of a harmful monopoly practice. But I believe the theory and the evidence does not support this. Anti-trust legislation which was created to break up such harmful monopolies has a dishonest history. It is really just a way for competitors to lobby governments.

Here is a very interesting video by historian / economist Thomas Dilorenzo on the 'Protectionist Origins of Antitrust'.
http://mises.org/multimedia/video/DiLorenzo/6.wmv

There is much written on monopoly, antitrust and the theory of competition at the www.mises.org website that contradicts much of mainstream economic opinion.

Colin
 
Bola Ocho said:
Mises.org is a fantastic website with historically accurate commentary and analysis. Perhaps one of the very few on the web.

It is a free-market website that is libertarian. If you don't like that stuff, you'll hate it.

Many of the articles are written in an academic fashion with citations and the historical articles have large excerpts from the historical figures themselves that gives full context. Some of the economic articles are not easy reading for most people.

I like that website because it blows apart the BS found in most anything these days. Not even the Neil Boortz "fair tax" is OK by them. A number of articles have covered it and its mass flaws and hypocrisy.

It is definitely not a politically correct website. Socialists and freedom haters are easily offended there. It is also highly anti-State. Not anti-government as in fight the government, but anti government power or expansion.
Click to expand...
That's a pretty good appraisal Bola Ocho,
I've been a regular visitor at www.mises.org pretty much since it started online around 8 years ago I guess.

Some find them idealogically driven, which I guess they are to an extent. But they are open to differing viewpoints in certain areas.

Perhaps the most enlightening articles for the casual reader are the many that offer revisionist thinking on historical and current affairs issues.

Colin
 
Playsome said:
What's wrong with Ayn Rand? Marc:)
Click to expand...

I would say there is a lot right with Ayn Rand, and her achievements are remarkable. But there are some critical areas of difference between the Objectivists and Austrians. One that arises at the moment being that many objectivists tend to support wars much more readily.

Anyway, here is a very good article from the Mises site celebrating Ayn's 100th birthday highlighting the similarities and some of the differences.
http://www.mises.org/fullstory.aspx?Id=1738

The next article is more of an analytical critique of Ayn by an Austrian:
http://mises.org/journals/jls/20_2/20_2_6.pdf

Colin
 
I'll certainly take you up on reading about current theory. There is a difference between vertical integration and being a monopoly. It is only when a company begins to have such a market advantage that they absolutely crush the competition that they begin to enjoy and often abuse their monopolistic status.

Vertical and lateral integration is seen as a way for related companies to strengthen themselves through ownership in each other's businesses. This leads to an enviroment of cooperative development, a shared interest in efficiency and generally a good enviroment for labor and consumers.

Sure, anti-trust often has competitive roots, that's the nature of competition as well. Government has a mandate to insure a level playing field because a level playing field protects the rights of the citizens as a whole. Monopolies often trample those rights through oppressive labor practices, purchasing corrupt legislation, and price gouging. A competitor who is being unfairly crushed by a competitor's monopolistic purchases of all supply lines needs to be able to lobby government for relief or else we have a bunch of commercial wars which did in fact happen often throughout the industrial age.

How would each of us feel if Trudeau really were the billionaire that he claims to be and he were to simply purchased all of the billiard equipment making suppliers in the world (there aren't that many you know)? Now the price of pool goes up to $20 an hour because no one can get balls and cloth and cue sticks at competitive prices? A lot of us would find a new hobby while a lot of us would continue on and just pay it. Of course this is a wild exaggeration but a scenario of Trudeau having a monopoly on Professional Pool is not. And given what we know know of his practices do we really want to have this man with all of the professional players on earth under his thumb?
 
Roadie said:
I'll certainly take you up on reading about current theory. There is a difference between vertical integration and being a monopoly. It is only when a company begins to have such a market advantage that they absolutely crush the competition that they begin to enjoy and often abuse their monopolistic status.

Vertical and lateral integration is seen as a way for related companies to strengthen themselves through ownership in each other's businesses. This leads to an enviroment of cooperative development, a shared interest in efficiency and generally a good enviroment for labor and consumers.

Sure, anti-trust often has competitive roots, that's the nature of competition as well. Government has a mandate to insure a level playing field because a level playing field protects the rights of the citizens as a whole. Monopolies often trample those rights through oppressive labor practices, purchasing corrupt legislation, and price gouging. A competitor who is being unfairly crushed by a competitor's monopolistic purchases of all supply lines needs to be able to lobby government for relief or else we have a bunch of commercial wars which did in fact happen often throughout the industrial age.

How would each of us feel if Trudeau really were the billionaire that he claims to be and he were to simply purchased all of the billiard equipment making suppliers in the world (there aren't that many you know)? Now the price of pool goes up to $20 an hour because no one can get balls and cloth and cue sticks at competitive prices? A lot of us would find a new hobby while a lot of us would continue on and just pay it. Of course this is a wild exaggeration but a scenario of Trudeau having a monopoly on Professional Pool is not. And given what we know know of his practices do we really want to have this man with all of the professional players on earth under his thumb?
Click to expand...

Roadie,
Many of your points are addressed in the video I linked to to some extent.

Maybe watch that and see what you think, and then we can discuss more deeply.

Regarding the KT or anyone else buying up equipment and halls etc and putting up prices (gouging) there actually no evidence that so called private monopolies have ever succeeded in this strategy, and very few who have even tried it.

For a state granted monopoly, it happens often though. They don't have competitors that can move in.

KT could only own the players in the same way that the PGA or NFL does, by offering them the best deal in town. I think that would be pretty good if it happened and if he managed to popularize the game enough that he could afford to do this, there would soon be a bunch of entrepreneurs on the fringes ready to make counter offers should the players not be satisfied. There are just too many channels available for anyone to prevent heathy competition I believe.

Colin
 
Colin Colenso said:
I would say there is a lot right with Ayn Rand, and her achievements are remarkable. But there are some critical areas of difference between the Objectivists and Austrians. One that arises at the moment being that many objectivists tend to support wars much more readily.

Anyway, here is a very good article from the Mises site celebrating Ayn's 100th birthday highlighting the similarities and some of the differences.
http://www.mises.org/fullstory.aspx?Id=1738

The next article is more of an analytical critique of Ayn by an Austrian:
http://mises.org/journals/jls/20_2/20_2_6.pdf

Colin
Click to expand...


Wow, thank you so much for the link, it was one of the best articles I've ever read on Ayn Rand...Very nice site, thank you Colin!.........Marc
 
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