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I outlined serious flaws in the Malta Lotteries And Gaming Authority in my LGA article a few weeks ago. In recent days a regulator much closer to home has come into the spotlight. (The following appears in moreorless the same format in the Alderney Gambling Control Commission article on my own site.)

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The Alderney Gambling Control Commission oversees remote gambling within the states of Alderney in the Channel Islands. In the blurb on the homepage we find the following:

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The Commission ensures that its regulatory and supervisory approach meets the very highest of international standards.

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Excellent.

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So, does this have any practical relevance to the player?

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As reported at Casinomeister, in early July 2008 a player deposited at one “PKR Casino”, receiving a signup bonus in the process. The next day he was tempted to re-deposit with another bonus invitation, after which he cashed out his balance.

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Three days later, the casino revoked his bonuses on the basis of “bonus abuse”:

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After a thorough review of your account it is evident that you have abused the PKRCasino Reload bonus. You have now been permanently banned from PKR and all funds gained by abusing the reload bonus have been seized.

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Since the player had infringed no terms, he appealed to the Alderney Gambling Control Commission. A week or so later the Commission released the following quite breathtakingly atrocious findings:

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You made two large deposits, $200 and $500. The first deposit of $200 is the maximum eligible amount for a first time deposit bonus. The second deposit is again the maximum eligible amount for reload bonus.

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As soon as the bonuses were cleared you requested a withdrawal, each time within five minutes of clearing the specific bonus.

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You did not engage in any play between the first withdrawal and the second deposit when the reload bonus became available.

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The only game you played was casino hold em.

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The vast majority of the bets you made were the minimum $1. This is quite a small bet amount when compared to the amounts that you deposited. Only the basic main bet was played, never the side bet (AA bet).

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The total amount you bet on the account was $20,002.00, this reflects the $10,000 bet to claim the first deposit bonus and then a second $10,000 to claim the reload bonus. It is clear that as soon as the bonus was released no more games were played.

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Play only occured while a bonus was pending.

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The Commission has thoroughly investigated your claims and are found to be in agreement with PKR Limited’s decision to exclude you from their site. On obtaining details of your game play it’s apparent that you have abused the bonus scheme that was offered to you.

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In accordance with sections 9 and 10 of PKR Limited’s terms and conditions, of which you agreed to adhere to at all times, they are more than within their rights to close your account and seize all funds

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Here is section 10 of the above-mentioned terms and conditions:

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PKRCasino reserves the right to withhold any bonus payment if it believes that the promotion has been abused and/or where the terms of the offer are not fulfilled, or any irregular wagering patterns are found.

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So, according to the Alderney Commission:

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The player played no disallowed games.

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The player made no disallowed wagers, or disallowed wager sizes.

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The player did not wager less than the stipulated amount.

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In short: the player broke absolutely none of the rules of the contract.

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PKR does not define “abuse”, nor “irregular wagering patterns”; PKR does not, in fact, state that it must be unequivocally sure about this apparent abuse, only that it must believe that the undefined indiscretion has occured. And if PKR Casino believes that something which they cannot define may have happened, they reserve the right to confiscate players’ money.

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This must count as just about the most vague, inadequate and frankly risible condition you could find in a contract. Why not just say “we’ll keep your money if we don’t like your name”? Or “…if there’s a ‘y’ in the month”? Or “…on Tuesdays”?

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Would such absurdities be any more ludicrous than guesswork about a non-defined activity?

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And yet, the Alderney Gambling Control Commission endorses this condition.

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This is a precedent-setting move, as it sends a message out to players that casinos under Alderney jurisdiction may confiscate their legitimately-earned funds with absolute impunity, safe in the knowledge that the AGGC will do nothing to stop them.

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As such, I would like to ask the AGCC the following questions:

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1) Since a straight observance of all the stated rules is not acceptable to you, precisely what would a player need to do to earn his full cashout at one of your licensee casinos WITHOUT incurring your displeasure? Which additional rules would you have a player observe?

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2) You appear unhappy with the playing of just the one game; how many, and which, additional and unstated games would one need to play to earn a full cashout, and why do you not require that the casino list them?

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3) You appear unhappy with issues of betsize; what betsize is acceptable to you, and why do you not require that the casino list it?
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4) You appear unhappy with strict observance of the required wagering; how much additional wagering do you consider acceptable and why do you not require that the casino state this?

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5) You appear unhappy with the timescale of withdrawals (“within five minutes…”); how soon after requirements are met is acceptable to you for withdrawing, and why do you not require that the casino state this?

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6) You appear unhappy with the lack of play occuring outside of bonus requirements; how much additional play is acceptable to you, and why do you not require that the casino state this?

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Lastly,

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7) Why in the name of heaven can a player abide by all the given rules and not be paid in full?

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I hope that at some point the AGCC will address these points, as it seems clear that a player who simply follows the stated rules is guilty in their eyes of an indeterminate indiscretion.

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There is nothing new about incentivising bonuses – they occur even in the UK banking sector. Take a look at the Alliance And Leicester esaving account:

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Earn 6.50% AER (variable), this rate includes a 0.88% bonus payable until 31 August 2009

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The bank uses a bonus to boost the customer’s interest, giving them a nice, catchy headline rate. They may lose money on the bonus, but the idea is that the new customers they’ll gain will more than compensate for the loss. If the customer shamelessly empties his account when the bonus period expires and goes elsewhere, the bank does not confiscate the bonus funds. If they did, it would put them in quite monumental breach of UK law. And at the end of the day, why would they? – they should still make money overall.

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The exact same marketing concepts govern bonuses offered by online gambling operations: “give ‘em money and you’ll make money”.

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So if a profit-motivated customer of a UK bank cannot have his funds unfairly confiscated, why can similarly focussed customers of an operation under the jurisdiction of the Alderney Gambling Control Commission be subject to such outrageous treatment?

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Well, here’s where it get’s interesting.

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The answer is that there is nothing in Alderney law which prevents it.

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In the UK and across many, if not all, other EU countries, trading standards legislation does not recognise the legality of anti-customer clauses in contracts – take a look at the Unfair Terms in Consumer Contracts Regulations 1999:

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If there is doubt about the meaning of a written term, the interpretation which is most favourable to the consumer shall prevail…An unfair term in a contract concluded with a consumer by a seller or supplier shall not be binding on the consumer…The contract shall continue to bind the parties if it is capable of continuing in existence without the unfair term.

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One example of an unfair term is given as:

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“…giving the seller or supplier…the exclusive right to interpret any term of the contract

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You can see how this legislation would make it difficult for a business to hold customers to clauses like “we reserves the right to withhold any bonus payment if it believes that the promotion has been abused”.

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Unfortunately, there is no trading standards legislation in Alderney, and as such nothing that protects the consumer from unfair practice – take a look at the “fair trading” section of the States Of Guernsey trading standards page of the Guernsey government website:

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In March 2000 the States of Guernsey approved the introduction of legislation relating to the sale and supply of goods and services, unfair contract terms, misrepresentation and the disposal of uncollected goods. This legislation is at the stage of preparation and subsequent introduction

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I spoke to the Guernsey trading standards office yesterday, and they confirmed that this is still the case – this legislation, though in the pipeline, is still not in place in 2008, fully eight years later!

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I also spoke to the State Office of Alderney, and they confirmed that the same applies: there is no trading standards legislation in Alderney.

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So where does this leave the player, on the receiving end of an outrageous decision issued by the Alderney Gambling Control Commission?

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During my afternoon of phone conversations with the various Channel Islands public bodies, the Alderney Greffier pointed out that there is an appeal process listed in the 2006 eGambling Ordinance (see page 21, “appeals”). However, she acknowledged that this is a potentially rocky path:

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Acceptance of the appeal request is down to the court itself.

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Alderney solicitors charge upwards of £400 an hour, making the pursuit of anything other than very large sums completely self-defeating.

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Exactly what would happen as a result of a successful appeal is by no means guaranteed in terms of customer satisfaction.

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Lastly, in the case of an appeal against unfair contract terms, when there is no actual law prohibiting such terms in the first place, it requires quite a stretch of the imagination to think that the court might find for the customer on that basis!

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As such, appealing against a decision from the Alderney Gambling Control Commission is most likely an exercise in extreme pointlessness.

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None of this should even be remotely necessary; an ostensibly respectable and competent governmental body should not be taking decisions based on what a customer might have done in relation to undefined, and frankly undefinable, terms – this is grossly unprofessional and grossly unfair. Vague talk about “bonus abuse” is the stuff of the lowest level of online casinos; it’s unthinkable that a governmental regulatory body would talk in the same manner. A serious regulator needs to take fair and balanced decisions: did the customer break any clearly defined rules? If so, he should not be paid. If not, he should receive his money; if he does not receive his money having broken no rules, then action against the operator should be forthcoming, up to and including the revocation of the operator’s license.

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Not so in the case of the Alderney Gambling Control Commission. What did they say? It bears repeating:

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it’s apparent that you have abused the bonus

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What is the lesson that players can take away from all this?

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Well, take your chances by all means; a lot of the Alderney-based casinos are decent operations so you’ll probably be alright. But remember that if you are NOT alright, if you accept a promotional bonus, on the casino’s specific invitation as part of their marketing campaign to snag your deposit, and you cash out only to then find you’re the subject of ill-defined accusations of unacceptable behaviour you apparently may have indulged in, then you can expect no quarter given from the Alderney Gambling Control Commission on the basis of their performance in this case.

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This was, I think, a test case for the AGCC, the first one of its kind that’s been in the public domain.

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What a shame they fell at the first fence and set standards in online gambling back about ten years.

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What is the point of “regulation”, if the reality is this?

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The Authority may order the suspension or cancellation of a license if…the license holder has failed to meet commitments to players.

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This is important, because the ultimate purpose of any gambling regulatory organisation is to ensure protection of its licensees’ customers, the players.

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On the face of it, this appears to be a pretty serious organisation; it’s a governmental body, and one located within the European Union as opposed to some Caribbean or Costa Rican outpost; it’s got a snappy website whose contacts page lists an email address for player complaints; the LGA also moves on the international circuit: they attended the 2008 International Casino Exhibition in London this year, and will be attending the European iGaming Congress and Expo in Barcelona in a few months. It’s fair to say that the LGA folk don’t exactly hide away behind closed doors.

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So, does the LGA ensure that its licensees “meet commitments to players”?

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No.

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In fact, the Malta Lotteries And Gaming Authority appears to do nothing whatsoever for the players.

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As reported in the Malta Independent Online “Gamer demands £66,000 payout” report, and discussed in reasonable detail at the Winneronline forum, in late 2005 a player racked up £66,000 of winnings at Malta-based operation “Bingos”, which the casino subsequently refused to pay, citing “software error”. The LGA initiated an investigation, and along the way reported that there was no software error. Beyond that, they made no ruling; rather extraordinarily, they told the player to take legal action against the operator in Malta, and apparently offered some guidance with this task.

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Before the matter came to trial, and after the player had spent a lot in legal fees, the casino in question offered a payment settlement which the player accepted. This would almost certainly have come with a non-disclosure agreement, as the player made no further comment and the exact final details were never reported.

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Why did the player have travel to Malta and take expensive legal action? And why did the LGA advise him to do this while they were still “investigating”? A regulator’s job is to investigate a case and rule on it, not encourage the complainant to sort it out himself at his own expense while their investigation is ongoing.

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This is not regulation, this is passing the buck – and it’s grossly unprofessional and unacceptable. The LGA has at its disposal the right to suspend or revoke licenses “if the license holder has failed to meet commitments to players”. They have absolute power in this regard. Yet, they prefer to let the player divest them of their responsibilities and do nothing of value.

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All that said, at least in the above case the LGA appeared active to a degree. More recently, even this has been almost totally absent.

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A year ago, in July 2007, sportsbook “Betchance”, LGA license Class 2 no. 189, started showing signs of trouble – voided bets, delayed payments, bizarre excuses, general lack of communication, promises of payment from “new investors”. In short, Betchance was in financial strife. Players complained to Bill Dozer at Sportsbook Review, and you can read a summary of the unfolding story on his Betchance news page. Bill’s most recent comment, as good an overall summary as any, reads thus:

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Betchance is no longer pretending to take bets or allowing players to look at their balance. The book’s homepage gives players the message that the “operation is suspended for technical problems” and it “apologizes for any inconvenient..” The Malta-licensed sportsbook baited players with large deposit bonuses and advantageous lines and pricing. Some players have been pursuing their funds from betchance for nearly one year. History suggests, despite what betchance offers or arranges with players, the book will continue to stall and will not pay. Multiple players have stated that their opinion is the book will only pay if somehow leveraged to do so by The Lotteries and Gaming Authority of Malta and will hold out hope for their full balance. The LGA issued small payments to players on behalf of no-pay sportsbook Playbanks in March, months after the book had closed.

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The Betchance issue is also documented by Bookmakers Review – the full list of Betchance articles can be found on the Betchance update page. Some of the comments bear quoting, if nothing else for their amusement value:

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Betchance told us “not to make a fuss out of nothing.”

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Followed by:

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Betchance informs its customers to be in negotiations with new investors, practically admitting being broke.

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The LGA tells Bookmakers Review that new shareholders have been officially approved and they have now provided capital to BetChance. “The situation will really be solved in the next few days,” said a spokesperson for the LGA. [24 October 2007]

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Followed by:

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A Russian player received an e-mail from a representative of betchance.ru saying that it will take four more weeks to get paid as the company is trying to obtain a bank loan. [2 November 2007 - what was that from the LGA about resolution "in the next few days"?]

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Betchance has apologized for the delayed payments claiming that all problems have now been solved. [February 2008]

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Followed by:

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Three months after scam bookmaker BetChance said all problems had been resolved, players who have been waiting up to 8 months to get paid continue to be feeded with the usual worthless babble that all payments will be made within few days.

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Now take a look at the LGA licensees page, and select “class 2″.

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Betchance is still fully licensed by the LGA. The license has not even been temporarily suspended – an entire year has gone by in which Betchance has “failed to meet commitments to players”, the reason given for which the LGA may revoke or suspend licenses.

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Yet they have done nothing.

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I will briefly mention one more case, in which I am involved myself. The full details can be found in my Interwetten: confiscation of more than £5000 article. Several other players have posted mirror complaints in the Interwetten confiscating winnings discussion at Casinomeister.

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In summary, Interwetten offered a very generous bonus promotion, which they subsequently claimed was a “mistake”, in spite of the fact that the promotion played out exactly as it had been advertised.

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The complaint was initiated four months ago. I have, to date, received two communications from the LGA: one form response, and a subsequent acknowledgement of receipt of the complaint. The latter was received after a flurry of complaints about the LGA’s lack of response in the Casinomeister discussion, and it seems at least two other players received the same response at the same time as I did.

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Beyond that, the silence from the LGA has been total.

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Could there be an explanation for the LGA’s complete failure to do anything for its licensees’ players?

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CEO Mario Galea joined the LGA in 2004. Previous to this he was owner of Bell Med. Bell Med is the company which supplies hosting facilities to online gambling operations in Malta – see the Bookmakers Review article on the matter.

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Mario Galea sold his shares in Bell Med four months after being appointed to the LGA.

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Why did he not sell them before being appointed? The conflict of interests is very clear: as owner of BellMed, Galea received fees from those same companies that his new company sought to regulate.

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Even after selling his shareholding in BellMed and apparently divesting himself of all interest in the company, the fact remains that Galea is still in charge of regulating companies with which he had, at one time, a business relationship. It’s one thing removing a technical conflict of interest, but the human factor remains: one is “regulating” ones former colleagues and business partners. This is an absurd situation: why appoint to the top position of a regulatory operation the one person more closely associated than anyone with the operations to be regulated?

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One final points bears adding to the mix: according to sources at BookmakersReview, I can reveal that as late as last year, people on location in Malta alleged that Mario Galea was still very much involved with BellMed. I cannot corroborate this myself, but have permission from BookmakersReview to quote them.

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Either way, in or out, there is a clear conflict of interests at work here.

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Why do the people of the Malta Lotteries And Gaming Authority do nothing for their licensees’ customers?

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Presumably because they simply don’t want to.

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