10/09/2012 : CALIFORNIAN ENTREPRENEURS TEST ONLINE GAMBLING LAW
"Playing for something of value is illegal," says Attorney General's spokesman
Californian entrepreneurs Sean Stavropoulos and Jonathan Aiwazian could be about to test Californian law on online poker. The duo's recently launched online poker site Cafrino.com is the subject of the state Attorney General's scrutiny, although it does not require players to bet money or pay a subscription fee.
According to the Ventura County Star newspaper, Cafrino.com represents a novel test of California's online gambling laws, and opinions are mixed on whether it will pass legal muster.
A spokeswoman for Attorney General Kamala Harris said the state statute pertaining to online poker generally says "playing for something of value is illegal."
However, Aiwazian thinks the site is operating legally.
"The reason we are legal is we are not a gambling site," he said, adding that money generated from advertising revenue is what's paid to players, who don't have to make any payments.
And Cafrino.com's New York-based lawyer, Adam Solomon, describes the site as "a lawfully structured sweepstakes."
Cafrino has attracted around $300,000 in financing from Kayweb Angels LLC in New York and went live on September 10, operating and marketing from Southern California. Media company LiveRail is partnering with Cafrino.com to provide advertising.
"It's done a lot better than we anticipated," Aiwazian told the Ventura County Star. "We're on pace to reach over a half-million hands dealt in the first month of operation."
Online gambling legal expert Prof. I. Nelson Rose, says State law allows poker games to be played for money in limited circumstances at state-licensed card clubs, tribal casinos, charities and private homes. The California statute, however, is sloppily worded, he claims.
The wording led then Attorney General Bill Lockyer to issue a flawed opinion, in Rose's view, that "gambling" includes instances when a person spends nothing to play poker for a prize.
"The attorney general is simply wrong when saying that something you can enter for free is gambling," Rose said. "If anyone and everyone can enter for free, then it is not gambling."
Rose said legal precedent provides that "gambling" involves three key elements: a prize, chance and consideration.
"I don't think the state Legislature intended to overturn 2,000 years of legal history when it said poker, if played for money or other prizes, is gambling without having to pay anything to enter and without any chance of losing money," Rose said.