Joined: 18 Aug 2004
|Posted: Sat Jan 29, 2005 1:44 pm Post subject: Kahnawake Part I -- Is it really legal?
|Is it really legal? (See the reply at Part II - Maybe).
The Kahnawake Gaming Commission hasn't been prosecuted in Canada for hosting Internet gambling sites - so far
Despite the 65 pages of regulations published by the commission, we are troubled by the lack of documentation clearly authorizing either its creation or its licensing activities.
According to Internet Gaming Regulation: The Kahnawake Experience by New Jersey gaming attorney Frank Catania, Kahnawake Mohawks sought Mr. Catania's advice regarding the development of the commission. Nevertheless, we're unsure whether his expertise extends to Canadian criminal law, which is anything but clear even to local practitioners on the subject of gambling. (See Canadian gaming law overview here). Nor do we find anything in his report to indicate an understanding of Kahnawake's actual agreement with Canada on self-government, which remains unresolved, or of the interaction of that agreement with overarching federal gambling prohibitions as well as provincial regulations.
Not surprisingly, we are similarly unconvinced by the bare assertion at p. 1 of the regulations that:
|...these Regulations are not dependent on the ratification or approval of any other jurisdiction or regulatory body. (Item 3 under Regulations Part I, Jurisdiction) here. |
Why seek advice from New Jersey, of all places?
Good question and one that leading Canadian sociologist Margaret Beare might pose in view of her investigation of that state's casino initiatives in 1977:
|While the development of gambling in New Jersey predates the legalized casino industry, the media gave considerable attention to the enactment of casinoo-gambling legislation. At that time Governor Brendan Byrne issued a warning to organized criminals to "keep your filthy hands out of Atlantic City, keep the hell out of our state." These good intentions were not sufficient to keep the industry pure!
Without repeating the documented list of organized crime business ties, friendships, direct payoffs or compromised deals that characterized many aspects of the gambling industry in New Jersey, even before the casinos opened, the extent of official corruption at the state and local level, in addition to the massive influence peddling, was extensive. For example, after all of the planning for a rigorous investigation process into applicants for casino licenses, the Mayor was quoted as saying, "We're not concerned about who runs them" and that he only cared that the casinos were opened to improve the Atlantic City economy. This view was perhaps indicative of the negligence of city officials and the corruption that already existed. It was this attitude that was to determine the general direction in which the New Jersey casino industry was to go. (Footnotes omitted) (From Current Law Enforcement Issues in Canadian Gambling by Margaret Beare in Gambling in Canada: Golden Goose or Trojan Horse? A Report from the First National Symposium on Lotteries and Gambling, May, 1988, edited by Colin S. Campbell and John Lowman, published by the School of Criminology, Simon Fraser University, at p. 180).
For and Against
Edited by Rod L. Evans and Mark Hance
We also note observations made by Paul Pasquaretta, an American scholar on First Nations, who is concerned about the potential for alliances between crime bosses and tribal leaders that would create a new power elite operating independent of current political structures.
|...Does reservation gambling, then, support the proliferation of a federally mediated tribal culture to the detriment of American Indian nationhood? Or can the tribally run American Indian gambling industry be appropriated in ways that support indigenous identities and traditions?
The answer depends to a large extent not on how conflicts with external forces are resolved but on how factions within Indian communities come to understand one another. For the presence of high-stakes gambling facilities has aggravated existing conflicts within the Native American community itself. Throughout the U.S., tribal leaders have argued that gambling revenues provide the most available means to stimulate reservation economies. This claim is supported by the great success of a number of tribal communities. Gambling on the Mashantucket Pequot Reservation has transformed an all-but-abandoned Indian territory into a thriving and dynamic community. In other places, however, gambling has had a more negative impact. In the most dramatic example, the establishment of high-stakes gambling operations at Akwesasne divided the Mohawk community into gambling and anti-gambling factions. At the height of the controversy two men were killed. The Mohawks continue to be plagued by this fundamental division.
...Gambling is a notorious industry, and many Indians are concerned that tribal leaders and crime bosses will develop powerful alliances. In California, for example, mobsters attempted to gain control of the Rincon Tribal Council's high-stakes bingo operation. Their efforts were eventually thwarted by internal tribal politics and the work of federal agents. Nevertheless, the possibility remains that Indian gambling operations could be infiltrated and run by organized crime. (footnote omitted)
Reservation gambling also creates new leaders who are politically and economically independent of both elected and traditional governing councils. Are these "bingo chiefs" appropriating a corporate tribal sovereignty for personal gain, or are they expressing their own fundamental rights as tribal people? That question is related to another regarding they long-term economic effects of reservation: Will high-stakes gambling stimulate the growth of viable reservation economies, or will it contribute to a greater disparity in the distribution and use of Indian resources? From Modern Gambling Is Unlike Indian Games of Chance by Paul Pasquaretta in Part VII of Legalized Gambling For and Against, edited by Ron L. Evans and Mark Hance (Chicago: Open Court Publishing) 1998 at pgs. 352-353).
The conflict in a nutshell:
Item 9 (w) of The Draft Umbrella Agreement with respect to Canada/Kahnawake Intergovernmental Relations Act of Jan. 17/01, a framework agreement representing merely the first stage of treaty negotiations (see Indian and Northern Affairs Canada Framework Agreements link), reads as follows:
|Kahnawake has jurisdiction or authority or both with respect to the following subject matters as set out in sub-agreements corresponding to each subject or subjects...(w) Gaming. (at p. 9) |
However, at p. 20 of that document, item 74 states:
|For greater certainty, Kahnawake's jurisdiction as set out in sub-agreements does not relate to those matters within Canada's jurisdiction under s. 91(27) of the Constitution Act, 1867 (emphsis ours). (Means criminal law, which includes various gambling prohibitions and exceptions under exclusive provincial control). |
Query, too, the interplay of that agreement with The Land Governance Agreement with Kanesatake, which also appears to hold some sway over Kahnawake lands. Here is an excerpt from a speech by Indian and Northern Affairs Minister Robert Nault June 21/00 regarding the Kanesatake agreement:
|By recognizing the Kanesatake land base, we are ending the uncertainty over the application of laws in Kanesatake and enabling Kanesatake to govern its interim land base. The Mohawks will now benefit from having a solid legal foundation on which to adopt their own laws and regulations over land-related matters (emphasis ours) on their interim land base. In addition, a process is now in place to ensure that certain Kanesatake laws applying to its lands in the village are harmonised with relevant municipal by-laws.
The "Land Governance Code" that the Mohawk Council of Kanesatake is adopting in parallel with the Agreement will ensure that the authority granted by the LGA will be used responsibly and with full accountability.
For the people of Oka and Kanesatake, this Agreement will establish a clear legal and political framework for the settlement of land-use and economic development issues for the benefit of all residents. The legal void that has made land-use issues so contentious in the past will now be filled.
And for all Canadians, the LGA makes clear that in the limited circumstances where jurisdictional conflict might arise, federal laws remain paramount (emphasis ours).
Criminal investigations into e-gaming at Kahnawake to date:
It appears we're not alone in our confusion regarding Kahnawake's authority to operate as a server for Internet gambling sites. See CBC's excellent Nov. 18/03 roundup, Kahnawake - Gambling on internet casinos, excerpted below:
|The Kahnawake Mohawk Reserve is just across the St. Lawrence River from Montreal. The reserve is home to the only real-money online gambling in North America.
Despite a referendum in 1994 that decided against opening casinos on the reserve, the reserve council set up the Kahnawake Gaming Commission in 1996 to regulate gambling activity on the reserve. The three-person commission began considering the possibilities of online casinos.
Because of rules requiring that Mohawks own all businesses on-reserve, the commission set up Mohawk Internet Technologies to operate the online casino business. MIT operates a server farm on the reserve, and offers space on the servers to online casino operators. MIT collects a monthly fee from the casino operators.
The KGC is responsible for licensing the operators. Its rules require a full investigation of any new casino operator, or a more cursory investigation of an established operator. The KGC has regulations that require online casino operators to operate openly and follow certain guidelines pertaining to issues such as audits, payouts and access by underage users.
As of November, 2003, the Sureté du Quebec says it is investigating the online casino business at the reserve. According to news reports, that investigation has been going on for at least two years. (Note: See also SQ investigation of MIT a big surprise to Rice by Dan Rosenburg in Eastern Door Apr. 21/00 and Mohawk Internet Technologies (Kahnawke Reserve) Reportedly Under Investigation By Canadian Government posted by Jennifer Woo Mar. 4/04 at Bet2Gamble.com).
Spokespeople for Loto Quebec and Quebec's alcohol, racing and gaming board have been cited as saying they view the casino operation as illegal. Attorneys general in Canada and Quebec have also said it is illegal. But no charges have been laid, and the Kahnawake Gaming Commission's lawyer, Murray Marshall, says no one has contacted the commission about an investigation. He says the commission and the casinos are perfectly legal. "It's the exercise of an aboriginal right that's recognized and protected in the Canadian constitution," he says. (emphasis ours)
The casino also faces some opposition from within the reserve. Activist Sonny Joe Cross says the business hasn't brought that many jobs, and some employees are from off-reserve. Another referendum on setting up a bricks-and-mortar casino at the reserve was again defeated in October 2003. There has not been a referendum about online casinos at the reserve.
Cross says many people on the reserve don't support the online business, just as they didn't support the proposal for an on-site casino.
But Marshall, says the online casinos have brought more than 200 jobs to the community. He estimates that at least half of the jobs are filled by people from the reserve. Marshall says the commission has not had any complaints from the community about the online casino business.
|The Eastern Door
We also searched the term, 'gambling,' at the excellent Eastern Door Archives on Jan. 21/05. View our results - 19 hits - here. Among those was an April 21/00 story by Dan Rosenburg, SQ investigation of MIT a big surprise to Rice, from which the following is excerpted:
|Davis Rice, the MCK Chief responsible for the Mohawk Internet Technologies (MIT) file, is surprised by recent comments from Public Security Minister Serge Menard saying that the provincial government will be investigating on-line hosts of virtual casinos in Kahnawake and elsewhere in Quebec.
According to reporter Martin Pelchat of La Presse, Rice feels Quebec does not have a legal basis to address internet gambling. Rice notes there are over 200 internet casinos worldwide offering their services with the simple use of a credit card. Rice says the legal area, according to the law, is very gray on the matter.
Rice adds that the MCK has no intention of applying for a Quebec permit, feeling Kahnawake’s own institutions are the only authorities required to support this venture. Rice then questions the obvious: “Why is it okay for the provincial government to offer Loto-Quebec but it’s not okay for the Natives to do the same?”
...Menard confirmed to La Presse last week that the Surete du Quebec is conducting several ongoing investigations into gambling activities operating without provincial permits. Such activities have been deemed “illegal” by the Quebec Justice Minister.
Menard would not specify the exact number of investigations under way but confirmed to La Presse that there are currently less than a dozen. These are not limited solely to operations in Kahnawake.
According to the Criminal Code, only governments or individuals who hold active gambling permits are allowed to operate casinos in Canada. Menard believes the law must be applied equally to everyone.
“If we accumulate enough proof of a violation of the law, we will submit the information about these individuals to the Minister of Justice,” Menard warns. He advises all parties concerned to cease such activities immediately and consult with their lawyers about these apparent violations.
Menard explains that in Quebec the right to run casinos is reserved for the government even if the games are on the internet. The Quebec gaming board, which also governs alcohol and racing, has not authorized anyone to operate an internet casino, Menard says.
Have the investigations concluded, we wonder? What about the somewhat puzzling press release of November, 2004 concerning an investigation by Surete du Quebec, whose members are alleged to have been masquerading as telephone service employees. We'll try to get more on this story. Please check back for updates. In the meantime, have a look at First Nations Gaming in Canada and Internet Gaming in Canada, both of which are by Michael D. Lipton, Q.C. of the Toronto, Ont. law firm, Elkind, Lipton & Jacobs. Here are two key paragraphs from the latter dated Sept. 17/03 regarding Kahnawake:
|The Face Off - The province wants sole control over any Internet gambling from inside its borders. The Mohawks contend that despite stipulations in the Code, their inherent right to self-government allows them to operate the Internet gambling sites. The case law to date (i.e. R. v. Nelson, mentioned earlier) has repeatedly held that the inherent aboriginal right to self-government, when applied to gaming, does not include the right to operate a commercial gaming enterprise. Barring a major change in the jurisprudence, therefore, the Mohawks legal position on this matter is shaky at best.
Mohawks are ignoring the gaming provisions of the Code, and are currently hosting Internet casinos on reserve. The Quebec and federal governments, together with the provincial police, have investigated the activities of the Commission. The Quebec Minister of Public Security, Serge Menard, has spoken out against the operation of online casinos in Quebec on the grounds that they are illegal: (L. Moore, Montreal Gazette.com, June 10, 2001). However, the province of Quebec has taken no action to halt the activity of the reserve, possibly due to residual tensions between the Quebec province and the Mohawks of Kahnawake from the summer of 1990, when a police raid at a Mohawk barricade near the reserve led to a stand-off between the Mohawks and the Canadian military: Ibid....
Does this mean Internet gaming sites licensed in Kahnawake are at risk of prosecution in Canada?
Yes, probably. See the edifying Jurisdiction in Cyberspace by C. Ian Kyer, who heads the IT Group at Fasken Martineau, a national law firm. However, that said, there are several unique and compelling arguments to be made in favor of the Mohawks' somewhat maverick approach. See Stay calm, be brave and wait for the signs below.
More about Mohawk Internet Technologies (MIT):
See Mohawk Internet Technologies, Powering the Internet through Partnerships by Karin Lynch at p. 3 of the May, 2001 issue of Circles of Light, a publication of Indian and Northern Affairs Canada, and First Nations Internet Technologies: Contemporary Trading Posts in Cyber Space from aboriginaltimes.community, which reported in March, 2002:
|With smart and savvy business strategies, and an investment of $4-million, Kahnawake established a high-security electronic business centre with a superior network infrastructure, raised flooring, air-conditioning and a clean-room environment.
The MIT facilities marked the beginning of another business venture for Chief Norton. When he saw the success enjoyed by on-line gaming companies particularly in Australia and the Caribbean, he discussed the possibility of pursuing on-line gaming with his industry contacts in Montreal.
"They became interested in the same thing that I did and suddenly, we found ourselves developing an on-line gaming industry in Kahnawake."
MIT (Mohawk Internet Technologies) swiftly set its target for services to the new and growing on-line gaming industry in motion, becoming a competitor to Las Vegas, Australia, and the United Kingdom.
"We have on or about 70 per cent of the dollar volume of the industries current global market in our community right now quickly establishing ourselves as "Virtual Vegas", because we’re equipped to provide the best possible service anywhere," says Chief Norton.
The council legalized gambling in Kahnawake (emphasis ours), established the Kahnawake Gaming Commission (KGC) to administer the Regulations Concerning Interactive Gaming that regulates its many online gaming clients. The regulations were drafted with assistance from Frank Catania, former director of the New Jersey Division of Gaming Enforcement and Murray Marshall, the commission’s lawyer. (emphasis ours)
Chief Norton says, "The gaming commission put into place the rules and regulations, and all of the security measures in order to filter out any bad apples in the industry to make sure that there is no money laundering or criminal involvement. It’s a clean and transparent operation. We share information with other governmental authorities, particularly at the federal and provincial level, so they know what’s going on."
Recent organizational changes at MIT are described in An Overview of MIT's Transfer From MCK to Tewatohnhi'saktha by Kenneth L. Williams in the March 12/04 Eastern Door, which also provides a good summary of MIT history. Here are a few excerpts:
|This past week, The Eastern Door spoke with some key people about the proposed transfer of MIT's supervision from the MCK to Tewatohnhi'saktha…
An interview with Tewatohnhi'saktha CEO John Bud Morris focused on accountability on a number of fronts...
The transfer by itself addresses this concern, as Tewatohnhi'saktha's general mandate is to develop and support community-scale businesses..
Grand Chief Joseph Tokwiro Norton (current MIT Board Chairman) gave a brief historical overview of MIT, with some emphasis on the political and legal issues surrounding that entity's creation. The idea became a reality in 1999, after partners Mike Tobin and Jay Stubina came to Kahnawake hoping to find a venue for an Internet service provider.
During that time, Norton had presented the idea of on-line gaming to the partners. There was a lot of research involved in the feasibility of such a partnership for Kahnawake, and also a lot of preliminary groundwork to ensure there would be no problems from any outside governments. Norton explained that Quebec had expressed the most concerns (though not in writing), as to its own supposed "legal opinion" with regard to on-line gaming.
It should be noted that, prior to MIT's inception, Kahnawake's gaming laws were already taking shape. This process started in the mid 1980s, with the introduction of the Super Bingo. Then, in the mid 1990s, a Fundraising Casino (which was a singular event) led to more in-depth development of local gaming legislation, as well as to the instituting of the Kahnawake Gaming Commission in 1996. Incidentally, Norton mentioned that the new arrangement for MIT would not necessitate any changes to Kahnawake's current Gaming Law.
As for the nature of MIT, Norton explained that roughly 85 per cent of its clientele was related to Internet gaming, but that no actual gambling of any kind takes place at the facility. Meanwhile, many other applications of the technology are being served by MIT as an Internet service provider, including a contract with the Canadian government, which Norton indicated as being valuable not only in monetary terms but in political terms as well (emphasis ours).
We are mystified by Kahnawake's apparent immunity from federal regulations, which seem otherwise to prohibit Internet gambling in Canada. What authority does a New Jersey attorney have to oversee gambling regulations anywhere in Canada? How secure are permit holders using the Mohawk server, we wonder? We'll try to answer these questions as soon as possible. Until then:
Our e-mail to Indian and Northern Affairs:
Sent: Friday, January 21, 2005 3:58 PM
Subject: Clarification on Kahnawake and its gaming sub-agreement v. Criminal Code
We are trying to sort out our confusion regarding Kahnawake's draft umbrella agreement with Canada and federal paramountcy rules, which appear to trump Mohawk authority to operate as server for Internet gambling sites. Specifically, we refer you as follows:
P. 9 of the Draft Umbrella Agreement with respect to the Canada/Kahnawake Intergovernmental Relations Act of Jan. 17/01, a framework agreement, the first stage of the treaty procedure, at item 9 (w) states:
|Khanawake has jurisdiction or authority or both with respect to the following subject matters as set out in sub-agreements corresponding to each subject or subjects....(w) Gaming. |
However, at p. 20 of that document, item 74 states:
|For greater certainty, Kahnawake's jurisdiction as set out in sub-agreements does not relate to those matters within Canada's jurisdiction under s. 91(27) of the Constitution Act, 1867. |
Does Kahnawake, in fact, have authority to operate as a server in this way and, if so, could you kindly refer us to the document(s) providing that authority? Are the regulations provided at the commission website of legal force and effect and, if so, how so?
Thanks very much. Our international visitors are understandably concerned at this apparent conflict. We look forward to hearing from you.
Tracking Internet poker worldwide.
We'll post any replies we receive here. Please check back for updates.
Last edited by legal on Mon Feb 28, 2005 5:39 pm; edited 9 times in total