1. 1 North American Gaming Regulators Association 2009 Annual Conference Washington, D.C. Hot Topics in Internet Gambling Michael D. Lipton, QC June 3, 2009

2. 2 Timeline of Growth of Internet Gambling © 2007 Dickinson Wright PLLC All Rights Reserved 1995 – first internet gambling website introduced. 1996 – Antigua & Barbados and the Kahnawke Territory (Canada) establish regulations authorizing i- gambling. 2005 – the United Kingdom Gambling Act 2005 authorizes i-gambling. 2006 – U.S. enacts UIGEA, ostensibly to block payments by financial institutions to i-gambling sites. 2008 – estimated 2,800 i-gambling websites operating.

3. 3 Economic Growth of Internet Gambling © 2007 Dickinson Wright PLLC All Rights Reserved 1997 – estimated $300 million in revenue 1998 – estimated $651 million in revenue 2001 – 2007 – i-gambling grows from an estimated $3 billion to a $20 billion industry. 2009 – estimated $22 billion in revenue. Source: Christiansen Capital Advisors, LLC.

4. 4 Regulatory Models © 2007 Dickinson Wright PLLC All Rights Reserved Licensing and active regulatory models: –United Kingdom – robust regulation of operators and allows residents to place online wagers. –Australia – regulation of operators, but generally prohibits residents from placing online wagers. Payment blocking: –United States (UIGEA). –Norway –The Netherlands Criminal prohibitions –Viet Nam

5. 5 Current Developments: E.U. WTO © 2007 Dickinson Wright PLLC All Rights Reserved Antigua awarded ~ $21 million annually as a result of its World Trade Organization challenge to UIGEA. European Union formally studied complaints from domestic i-gambling operators that UIGEA discriminates in favor of U.S. gaming industry. March 2009, European Union announces intent to commence World Trade Organization proceeding with respect to UIGEA.

6. 6 Internet Gambling in the U.S.? © 2007 Dickinson Wright PLLC All Rights Reserved Congressman Barney Frank tries again! Introduces the " Internet Gambling Regulation, Consumer Protection, and Enforcement Act" ("IGREA") (H.R. 2267) IGREA already has 23 co-sponsors Senator Robert Menendez (D-N.J.) expected to introduce similar legislation in the Senate.

7. 7 Internet Gambling in the U.S.? © 2007 Dickinson Wright PLLC All Rights Reserved Challenges to enacting IGREA: 1.Opposition from NFL, NHL, MLB, NBA and the NCAA despite IGREA excluding sports betting from the permissible wagering activity. 2.Games of skill vs. games of chance – IGREA would authorize all gambling games; pragmatic observers suggest that a bill authorizing only poker or card games ("games of skill") has the best chance of passing. 3.Opt-out or opt-in – IGREA creates a regulatory system requiring States and Tribes to "opt-out" if want to ban i-gambling; States and Tribes may prefer an "opt-in" approach. 4.Federal regulation vs. State regulation – IGREA establishes a federal regulatory scheme (could delegate to States, but feds can still override); States likely to push hard to have any regulation at the State level and not at the federal level.

8. 8 Contact Information © 2007 Dickinson Wright PLLC All Rights Reserved Michael D. Lipton, QC Dickinson Wright LLP 120 Adelaide Street, Suite 2107 Toronto, Ontario M5H 1T1 e-mail: MDLiptonQC@dickinsonwright.comMDLiptonQC@dickinsonwright.com Tel: (416) 367-0874