When it comes to gambling, there has never been a shortage of opinion amongst the masses. Either people favor it or they feel strongly that it accompanies some of society's more depraved behaviors, along with attracting crime, and is a negative temptation for our youth.

Regardless of what side of the table you are on, most folks can agree that they would like less government regulation when it comes to indulging in their leisure activities of choice. But such becomes far less clear when the government jumps in.

As hard as we might try to understand the present United States federal laws on the books when it comes to gambling, and especially with the advent of constantly evolving computer technology, legislation has not kept pace.

Additionally, lawmakers are too often wont to ignore a problem, lest it detract from their popularity, and more importantly, when it might interfere with receiving campaign cash from certain lobbying industries.

So they drag their proverbial feet until an issue reaches a fever pitch and it simply must be addressed; even if it is not in a cohesive manner or in the best interests of their constituents.

Also, with respect to gambling, I have previously documented in several previously published 2010 articles that many state governments in the U.S. have already started to craft legislation in hopes of feeding their depleted coffers by further relaxing their laws to allow more access to gambling.

Everything from expanding brick and mortar gambling casinos to advancing racinos and adding slot machines at horse race tracks to allowing intrastate and interstate online gambling are seen collectively as a potential bonanza that will cure all ills for the empty tills lining their budgets. And it is estimated by the federal government that there could be as much as a $42 billion windfall over a 10-year stretch in taxable revenue.

It is quite interesting, but not by virtue of coincidence, that most of this seeming rush to pass such legislation by U.S. states comes at the same time that the U.S. Congress is plotting ways to overturn the only recently implemented the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), through a proposed law by Congressman Barney Frank (D-MA) that he originated in 2009.

It just won its initial approval in the U.S. House of Representatives through its Committee on Financial Services on July 27, 2010, on which Rep. Frank is the Chairman. Known as the House Resolution 2267 (H.R. 2267) Internet Gambling Regulation, Consumer Protection and Enforcement Act the House Financial Services Committee's approval is but the first phase of its passage, required by both houses of the U.S. Congress.

In short, the UIGEA was a nice way for the U.S. government to keep offshore online betting casinos at bay from the American consumer. It was initially enacted in October 2006, but was never implemented until June 1, 2010, after many long delays by the federal government's U.S. Department of the Treasury in compelling U.S. banking institutions to honor its rules.

However, the main problem, which will continue to haunt H.R. 2267 is the actual legal definition of "illegal online gambling," thus creating all kinds of loopholes and wiggle room, from the living room gambler to organized crime, to skirt the law.

And also of concern in the presently active UIGEA is that banks remain the only legally accountable parties subject to penalty and prosecution for furnishing offshore online gambling to U.S. residents, while the U.S. gambler placing the bet remains safe. And to date, banks and payment processors are still unclear as to which transactions are actually required to be blocked.

Due to the difficulty in deciphering a non-finite system for the processing of legal U.S. based online gaming transactions, consumers' credit cards and debit cards cannot only be blocked or frozen, but accounts are often cancelled.

Furthermore, a consumer, ignorant of the UIGEA could innocently go to a gambling site, not even knowing from where it emanates and later find that their credit line or checking account is in peril, simply by clicking on an illicit site.

So for now, that is the best that the U.S. government has served up, as concerns online gaming. But not shy to out-do itself, even if it compounds a dysfunctional process even more so, the federal government has plans to muck it up again through a poorly framed H.R. 2267 almost immediately setting it up to fail.

H.R. 2267 is overly broad and murky, yet will intrinsically involve the U.S. Department of the Treasury and the U.S. Internal Revenue Service (IRS), amongst other U.S. federal agencies, for starters.

It is merely a wish list without the necessary mechanisms in place to not only generate the hoped for tax revenue, but for enforcing the law itself. And it stands to open the floodgates for illicit online gaming, incongruous with what it should be designed to do.

It would leave online gambling sites left to police themselves, merely under the purview of the U.S. federal government.

And like most other large pieces of U.S. legislation that has been conveniently rushed through to final Congressional passage, H.R. 2267 is another boiler plate document of mandates to be fulfilled at a date certain after it is already signed into law.

But due to its ambiguity, which seemingly appears by design, H.R. 2267 calls for provisions and assorted amendments that cover a wide array of issues. And it is worth noting several of them here, in order to show how arduous it will be for its desired compliance.

Firstly, it authorizes the U.S. Secretary of the Treasury to create a licensing program for regulations and enforcement of the law, issuing licenses to online gambling entities, effective for a period of five years.

Thus, it prescribes the licensing requirements for such internet gambling entities and prohibits operation of an Internet gambling entity that knowingly accepts bets or wagers from persons within the U.S. without the necessary license issued from the U.S. Department of the Treasury.

The law would prohibit a person, deemed prohibited from gambling with an online gambling entity, from collecting any winnings. Such a system to screen a gambler's veracity must be created by each gambling entity, and to be overseen by the federal government. And such is pure folly at this juncture.

H.R. 2267 would require that an online gambling entity pay required taxes to the IRS. And most curiously of all, each gambling entity, itself, would need to implement safeguards against fraud, money laundering, and terrorist financing.

In addition, each online license would require that gambling sites have strong protections in place to prevent minors from gambling online, and to prevent inappropriate online advertising targeted to underage gamblers or specifically aimed at compulsive gamblers.

Not only must the gambling site maintain a list of compulsive gamblers, but must block them from site access. And it cannot allow access to its site for those individuals who are delinquent on child support payments. These are just some amongst many other illusory imperatives.

Enforcement of U.S. law for the prevention of and tracking of electronic transactions of funds sent to terrorist organizations abroad has been weak at best through the U.S. Department of the Treasury, nine years since September 11, 2001. And to essentially require online websites to take on such a task is laughable.

Other proposed mandates include that debit cards only be used for transactions, to the exclusion of credit cards. Offshore online gambling operations such as PokerStars.com, FullTiltPoker.com and UltimateBet.com, which allowed U.S. players to access their sites after the UIGEA went into effect, will be banned from acquiring a U.S. license, as well as other entities that intentionally violated this U.S. law.

Each state and Indian tribe may opt-out of the federal legislation during the first year after its enactment, requiring that their residents abide by respective local laws.

And sports betting, with the exception of U.S. based horse racing and para-mutuel betting, would be disallowed, much to the delight of the professional and college sports industries. U.S. state lotteries, should they eventually become accessible online, would also be exempt.

But perhaps falsely anticipated with this new law is the notion that gamblers will be allowed much freedom to do as they wish in the privacy of their own homes. However, given the bevy of requirements for oversight, nothing could be further from the truth. Deadbeat dads need not log on, as previously noted.

But more realistically, beginning with Internet Service Providers or ISPs, one would expect that they would have to be the gatekeeper for gathering initial information as to whether the gambler is even eligible to gamble, based upon their state of residence, if that state has opted out. And the banks would be the second line of defense, cutting off the gambler's funds if need be, should the online gambling site find that it is a documented compulsive gambler placing the bet.

And should a player gain access to a legitimate site, then the process begins as to whether they are of majority age, has been flagged as a delinquent parent, or has a criminal background. Without such due diligence, the individual gambling site is subject to losing its license.

Certainly none of these entities are law enforcement agencies, so for the federal government to expect legitimate oversight to be realized at these levels seems more than silly.

The purpose of this report was to give a glimpse into what lurks ahead for U.S. online gaming and is not intended to disparage the gambling consumer nor the gambling industry. Rather, the intent is to highlight some of the future changes in law which may not best serve the public or the industry.

And contrary to the online gaming industry's millions of lobbying dollars spent in Washington, D.C. in order to help initiate this latest planned legislation, it might be best for it to restrain its glee, at this time.

For one only needs to look at the present economic condition of Las Vegas, NV. It has now been proven, going back to the onset of the current recession in 2008, that the gambling industry is indeed no longer recession proof. Yes, in time Vegas and its hurting East Coast counterpart, Atlantic City, NJ, will both rise again.

However, with a 14.5% unemployment rate that Las Vegas presently owns, it is evidence for when entire economies are dependent upon the gambling industry for the creation of jobs and funding municipal programs, disaster can ensue. Therefore, for entire U.S. state and federal programs' very survival to be based upon discretionary income from gambling has lawmakers living in a fool's paradise.

Hopefully, in the coming weeks and months, prior to the entirety of the U.S. House of Representatives approving H.R. 2267 and before it is sent on to the U.S. Senate, that not only will cooler heads prevail, but that a better proposed outcome will exceed before everyone's chips are cashed in.

Cheers!

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

“If an alternative process is established, we’re going to be guided by the court’s procedures, subject to of course, our ultimate right to approve any owner submitted to us.”

– MLB Commissioner, Bud Selig – July 12, 2010

As this reporter documented here in May 2010, the still impending sale of Major League Baseball’s (MLB) Texas Rangers has suffered no shortage of legal and financial machinations and maneuvers, including political manipulation, for many, many months. Yet, it has been nearly a year and a half since Texas Rangers owner, Tom Hicks, defaulted on a $525 million loan in March 2009, eventually ending up in bankruptcy.

Unfortunately to date, the sale of the Rangers still awaits finalization and most importantly, the investment group to be awarded the final sale of the club has yet to be determined by the U.S. Bankruptcy Court and ultimately to be approved by MLB and its respective owners.

But Mr. Selig’s above referenced recent quote indicates that despite the length of time and resources expended by the U.S. Bankruptcy Court, and the hundreds of millions of dollars at stake for the Rangers’ numerous creditors, Bud Selig will fight all obstacles in securing the group he sees fit to own and run the Texas Rangers; namely the Greenberg-Ryan Group. It is comprised of Pittsburgh sports attorney, Chuck Greenberg and present Texas Rangers president and minor league team owner, Nolan Ryan and their entity, Rangers Baseball Express, LLC.

It unfortunately takes far more than a good score keeper to not only understand but to keep track of all of the twists and turns in this case, Texas Rangers Baseball Partners, 1043400, U.S. Bankruptcy Court, Northern District of Texas, (Fort Worth), even since May 2010.

The upshot is that there will be an auction in U.S. Bankruptcy Court on August 4, 2010. However, prior to that date on July 22, 2010, the Rangers shall emerge from Chapter 11 Bankruptcy Protection, initiated on May 24, 2010. At that hearing, U.S. Bankruptcy Court Judge D. Michael Lynn will hold the Ranger’s reorganization confirmation hearing.

Additionally, Judge Lynn will hear complaints on July 20, 2010, regarding new auction rules for the August 4^th date. It concerns creditors’ issues primarily due to MLB’s acceptance of the lowest of the three bids previously offered for the Rangers, and its clear preference to award the club to Greenberg-Ryan.

The two previous higher bids were from former sports agent, Dennis Gilbert in collaboration with Dallas businessman, Jeff Beck and the other came from Houston businessman, Jim Crane.

Crane, whose bid was the highest, backed through lender, J.P. Morgan Chase & Co., previously filed a motion with the U.S. Bankruptcy Court stating that MLB deliberately blocked his negotiations with the Texas Rangers. In fact, Selig wrote an April 30, 2010 letter to J. P. Morgan Chase & Co. in response to that motion, reiterating his “best interests of baseball” motives, in his attempt to diffuse the matter; albeit unsuccessfully.

And since creditors are owed approximately $576 million on first and second-lien debt, that includes interest, by Tom Hicks’ HSG Sports Group, LLC, they want every opportunity to be given the best chance to recoup their losses.

However, an 11^th hour wrinkle has also emerged, which perhaps may be the best resolution of all; according to various financial experts, legal representatives, sports industry analysts and many involved with some business facet of MLB.

And that magic bullet would be none other than Dallas Mavericks owner, Mark Cuban. Cuban made a bid for the Chicago Cubs three years ago, when it was up for sale by the Tribune Co. At that time speculation surfaced that Cuban’s brash outspokenness and aggressive management style would clash with that of MLB’s.

It seems pretty ironic now, given that a former MLB owner, one George M. Steinbrenner, who was eulogized this past week, was but praised for having some of those very same qualities, which Cuban seems to also behold.

Mark Cuban’s recent interest in the past couple of weeks in the Texas Rangers is especially intriguing in that he may have interest in placing his own bid before the August 3, 2010 deadline for acceptance of bids for the August 4^th auction.

Or, Cuban may ask to become just one of the investors of a group, by supplementing the capital of one of the other investment group’s bid, since the new auction guidelines require that to qualify a bid must now clear the Greenberg-Ryan bid by $20 million.

Cuban recently stated, “With some of the court rulings, it’s changed the economics of everything…I wanted to make sure that I was at the table, just in case.…I’m hoping I’m more of a backstop than anything else.”

It would be hard to believe that Mark Cuban would want to be anyone’s backstop, no more so than would George Steinbrenner.

But one thing is more certain in this whole messy scenario as concerns the sale of the Texas Rangers and that is that there will be no lack of drama and last minute antics by all parties involved; especially given Cuban’s entry into the fray and just under the wire.

And if U.S. Bankruptcy Judge Lynn still has anything to say about it he said plenty when asked on July 12, 2010 about Bud Selig’s public remarks about his preference for the Greenberg-Ryan bid, “I don’t believe MLB can frustrate this process any longer.” Hopefully Judge Lynn is right, this time.

Once again, stay tuned…

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

Back in 1989, it was but a no-brainer for George W. Bush to inject himself into the proposed purchase of the then flailing Major League Baseball (MLB) Texas Rangers. His goals in mind were to propel himself into the governor’s mansion in Austin, TX and eventually to the presidency of the United States, while even making a little bit of cash along the way. And he succeeded on all fronts.

And just a dozen years after the sale of the Rangers by Bush and his investors in 1998, the Texas Rangers organization is again immersed in financial wheeling and dealing, with an upside down ledger. For its expected imminent sale by owner, Thomas O. Hicks, has been met by a major snag from both his creditors and Major League Baseball (MLB), which has injected itself into the middle, with its purported takeover of the Rangers in the very near future.

Should MLB proceed to seize the club, it could be facing an involuntary bankruptcy by creditors, and tied up in court indefinitely while owners of MLB’s 29 other clubs incur the cost of operations of the Rangers. But that prospect does not seem to deter MLB commissioner, Bud Allen Selig, as he believes that MLB’s taking control of the Rangers will offset any bankruptcy proceedings; but another gamble.

But in order to fully appreciate the present predicament of a franchise that has mightily underachieved since arriving in Texas in 1972, from Washington as the Senators, and reaching the post-season only 3 times since, it is worth retracing some highlights of how the Rangers wound up in such a mess.

George W. Bush, with the help of then-commissioner of MLB, Peter Ueberroth, gathered a group of wealthy Texas investors who had political and business connections to his father, then-president of the U.S., George H.W. Bush. In 1989, George W. Bush initially invested his $106,302.00 for a 1.8% stake in the club and later took out a $500,000.00 loan to up his ante to a total of $606,302.00, increasing his interest to 11.8% in the Rangers. While the club eventually sold in 1998 for $250 million, Bush and his investors’ purchase price was a cool $25 million.

In short order, plans for a new stadium were under way, financed completely by Arlington taxpayers, including a surcharge on game tickets and state tax exemptions, totaling over $200 million. And all profits went directly back to the owners. Of note, however, this model of commandeering stadium construction on the backs of taxpayers has been replicated over and over again both before and since, throughout cities across the U.S., with no greater beneficiary of such corporate profiteering than the New York Yankees.

By the time the Rangers Ballpark in Arlington was opened in 1994, George W. Bush was nearly governor of Texas, as he put his assets into a blind trust, with his interest in the Rangers being the exception.

The upshot being that for his original $606,302.00 investment, George W. Bush got a 25-fold return on his original investment, clearing a $15 million profit. And such got him the capital and gravitas he curried for his run to the White House.

Enter billionaire, Tom Hicks, co-founder and CEO of Hicks, Muse, Tate & First, Inc. from 1989 to 2004, a nationally prominent private equity firm specializing in leveraged acquisitions, including multi-media broadcast entities, banks and real estate. And it was the Hicks Sports Group, LLC of HMTF that purchased the Texas Rangers Baseball Club in 1998 for that $250 million.

Hicks also purchased the National Hockey League’s (NHL) Dallas Stars Hockey Club in 1996, which went on to win a Stanley Cup Championship in 1999. Since then Hicks has been noted for his controversial purchase of a 50% interest in the Liverpool Football Club, an English Premiership League team known as “Britain’s Most Successful Football Club”, purchased in 2007 and much to the dismay of British fans.

Similarly to the Rangers, Hick’s is selling his interest in these other franchises as well. He wants double the price he paid for the Liverpool club and is currently working with NHL commissioner, Gary Bettman, on the sale of the Stars.

But the sale of the Rangers has proven to be far dicier. Bud Selig and MLB have far more to worry about, however, than Tom Hicks at this point, as MLB is now the intermediary in the ongoing negotiations with prospective buyers of as well as the Texas Rangers’ creditors. But a $525 million loan default, threats of court decisions from potential litigation, bankruptcy and the future fiscal health of the team that includes keeping it afloat, will rest with MLB.

What’s next? MLB taking over the Los Angeles Dodgers, while its owners, Frank and Jamie McCourt duke out their divorce decree?

Yet, MLB makes no apology for its policy of sequestering its own books from both the Major League Baseball Players Association (MLBPA) and the public-at-large. For MLB to hold itself in higher regard than Tom Hicks, an evident capitalist who pushed the envelope only as far as his creditors would allow, and at the time with the blessings of MLB, is but the height of arrogance.

However, MLB has invoked its “not in the best interests of baseball” rule, by virtue of the commissioner’s charter, as reason to interfere with the proposed sale of the Texas Rangers. And in that effort, it is willing to accept the least lucrative bid made for the club’s purchase. MLB is determined to guarantee that the Greenberg-Ryan Investment Group which includes Rangers’ president, Nolan Ryan, will ultimately become the eventual owner, in spite of two legitimate and higher bids that were made.

But the “not in the best interests of baseball” rule is a reach at best, given the challenges that MLB will embark upon such as with Monarch Alternative Capital, which has a 57% interest in the Rangers’ debt along with 40 other creditors’ liens against the Rangers, that includes the CIT Group, Inc. They want to make good on the sale of the team in order to recoup their losses and have no fear of tying up the sale in court no matter how long it takes.

And it is there that the rub begins for Bud Selig, who himself appropriated more than $25 million in MLB loans to the Rangers in 2009, $16 million of which went to salaries alone, to keep the Rangers going until June 2010. And since 2009, MLB has embedded itself in Rangers’ management decisions. For example, 1^st-round 2009 draft pick, starting pitcher Matt Purke, declined the Rangers’ market value offer and opted to attend Texas Christian University instead, as it was reported that MLB would not permit the Rangers to tender an offer to him for more than the minimum ‘slot system’ specifies, in order to sign him.

If there is no resolution by creditors or a closing date set for the sale of the team soon, this June too could put salaries and bonuses for MLB draftees as well as projected trades for the July 31^st trade deadline in jeopardy, as well as put the future of the Texas Rangers franchise in peril for years to come.

MLB and Bud Selig calling all of the shots by fiat presents a clear conflict of interest in terms of the free marketplace. And clearly this is but a bailout by MLB with ramifications similar to those of the U.S. federal government in bailing out financial institutions, car manufacturers and insurance companies. Not only does the government incur a financial stake in these companies but is but purchasing the right to dictate corporate policy. And MLB is no different in that regard in this case.

Yet, on its face, the intricacies are more far reaching than MLB’s takeover of the then Montreal Expos in 2004, now the Washington Nationals. In this matter, after the layers are peeled back, we can see that the “not in the best interests of baseball” rule does not necessarily include taking on Wall Street brokerages, the multi-national banking industry and the U.S. Bankruptcy Court, all the while showing favoritism towards a specific group that wishes to purchase the team.

Volumes have thus far been written over the past year concerning an over-leveraged Tom Hicks. Yet, the same can be said of the entire U.S. economy and its players from Wall Street to Capitol Hill. While that is no excuse for alleged corporate malfeasance, with respect to MLB, cooler heads should prevail. And sometimes that should actually mean that the integrity of the game stands for something other than its bottom line.

In light of the Rangers’ 87-75 2009 win-loss record, far better than in years past, it would be a shame for the hopes and talents of some of its young players to be squandered by reckless decisions on behalf of Bud Selig and MLB. And hopefully, the remaining MLB owners will weigh in and fall on the side of common sense. Stay tuned.

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

With the melt down of the global economy over the past 2 years, multi-national brokerage firms and trusted financial institutions bore the brunt of accusations of gambling away the financial health and futures of investors, primarily through the sale of toxic mortgages with credit default swaps as the vehicle in doing so.

Yet, it is the mainstreaming of gambling on many levels that has created a culture whereby it has become an acceptable norm for not only corporations but governments in the United States, on both the federal and state levels, to literally invest in the gambling industry, with the recession as the excuse for its necessity.

Yet, for years prior to the current recession, brokerage firms such as Goldman Sachs & Co., Merrill Lynch & Co. and Fidelity Investments were already investing their clients’ stocks and mutual fund portfolios, in financing offshore casinos.

The question remains as to whether they skirted U.S. federal law, which prohibits offshore online gambling for Americans, as well as to whether they made reliable investments on behalf of their clients, many of whom remain unaware that such financial instruments are involved in such volatile industries. So, Wall Street was already in on the game.

Fast forward to 2010, where many U.S. states are on the precipice of bankruptcy and are desperate for that magic bullet to increase tax revenues without continually cutting services for their already over-taxed residents. And to that end, many state governors and state legislators are clamoring to push through laws in anticipation of overturning the federal law in place, prohibiting sports betting on both professional and amateur sports, otherwise known as the Professional and Amateur Sports Protection Act of 1992 (28 U.S.C. §3701) (PASPA).

To wit, the state legislature of New Jersey passed State Resolution No. 19 on January 12, 2010, which authorizes its President of the Senate to “take legal action concerning certain federal legislation prohibiting sports betting.” It would repeal the federal ban on sports betting, in all other U.S. states, with the exception of Nevada, Delaware, Oregon and Montana, already permitted to offer parlay-type sports betting. Nevada, however, exclusively enjoys all types of sports betting, statewide, on any professional or amateur sports games, in any capacity.

Basically, New Jersey, and specifically Senator Raymond Lesniak, who originally launched a lawsuit on his own in March 2009 against the federal government, claims that the 1992 law violates the 10^th and 14^th Amendments to the U.S. Constitution, in that “It establishes a selective prohibition on sports betting in the U.S.” The argument is that it violates the 10th Amendment to the United States Constitution by regulating a matter that is reserved to the States. And that it violates the 14th Amendment to the United States Constitution by being unconstitutionally discriminatory against the Plaintiffs and the people of the State of New Jersey.

Lesniak’s case presently resides in the U.S District Court, District of New Jersey, seeking declaratory relief. But the upshot is that New Jersey believes that it “Would benefit significantly from lifting the federal ban and legalizing sports betting in this state, as increased revenues would be generated and numerous jobs would be created for New Jersey residents as a result of sports betting activities at Atlantic City casinos and New Jersey’s racetracks, further enhancing tourism and economic growth,” according to Resolution No. 19.

Prior to PASPA, the Wire Act was enacted in 1961. It was intended exclusively for prohibiting the placement of bets by telephone to bookmakers for sporting events, and was largely put in place by then U.S. Attorney General, Robert F. Kennedy, in order to discourage organized crime and bookmaking. But gaming and its technology has come light years since 1961, and it would appear that the Wire Act’s shelf life has thus expired.

Meanwhile, in the U.S. Congress, House Representative Barney Frank (D-MA), Chairman of the House Financial Services Committee, has promoted a federal resolution to legalize and regulate the internet gambling industry in the U.S. (H.R. 2667). That proposal falls on the heels of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). It proscribes that offshore internet gambling is a violation of federal law.

Furthermore, legislation was passed by the New Jersey legislature in its state Senate to amend the New Jersey State Constitution, allowing legalized sports betting, which the New Jersey voters would ultimately vote on in a referendum as early November 2010.

But this constant back and forth between drafting new law and upholding existing legislation on a federal level to regulate gaming, runs in direct conflict with those states introducing new laws, geared to open up the flood gates for a variety of legalized gaming platforms, including sports betting. In addition, the National Indian Gaming Association, with respect to state Indian gaming contracts, originally authorized by the U.S. federal government, presents other conflicts on both state and federal levels.

Therefore, with the rights of gamblers continually in flux, the question must be asked what about the rights of non-gamblers and the resources that will be expended towards the downside that accompanies a gambling culture, upon which states will necessarily become dependent?

In the state of Nevada alone, with unemployment approaching 23%, for those presently receiving extended unemployment benefits as well as those no longer receiving such benefits, it is the gaming industry specifically that is responsible for such a jobs freefall which accompanies a nearly $1 billion state budget shortfall. Add to that the highest mortgage foreclosure rates in the entire U.S. and there arises a recipe for disaster.

And as gaming drives all other industry including construction, conventions and tourism, primarily in Las Vegas, it would make one wonder what other state officials are thinking when gaming revenues in Las Vegas went down over 20% between 2008 and 2009, and it has yet to come out of its funk.

Las Vegas Strip properties’ construction is at a virtual standstill with over leveraged multi-national conglomerates also reeling from the worldwide mortgage crisis. It appears that it was not only the little guys at the slot machines who gambled with their fortunes over the past few years.

With respect to sports betting on the National Football League’s (NFL) Super Bowl, Las Vegas betting revenues for the past 2 seasons of 2008 and 2009 were down considerably from years past. Nevada casino sports books in 2008 lost $2.6 million on the Super Bowl and in 2010 a total of $82.7 million was wagered with a net gain of only $179,000.00 more for casino sports books than in 2009. In contrast, $94.6 million was wagered in 2006, prior to the recession.

Yet, New Jersey is convinced and presupposes that sports wagering will generate hundreds of millions of dollars in state revenue over the course of a 5 year period, for its state alone. And it remains dedicated to also expand casino gambling in spite of its own realized massive decline in profits over the past 2 years.

But the state of New Jersey is hardly alone in its desire to gamble on gambling with many states introducing legislation and campaigning for both intrastate and interstate forms of gambling, both online and throughout casinos and racetrack locales throughout the U.S.

Currently, 48 states enjoy some form of legalized gambling and/or state lotteries, with the exception of Hawaii and Utah which do not presently permit any type of gambling, wagering or lotteries. However, Hawaii is presently weighing legislation for a stand-alone casino in Waikiki.

States in addition to New Jersey proposing sports betting and some type of expansion of casino gambling, including online gaming, with some states already preparing such legislation regarding sports betting in the event that PASPA is overturned includes: Iowa, Delaware, Massachusetts, California, Texas, Alabama, Missouri, Georgia, Florida, Pennsylvania, Indiana, Maine, New Hampshire, Connecticut, , Michigan, Kentucky, Illinois, amongst others.

In the case of Delaware it won the right in 2009 to offer 3-game parlay style sports betting at its 3 racetracks or racinos for NFL games only, as states that previously offered lottery style or legalized sports betting from 1976-1990 were exempt from PASPA. Yet, after its well fought challenge in federal court in 2009 for Delaware to be permitted to bet on all professional sports a la Las Vegas style without restrictions, it was defeated. But Delaware has not yet given up its fight and its case has been appealed to the U.S. Supreme Court.

Iowa is also leading the charge in crafting legislation to allow legalized sports betting. However, Iowa State Senator, Jerry Behn (R-Boone), thinks that gambling is a “Tax on the people who can afford it the least.” Yet, his colleague, State Senator, Jack Kibbie (D-Emmetsburg), on betting on professional sports says, “People say I would love to do what they can do in Las Vegas.”

Perhaps those with the same sentiments as those of Senator Kibbie will not be so game, so to speak, when there remains little discretionary income for such sin taxes to generate anticipated windfall profits.

With respect to California’s new plan there comes an additional rub. It plans to introduce an online gaming network. Yet, it potentially could be in violation of Indian Gaming licenses or compact agreements that California entered into in 1999 with Native American tribes in its state. The compacts gave the tribes exclusive rights to any gambling that involved gaming devices including slot machines, roulette tables and video poker machines, etc.

Furthermore, it took 5 years for California to get the tribes to honor the payment of taxes due to the state of California by virtue of the compacts. The tribes withheld tax payments until 2004. However, the state of California still gives such exclusive rights to the Indian tribes through 2030, which remains a binding agreement to date.

Now, the California tribes have threatened to once again withhold paying the government of California its share of taxes due for gaming revenues, should California proceed with its online poker network plans. The state’s position is that the compacts do not include poker and cover only games of chance. Yet, the tribal councils deem gaming devices to include computers used for online gaming, and thus negating California’s plan.

Such a dust-up could resonate through the Native American community, with its 442 tribal casinos operated by 237 tribal governments and Alaska native villages in 28 states. Revenues translate into a nearly $30 billion a year industry for them.

And Congressman Frank’s legislation to regulate internet poker would also be a direct threat to Indian gaming casinos, unless the Indian Gaming Regulatory Act of 1988 is somehow amended.

Ideally, California wants its poker network to go nationwide, raising revenues by ultimately licensing interstate networks and thereby generating additional profits through the ownership of such various licenses between states. The hope is that it could eventually trump PASPA.

Everything is politics, it would seem. But complicated legislative loopholes aside, basing entire economies – and California’s alone is the six largest in the entire world – on games of chance is quite the risky proposition itself.

And how taxpayers can be expected to trust their state governments to invest in struggling enterprises, already in the red, in order to prop up their cash-strapped states, many nearing junk-bond status due to irresponsible governing, remains the $64,000.00 question.

Time was when Vegas thought gambling was recession proof. And there should be little doubt that Las Vegas now serves as the poster child for that which results when gamblers stop gambling and traveling to destination resorts.

And for public officials to abandon all reason and principles, looking for a quick fix, rather than by relying upon ingenuity for the creation of jobs and revenue outside of the gambling sector, could very well come back to bite them, in the end.

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

In 2006, this reporter shed light on the seemingly unfair labor practices taking place in the Central American country of Costa Rica, in a factory operated by the Rawlings Sporting Goods Co., Inc., and now a subsidiary of the multi-national corporation, Jarden Corp. As we embark upon the 2010 Major League Baseball (MLB) season, let us take another look back on this important issue regarding free trade and on that which has transpired since.

At that time, Rawlings was a subsidiary of K2, Inc., primarily a snowboard and in-line skate manufacturer. Then in 2007, Jarden absorbed all of K2's holdings and Rawlings became one of the many assets of Jarden's portfolio.

The Jarden Corp.'s holdings, prior to 2007, had primarily been in the consumer household goods industry, such as with Mr. Coffee®, Oster®, Holmes® and CrockPot®. It became pro-active in the purchase of outdoor clothing and camping equipment companies such as ExOfficio and Coleman and then with the purchase of K2, which owned Rawlings, Jarden became a force in the professional sporting goods industry as well.

But much like the way corporate takeovers can surface rapidly and on a global scale, with what appears as little hands-on management, corporations' goods are then subject to manufacture in far-off lands with little oversight, too. And unfortunately, this accomplished strategy, having culminated primarily over the past 25 years, has enjoyed the muscle and delight of the U.S. government and other state governing bodies of countries throughout the world. Unfortunately, global trade does little to improve the standard of living and human condition of the citizens living in such impoverished countries, where many global giants relocate.
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Since this last report, to wit, Costa Rica has become a member of the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA). Costa Rica, the oldest democracy in Central America, held a voters' referendum in 2007, giving its citizens a voice as to whether they would like to join DR-CAFTA.

The United States Congress rushed through DR-CAFTA in record time, over several months in 2005, but never expected a country such as Costa Rica to actually fight its demands or to obstruct its rush-through process; for all six other CAFTA countries – El Salvador, Honduras, Nicaragua, Guatemala, and the Dominican Republic – were all on board by 2007. As it were, approval for DR-CAFTA was barely passed by Costa Rican voters, and it was not until January 1, 2009 that Costa Rica formally became another Free Trade Zone in Central America.

Few working for or playing in MLB, or for that matter most people living in the U.S., are aware that Free Trade Zones are but a win for the U.S. government and multi-national corporations operating offshore, only. Such corporate entities are not required to pay taxes or tariffs, are allowed to import their supplies duty-free, and electricity and water usage are subsidized. Yet, they are not responsible or required to enforce labor and environmental policies, that would be required had they remained doing business in the U.S.

The following contains parts of the 2006 article, that encapsulates the story of Rawlings Sporting Goods, Inc. and its subsidiary, Rawlings de Costa Rica, S.A., and its manufacture of some 2.2 million baseballs each year made by hand. These laborers work for MLB's gain, its billionaire owners, and multi-millionaire players, who largely remain mum on this topic to date:

As America's National Pastime has continued to rake in record high revenues over the past several years – in the billions of dollars each season – MLB continues to remain deaf to its critics concerning the manufacture of its Official Baseball, apparel and other accessories, with regard to unfair labor practices in the Third World.

In 2004, a 60-page report produced by the National Labor Committee (NLC), an international labor rights organization, entitled, Foul Ball, initially exposed the poor working conditions of the Rawlings baseball factory in the remote city of Turrialba, Costa Rica.

MLB had a tepid response to such claims. Then, following the report, life-long consumer advocate, Ralph Nader, wrote a letter to both MLB Commissioner, Bud Selig, and then-Major League Baseball Players Association (MLBPA) Executive Director, Donald Fehr, to address Rawlings' labor practices. Selig referred Nader's letter to his legal department and Donald Fehr said he was unaware of such claims. Neither man ever followed up.

In 2005, the United States government entered into the DR-CAFTA, allowing for further tax breaks, duty-free tariffs and Free Trade Zone status for U.S. corporations doing business in Central America, without providing for any policing of unfair labor practices in such offshore locales. Although the Agreement contained language to that effect, there is no enforcement mechanism or political will to instill such.

And instead of it taking the lead in calling-out such a worldwide problem, MLB, through its silence, therefore remains complicit in such exploitation by multi-national corporations throughout the Third World, and especially those that are U.S.-based.
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The facts are quite stunning as to what goes into the manufacture of a Major League baseball and the sometimes physically debilitating toll workers take in order to produce some 2.2 million balls utilized each MLB season, in addition to the Minor Leagues and the NCAA College World Series, with which the Jarden Corp., on behalf of Rawlings, also exclusively contracts.

Rawlings has been operating its baseball factory out of Costa Rica since 1988, as it gradually transitioned its factories from the country of Haiti, during its period of government unrest in the late 1980's. Since 1990, Rawlings has produced all of MLB's baseballs in Costa Rica, with its non-professional baseballs manufactured in China.

Although Rawlings also contracts with the National Football League (NFL) and the National Basketball Association (NBA) in producing some of its balls and accessories, the baseball itself perhaps best symbolizes all-things-American and is therefore worthy of the attention it garners from critics of the Rawlings factory.

The approximate 600 workers at the baseball factory in Turrialba are either "sewers" who stitch the cowhide covers onto the baseball's sphere, or they are "assemblers" or "winders", responsible for assembling the core's parts, made of two kinds of rubber and cork, and the winding of the ball's four different grades of yarn. Those who stitch are required to complete 108 stitches into the cowhide leather of each ball by hand.

Each sewer must complete one ball every 15 minutes. They are required to reach a minimum quota of 156 balls per week, in a factory without air conditioning, in temperatures exceeding 100°, requiring permission to use bathrooms, and prohibits workers from speaking to each other on the factory floor. The hours that workers put in average 11 -12 per day and they must always reserve their Saturdays for the factory, in the event an "emergency order" comes through. If not available on Saturday, they are subject to termination.

The gross wages per worker average $1.50 per hour. Workers can earn up to an additional $8.00 per week if they reach the threshold of completing 180 baseballs in one week. Baseball factory workers earn more than the country's minimum wage but are subject the Costa Rican Labor Ministry for any increases in the minimum wage. Provided they reach the minimum weekly ball quota each week, workers are compensated an additional 25-30 cents per baseball by Rawlings. Should they not reach the minimum quota they again risk being terminated.

The physical impact endured by the sewers has left about one-third of them with carpal tunnel syndrome or repetitive stress injuries, including permanent disability, after just two or three years of stitching. And sadly, most MLB players have no knowledge that every baseball manufactured is done so solely by hand under such conditions. Should a worker miss any length of time greater than a couple of days of work, due to illness or injury, they can be easily replaced due to the desperate employment situation. And their healthcare, thereafter, is in doubt.
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Costa Rica, always reliant upon its agriculture to sustain its people and to provide jobs, was dependent upon coffee and sugar cane as its main exports. Yet, in the past several years, as prices for coffee in particular rose, a good part its coffee exports, including its sugar cane industry, lost out to Nicaragua, as even cheaper labor costs prevail there. Some labor experts directly blame the impact of DR-CAFTA on the erosion of the agricultural industry in Costa Rica; the opposite of DR-CAFTA's supposed intent.

Because of the loss of agricultural jobs, the baseball factory now largely sustains the city of Turrialba and its population of 30,000. Rawlings has its workers over a barrel, as they know jobs are scarce, with many more willing to endure such a tough and pressurized work environment.

The NLC as well as the International Labor Committee (ILO) have called upon Rawlings of Costa Rica, S.A. to modify some of its working conditions. Rawlings was asked to provide ergonomics training for workers in order to reduce repetitive stress injuries; to provide workers with a better wage and to increase the amount of incentives based upon levels of production. Yet, Rawlings U.S. deferred to Rawlings de Costa Rica, S.A. and the Costa Rican government.

And the NLC emphasizes the need to allow the workers the right to organize in order to regulate problematic issues, without fear of being fired or reprisal, such as forced overtime or forced layoffs after 3 months, before workers can earn any legal rights. Currently, the workers are well aware that any talk of labor unions will get them dismissed and fear that the factory will go the way of its agricultural industry and relocate to a country where labor is cheaper.

Unfortunately, as the result of doing business abroad, corporations are still subject to the labor laws of the respective country in which they do business. In the case of Costa Rica, there remains a lack of oversight, follow-up or initially filed documents by the Labor Ministry for worker complaints, throughout all industries.

With respect to collective bargaining, it is permissible by law, but is discouraged in the workplace, with employers encouraging workers to join "solidarity associations" instead. These groups are allowed to assemble but are prevented from collective bargaining and are partially financed by the employer.

Ralph Nader previously demanded that MLB and the MLBPA, "Adopt internationally recognized workers' rights standards and effective enforcement mechanisms, as a core condition governing all of its product sourcing and license agreements." Yet, much like the U.S. government's claim it cannot fully enforce its Free Trade Agreements, MLB can make the same claim when it comes to its licensees or subcontractors. Thus, passing the buck becomes an accepted practice and it is chalked it up to the price of doing business in the U.S. and abroad.

Ralph Nader, at the time, went on to say that, "We cannot tell you that it comes as a shock to us that MLB properties do not have any workers' rights guidelines in their licensing agreements. Nor are we surprised by the irony of the Players Associations' Strike Fund being supported by royalties from products which might be made by Third World workers stripped of their own rights. The irony is bitter."

MLB stands pat in that, "Our agreements routinely include provisions that require our partners to comply with applicable laws including those related to employment and workplace safety. At the same time, I am sure you understand that we are not in a position to actively regulate the practices of each and every separate company with which we do business." No, but they could start with the ball; its centerpiece.
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It is not too late for MLB and its superstars to take a stand on workers' rights, regardless of lax U.S. laws in the world of Free Trade and its Agreements' legal loopholes. And important to note – although it has only been 1 year since DR-CAFTA has been realized in Costa Rica – its exports to the U.S. fell 15%, imports from the U.S. to Costa Rica fell 30%, unemployment rose to 7.8% from 4.9% in 2008 and Foreign Direct Investment from other countries fell approximately 30%. Economists will conveniently blame the global recession on these bleak figures, but it represents many Costa Ricans' worst nightmares coming true.

The sweatshop culture in the U.S. ended with the enactment of labor laws and the rise of labor unions. However, one must ask that private industry as well as the U.S. government be held accountable. For not only are both culpable in the permanent export of U.S. jobs, but both stand by – eyes wide open – as workers in other countries, without many of the freedoms U.S. citizens enjoy, are blatantly exploited. For there is no "free trade," as someone ultimately pays.

Take a stand MLB! Perhaps now is the time for Rawlings to go.

Copyright ©2010 Diane M. Grassi
Contact: dgrassi@cox.net

"Considering the fact that so many state governments – probably between 40 and 50 – don't consider it immoral, I don't think that anyone should. It may be a little immoral because in reality it is a tax on the poor; the lotteries. But having said that, it's now a matter of national policy. Gambling is good."

No, that high profile quote is not attributable to a member of the U.S. Congress, a state governor nor other public official or public figure. Most people had no clue who said it until it was published on December 11, 2009 in a Sports Illustrated interview that writer, Ian Thomsen, had with National Basketball Association (NBA) Commissioner, David Stern. In it, Stern reveals that his stance on legalized sports betting has softened.

But having been the NBA's face for the past 25 years, Stern has no less been a shrewd businessman. Moreover, as a studied attorney, he knows the meaning of precedent and its value in proving one's case.

As such, the prevailing precedent Stern created was his steadfast endorsement of the prohibition of legalized sports betting. And therefore, as he has now seemingly opened Pandora's Box, if but a crack, his juxtaposition may not be greeted with such warm and fuzzy feelings by the commissioners of the other professional sports leagues as well as the National Collegiate Athletic Association (NCAA).

For it was but a few short months ago, in July 2009, when the NBA joined suit with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL) and the NCAA in successfully defeating the state of Delaware in its attempt to legalize single game sports betting in its state.

The case in Delaware was based upon the legal theory that the 1992 federal law, known as the Professional and Amateur Sports Protection Act (PASPA) was not applicable to it. In three court hearings, the last before the full 12-judge panel of the U.S. 3rd Circuit Court of Appeals, found that Delaware was not entitled to offer sports betting a la Las Vegas style sportsbooks sports betting.

So, Delaware had to settle for NFL only 3-game parlay style betting, which links together two or more individual wagers, but is dependent on all of those wagers winning together, in order for the gambler to profit. In addition, all sports bets must be waged solely at Delaware's race tracks, Dover Downs and Delaware Park. Aside from a hit that the NFL took, however, the other leagues prevailed in winning their case.

In brief, states that offered lottery style or legalized sports betting from 1976-1990 were exempt from the PASPA, and it provided a 1-year grace period for states, who had allowed sports betting over the previous 10-year period, to create legislation permitting sports wagering. Delaware, Oregon, Montana and Nevada had such exemptions. But Delaware did not act within that 1-year period, thus creating its present dilemma.

Since Delaware offered a 3-game parley lottery on NFL games in 1976, it was offered no more than that which it had previously enjoyed.

The leagues, including the NBA, however, played no small role, along with several members of the U.S. Congress, in winning the case. They all appealed to U.S. Attorney General, Eric holder, in their opposition to grandfathering in any sports wagering of any kind. And in the end, Delaware came up short, where its last act would only be to appeal to the U.S. Supreme Court. It does not have any such plans at this time.

Back in 2007, Commissioner Stern agreed to hold the NBA's 2007 All Star Game in Las Vegas, NV, which remains the only state in the Union which allows single bets to be taken at sportsbooks for every league in professional and college sports and for every team. The only exceptions are the NBA's Sacramento Kings and the Boston Celtics along with the teams they are playing against on any given day. And such limitations are only with respect to specific casino properties.

The reason for that is that the Palms Hotel and Casino is owned by Joe and Gavin Maloof, who also own the Kings and previously owned the WNBA's Sacramento Monarchs. The other exception is Harrah's Entertainment, Inc., which owns a minority interest in the Boston Celtics. As Harrah's own numerous Las Vegas casino hotels, no sports bets may be taken at those Harrah casinos which have sports books, on Celtics games or their respective opponents, as mandated by the NBA. Prior to 2008, the Palms Casino was not permitted to have sports betting on any NBA teams, but the NBA Board of Governors ruled to allow the Palms to join the rest of the Strip properties, doing so in October 2008.

And during 2007, David Stern had talks with Las Vegas Mayor, Oscar Goodman, regarding the mayor's interest in acquiring an NBA franchise for his city. But the future looked bleak at that time. Now, the NBA's Summer League is a fixture there as well as a training ground for USA Basketball and the U.S. Olympic team. And by 2008, Stern had decided to allow the NBA owners to decide whether there will be a future for an NBA club in Las Vegas.

Fast forward to 2009 and Stern now says, "Las Vegas is not evil. Las Vegas is a vacation destination resort and they have sports gambling." He apparently has come a long way from the 2007 All Star Game when he was adamant about blocking any potential ownership opportunities for his league in Las Vegas. Apparently, the Maloof brothers have done a nice job convincing him otherwise.

The Tim Donaghy referee scandal, also in 2007, put a crimp in Stern's possible growing interest in a potential marriage with games of chance. At that time, Stern ordered the drafting of new policies with respect to NBA referees' off-season limit on gambling at legalized casinos. It is now permissible. However, sports betting is off-limits any time of the year. Ironically, Tim Donaghy's alleged gambling addiction started in legal gambling casinos, now endorsed for NBA referees by David Stern himself.

However, NBA referees are now more closely scrutinized and monitored in their off-court and off-season behaviors, requiring more invasive background and credit checks, while under the employ of the NBA.

And now it makes even more sense as to why Stern would insist that Tim Donaghy was a "rogue" or lone referee with regard to passing on inside information to illegal bookmakers and organized crime syndicates. Yet, both the FBI and the NBA's own internal investigation found that any of Donaghy's malfeasances did not alter game outcomes. Still, Donaghy was convicted and served 15 months prison time, including a fine of $500,000.00 and $30,000.00 in required restitution to the NBA.

Assuming that Stern had a grand scheme all along to eventually cash in his chips for a piece of the gambling revenue empire for the NBA, Donaghy merely mucked up the works temporarily, as Stern necessarily went into high gear damage control or virtual denial.

It was by mere coincidence, however, that the FBI even stumbled upon Donaghy, and obviously not through the lax mechanisms in place in Stern's house, which was neither equipped nor anxious to reveal any corruption in his ranks. An investigation by the federal government into the Gambino Crime Family is what prompted the FBI's findings; and was flawlessly staged as a complete surprise and seemingly unfathomable to the NBA's Stern.

And although David Stern might be out of step with the other professional leagues' commissioners, as concerns legalized sports betting, with the exception of his joining them in the Delaware lawsuit, he is right in line with multi-national corporations, global investors, foreign governments, U.S. state governments and gamblers of all kinds in the U.S. and throughout the world.

If anything, one must agree that David Stern is a master at playing both sides of the fence and therefore may not be as inconsistent as many have criticized him for being since the Sports Illustrated article broke.
Hypocrite or merely an evolved businessman wanting to cash in his chips, so to speak?

It is estimated that in the U.S. alone, nationalized legal sports betting income taxes and sin taxes could generate over $40 billion over 10 years. And that does not include the take that the NBA would stand to gain from ancillary revenue streams.

With the United Kingdom, Australia, other European entities as well as China in the sports betting business, many in the U.S. Congress, for example, believe legalized sports betting and online gaming would but eliminate illegal off-shore gambling and would be a win-win both for the government and private enterprise, while removing the organized crime quotient.

But whether such comes to pass in the near future, remains to be seen, although cash-strapped states remain hopeful. Yet, in this economy it is anyone's bet. Yes "gambling is good." But is it not ultimately about greed?

And the NBA's appearance of duplicity will continue to have its critics:

"Apparently, the NBA is not as a concerned about the integrity of the league when their teams' owners' money is at stake." – Delaware House Majority Leader Peter C. Schwartzkopf (7/28/09)

Copyright ©2009 Diane M. Grassi
Contact: dgrassi@cox.net

It was 30 years ago when baseball legend, Willie Mays, was banned from Major League Baseball (MLB). Four years later, NY Yankee great, Mickey Mantle, met with the same fate as did Willie. And what was their supposed fall from grace? They each became promotional spokesmen for two Atlantic City casino hotels.

Willie Mays had a deal with the Park Place Casino – now Bally's Park Place – and Mantle contracted with Del Webb's Claridge Casino Hotel. The roles both played were as pitchmen for the resorts as they appeared in television and print ads for the respective properties.

At the time, it was MLB Commissioner, Bowie Kuhn, who made both then Hall of Famers "permanently ineligible" to participate in any capacity with MLB. In 1985, after Kuhn's retirement, then newly appointed Commissioner Peter Ueberroth exonerated both Mays and Mantle, thereby lifting their banishment. Ueberroth proclaimed, "A lot of people will misinterpret my position as being soft on gambling. My stance is as strong as any Commissioner's going back to Judge Landis. But there's a need for new rules."

And the argument could be made back then that both Mays and Mantle were not front-men for gambling, but rather were promoting entertainment interests of hotel resorts.

Fast forward to sometime around 2006 when MLB supposedly relaxed its rule on permitting direct relationships with gambling casino interests and its MLB teams. However, most such deals blossomed for this year's 2009 baseball season that includes large casino hotel properties as well as many lucrative agreements with Indian reservation hotel casinos.

Sponsorships and the financing of such throughout professional sports as well as amateur athletics are drying up by virtue of the worst recession in 70 years. Added to that is the negative public perception that corporations receiving federal tax bailout dollars should not be dabbling in multi-million dollar contracts for advertising at sports venues nor buying skyboxes and over-priced season tickets at stadiums.

However, there now appears to be a new revenue stream, largely untapped, yet quickly assembled by many MLB teams and with Commissioner Bud Selig's blessings. But in order to fully appreciate the precariousness of such contracts that MLB has already approved, it is helpful to revisit MLB Rule 21:

(a)Any player or person connected with a club….or who being solicited by any person, shall fail to inform his Major League President and the Commissioner
(d)Any player, umpire, or club or league official or employee, who shall bet any sum whatsoever upon any baseball game in connection with which the bettor has a duty to perform, shall be declared "permanently ineligible."

And now the question must be asked. How does MLB oversee such sponsorships between MLB teams and those casino operations which allow legal sports betting on their premises, such as Harrah's Entertainment, which has become a major sponsor for the NY Mets' new Citi Field, most prominent in its outfield stands?

Harrah's is now a Signature Partner of the Mets and has a 12,000 square foot 900 seat capacity full-service restaurant called the Caesar Club. Harrah's hopes to recreate the atmosphere it provides at its Caesar's Atlantic City property. Harrah's will also benefit from naming and branding rights and orchestrate theme nights for baseball fans throughout the season.

It is important to note that Harrah's casino hotel properties that it owns in Las Vegas, such as Caesar's Palace, the Flamingo Hotel and Casino, Bally's and its Rio Hotel and Casino which is host to the World Series of Poker, among others, all have sports books where sports betting on all professional and amateur sports is legal. And such includes sports betting on MLB.

At the new Yankee Stadium, the Mohegan Sun Hotel & Casino also has a presence in its center field stands. Its Mohegan Sports Bar is a 4,900 square foot full-service restaurant with major signage and a naming rights deal with the Yankees. In addition, Seminole Hard Rock Entertainment will own and operate the NYY Steak restaurant as well as the stadium's new Hard Rock Café. The Seminole Nation is the primary proprietor of all Hard Rock Café and hotel casino properties worldwide, with the exception of the Hard Rock Hotel and Casinos in both Las Vegas and London.

The casino sponsorships for both the Yankees and the Mets are quite lucrative and in the millions of dollars, although MLB clubs do not necessarily accurately disclose the amount of their sponsorships, nor are they required to do so. But the NY teams are hardly in the minority when it comes to lining up for casino riches in the form of sponsorships. The Milwaukee Brewers inked a deal over the winter with the Potawatomi Bingo Casino of the Potawatomi Tribe.

The Brewer's deal with the Potawatomi Tribe is just second to its deal with Miller-Coors Beer. And in MLB's logic according to MLB's Chief Operating Officer, Bob DuPuy, "There is no sports book associated with Potawatomi and casino gambling is now part of the entertainment landscape in 40-plus states and a number of clubs have had advertising and sponsorship relationships with local casinos."

Perhaps DuPuy does not realize that Harrah's is in the sports betting industry?

In Detroit there appears to be a long-standing conflict of interest with respect to the ownership of the Detroit Tigers as well as the Motor City Casino, purchased by Ilitch Holdings, Inc. in 2005, which purportedly owns both entities simultaneously.

Michael Ilitch and his wife, Marion Ilitch, are listed as the Tigers' owner and the Motor City Casino owner, respectively. The question arose when it was revealed that Marion Ilitch is Vice Chairman of Ilitch Holdings, Inc. which also owns the Detroit Tigers. But Ilitch friend and Commissioner Bud Selig overlooked the proprietary conflict and asked his staff to stand-down.

There is indeed no shortage of casino sponsorships throughout the major and minor leagues of baseball. The Atlanta Braves, the Arizona Diamondbacks, the Los Angeles Angels, the Los Angeles Dodgers, the Florida Marlins and the Chicago Cubs all have contractual sponsorships with Indian casinos, gambling interests or state lotteries.

So what impact does this state of affairs have on the "best interests of baseball?" One could say that it was precipitated by Commissioner Ueberroth's comments"…there's a need for new rules." Or did Bud Selig's multi-billion dollar empire become too greedy for MLB's own good by accepting a strong presence of gambling partnerships throughout the leagues? Has the appetite for big bucks clouded Selig's judgment and has he crossed the line?

For MLB must be careful not to step on that 3rd rail; that which endangers its integrity. After all, MLB itself has already gambled on fan loyalty after nearly 20 years of the Steroid Era, also on Selig's watch.

And finally, if the apparent overlap between gambling interests and MLB is not clear to the MLB Commissioner, then why is he so clear on keeping Pete Rose "permanently ineligible" and forever denying his chance of realizing his place in the Baseball Hall of Fame?

Copyright ©2009 Diane M. Grassi
Contact: dgrassi@cox.net

In this third chapter of this ongoing discussion and analysis of United States energy policy and its ramifications both realized directly and indirectly from the U.S. Energy Policy Act of 2005, (EPAct 2005) it would be irresponsible not to include U.S. nuclear energy policy in such analysis.

As such, the EPAct 2005 and its previously referenced and unprecedented mandates, in prior chapters of this report, play a role with the reformulation of the regulation of U.S. nuclear energy and its projected and rather overwhelming imminent comeback.

The nuclear energy industry has become a global proposition given the changing geographic demands of energy needs in newly industrialized nations such as India and China. And it would be foolish for the U.S. to assume that it operates in a vacuum and that its future energy needs and demands will not be impacted by such changes in a global economy; one in which the U.S. is now primarily at the receiving end of offshore manufactured goods, including more and more of America's food supply.

But the global economy has but given the U.S. government and in particular in this case, the U.S. Department of Energy, (DOE) an excuse to take the proverbial lid off of sound national security policy which has necessarily dictated U.S. energy policy for decades, until now, for the safety of the American people and the integrity of its critical infrastructure.

Although the first large scale civilian nuclear plant started providing electricity in 1957, it was basically between that time and the late 1970's when all of the current operating nuclear reactor facilities were constructed. And with an average lifespan up to 60 years for each, most of the currently operating 104 U.S. nuclear plants are either in or have applied for their 2nd 20-year licensing period extensions.

Since the last U.S. nuclear reactor was ordered in 1973, those handful that were completed, after 1978 and post-3 Mile Island, were ordered prior to 1973. To wit, in 1996, the last U.S. plant constructed, the Tennessee Valley Authority's Watts Bar 1 reactor in Tennessee, was the result of a revived dormant license from 1970. And there are plans to build the Watts Bar 2 from another previous license from dating back to1973.

Since U.S. nuclear energy policy has nearly come full circle today, it is important to take stock of its history. The Atomic Energy Commission, (AEC) was formed through the Atomic Energy Act of 1946, originally to specifically oversee the military's and civic atomic energy programs. And it was given the expanded responsibility, for the first time, to assume dual oversight and regulation of atomic energy both militarily as well as commercially through the Atomic Energy Act of 1954.

But it was through the Energy Reorganization Act of 1974, that created the Nuclear Regulatory Commission (NRC), the present U.S. nuclear regulatory agency, to assume the oversight authority from the AEC. It now regulates most U.S. commercial nuclear activities, including nuclear power reactors and the use of radioactive materials in industry, medicine, agriculture and scientific research as well as fuel cycle facilities and nuclear waste management.

The 1974 law was seen as an opportunity to put trust back into the oversight agency which took on the dual task of both promoting nuclear power while safeguarding the American people, initially in 1954. And it was after that point in time that the American people had already begun to lose trust in the agency's ability to do so. Apparently, the U.S. government thought that changing the acronym of the agency would calm the public's displeasures.

But it was during the late 1960's and early 1970's when the nuclear plant construction boom was in full gear and simultaneous reassurances from the federal government to keep safeguards in place fell on the deaf ears of energy consumers. Most importantly, the agency was designated to walk a fine line of both promoting commercially viable nuclear energy as well as handling all of the required licensing for new construction of nuclear power plants.

And in this global economy, at a time when the U.S. is seeing extraordinary growth in the foreign direct investment and acquisition in U.S. critical infrastructure, it appears reaped with conflict for the licensing agency to also be able to independently assess potential security risks both civilly and criminally.

Unfortunately, the notorious Browns Ferry Nuclear Plant fire in 1975 in Decatur, AL could have been avoided and was the result of human error rather than an unexpected meltdown. A mechanical technician foolishly was looking for reported air leaks within the reactor with a lighted candle which ultimately started the fire. But
Three Mile Island Unit 2 (TMI-2) nuclear power plant near Middletown, Pennsylvania, on March 28, 1979, was the most serious nuclear plant fiasco in U.S. history. The reactor sustained the melting of half its core, which was later found to be a combination of technical and human error and allowed for released radioactive gases into the atmosphere and putting its employees immediately at risk.

The 3 Mile failure was followed in 1986 by the misfortune of Unit 4 of the nuclear power station at Chernobyl, Ukraine in the former USSR. It emitted radioactive material, far more deadly an accident that 3 Mile Island, affecting 52,000 people in the vicinity, immediately killing 30 people and possibly impacting up to 5 million others. Nevertheless, it was 3 Mile Island that provided the final nail in the coffin for skittish investors in U.S. nuclear technology, although nuclear facilities throughout the U.S. still provide 20% of electrical power generation. It remains very low in greenhouse emissions and is considered a form of clean energy.

In spite of the NRC's own damage control to restore safety measures in nuclear plant facilities over the past 30 years, its ill-repute remains along with remnants of trepidation in reinvesting in nuclear energy. Therefore, the apparent overnight reverse course by the DOE in lining up investors to submit license construction applications for nuclear energy plants, with some 20 expected by mid-2009, has set off alarm bells of another sort.

And that brings us back to the EPAct of 2005 which provides for a vast assortment of givebacks, subsidies and federally subsidized loan guarantees including risk insurance packages to the brokers and investors who come a-callin', totaling billions of dollars worth of incentives. And once again, foreign owned holding companies, foreign government-owned entities and foreign-U.S. joint ventures, acquisitions and mergers will be the recipients of these U.S. taxpayer provided benefits.

The nuclear energy industry not only remains a hot-button issue because of its sullied past, but because of a heightened internal as well as public awareness of its ever-present national security risks it now poses in a post-9/11 world. In addition, there is the issue of the failing power grid infrastructure, which has not been improved in decades, and minimally maintained, along with a continued U.S. deregulation policy from which the American economy may never recover.

All of the aforementioned but creates for a perfect storm, all the while U.S. foreign policy dictates to other nations and regions on the ways in which they may engage or use nuclear material, whether for weaponry or for electrical power distribution.

The first step in trying to comprehend this multi-faceted and current energy policy, based upon both its history as well as current law, is to understand the revised NRC application process. Although the regulation revisions date back to 1989, the most recent and final rules were not certified and published in the Federal Register by the NRC until August 2007 (10 CFR Part 52).

The revisions have changed the entire regulatory review process and framework for the construction of new nuclear reactors and facilities. And over the next 18 months, such changes in the regulation process, with ink barely dry, will be tested in a paint-by-numbers fashion.

The EPAct 2005 while not intrinsic to the actual changes in NRC rule making, has played a consequential role in incentives for investors and ultimately the NRC's seeming rush to finalize regulation revisions over a matter of months, after many years they were held in virtual abeyance.

And now the one time 2-step licensing process created for its thoroughness and for compliance with the Environmental Protection Agency (EPA) as well as providing enough time to have the appropriate number of public hearings, has been whittled down to a 1-step process; one that appears less investigative in scope and more equivalent to drive-through governance.

In order to supposedly bring an improved regulatory model for U.S. nuclear energy construction, which the NRC believes to be more efficient, the COL, or combined license application, early site permits (ESP), and standard design certifications pushes the process along more quickly. However, also cut in the process will be preoperational hearings on plant construction qualification that would be limited and not required by the NRC, and minimizing public input.

The ESP procedure includes site safety issues and emergency plans apart from the plant design. The NRC's and nuclear industry's reasoning is that the new process will cut down on delays, cost overruns and reduce the application process down to 42 months. In that regard, there is some speculation that the next nuclear plant could break ground in the U.S. by the end of 2010 and perhaps be completed by 2015.

In the final part of this series, the actual players or investors in new U.S. nuclear plants construction will be addressed as well as who and from where from these entities hale. And the mechanisms mandated in the EPAct 2005 for lucrative financial rewards to these corporations will be discussed. Whether or not such investors will be even remotely close to ensuring the fiscal as well as environmental health of the American people is an important question which will be asked.

And finally, that which is most crucial in this entire changing energy landscape, that being the national security of the U.S, was etched into law in the Atomic Energy Act of 1954 in 42 U.S.C. Sec. 2011 (1954) as follows: "Aliens and entities owned, controlled or dominated by aliens or foreign governments may not engage in operations involving the utilization of energy. This restriction applies primarily to nuclear reactors and reprocessing plants extracting plutonium."

Yet, as will be analyzed in Part 4 of this series, we will see that through the use of joint ventures, foreign holding companies, license transfers and majority subsidiary investment mergers, rubber-stamped by virtually all branches of the U.S. government, historically held energy law no longer remains the watchdog it was once meant to be. Therefore, the best interests of the American people are now marginalized and the future national security interests of the U.S. may be forever compromised.

Copyright ©2008 Diane M. Grassi
Contact dgrassi@cox.net

As previously chronicled in this series of reports subtitled, MLB Goes to Harlem Seeking Welfare, on the public financing of the new Yankee Stadium in Bronx, NY, a borough of New York City, the issues it encompasses and the various impending outcomes may have a broad impact for cities across the United States.

Moreover, public-private partnerships have become intentionally blurred when it comes to taxpayers ultimately funding of Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA) and other professional sports' stadiums and venues.

Balance sheets, land assessments, funding arrangements via questionable ethical relationships if not borderline illegal ones between public officials and corporate entities are now being revealed as more than troublesome with respect to the new Yankee Stadium. And it may eventually take an act of the U.S. Congress to unravel that which appears to be an egregious violation of the public trust on behalf of NYC and the New York Yankees.

As last reported here in July 2008 in NYC, Yankees Redefine Crookery in Part 2, the NY Yankees a/k/a/ Yankees Global Enterprises LLC, had requested that an additional $366 million in tax-free bonds be appropriated, to the already ballooning $1.3 billion cost of the new Yankee Stadium tallied thus far, and financed primarily through such funding instruments.

But in order for any new approval for any such new appropriations, the process must be cleared again by a host of multiple New York City, New York state and federal agencies. However, unanticipated by the NY Yankees is that not only could such a request be denied but that they have opened up a proverbial Pandora's box of quagmires now being given scrutiny with a fine tooth comb by both the State of NY and a powerful Congressional committee.

On July 4, 2008, during the NY Yankees game at Yankee Stadium versus the Boston Red Sox and broadcast on the YES cable network , the NY Yankees own broadcast outlet, play-by-play announcer, Michael Kay, was speaking about how the current stadium would be replaced starting with the 2009 season. And he stated at the top of the 2nd inning that "And across the street they're building a new ball park which the Steinbrenner family is paying for."

Perhaps Kay should go to Capitol Hill and testify under oath and relay such news to those investigating the suspicious circumstances under which the NY Yankees obtained all of their dough. He may get a chance in September 2008 when additional hearings will be held by the House Committee of Oversight and Government Reform's Sub-Committee on Domestic Policy. After all, Kay would be in good company along with notable others associated with MLB who have been less than forthright before Congress.

But sadly, most New Yorkers either already believe that which Kay and others have reiterated or have no idea about anything going on in Yankee Land. Yet, such may set important precedents for future building projects and land takings both in NYC and other municipalities.

But far more importantly, and at a time when NYC and NY state are both eliminating important public services due to budget shortfalls, it is incumbent for taxpayers to know far more comprehensively, than that which the local tabloids have recently and but occasionally provide, about this complex web of wheeling and dealing.

For the new Yankee Stadium is no longer a house that Ruth built but one that New Yorkers citywide and statewide will be paying for and for generations to come. And in that regard a brief context of the back-story is in order and to understand in the interest of public policy.

Prior to the NY Yankees' initial approvals required from public agencies, the last of which were not completed until 2006, the Yankees put into motion key lobbyist law firms and former public officials who had prior governing positions from City Hall to the Internal Revenue Service to the U.S. Department of Treasury. And it was through such seemingly conflicts of interests that have driven the realized stadium.

Initially, the NY Yankees had to clear a hurdle by the IRS, which many now consider questionable, for the $941 million gain in triple tax-exempt bonds with a favorable low interest rate. Such will save the Yankees close to $150 million in saved interest alone.

Bond buyers get a considerably less lower set interest rate of return, when exempt from federal, state and city income taxes and therefore the NY Yankees benefit from an interest rate approximately 25% lower than taxable bonds.

Bruce Serchuk, a partner at the law firm, Nixon Peabody LLP, was retained by both the NYC Industrial Development Agency, and the NY Yankees to lobby the IRS. Serchuk was a former lawyer in the Office of the Chief Counsel at the Internal Revenue Service (IRS) and in the Office of Taxation Policy at the Department of the Treasury. He was instrumental in providing NYC lawyers help with submitting the request that allowed such payments-in-lieu-of-taxes (PILOTs).

In June 2006 the IRS granted that request to NYC in a private letter ruling. In spite of regulations that changed that very year which further restricted publicly financed stadiums using tax-exempt bonds, it got the attention of the Committee on Oversight and Government Reform's Sub-committee on Domestic Policy and precipitated a March 2007 hearing.

Yet, instead of putting a cap on spending by the NY Yankees and NYC's Industrial Development Agency (IDA), an arm of the NYC Economic Development Corporation, which operates at the Mayor's behest, NYC was granted another $190 million in tax-exempt financing for the new stadium's 3 parking garages.

But in order to get this increased financing, the garages were termed by NYC officials as "Civic Facility Projects." Additionally, the IDA created a specious not-for-profit organization, referred to as the Bronx Community Initiative Development Corporation as a "special purpose LLC" that was needed as a bridge to complete the garage financing.

Tishman Speyer Properties, now a global multi-national conglomerate, was hired by the NY Yankees for the construct of the new stadium. Anthony Mannarino, who now is in charge of Tishman's stadium development, was previously the Executive Vice President of the NYC Economic Development Corporation from 1990-1994 and its acting President in 1994.

None other than former Mayor Rudolph Giuliani and one of his former NYC Police Commissioners, Howard Safir, are both listed in court documents as security consultants for the new stadium project as Giuliani Security & Safety Partners, a division of Giuliani Partners, LLC and Safir-Rosetti Security, respectively.

There are far too many lobbying interests and reciprocal relationships to detail in this one report, but suffice it to say that the NY Yankees and NYC officials have easily spent upwards of $500,000.00 of taxpayer dollars in lobbying costs for their back-scratching stadium behemoth.

Most of the lobbying expenses were accorded in a final deal which Mayor Giuliani had ratified prior to his departure from City Hall in 2001. It allocated $25 million over a 5 year period from 2002-2007 to be used by the NY Yankees in any way they saw fit for the planning stages of the new stadium on the taxpayer's dime. And unfortunately far more than new stadium expenses were charged to the taxpayers, which had nothing whatsoever to do with stadium planning. But the NY Yankee organization could not help itself and applied for every last dime of that $25 million.

The puppet master of the whole deal is former NYC Deputy Mayor of Economic Development, Planning and Administration, Randy Levine, from 1997-2000, and now President of the NY Yankees. Prior to Levine's leaving his office in 2000, he was given the primary responsibility to craft a financing structure document for Mayor Giuliani and the new Yankee Stadium.

And prior to becoming Deputy Mayor, Randy Levine was a chief labor negotiator for MLB Commissioner Bud Selig. To make matters worse, Levine was granted a waiver from the NYC Conflict of Interest Board which oversees NYC's Conflict of Interest Law. And as a direct result of that waiver, throughout Randy Levine's term as NYC Deputy Mayor, he maintained a consulting contract with MLB.

In September 2008 the House Committee on Oversight and Government Reform's Sub-Committee on Domestic Policy whose Chairman is Congressman Dennis Kucinich (D-OH) will concentrate on those federal agencies formerly involved in the previous financing approvals and the newly requested $366 million in additional funding requested by NYC and the NY Yankees in June 2008.

Those agencies include the U.S. Department of the Treasury, the IRS, and the National Park Service of the U.S. Department of the Interior along with the NY Yankees, the NYC Department of Finance, and the NYC Economic Development Corporation. Those involved agencies have all been required to submit specific documentation to Congressman Kucinich's committee by August 6, 2008 in preparation for the atest hearing which took place on September 18, 2008 on Capitol Hill.

The issue that will continue to be explored will be the conflicting land value assessments which were supplied and used as a basis for the original $941 million tax-free bonds. It has come to the attention not only of Rep. Kucinich but New York State Assemblyman, Richard Brodsky, that the unjustified land assessment valuations may be the smoking gun in the now $1.3 billion house of cards which may bloat to upwards of $2 billion before all is said and done.

The NY Yankees claim that the land upon which the new stadium sits is worth $275.00 per square foot, more than most lots on waterfront property on Manhattan Island, the heart of NYC. The NYC Department of Finance claims that the land is worth $204 million versus NYC's commissioned independent assessors who value it at $21 million. And land just across the street from the new Yankee Stadium, according to the NYC Department of Finance's latest assessments and the latest average market value of such land in that area of the Bronx, is but $36 per square foot.

According to NY State Assemblyman, Richard Brodsky, who heads the NY State Committee on Corporations, Authorities and Commissions and who is also holding hearings on this issue on the state level has said that, "This issue goes to the heart of whether it is a public project or a private project…There is substantial discrepancy on a whole host of levels that we are going to proceed to investigate thoroughly and fairly, but we are going to get to the truth."

And as the ongoing story of this slippery slope of either trickery or merely free market big business, depending on one's point of view, this journalist will pick up the case in September 2008 and report back in Part 4 of this series.

And just in case you were wondering, "Everything is politics."—Thomas Mann (1950)

Copyright ©2008 Diane M. Grassi
Contact: Dgrassi@cox.net

"Energy independence from foreign sources." A mantra repeated over and over again by those responsible for establishing United States energy policy. But it remains a contradiction in terms as the topic is never broached candidly by lawmakers as to how much of the U.S. energy infrastructure and lines of transmission have been consumed by a constant stream of foreign direct investors and diversified holding companies.

Also unbeknownst to most consumers is that legislation which led to such deregulation of U.S. public utilities is hailed from Wall Street to Capitol Hill as the answer to resolving U.S. energy woes.
Now, foreign investors have been granted even greater leeway as now realized by such mandates of the Energy Policy Act of 2005 (EPAct 2005) which essentially eliminated the Public Utilities Holding Company Act (PUHCA) of 1935. Yet, EPAct 2005 has continually escaped public scrutiny and a lack of accountability in both houses of the U.S. Congress.

U.S. energy policy and the generation of power is a complex web of public policy, law, economics, infrastructure and ever-present globalization. So for purposes of this report, and in order to best comprehend current U.S. energy policy, it is helpful to take stock of the more recent evolution of such and to examine its many and varied elements which have changed post-2005.

EPAct 2005 amended Section 203 of the Federal Power Act (FPA) which mandated how future transactions in the energy industry will be handled by the U.S. federal government and will impact matters of states' sovereignty and ultimately regulating costs to consumers.

For over 70 years, federal laws have played a vital and critical role in the operation, production, distribution and protection of the U.S. electrical power grid. Federal laws in concert with state laws and regulations have necessarily dictated that the power grid be shielded from market manipulation and criminal behavior.
Yet, the 100 year old power grid is faced with increased power demands simultaneously with deregulation by mandate. And deregulation has led to less and less necessary preventative maintenance, upgrades in technology as well as necessary investment in research and development.

The basic structure of the North American transmission system is made up of over 140 control centers and approximately 3500 utility providers covering over 200,000 miles. Utility generating plants, transmission and sub-transmission systems, distribution systems and customer loads traveling over a two-part power grid; one in the east and one in the west. Texas has its own grid.

Compounding the vast network and intricacy of the grid is the interconnectivity and delivery of power that in many cases is incompatible with widely varying levels of equipment integrity, data systems and personnel training. It is the secondary system which supplies the distribution of electricity to consumers, where most of the power failures occur, and that which require time to repair. And the network of sub-stations feeding electricity to neighborhoods, via feeders which flow to transformers, is where most problems arise during local outages, further exacerbated by ill-maintained equipment.

U.S. deregulation of the utility industry began over two decades ago, and it was the 1992 Energy Policy Act which changed the way electricity was sold to local consumers for the first time. Energy companies were permitted to install their own plants and sought customers throughout the country, but not necessarily in the same geographic region. Energy brokers then entered into the picture and utilized the open market to buy and sell power. And thus came the onset of potential unreliability of energy delivery.

Purchasing power from plants hundreds of miles away from a respective region put unprecedented burdens upon the transmission system, raising the likelihood of power failures at the local level. Most importantly, the U.S. electrical grid was not originally designed to absorb the transmission of high voltage capacity across the continent, especially in absence of comparable and upgraded systems in place.

Although Enron became the poster-child for electrical power market manipulation, which came to light after the rolling blackouts of California in 2000 and 2001, U.S. public policy and lawmakers must be held responsible for even further erosion of federal regulations and mandates now realized in EPAct 2005.
Instead of increasing the odds that such market threats would not reappear, the U.S. government has but relaxed the law, its regulations and oversight even more, with the repeal of PUHCA 1935.

PUHCA 1935 became law after the height of the Great Depression and after the stock market crash of 1929 and was a cornerstone of President Franklin D. Roosevelt's New Deal industry legislation. It called for the prohibition of market manipulation, specifically to curtail then super-sized utility conglomerates, and to prevent monopolies from overtaking geographic regions. And just as importantly, PUHCA 1935 made it unfeasible for non-energy corporations to purchase a public utility.

The emergence and formation of the Securities Exchange Commission (SEC) in 1934, together with PUHCA 1935 became essential in safe-guarding the public trust and in protecting consumers and investors alike, as PUHCA 1935 delegated multi-state utility ownership regulation to the SEC.

With the official repeal of PUHCA 1935, in EPAct 2005, the SEC vacated its regulatory authority over multi-state utility ownership by holding companies and only retains the ability to protect investors, not utility consumers and will carry little weight over multinational holding companies. It is the Federal Energy Regulatory Commission (FERC) that will now hold individual utilities accountable through self-policing and self-reporting policies of any irregularities such as cross-subsidization.

EPAct 2005 now allows multi-state transactions and mergers of distribution facilities, utilities merging with non-utility corporations, and including foreign ownership over domestic utilities. Oil companies may now own electricity and natural gas utilities, paving the way, yet again, for the formation of cartels. Construction and infrastructure companies, from abroad, are eager to partake in being afforded acquisition of U.S. public utility operations as well.
No individual state or federal agency will have the jurisdictional efficacy to regulate the finances of U.S. public utility assets. Required oversight of parent holding companies such as investment banks, which speculate and invest in far riskier businesses with utility rate-payer revenues, is not established nor mandated in EPAct 2005.

The cost? The reliability standards of U.S. public utilities, which could have grave ramifications on U.S. national security, the U.S. economy and the well-being and safety of the American people; all with the blessings of the U.S. Department of Energy (DOE), the U.S. Congress and the global stock market.

EPAct 2005 does set forth specific mandates, unprecedented with respect to U.S. energy law, states' constitutional rights and sovereignty, as well as interstate commerce. Specifically, Section 1221 of EPAct 2005 updates Section 216 of the Federal Power Act (FPA) for a National Transmission Congestion Study which paved the way for the mandated National Interest Electric Transmission Corridors (NIETC). The Secretary of Energy may designate "any geographic area experiencing electric energy transmission capacity constraints or congestion that adversely affects consumers as a national interest electric transmission corridor."

The DOE then created as a direct result of the study two transmission corridors which consist of the Mid-Atlantic Area National Corridor and the Southwest Area National Corridor and finalized in October 2007.
Many state governors, state representatives, many federally elected members of the U.S. Congress, consumer advocacy organizations, and environmental and historic preservation organizations, oppose such corridors.

The enormity of the construct of the Mid-Atlantic Area National Corridor will impact states legislatively, constitutionally, economically, environmentally and historically. The Mid-Atlantic Area National Corridor states include the entireties of New Jersey, Delaware, and Washington, D.C., most of Maryland, most of New York; most of Pennsylvania, most of West Virginia, and major areas of Ohio, and major areas of Virginia.

In contrast, the Southwest Area National Corridor includes parts of California and parts of Arizona, albeit the most heavily populated areas of these states.

The NIETC lays the groundwork for supplemental transmission siting approval in the construction of High-Voltage Direct-Current (HVDC) Transmission lines, above ground, throughout all the NIETC designated states, whether or not that particular state in fact has an electricity congestion problem itself. Additionally, the entirety of the U.S. power grid, as it presently exists, uses High-Voltage Alternating-Current (HVAC) Transmission lines.

Only 2% of the 200,000 electrical transmission line miles throughout the U.S. are HVDC. According to the Government Accountability Office Report of February 1, 2008, (GAO-08-347R) with respect to HVDC, there will be "higher costs for short-distance lines due to the cost of equipment needed to convert DC into AC electricity used by residents and a lack of electricity benefits to consumers living along these lines –unless converter stations are installed at intermediate locations – because such lines are generally not connected to local electricity lines."

The rationale for designation corridors is not to facilitate or dictate how the states' regions, transmission providers or electric utilities should meet their own energy challenges, according to the DOE. But the truth is quite the opposite.

"The process is geared more toward expediting the approval and siting of transmission corridors than it is geared toward respecting states' rights about their residents' energy future and needs…and by a heavy-handed centralized one-size fits all approach..," according to Congressman Maurice Hinchey (D-NY). And it is precisely such sentiments that have been raised to the Secretary of Energy, Samuel Bodman, by both federal and state lawmakers on both sides of the aisle in all 10 states and Washington, D.C. that will be directly impacted by the NIETC.

This EPAct 2005 legislation enables eminent domain law over states by the federal government on a scale unlike the U.S. has ever seen and is historically unprecedented, and with respect to the federalization of U.S. power transmission.

As such, the law provides for the DOE to assign the FERC siting authority. In other words, the U.S. federal government shall dictate to individual states the transmission of their own energy and by extension, the loss of state price controls. For state Public Utility Commissions always represented consumers and oversaw pricing and maintenance standards.

The FERC is given authority "to issue permits for the construction or modification of transmission facilities in a National Interest Electric Transmission Corridor if FERC finds that: (1)(A) a state in which the facilities are to be constructed is without authority to approve the siting of the facilities or to consider the interstate benefits expected to be achieved by the project; (B) the applicant for a permit is a transmitting utility that does qualify for a permit federally but does not qualify for a permit under state law because it does not serve end-use customers; or (C) the state has siting authority but (i) it has withheld approval for the later of one year after the filing of an application; or (ii) conditioned approval in such a way that the proposed construction will not significantly reduce transmission congestion or is not economically feasible."

And, "If a permit holder cannot obtain the necessary rights-of-way for the project, the permit holder can acquire the rights-of-way through an eminent domain proceeding in the federal district court where the property is located….A right-of-way acquired in an eminent domain proceeding is a taking of private property for which the landowner must receive just compensation, which is the fair market value on the date of exercise of eminent domain."

However, any fluctuation or rise in real estate property values during the course of the proceeding and including any period of time due to litigation arising from such a proceeding to the time of completion of the project, if finally approved, would be locked in at the fair market value of the initial date of the proceeding, which could potentially take years to resolve.

Historically federal jurisdiction of the siting of transmission lines in states has been reserved solely for federal lands within respective states. Again, it is the state public utility commissions of each given state which have otherwise been the regulators of siting permits and applications.

Reasonably understood is the anger and angst that states' governors and states' legislators feel having recently learned of the fate of their states' own power resources and transmission, and in such an injudicious way. In his letter to the U.S. Secretary of Energy, Samuel Bodman, in November 2007 after the NIETC was finalized, Pennsylvania Governor Ed Rendell wrote, "These transmission lines will be on our land and depreciate our property values, but they may not offer any benefit to Pennsylvania consumers. This designation and action by the federal government is a blatant abuse of states' rights."

Already the first official challenge to state transmission siting authority given to the FERC or federal government, as prescribed by such EPAct 2005 mandate, has been filed for appeal. A Southern California Edison (SCE) application to the Arizona Corporation Commission, (ACC) the public utility commission of Arizona, was rejected in May 2007 by the ACC. SCE merely wanted to run a 230-mile transmission line from Arizona to California at a cost of $242 million to Arizona ratepayers.

And the benefit to Arizona? None, as it would specifically serve only Californians and their growing energy needs, not the residents of Arizona. The ACC described SCE's project as "a 230-mile extension cord" into Arizona's generation supply.

This likely is just the beginning of struggles ahead, exemplifying a dysfunctional remedy, to "fix" the U.S. power grid's growing national energy needs and the need for alternative power resources. EPAct 2005 will create an ultimate power grab for power both literally and figuratively, the sights of which the U.S. has never seen.
Now, the U.S. justice system, by use of its federal courts, will bear the brunt of such misguided energy policy, in which the American people had no role. Meanwhile, the infrastructure and power needs of Americans remain at risk from both corporate greed and political intimidation.

Copyright ©2008 Diane M. Grassi
Contact: dgrassi@cox.net

For several years now, American healthcare consumers, including many from other western industrialized nations, have heard about elective surgeries being performed in lesser-developed nations and due to cost and denial of coverage by health insurance providers have opted to go there. However, surgeries in the past were truly elective and not medically necessary procedures that largely consisted of face-lifts, tummy tucks and gastric bypasses for cosmetic purposes.

But just in the past two years, American patients are being wooed to make decisions on serious medically necessary surgeries due to their fears of excessive healthcare costs. And the decision involves traveling abroad primarily to India and Thailand in order to receive such hospital care which they require.

For those self-insured, underinsured, or not insured at all, the desperation of receiving medical care without sacrificing homes or assets in the process is plausible, since costs of similar procedures in South Asia range from 75% - 80% less than in the United States. But now U.S. based corporations have entered the arena as well by encouraging employees to go to India and Thailand via cash incentives, free airfare and hotel stays with no co-pays due on the final bill.

Yet, just as with any large purchase consumers must look beyond the fancy advertisements and read the fine print with a Buyer Beware mentality. Americans have become quite adept at learning what to look for when dealing with car dealerships when purchasing an automobile and with computer retailers when purchasing a new computer. But it has taken many years to educate consumers as to their rights and protections under the law and what to do when something does go wrong.

The term "medical tourism" has been inaccurately applied to what is essentially the offshoring of patients of the U.S. healthcare system to foreign countries, in order to appeal to potential customers who are really medical patients. The term was invented by the media and it stuck and is now being used as a marketing tool. Deceptive in its concept, it is an implication that a patient can go sightseeing before or after a serious hospital procedure in that foreign country. But for those who are more scrupulous it remains difficult to get the necessary information needed to make a reasoned decision on whether to have surgery performed, let alone halfway around the world.

There are now organizations being touted as medical tourism agencies that have cropped up throughout the U.S. in order to facilitate such care overseas for individual patients as well as to serve as a clearinghouse for corporations wishing to outsource their employees' healthcare with them in tow. These groups include MedSolution, GlobalChoice Healthcare, IndUShealth, Planet Healthcare and Med Retreat, to name just a few.

And with more and more corporations adding select foreign hospitals as Preferred Providers to their employees' health insurance plans, medical tourism companies handle the paperwork and travel arrangements for their employees. Other countries of destination include Costa Rica, the Dominican Republic, the Philippines, Panama, Mexico, China, Malaysia, Singapore, Turkey and South Africa.

However, it is at this point that the patient needs to start their own due diligence. There is usually a requirement by most U.S. healthcare insurance providers for patients to get second opinions for most complicated surgeries in the U.S., but not so for offshore surgeries. And the list of surgeries which are being sent offshore are indeed medically necessary but confusingly being reported to the media as elective. But you can determine for yourself whether or not the following are elective procedures: cardiac bypass, cardiac stent implantation, cardiac angioplasty, knee replacement, hip replacement, mastectomy, hysterectomy, chemotherapy, eye surgery, vascular surgery, among others.

And as the medical tourism agency is only an intermediary between the client and the hospital as well as between hotels and airlines they do not provide any liability in the event that there is a medical complication or there is a mishap at the destination hospital. Furthermore, there are fees which could arise not documented by an employer nor agency which could require additional expenses upon the patient's arrival. And as a conduit between patient and hospital, the medical tourism business remains an unregulated industry in the U.S., without licensing requirements and with most managed by non-medical personnel.

Similarly, and unbeknownst to most U.S. patients is that the healthcare industry in India is highly unregulated. It was only in 2006 that regulations regarding the medical device industry, which includes surgical devices such as cardiac stents and orthopedic implants for use in hip and knee replacements, was mandated. Such call for regulation from the Drug Controller General of India (DCGI) only came about as the result of discovered defective drug eluting cardiac stents in 2004. And although hospitals have the option of applying for accreditation through the Joint International Commission established in 1999, a subsidiary of the Joint Commission on Accreditation of Healthcare Organizations, used for hospitals in the U.S., there is no such requirement to do so.

As of 2006 there are five hospitals in India which have JCI accreditation, renewable every three years. They include the three facilities of the Apollo Hospital group, the Shruff Eye Hospital and the Wockhardt Hospital. The Bumrungrad International in Bangkok is Thailand's sole JCI hospital. Singapore has over a dozen JCI hospitals however, and the Philippines has one. But the JCI accreditation only applies primarily to hospital management which although includes procedures to reduce risk of infection and disease and to ensure patient safety, it has no jurisdiction over the actual physicians performing surgical procedures.

The patient is provided limited information other than an introductory phone call to the intended physician and having medical records electronically sent to the doctor or hospital via the internet by the medical tourism agency. The patient has a choice of physicians, but unlike in the U.S. where there is easy access to a doctor's medical status by medical boards and organizations, other than knowing whether the doctor may have practiced medicine in the U.S., there is little information to come by. Without standardized protocols it is difficult for the patient to make a correct assessment.

When decisions on a patient's health is driven primarily by cost it can impair the decision making process. There is little argument that healthcare costs in the U.S. are bankrupting corporations and labor unions and deceleration of escalation is nary in sight. With the healthcare industry being 15% of the U.S. Gross Domestic Product and having risen in cost 75% for employers and 143% for employees since the year 2000, the system is broken. High malpractice insurance fees required by both employers and physicians, hospital deregulation and class action medical litigations have only exacerbated the problem.

Such high medical costs will only encourage limited access to healthcare for the middle class and ultimately result in less preventative care costing taxpayers more in the long run. The problem is not the medical care in the U.S., still considered the best in the world, but its delivery system. It is when Medicare and the health insurance providers became the decision makers and took that power away from the physicians that the system began to unravel. Added to that is the lack of restraint of costs by the pharmaceutical industry which charges U.S. patients more for its own medications than any other country in the world.

But as expensive as healthcare is in the U.S., there are legal and safety issues which are part of the American fabric which Americans very much take for granted yet expect but are not present in the undeveloped world. For example, there are few regulatory bodies such as the Centers for Disease Control, the Food and Drug Administration, the Federal Trade Commission, various medical boards, consumer protection laws, available legal experts and the court system. All serve as a net of safeguards offering remedies. But unlike a car purchase, medical care is a complicated undertaking in which there are no guarantees, yet there are areas of compliance which must be maintained.

Once the patient is in a foreign country there is little protection for redress and once that patient leaves the country should they need follow-up care such as therapy or if complications arise even during travel, they must seek medical care in the U.S. Secondarily, if the procedure is performed overseas, insurance providers or Medicare may not honor the additional required care in the U.S. Still, patients may decide to take the risks in addition to the inherent risks of any surgery, but should not be coerced into uninformed choices in order for their employer to save costs under the guise that they are helping to reduce the costs of U.S. healthcare in the long run.

In July 2006 the U.S. Senate Committee on Aging held a hearing called "The Globalization of Healthcare: Can Medical Tourism Reduce Healthcare Costs?" Its goal was to address the subject of medical tourism, its growth, safety of patients and possible regulation of the industry itself. Its Committee Chairman, Senator Gordon H. Smith, has asked that several federal agencies such as the Department of Health and Human Services, the Department of Commerce and the Department of State create an interagency task force necessary for lawmakers to reach informed decisions that healthcare consumers themselves cannot accurately make at this juncture regarding offshoring their medical care.

And among the labor unions, the United Steelworkers Union (USW) has publicly weighed in on this issue when it learned one of its union members, employed by Blue Ridge Paper Products, was going to be sent to India for gall bladder surgery simultaneously with shoulder surgery. Leo W. Gerard, USW International President, fired off a complaint dated September 11, 2006 to Congress by contacting the following committees: the House Committee on Education and the Workforce, the House Committee on Energy and Commerce, the House Committee on Ways and Means, the Senate Committee on Finance, and the Senate Committee on Health, Education, Labor and Pensions.

The goal is not necessarily to create more legislation but to establish guidelines. Perhaps Mr. Gerard puts it best when he states, "The right to safe, secure and dependable health care in one's own country should not be surrendered for any reason-certainly not to fatten the profit margins of corporate investors." He also contends to the Congress that "We remain steadfast in our commitment to rebuild a domestic healthcare system."
Let us hope that our government and healthcare providers can likewise make such a commitment by investing in the health and welfare of the American people.

Copyright ©2006 Diane M. Grassi
Contact: dgrassi@cox.net

General Motors Corp. announced in late November 2005 that it will close 9 of its United States auto manufacturing plants as well as three assembly-related plants which includes one location in Canada. Ford Motor Co. followed suit in early December 2005 announcing it is considering the shutdown of up to 8 of its U.S. manufacturing plants, including engine and assembly operations, with one in Mexico. Americans are well familiar with the downsizing, outsourcing and offshoring of the U.S. manufacturing base which has seen 2/3 of its jobs lost in the past 20 years, having been traded in for third world cheap labor. And while white-collar workers have hardly been immune from offshoring practices infiltrating boardrooms, indication this week is that the tide has changed.

Both the Intel Corp., the world's largest computer chip manufacturer, as well as J.P. Morgan Chase & Co., one of the world's largest financial institutions and 2nd largest in the U.S., are investing in creating new jobs in India over the next few years rather than in the U.S. Different in prior offshoring scenarios, however, is that back-office jobs such as investment banking, software engineering and research and development, previously occupied by American workers, will now originate from India as well.

J.P. Morgan plans to locate 1/3 of its investment banking and support staff in Bangalore, India by the end of 2007. It will double the amount of its employees by hiring 4,500 graduates over the next two years. 3,000 of the new hires will work in investment banking with 1,500 providing support in its retail and commercial banking operations. There are presently 4,500 employees in front-office staff positions in Mumbai, India.

With only 200 on staff in India just two years ago, in order to achieve their latest goal, J.P. Morgan will hire between 300-400 graduates a month in order to have 9,000 total positions in front and back-office positions by 2008, which includes complex derivatives settlements and structured finance transactions. The remaining approximately 4,000 – 4,500 employees J.P. Morgan employs will be divided between Bournemouth, England and New York, NY, although the ratio between both countries was not disclosed.

Similarly, Intel will invest $1.1 billion in India over the next 5 years, with $800 million dedicated specifically for research and development operations and other projects including chip design, also in Bangalore, according to Chairman Craig Barrett. Although Intel will also explore expanding its manufacturing prospects in India, its present investment will largely be for more complex high-value work as opposed to just technical support and call-center jobs, which most IT firms offshore today.

Other firms following this latest trend are Cisco Systems, the world's largest maker of internet equipment, which announced in October 2005 that it would invest $1.1 billion in India, tripling its work force to more than 4,000 from 1,400 in the next three years. It too will have research and development located in Bangalore. And it is likely that more of the banking industry will soon follow J.P. Morgan's lead such as Goldman Sachs & Co. which may double its staff to 1,500 in Bangalore.

Microsoft Chairman Bill Gates is expected to invest $400 million in Hyderabad, India where he plans to hire several hundred workers. Gates has been outspoken, with his statement in April 2005, citing that there were not enough U.S. college students majoring in computer science, and thus wants to expand the H1B Visa program, allowing more foreign workers to come to the U.S. But critics believe that Gates and other industry executives are not being honest in their assessments, to wit, the banking industry's India strategy which is hiring finance graduates and not computer science graduates in expanse of their industry.

In fact, consultants such as Stefan Spohr of AT Kearney estimate that investment banks could raise their staff levels in India to as much as 20% in the next few years. Since salaries in India are 70-80% lower than in the U.S., with total costs about 40% lower than in the U.S., the trend of offshoring will no longer exist. Rather, jobs will now originate from India and totally bypass the U.S.

Disputing the fact that there are not enough quality candidates, for example, in the computing engineering field, is the change in the way in which U.S. engineers are hired. Candidates are not only competing with their peers but also with the fear that they will be replaced by either imported foreign workers or offshore workers, even after they are hired.

Companies are directly contributing to the supposed engineering shortage themselves by requiring that an applicant meet every item on a detailed list of qualifications. Transfer of like-skills is a long lost concept. With approximately 200 responses for every job listing, companies have the luxury to hold out until they get the perfect candidate, as job cuts in technology positions are up 20% in the past year, according to Challenger, Challenger, Gray & Christmas. The unemployment rate for computer programmers and engineers is higher than the national average which does not reflect those who remain unemployed in Silicon Valley as they no longer register for unemployment benefits, nor those who were forced to move on to other careers.

According to Veronique Weill, head of operations at J.P. Morgan's investment banking division, "The quality of the people we hire is extraordinary and their level of loyalty to the company unbeatable," when referring to the hiring of employees in India. Funny, but that's what used to be said about American workers. Perhaps the American worker's biggest error was requiring a decent wage for quality work done. And others would argue that maybe it was their expecting U.S. companies would prefer them over foreign labor. Tragically, greed, under the guise of a global economy was the error, committed not by U.S. workers but by U.S. CEO's, and condoned by the U.S. government.