[Federal Register: September 26, 2003 (Volume 68, Number 187)]
[Notices]
[Page 55654-55656]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se03-89]
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DEPARTMENT OF JUSTICE
Antitrust Division
United States v. National Council on Problem Gambling, Inc.,
Civil Action No. 1:03CV01278; Public Comments and Plaintiff's Response
Pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C.
16(b) and (d), the United States hereby publishes below the written
comments on the proposed Final Judgment in United States of America v.
National Council on Problem Gambling, Inc., Civil Action No.
1:03CV01278 filed in the United States District Court for the District
of Columbia, together with the United States' response to the comments.
Copies of the comments and the United States' response are available
for inspection at the United States Department of Justice, Antitrust
Division, 325 Seventh Street, NW., Suite 200, Washington, DC 20530, and
at the Office of the Clerk for the United States District Court for the
District of Columbia, E. Barrett Prettyman Building, 333 Constitution
Ave. NW., Washington, DC 20001.
J. Robert Kramer,
Director of Operations, Antitrust Division.
Response to Public Comments
Pursuant to the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. 16(b)-(h) (``APPA'' or ``Tunney Act''), the
United States hereby responds to the public comments received regarding
the Proposed Final Judgment in this case.
I. Background
On June 13, 2003, the United States filed a Complaint alleging that
the National Council on Problem Gambling, Inc. (``NCPG'') had
orchestrated an unlawful territorial allocation of problem gambling
products and services along state lines in violation of section 1 of
the Sherman Act, 15 U.S.C. 1. Simultaneously with the filing of the
Complaint, the United States filed a Proposed Final Judgment. A
Competitive Impact Statement (``CIS'') was also filed with the Court at
that time, and published in the Federal Register, along with the
Proposed Final Judgment, on June 26, 2003 (see 68 FR 38093). Pursuant
to 15 U.S.C. 16(c), a summary of the terms of the Proposed Final
Judgment and CIS was published in The Washington Post, a newspaper of
general circulation in the District of Columbia, during the period of
June 24 through 30, 2003.
Under the consent order, NCPG is prohibited from directly or
indirectly initiating, adopting, or pursuing any agreement, program, or
policy that has the purpose or effect of prohibiting or restraining any
Problem Gambling Service Provider (``PGSP'') from: (1) Selling problem
gambling services in any state or territory or to any customer; or (2)
submitting competitive bids in any state or territory or to any
customer. The NCPG is also prohibited from directly or indirectly
adopting, disseminating, publishing, seeking adherence to or
facilitating any agreement, code of ethics, rule, bylaw, resolution,
policy, guideline, standard, certification, or statement made or
ratified by an official that has the purpose or effect of prohibiting
or restraining any PGSP from engaging in any of the above practices, or
that states or implies that any of these practices are, in themselves,
unethical, unprofessional, or contrary to the policy of the NCPG.
The consent order further provides that the NCPG is prohibited from
adopting or enforcing any standard or policy that has the purpose or
effect of: (1) Requiring that any PGSP obtain permission from, inform,
or otherwise consult with another PGSP before selling problem gambling
services or submitting bids for the provision of problem gambling
services in any state or territory or to any customer; or (2) requiring
that any PGSP contract with, provide a fee or a portion of revenues to,
or otherwise remunerate any other PGSP as a result of selling problem
gambling services in any state or territory or to any customer.
Finally, the NCPG is prohibited from adopting or enforcing any standard
or policy or taking any action that has the purpose or effect of: (1)
Sanctioning, penalizing or otherwise retaliating against any PGSP for
competing with any other PGSP; or (2) creating or facitating an
agreement not to compete between two or more PGSPs.
The sixty-day period for public comments expired on August 29,
2003. As of today, the United States has received written comments
from: (1) Joseph E. Finnerty, James A. Gentry, Fred Gottheil, and John
Warren Kindt of the Gambling Research Group (``Gambling Research
Group''); (2) Kathleen M. Scanlan, Executive Director of the
Massachusetts Council on Compulsive Gambling, Ind., (``Massachusetts
Council''); and (3) Richard A. Johnson, CEO, and Glen Gorelick,
Director, of Problemgambling.com, Responsiblegaming.com, and
Safegamingsystem.com (``Problemgambling.com''). The United States has
carefully considered the views expressed in these comments, but nothing
in the comments has altered the United States' conclusion that the
Proposed Final Judgment is in the public interest. Pursuant to Section
16(d) of the Tunney Act, the United States is now filing with this
Court its response to such comments. Once these comments and this
response are published in the Federal Register, the United States will
have fully complied with the Tunney Act and will file a motion for
entry of the Proposed Final Judgment.
II. Response to Public Comments
A. Gambling Research Group's Comment
The Gambling Research Group asserts that ``a majority of experts
would probably argue that this entire market [for services to
pathological and problem gamblers] is currently dominated by problem
gambling service providers (PGSPs) who are involved in direct or
indirect vertical relationships [with Gambling Related Organizations
(``GROs'')] resulting in those PGSPs being dominated or substantially
influenced by various GROs.'' The comment asserts that control of the
PGSPs by GROs may result in less effective services to pathological and
problem gamblers because GROs benefit financially from the excessive
wagering of these troubled gamblers. Thus, the Gambling Research Group
recommends that the NCPG be required to reveal all donations and
influences impacting upon its financial viability and to divest itself
from all direct and indirect
[[Page 55655]]
associations and vertical and horizontal influences from GROs. (A copy
of the Gambling Research Group's comment is attached as Exhibit A.)
The Proposed Final Judgment addresses the violation alleged in the
Complaint--an unlawful territorial allocation of problem gambling
products and services along state lines in violation of Section One of
the Sherman Act. While the Gambling Research Group's comment raises
interesting issues, it does not address the violation alleged in the
Complaint. Nothing in the Gambling Research Group's comment changes the
view of the United States that the Proposed Final Judgment is in the
public interest. In making its determination whether the Proposed Final
Judgment is ``in the public interest,'' the ``court is without
authority to `reach beyond the complaint to evaluate claims that the
government did not make and to inquire as to why they were not made.'
'' United States v. Microsoft Corp., 231 F. Supp. 2d 144, 154 (D.D.C.
2002) (quoting United States v. Microsoft Corp., 56 F. 3d 1448, 1459
(D.D.C. 1995)).
B. Massachusetts Council's Comment
The Massachusetts Council's comment does not state whether it
supports or opposes entry of the Proposed Final Judgment. Rather, the
comment cites various instances in which the Massachusetts Council--as
a member of NCPG--and others, spoke out against or disagreed with
NCPG's policy of territorial allocation of problem gambling products
and services along state lines. (A copy of the Massachusetts Council's
comment is attached as Exhibit B.) The NCPG's policy of territorial
allocation is the issue squarely addressed by the Complaint and the
Proposed Final Judgment. Given the Massachusetts Council's stated
disagreement with the NCPG's policy of territorial allocation, the
United States views this comment as one in support of the entry of the
Proposed Final Judgment.
C. Problemgambling.com's Comment
Two executives of Problemgambling.com stated that they support the
Proposed Final Judgment and it is in the public interest. (A copy of
Problemgambling.com's comment is attached as Exhibit C.)
III. Conclusion
After careful consideration of these pubic comments, the United
States has concluded that entry of the Proposed Final Judgment will
provide an effective and appropriate remedy for the antitrust violation
alleged in the Complaint, and is therefore in the public interest.
Pursuant to section 16(d) of the APPA, the United Sates is submitting
these public comments and this response to the Federal Register for
publication. After these comments and this response are published in
the Federal Register, the United States will move this Court to enter
the Proposed Final Judgment.
Dated:-----------------------------------------------------------------
Washington, D.C.
Respectfully submitted,
/s/--------------------------------------------------------------------
Rosemary Simota Thompson,
IL Bar #6204990, United States Department of Justice, Antitrust
Division, 209 South LaSalle Street, Suite 600, Chicago, Illinois
60604, (312) 353-7530 (telephone), (312) 353-4136 (facsimile), Rosemary.Thompson@usdoj.gov.
Certificate of Service
I hereby certify that I served a copy of the foregoing Response
to Public Comments via First Class United States Mail, this ---- day
of ----------, 2003, on:
Sanford M. Saunders, Jr., Esq., Greenberg Traurig, LP, 800
Connecticut Avenue, NW., Suite 500, Washington, DC 20006.
/s/-------------------------------------------------------------------
Rosemary Simota Thompson,
Attorney, Chicago Field Office, U.S. Department of Justice,
Antitrust Division, 209 South LaSalle Street, Suite 600, Chicago,
Illinois 60604, (312) 353-7530 (telephone).
EXHIBIT A
Gambling Research Group
P.O. Box 70
Savoy, IL 61874
August 21, 2003
Marvin N. Price, Jr., Chief
Field Office
Chicago U.S. Department of Justice, Antitrust Division
209 S. LaSalle St., Suite 600
Chicago, IL 60604
RE: U.S. v. Nat'l Coun. Problem Gambling, Inc.
Dear Mr. Price: This comment is made pursuant to 68 Fed. Reg.
38090-98 (June 26, 2003). If the gambling industry, its affiliates,
associates, or related service industries (hereinafter gambling
related organizations: GROs) can control, dominate, or substantially
influence the expertise and policies at the only national
organization (such as the National Council on Problem Gambling:
NCPG) or cluster of organizations dealing with pathological and
problem gambling (Am. Psychiatric Ass'n, Diagnostic and Statistical
Manual of Mental Disorders, Sec. 312.31 ``Pathological Gambling''),
the GROs can control, dominate, or substantially influence both
horizontal and vertical relationships regarding the expertise and
policies relating to nomenclature, terminology, standards, markets,
and even market shares. For example, they have ostensibly supported
the introduction of new terms, such as ``disordered gambling'' that
have had the effect of obfuscating issues and market segments.
Two prime relevant markets consist of the provision of services
to the pathological (i.e., compulsive) gambler market segment and
the problem gambler market segment. (These market segments are
delimited in the next paragraph). As indicated in 68 Fed. Reg. 38090
et seq., a majority of experts would probably argue that this entire
market is currently dominated by problem gambling service providers
(PGSPs) who are involved in direct or indirect vertical
relationships resulting in those PGSPs being dominated or
substantially influenced by various GROs. The conflict of interest
is that theoretically GROs would not want to have the most effective
or efficient PGSP programs for pathological and problem gamblers
since those gamblers constitute cr[egrave]me market segments. The
analogy is to United States v. Motor Vehicles Manufacturing Ass'n,
No. CV 69-75-JWC (D.C., Central Dist. Calif.), 1982 U.S. Dist. LEXIS
17850; Trade Cas. (CCH) P65, 175, Oct. 28, 1982 which resulted in a
consent decree prohibiting major auto manufacturers from combining
to research pollution control devices. The theory in Motor Ass'n is
that they all have incentives to repress innovation in this area.
All of these determinations also impact on the identification of
market segments and abilities to attract or market to those
segments--if any GRO should desire to do so. For example, the
cr[egrave]me market for gambling revenues apparently consists of the
pathological (i.e., compulsive) gambler market segment
(approximately 1-2 percent of the general population) and the
problem gambler market segment (approximately 3-5 percent of the
general population). These two segments account for between 10-74
percent of the total dollars lost in all geographic gambling
markets. (Lesieur, 1998). As indicated in the Final Report of the
1999 National Gambling Impact Study Commission (e.g., page 4-4),
these market segments are more concentrated near gambling venues.
The percentages of these markets and their percentages of total
dollars lost to the different types of gambling were first
categorized during the 1996 annual meeting of the National Council
on Problem Gambling (NCPG) and were subsequently published as a
table in: Henry R. Lesieur, Costs and Treatment of Pathological
Gambling, 556 Annals Am. Acad. Pol. & Sci. 153, 165 Table 1 (1998)
(Table 1: ``Percentage of Expenditures by Problem Gamblers for
Selected Forms of Gambling by State or Province''). (See also
Australian Productivity Commission 1999; Focal Research (1998);
1997/1998 Nova Scotia lottery players survey.)
Thus, if the GROs can control, dominate, or substantially
influence the financial viability of the NCPG, the GROs almost
necessarily control, dominate, or substantially influence the
expertise and policies relating to nomenclature, terminology,
standards, markets, and even market shares among segments of
gamblers, as well as the problem gambling services providers (PGSPs)
which service segments of those markets.
Accordingly, the NCPG should be required to reveal all donations
and influences impacting upon the financial viability of the
[[Page 55656]]
NCPG for the last ten years and divest itself from all direct and
indirect associations and vertical and horizontal influences from
GROs both now and in the future.
In this regard, any direct or indirect interlocking
relationships, both vertical and horizontal, between the NCPG and
other organizations do not appear to be fully discovered, explored,
or addressed. The NCPG and state PGSPs should be compelled to divest
themselves of any such relationships from which GROs could obtain
quasi-public or inside marketing advantage information.
Sincerely,
Joseph E. Finnerty
James A. Gentry
Fred Gottheil
John Warren Kindt
Massachusetts Council on Compulsive Gambling
August 11, 2003
Marvin N. Price, Jr., Chief
Chicago Field Office
U.S. Department of Justice
Antitrust Division
209 S. LaSalle St., Suite 600
Chicago, Illinois 60604
Dear Mr. Price: In regard to the Civil Action No. 1-03CV01278,
United States v. National Council on Problem Gambling, the
Massachusetts Council on Compulsive Gambling is taking the
opportunity to comment on the Complaint, proposed Final Judgement,
Stipulation, and Competitive Impact Statement filed on June 13,
2003.
These documents refer to ``the NCPG acting illegally to curtail
competition by establishing territorial allocation.'' They also
describe the state affiliates agreeing with the NCPG on these
policies.
The Massachusetts Council on Compulsive Gambling would like to
call to your attention that it consistently during the 1995-2001
period argued against territorial allocation, disagreed with
proposed policies related to it, voted against these policies, and
in August 2000 submitted a written refusal to sign a proposed
affiliate agreement, in part, due to this issue.
Also, during that time period, the NCPG requested that the
Director of the Harvard Medical School, Division on Addictions
conduct a study designed to find facts land make recommendations
regarding the issue. The Massachusetts Council on Compulsive
Gambling participated by providing interviews and again spoke
against territorial allocation. The final document provided to NACPG
by Harvard Medical School recommended against territorial allocation
of problem gambling services.
The documents also refer to a complaint of the Arizona Council
against the Minnesota Council for a successful bid on a contract
with the Arizona Lottery that resulted in a hearing for both parties
to present their cases to a committee of the NCPG. The Massachusetts
Council on Compulsive Gambling was selected to participate as a
committee member. The committee was charged with presenting a
finding and making recommendations to the NCPG. Again, the final
report recommended against territorial allocation of problem
gambling services.
EXHIBIT B
The Massachusetts Council on Compulsive Gambling brings this
information to your attention in order to persuade you that state
affiliates were not necessarily in agreement with NCPG policies
related to territorial allocation of problem gambling services. The
Massachusetts Council on Compulsive Gambling would like to go on
record as having opposed these policies since they surfaced and
having actively worked to eliminate them.
Thank you for your attention to this.
Sincerely,
Kathleen M. Scanlan
Executive Director
EXHIBIT C
Richard A. Johnson, CEO
Problem gambling.com,
Responsiblegaming.com,
Safegamingsystem.com,
10443 Noontide Avenue
Las Vegas, Nevada 89135
(702) 562-0232
Marvin N. Price, Jr.
Chief, Chicago Field Office,
Anti Trust Division,
Department of Justice,
209 S. LaSalle Street, Suite 600,
Chicago, Illinois 60604
August 1, 2003
Re: Civil Action No. 1:03CV01278, United States of America vs The
National Council on Problem Gambling, Inc., Comments on Proposed
Judgment
Dear Mr. Price, We respectfully attach our comments dated July
24, 2003 to the proposed judgment dated June 13, 2003 in the
aforesaid action.
Naturally if you have any questions, please feel free to call.
Sincerely,
Richard A. Johnson
cc: Rosemary Simota Thompson
Comments
Pursuant to the Notice dated June 26, 2003 given according to
the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b) -(h),
that a proposed Final Judgment, Stipulation and Competitive Impact
Statement have been filed with the United States District Court for
the District of Columbia in the United States of America v. National
Council on Problem Gambling, Inc. and in which said notice requested
public comment within (60) days of said notice, the following
response is hereby submitted:
1. The proposed settlement appears to render fair and unhindered
competition among those ``persons'' interested in promoting
``problem gambling services'' as defined in Section II (Definitions)
of the Final Judgment dated June 13, 2003.
Moreover, the aforesaid document appears to be clear that
``problem gambling service providers'' are free to do business
anywhere in the United States without interference from the National
Council on Problem Gambling, Inc. or any of its state affiliates,
including but not limited to Arizona, California, Connecticut,
Florida, Louisiana, Massachusetts, Minnesota, New York and Nevada.
Said conduct appears to be set forth in section IV, entitled,
Prohibited Conduct of the Final Judgment.
As such, the undersigned support the proposed final judgment
between the United States of America and the National Council on
Problem Gambling, Inc. and its state affiliates. The agreement
appears to be in the best public interest. It promotes fair business
practices and assures a competitive process. As a problem gambling
service provider (``PGSP''), we feel that it opens the door to a
more creative environment wherein the future development and
application of responsible gaming and problem gambling products and
services will be enhanced. As a result, any damage to our social
system due to increased availability of gambling can be mitigated.
Richard A. Johnson,
CEO, Problemgambling.com., Responsiblegambling.com.,
Safegamingsystem.com, 10443 Noontide Avenue, Las Vegas, Nevada
89135, (702) 562-0232.
Glenn Gorelick,
Director, Problemgambling.com, Responsiblegaming.com,
Safegamingsystem.com, 89 Cranbury Drive, Trumbull, Connecticut
06611, (203) 268-0292.
[FR Doc. 03-24311 Filed 9-25-03; 8:45 am]
BILLING CODE 4410-11-M