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The Mohawk Connection

POSTED: 10:30 AM ET, 11/29/2008 by The Editors

In reporting his two-part series about online poker, Inside Bet, Post writer Gilbert M. Gaul learned that the two big cheating scandals occurred at Web sites owned by the same person -- Joseph Tokwiro Norton, former grand chief of the Kahnawake Mohawk tribe located on a reservation near Montreal.

The Kahnawake became the unlikely hosts for computer servers that handle not only Norton's companies but many of the world's biggest online poker businesses. In this edition of Reporter's Notebook, Gaul explains how this came to be:

At first glance, Joe Norton and the Kahnawake might seem like surprising players to control a large share of the $18 billion Internet gambling business.


Joe Norton arrives at the Kahnawake Peacekeepers station to announce his retirement, June 1, 2004. (Marcos Townsend / The Montreal Gazette)

While in his twenties, Norton worked as an ironworker helping to build the World Trade Center in New York City. At the age of 28 he was elected to the Mohawk Council of Kahnawake, the governing body for the 8,000-member tribe located minutes from Montreal. Two years later, Norton took over as grand chief, a position he held for more than two decades.

For years, the Kahnawake had relied on cigarette sales and payments from the federal government to get by. Under Norton, they began to look at gambling as a way to lift up the tribe's economic fortunes. In the mid-1990s, Norton promoted an effort to open a land-based casino on the reservation, but the tribe voted it down. A second referendum was also rejected.

Norton and the Kahnawake shifted their focus to Internet gambling. Several factors played to their advantage.

First, the Kahnawake consider themselves a sovereign nation, outside the laws of the federal and provincial governments. So, even though Internet gambling is considered illegal in Canada, they could set themselves up as a licensing authority and not have to worry about being prosecuted.

Second, they were close to the potentially lucrative U.S. market with millions of online gamblers. That was attractive to Internet gaming sites. Finally, running near the 35,000-acre reservation was a major broadband pipeline capable of handling millions of bets and other transactions.

In 1996, the Kahnawake established a gaming commission and later drafted regulations and started licensing Internet gambling sites, including Absolute Poker and UltimateBet. Today, the Kahnawake Gaming Commission licenses more Web sites than any other agency, generating thousands of dollars in fees from each license.

But that's only the start. Gambling sites that apply for a Kahnawake license are required to place their computer servers in a refurbished mattress factory on the reservation for a minimum of three years. Mohawk Internet Technologies collects millions in fees annually from these rentals, though Kahnawake officials said most of the profits have been plowed back into the company.


The Kahnawake reservation near Montreal. (Gilbert M. Gaul / The Washington Post)

Norton played an instrumental role in helping to set up MIT and later worked at the site for two years after he retired as grand chief in 2004. In 2006, he bought Absolute Poker and UltimateBet, though he didn't announce the purchases until a year later.

Recently, the Kahnawake expanded their reach by taking a 40 percent stake in a company called Continent 8 Technologies, based on the Isle of Man in the Irish Sea. The new company operates an Internet server farm for gambling Web sites and other businesses, and offers the Kahnawake a potentially lucrative portal to the growing European market for online gambling.

One of the owners of Continent 8 is Michael Tobin, a consultant who helped the Kahnawake establish their foothold in the Internet gambling business and set up Mohawk Internet Technologies.

"They were looking at building a data center for the financial markets at first," Tobin said in an interview. But that idea of a financial trading post didn't work out. "Somebody [then] made a call to a lawyer friend of somebody at the Mohawks. He said, `I have a customer who might be interested.' It turned out it might be an online gaming customer," recalled Tobin.

The Kahnawake were in the right place at the right time, said current Grand Chief, Michael Delisle. "It was a field not yet occupied....we were the first ones into it."

The Kahnawake view their recent investment in Continent 8 as a way to protect their gambling franchise. "Five years ago, the Kahnawake was the fastest place to be," said John Bud Morris, the executive director of the Kahnawake Economic Development Commission. "Today, that's not necessarily true."

Under their deal, the Kahnawake Mohawk Council is guaranteed the first $1.7 million if Continent 8 issues a dividend, Morris said. The next $1.7 million goes to the economic development commission. The council and commission split anything above that. To date, only the council has received a payment, said Morris.

Delisle said the Kahnawake have received "millions" from their Internet gambling ventures, and have used the money to support a native language program and other community efforts. He added that Internet gambling supports about 150 jobs on the reservation.

Less clear is what it means financially to Joe Norton. He declined to be interviewed and has provided few financial details about his Internet poker sites.

-- Gilbert M. Gaul

By The Editors |  November 29, 2008; 10:30 AM ET Reporter's Notebook
Previous: Picks of the Week: Hacking, Rangel and Bad Loans | Next: Resisting Temptation

Comments

Please email us to report offensive comments.



From 1998 till 2003 I was the CIO of a large off-shore sports book. I used to laugh every time I saw estimates of the size of the off-shore sports betting business. We were a mid-size book and did $500M a year and several books I knew were doing two to four times that, and there were almost a hundred books at the time.

We would have loved to have operated legally in the US and pay taxes. Operating illegally off-shore was not our first choice. A T-1 Internet line cost me $65,000 a month and I needed 8 of them. I had spent many years operating legally within the Nevada gaming industry and missed the legal side of gaming.

You are not going to stop gaming. Why not leagailze, regulate and tax it.

Posted by: theglot | November 30, 2008 8:06 PM

My partners and I have been suspicious of these online sites for quite some time. We developed a product to ensure the integrity and security of online play and have been given the cold shoulder by every online site we approach.

Our product would have prevented such fraudulent activity, yet none of the sites will talk to us. Why? My guess is they do not want to admit that there are holes in their system or they don't care.

DealGuardian is the only security software available to provide the assurance player need to trust they are not being cheated. If these site are serious about running a legitimate operation, they need a product like DealGuardian to prove to their players that they are not being victimized.

Nick Maiorana
Product Development
Secure Card Dealer, LLC

Posted by: nick17 | November 30, 2008 8:17 PM

My name is mark adamczyk, i live in Orlando, Florida. I have evidence of a case from 2003 that was with sportsinteraction.com poker room. They are also licensed under this gaming commission in Canada. The situation was I won over 5k online and they accused me of cheating and never paid me out. I have quotes from customer service saying "sue us we are outside the US jurisdiction." It was a joke. Contact me if your interested in knowing more, I really could use the money because I sell real estate in central florida for Itsyoursale.com and am really suffering due to the economy. It's amazing that people are out cheating millions and Americans are suffering and can't do anything about it.

Posted by: itsyoursale | November 30, 2008 10:18 PM

It'd be great to see if the new Obama administration can cut through all the disinformation and maybe try to build a common sense approach to betting & gaming.

Poster Adamczyk talks about suffering because of the economy - maybe tax dollars from Gaming would help a little? Small world though - I've also bet at Sports Interaction.com. I know them because they are probably one of the oldest sportsbooks out there. I've never had any problems and I would rate them very highly.

Posted by: Redivid3r | December 1, 2008 7:50 AM

Legalize it and regulate it! The long standing operators would welcome it.

I have also bet at sportsinteraction.com in the past and played in their poker room and found them to be a reputable operator. To my recollection sportsinteraction.com didn't have a poker room until 2004 so poster Adamczyyk couldn't have been done out of $5k in 2003

Posted by: poker123 | December 2, 2008 5:22 AM

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