The Mohawk Connection
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.
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.
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
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