[Federal Register Volume 68, Number 187 (Friday, September 26, 2003)]
[Notices]
[Pages 55654-55656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-24311]


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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), 
[email protected].

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