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12/26/05

Wallstreet Gambling on Gambling

Some people think I'm too critical of corporations and that my claims that corporations run this country are not true. Let's examine the following from the NYTimes about gambling.

Blue-chip investment houses like Goldman Sachs, Merrill Lynch and Fidelity now hold hundreds of millions of dollars in shares of online casinos and betting parlors, which are publicly traded on the London Stock Exchange and headquartered in places like Costa Rica or Gibraltar. To be sure, it is not uncommon for Americans to invest in overseas companies whose operations may be considered illegal or unacceptable here, from sweatshop manufacturers to European energy producers that do business in Iran.

Representative Bob Goodlatte, Republican of Virginia, an opponent of gambling, said that the federal government had essentially given up enforcing laws against offshore casinos. He noted, for example, that casino operators now travel freely within the United States, gathering at trade conventions even though, he said, prosecutors would be within their rights to arrest and bring charges against them.

He said that the involvement of investment firms could be part of a pattern of laws being flouted. "It's very bad, and the Congress ought to investigate it," Mr. Goodlatte said, adding that it may turn out that the investment houses are knowingly supporting and promoting illegal enterprises.

For their part, the investment houses have taken the position that they indeed know there are legal risks involved in investing in offshore casinos, but that the risks are outweighed by the benefits of owning shares in growing, highly profitable businesses. Those shares can give a lift to mutual funds and other types of investments sold by the investment houses, meaning bigger returns for clients.

The ownership rolls of offshore casinos read like a Who's Who of America's top investment firms. For example, public filings show that tens of millions of shares of SportingBet, a company listed on the London Stock Exchange that allows people to place bets on sporting events, are owned by Fidelity, Merrill Lynch and Goldman Sachs.

The bottom line, according to casino industry executives and some financial analysts, is that the opportunity for profit may be too good for the investment houses to pass up. Over all, Internet gambling is projected to reach almost $12 billion in business this year, up from $8.3 billion in 2004, according to Sebastian Sinclair, a gambling industry analyst with Christiansen Capital Advisors.


Now, then. It's an illegal activity, acknowledged as so, even by those corporations who are investing in it. The government does not do anything to stop it. What's next? The Columbian Cocaine Industry is huge. Let them form a company and go public and these same corporations will invest in the drug trade. After all, it's not like they are controlling the drug trade, they are just passive investors. Whats the harm in making some money from illegal enterprises?

More Things That Just Piss Me Off

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