Eric Holder's DOJ Legalizes Online Gambling; Donors and Friends Make Big Money

A new report by the Government Accountability Institute reveals multiple conflicts of interest surrounding Attorney General Eric Holder’s former law firm and the Department of Justice’s surprise ruling last year to legalize online lotteries and gaming.

On Friday, December 23, 2011, with members of Congress leaving town for the Christmas holiday, Eric Holder’s DOJ issued a ruling that legalized non-sports betting over the Internet.  As the National Law Review put it, the DOJ decision was “a 180-degree reversal” of the 1961 Wire Act banning gambling over a wire and the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA)

DOJ’s decision also produced windfall profits for online lottery and gambling giants like Italy-based Lottomatica and Scientific Games. Indeed, one week before the decision, Lottomatica stock had been trading at 10.97 (euro) a share.  In the weeks after the decision, the stock shot up to 13.73 (euro). Likewise, the week prior to the decision, Scientific Games had been at $7.69 a share.  Just days after the decision, the stock had almost doubled in value to $13.03 a share.

But as the Government Accountability Institute’s report reveals, curious connections exist between Eric Holder and the companies who amassed massive profits based on the DOJ’s decision to override laws passed by Congress.

In 2006, Lottomatica acquired GTECH Holdings Corporation in a $4.8 billion deal.   The lawyer representing Lottomatica was Jack Bodner, an attorney at Eric Holder’s law firm, Covington & Burling.  Furthermore, the chairman of GTECH, which kept its name after the acquisition and is now a subsidiary of Lottomatica, is Donald Sweitzer.  Mr. Sweitzer is a major Democratic Party donor.  Since 1990, Sweitzer has donated $136,265 to Democratic candidates.  Mr. Sweitzer  was also the political director of the Democratic National Committee during President Bill Clinton’s first term and the former finance director of the Democratic National Committee.   When Eric Holder was Barack Obama’s campaign co-chairman, Sweitzer donated $4,000 to Obama’s inauguration.   GTECH also has its own 2012 political action committee (PAC), with $80,828 in total receipts. 

Then there is the case of Scientific Games, whose stock nearly doubled after the DOJ’s ruling.  On its board of directors sits Francis Townsend, a former senior official at Department of Justice.  According to the Chicago Tribune, Ms. Townsend “worked closely with [Eric] Holder in the Clinton administration Justice Department.”   Despite having served under Republican Administrations, Ms. Townsend was so fond of Eric Holder that she actually testified at his Senate confirmation hearing as a character witness on Holder’s behalf.

The new revelations come on the heels of the Government Accountability Institute’s reporting last week which revealed that Jon Corzine’s MF Global was a former client of Eric Holder’s former law firm, Covington & Burling and that MF Global’s treasurer, Edith O’Brien, has retained Eric Holder’s former attorney and “best friend,” Reid Weingarten, to represent her in the case.  


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