Bad News for Gambling Domains?

[verbster]

Read this interesting news article this morning about the Feds busting an online betting site and arresting people.

http://www.msnbc.msn.com/id/13907293/&GT1=8307

I'm wondering if this will impact the buying/selling of gambling related domains...what do you think?

 

[ripley]

I doubt it. Most casinos are located offshore anyway -- only impact I see is American entrepreneurs who run these things might stop visiting the U.S. quite as much. Plus, they're targeting the people who run casinos, not the people who are gambling at them. This doesn't make demand go down, and as long as there's demand there'll be someone out there supplying.

They're just ratcheting up the pressure because the politicians in DC are too, and that's only because it's an election year. Red meat for the conservative base. When the elections are over, this'll die down I predict.

ripley.

 

[Lasher]

The market seems to think so, Cryptologic (ticker CRYP) makes a lot of the software these gambling sites use and is down 14% today.

 

[JMJ]

It will end up being just another big disaster for the Bush Administration. This is not only going to affect the gambling industry it will affect the internet as a whole. These companies are spending alot of money on advertising which takes ALOT of money out of the industry as a whole. In addition to the shareholders of these companies losing alot aswell on the stock liquidation. And all of this for what? Because someone decides to place a bet on their favorite team? Give me a break.

 

[dotbidz]

i don't think it will affect the gambling names. we'll have to wait and see (I hope not I have like 10 of them...lol)

 

[GiddyUp]

good read, thanks... I was under the assumption that it was legal as long as they were based outside the U.S. and that they were allowed to take bets from people inside the U.S.

The article says that they are being charged with not paying federal excise tax on the bets that they took from U.S. residents. I wonder whether that is their sole crime (save from the consipracy and rackateering charges mentioned earlier in the article) and if they had paid their taxes would they have been allowed to continue operating?

Another question I meant to ask was this: Are U.S. citizens allowed to base a gambling site/casino online in the U.S. as long as they strictly enforce a policy of not taking bets from U.S. residents? If they simply took them from those outside the U.S., would this be legal?

 

[ripley]

Michael,

It's actually somewhat in dispute. The Justice Department says all online gambling is illegal if it's across state lines. (States are allowed to regulate themselves -- you could potentially have a state say online gambling is fine, and as long as only those state's residents are gambling online casinos in their state then it's no problem). I'm not sure about serving people overseas from a U.S. concern, but I'd think that would be very difficult to enforce from a customer standpoint -- what would you do, check IP's?

There's also a question of technology. The Justice Dept. is currently in an interpretive battle with the horse racing industry, for example, about whether or not the Wire Act (which prohibits interstate betting over *phone lines*) applies to the Internet. Clearly the spirit of the statute does, but it also expressly says telephone lines. And as we all know, people don't use phone lines much to access the Internet anymore.

ripley.

 

[fonzie_007]

It goes to show that what gets you in the end is greed--these chaps forgot to pay Uncle Sam.

The indictment charges Kaplan with failing to pay federal wagering excise taxes on more than $3.3 billion in U.S. wagers.

See: http://news.yahoo.com/s/ap/20060718/ap_on_hi_te/online_gambling_arrest

 

[AdoptableDomains]

The whole situation is a double edge sword. Chase the gambling operators offshore, and you lose control of regulating them. This means a higher potential for scams. If they then can't get the operators, they have to go to the gamblers. This means they start using proxies, making even more potential for scams, not being able to trace and tax gambling winnings. In effect outsourcing ALL gambling income to other countries.

I'm not a gambler, and don't have a stake either way. However, I would rather see it controlled and taxed instead of sent where it cannot be controlled at all and where US law won't have a say.

 

[ripley]

AD, I don't think your worst case scenario would happen -- the simple fact is that most online casinos are ALREADY offshore, people just don't realize it; lots in the Caribbean, some in the UK and, strangely, a lot in Costa Rica (including Bodog and Youbet). In fact I can't think of a single one located in the US.

ripley.