U.S. ban sparks Web gaming crisis

[faisj]

LONDON, England (Reuters) -- Online gaming firms faced their biggest-ever crisis on Monday after U.S. Congress unexpectedly passed legislation to ban online gaming there, threatening jobs and hitting stocks by as much as 70 percent.

Britain's PartyGaming Plc, operator of leading online poker site PartyPoker.com, and rivals Sportingbet and 888 Plc said they would likely pull out of the United States and warned on future profits.

PartyGaming's shares fell 59 percent by 0725 GMT, while Sportingbet lost 64 percent, 888 was down 45 percent and gaming software provider Playtech fell 55 percent. Austria's bwin.com Interactive Entertainment fell as much as 22 percent in the first few minutes of trading.

U.S. Congress unexpectedly approved a bill early on Saturday that would make it illegal for banks and credit-card companies to make payments to online gambling sites.

More:
http://edition.cnn.com/2006/BUSINESS/10/02/uk.betting.reut/index.html



Oh my God.... : (
My fabulous account holds 1000+ gambling/poker/casino domain names
and I was already feeling a huge drop in income...

 

[RogueWriter]

IMO - and my solution would never get accepted, because it reeks of big brother watching over you - a compromise that might work would be, only allow individuals whose credit ratings are above, say 550 ( or whatever, I don't even know ) to gamble via credit cards online. Your credit rating number can easily be pulled from an online database - and actually this is occurring anyway. Casinos would pay a small charge, say a buck, to verify that the name on the credit card can actually AFFORD to be online gambling.

This would keep everyone happy, IMO. Casinos get quality players, the government doesn't have to worry about as many bankruptcy's, credit card companies only get people gambling who can actually pay their bill, and people who are bouncing checks don't get in even worse shape.

Once the government passes a bill to tax online winnings that originate in the states, everyone should be happy.


ONE LAST THOUGHT THAT REALLY CRANKS MY TRUCK:

The U.S. government runs all kinds of lotteries, from the Powerball, down to hundreds of State run lottery ticket sales, running into the hundreds of millions in sales every year. So where does the U.S. Government get off saying gambling is bad? Putting up the occasional commercial that says, "Play the lottery responsibly" does not alleviate them from the same responsibility they are putting on others. They're already sleeping in that bed, it's a done deal.

 

[harkster]

This is what happens when you put republicans in office
They want to take as many rights as they can away from you

Please; do not make this a political discussion.

Our gambling laws are a total mess and I would like to see a rational discussion about internet gambling and where it will go from here. #1 RULE == If there is a need/desire for goods or services someone will find a way to provide same.

I do play but have never ventured into the online world mostly because it seems so dry and cold to me.

 

[equity78]

First off a payment processor does exist offshore a lot of ONLINE Players use Neteller
www.neteller.com

Secondly interesting that this does not include Horse Racing online or Lotteries online

THIRDLY two casino clicks at FABULOUS today $10 Each

 

[andysyme]

On that note, what's stopping people from using services like Paypal to bypass this law? How will Paypal stop people using it's services to gamble or bet?

(Ladbrokes accepts Paypal as a form of payment)

I'm fairly certain Paypal does not like dealing with "Poker money". I know of one guy who had his account frozen, with a lot of money in it as it happens, because one of his sites was a poker forum.

But as has just been mentioned, Neteller is a popular method for poker players.

Andy

 

[Lasher]

Just one more piece of freedom eroded away. Now there will be tax dollars devoted to policing this, in the same week that there have been 3 fatal school shootings in the USA. No matter what side of the political spectrum you're on, I can't see how anyone could argue that we don't have our priorities massively wrong here. How long before we all start trying to get Visa's for entry to China so that we can have greater freedom of personal choice?

In the meantime, at least one poker domain I own should do well out of this:

OverseasPoker.com

Slightly OT, but anyone care to appraise in light of today's events?

 

[KPR]

It's all BS not enough US citizens know about it heres a great video watch and share it let the masses know what kind of shit there pulling here. http://top-poker-deals.com/modules/sections/index.php?op=viewarticle&artid=31

 

[tipsfromthetop]

Well if they have gone as far as doing this on the internet whats stopping them from hitting places like Vegas. Personally i can not see the difference accept online means you do it from home and vegas you walk in and gamble.

Very weak bill this with hidden agendas i feel.

 

[Ronald Regging]

Well if they have gone as far as doing this on the internet whats stopping them from hitting places like Vegas. Personally i can not see the difference accept online means you do it from home and vegas you walk in and gamble.

Very weak bill this with hidden agendas i feel.

Because, Vegas is regulated and they get their cut from the till... Thats the only reason they are outlawing it on the Internet, because most of the companies are offshore, meaning they don't pay any taxes and they don't report any winnings by US Citizens... It's not a morality issue at all, they are still allowing online gambling for horse racing and lotteries, which I imagine are also regulated. It's all about the benjamins!

 

[RogueWriter]

Actually, and I am just throwing this out there to stir things up, maybe this would be a good time to pick up quality casino domains? If you figure that the U.S. will eventually switch to legalized - but regulated - online gambling, maybe this would be a buying opportunity as casino domain prices might be a bit depressed?

In the past, I've made money investing in depressed stocks of good companies - companies that I know will rebound after a couple of quarters will pass. It's sort of the same principle here.

Not that I have any extra money right now, but I bet if I went to SEDO and lowballed some casino domains, a few domainers might take me up on it just to cover their own investments.

 

[evermore2000]

How do you think these laws will affect Casino/Poker affiliate payments? As revenue will surely be down for these companies do you think affiliate commissions will be reduced?

 

[RogueWriter]

Revenues might be down for a bit, but think about it: can you imagine the effect it will have if the U.S. approves online casino gambling for registered U.S. companies? First, you will have every single casino in the state of Nevada promoting their own online site. Then, all of the riverboats in the U.S. will say, hey, wait a minute, if the server is located ON the riverboat, shouldn't we be able to promote online gambling? And then, the entire Native American population will say, hey, remember us, you killed most of us off, stole our land and forced us onto reservations, why shouldn't WE also have registered online casino sites?

My point is, within the next few years, after several congressional informational trips to Vegas paid for by taxpayers and casinos, I would be willing to bet that online gambling explodes within our borders.

 

[danielr]

Please Read This Article From Cardplayer

published on: Thursday Oct 05, 2006
Legal Landscape of Online Gaming Has Not Changed
Analysis From CardPlayer's Legal Counsel
Misleading news stories abound both online and in print regarding the passage of the Unlawful Internet Gambling Enforcement Act. The completely incorrect interpretation states that the new bill essentially outlaws most forms of Internet gambling. The new bill absolutely does no such thing.

I have been analyzing legal issues for 25 years. I have gone to court thousands of times interpreting statutes and I have taught new lawyers the correct method by which a statute should be analyzed. For over 15 years I was part of a legal hotline where California attorneys would call me with a legal question. As this is my field of expertise, I am flabbergasted at the misinformation being perpetuated regarding the new bill.

The New Bill Does Not Make Online Poker Illegal

The new bill attempts to make it more difficult to get money into a site by forbidding US financial Institutions from funding the type of online gambling that the law has previously made illegal. The new bill does not make online gaming illegal where it was not illegal before. Let me say that again. The new bill does not make online gaming illegal. The bill merely speaks to the mechanism by which an online account is funded. I am going to spend some time in this article explaining the accuracy of my reasoning.

The Bill Constitutes Enforcement Legislation

First and most simplistically, the bill is called the Unlawful Internet Gambling Enforcement Act. The operative word is enforcement. It is a bill whose goal is to enforce laws that already exist.

The bill begins in section 5361 by discussing congressional findings. In that section the bill states that Internet gambling is funded by credit cards, etc. Section 5361(a)(4) states in relevant part:

“New mechanisms for enforcing gambling laws on the Internet are necessary because traditional … mechanisms are often inadequate…”

The Bill Does Not Change Existing Gaming Law

Next, section 5361(b) specifically states that nothing in this new law shall be construed as “altering, limiting, or expanding any Federal or State law… prohibiting, permitting or regulating gambling within the US.” In other words, the language of the statute confirms that this new law does not change existing gaming law. It does not speak to the legality of online gaming. It only applies to the mechanism of funding any Internet gaming that has already been deemed to be illegal.

Even Senator Frist said about the bill, “Although we can't monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws.”

The Definition of Unlawful Internet Gambling

Of extreme importance in a statute is the definitional section that sets forth the parameters of a bill. The term “Unlawful Internet gambling” is given a definition. Section 5362(6) defines unlawful Internet gambling to mean placing or receiving a bet “where such bet or wager is unlawful under any applicable Federal or State law.” This raises the question regarding what type of online gambling is already illegal. That will be discussed below.

First, let’s move on to the meat of the bill. This is the section that states just what is prohibited. Section 5363 begins by saying that “No person engaged in the business of betting or wagering may knowingly accept…” electronic transfers, credit cards, etc. where a person is engaged in “unlawful Internet gambling.” This new law applies, if and only if, the gambling is already illegal under current law.

This brings us directly to the issue of what has been deemed illegal in the last 10 years since the first online casino opened its virtual doors. In a nutshell, sports betting is made illegal by the 1961 Wire Act, but poker is not.

Remember please, that the Attorney General’s office has not brought one lawsuit in 10 years against a poker site, even though it takes the position that online poker is prohibited by the Wire Act.

How the Law Works

In order to explain this discrepancy, I must digress with some rudimentary background about just how the law works. You probably remember from your high school civics class that the legislature makes laws that the judiciary construes. That means that our representatives in Congress draft the laws that judges then interpret.

Legislators are not wordsmiths, which is why there is a whole body of law called statutory construction. The first rule of statutory construction says that if the words of the statute are clear, the court may rely upon the common language. But if the language is not clear, the court must construe the language using a complicated legal process.

If a law is unclear, a depuy attorney general (the prosecutor) will take one position and often a defense attorney will take an opposing position. They go to court and a judge makes a determination. So when the Attorney General makes a public statement about what a law means, he might or might not be correct. It is ultimately the decision of a court.

When the Attorney General’s office takes the position that the Wire Act prohibits online poker, the court ultimately decided whether that opinion is accurate. Senator Frist incorrectly believes that all online gaming is illegal. He said: “or me as majority leader, the bottom line is simple: Internet gambling is illegal.”

However, in order for Internet poker to be illegal, there must be a specific statute that forbids such activity. For years I have posed the question: What statute prohibits online poker? And if it is illegal, why has there not been one lawsuit filed by the government against an owner of an online poker site?

Online Poker Is Not Illegal

Even though the Attorney General’s office has publicly taken the position that the 1961 Wire Act forbids online poker, in 10 years they have not put their money where their mouth is. Why? The judiciary (that is, the interpreting body) has already held that the 1961 Wire Act doesn’t speak to poker. It only applies to sports betting.

The case in point to which I refer is “In Re Mastercard International,” decided by District Court Judge Stanwood R. Duvall, Jr. in 2001. Among other issues, Judge Duval was faced with the question of whether the Wire Act applied to online gambling. The posture of the case was interesting because many deadbeat gamblers attempted to avoid online gambling debts they had incurred by alleging that the money they owed their credit card companies amounted to illegal gambling debts in violation of the Wire Act. As a matter of fact, there were so many similar suits filed by so many gamblers who did not want to pay their losses that the lower court consolidated 33 such similar charges.

Judge Duvall ruled that the Wire Act only prohibited wagering on sports events and he dismissed all 33 cases, noting that “Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests.” In other words, online poker was not within the reach of the Wire Act’s prohibition. The District Court of Appeal agreed with Duvall’s ruling that the 1961 Wire Act does not apply to online poker.

I must mention one caveat. District courts are permitted to disagree with one another until the Supreme Court steps in. However, in this case Judge Duvall’s reasoning is so sound that it is close to irrefutable. There is a well established body of law regarding statutory construction and Judge Duvall followed the procedure to a tee.

Even Representative Goodlatte, who authored one of the online gaming bills in the House, acknowledges the limitations of the Wire Act. “We need to modernize the Wire Act, which is 45 years old, and does not apply to all forms of gambling,” says Goodlatte, adding, “It clearly applies to sports betting.”

Hysteria Is Completely Unfounded

Since this new law does not change what is legal or illegal, the current hysteria is completely unfounded. This legislation attempts to make it more difficult to get money into a site. Besides a few wrinkles that will be the topic of another article, that’s about it.

The statute is primarily no big deal since poker players stopped using credit cards a few years ago and found other ways to get their money into their favorite gaming sites.

I am not saying there won’t be lawsuits construing the meaning of the statute, but ultimately, the statute will only be deemed to affect the method by which online sites are funded.

Correct Analysis

There are a few very insightful people out there correctly analyzing this new legislation. For example, the president of the American Gaming Association, Frank Fahrenkopf is one such person. “This bill did not make anything legal or illegal,” says Fahrenkopf. “What it did was affect the mechanism by which Internet gambling takes place…and there is some question as to whether or not that will be effective.”

Bloomberg correctly reports that “Congress passed legislation that curbs financial payments from banks to offshore Internet casinos that are illegal under US law.”

Consumer Affairs seems to have gotten it right as they report that “The legislation does not criminalize the placing of bets by consumers. Rather than outlawing online gambling, the bill prohibits banks and credit card companies from making payments to online gaming websites… However, it's unclear just what is covered by the bill. Internet sports betting is plainly outlawed but what about online poker and other popular games?”

I urge our readers to use care in accepting the opinions that one site gets from another site where no legal opinion is being presented. Please, read the statute yourselves. Read the words carefully and think about my analysis. The statute can be found by clicking here. The Unlawful Internet Gambling Enforcement section starts on page 213.

Jurisdiction

Another area I have written about extensively is the area of jurisdiction. Libraries of books have been written on the varied and complex meaning of jurisdiction. One of the simplest meanings of “jurisdiction” is legal power.

For example, a New York court doesn’t generally have jurisdiction (legal power) over a problem in Texas. A federal court doesn’t have jurisdiction over a violation of most state laws. A municipal judge doesn’t have jurisdiction over a felony trial.

Our government doesn’t have jurisdiction to make rules for a company that resides offshore. Our rules do not apply in other countries, as they have their own sets of rules.

This bill prohibits a gaming company from accepting payment that violates US gaming law. Besides the fact that no law makes online poker illegal, all the gaming sites are offshore and not subject to US laws.

A law that tries to control an offshore company is considered a law with no teeth, because it cannot be enforced. In the US, when a law is broken, a person is arrested. The government subpoenas records and a case moves forward. What it means not to have jurisdiction is that US laws do not apply offshore, nor can the US arrest a person in another country nor does our government have subpoena power to command an offshore company to turn over records. NETeller, an online money transfer service, is also an offshore company, not subject to US laws.

The Future

First of all, nothing is going to happen for 270 days. The Secretary and the Board of Governors of the Federal Reserve System have 270 days (after the bill is signed by the president) to come up with enforcement policies and procedures. Those procedures are directed to the behavior of banks and credit card companies. The procedures will be a nightmare.

Representatives of the financial services industry worry about a heavy regulatory burden being placed on banks. “The bill sets up banks to police a social issue,” said Laura Fisher, spokeswoman for the American Bankers Association. “It's not something we want to encourage.”

The bill passed by Congress could allow regulators to exempt checks and money transfers because they are more difficult to track. “Analyzing 40 billion checks a year would be a largely manual process,” Fisher said.

If checks are not exempt, this would break our banks as it would be too costly to enforce. If checks are exempt, players could simply send a check to an online site. If checks are not within the purview of the law, what about e-checks?

The rules won’t even be figured out for nine months during which time, all the clever sites will have legally circumvented this new law by other legal procedures to fund the sites.

Some Online Sites Are Overreacting

I am surprised to see some online sites overreacting and posturing as if they will pull out of the market. Any company that just pulls out of the market deserves to lose a lot of money because it is receiving bad legal advice.

Offshore companies are not bound by US antigaming laws. But the most persuasive reason why offshore companies shouldn’t pull out is because the laws of online gaming have not changed. A few years ago when the government was beginning to subpoena news networks, offshore sites didn’t pull out because the movement by the government couldn’t affect them. Similarly, a law that directs itself to the mechanism used to enforce current laws, does not change the legal landscape.

http://www.cardplayer.com/poker_news/news_story/1446?class=PokerNews

 

[cityforums.com]

Revenues might be down for a bit, but think about it: can you imagine the effect it will have if the U.S. approves online casino gambling for registered U.S. companies? First, you will have every single casino in the state of Nevada promoting their own online site. Then, all of the riverboats in the U.S. will say, hey, wait a minute, if the server is located ON the riverboat, shouldn't we be able to promote online gambling? And then, the entire Native American population will say, hey, remember us, you killed most of us off, stole our land and forced us onto reservations, why shouldn't WE also have registered online casino sites?

My point is, within the next few years, after several congressional informational trips to Vegas paid for by taxpayers and casinos, I would be willing to bet that online gambling explodes within our borders.

You are 100% correct in your assessment.


:tu:

How do you think these laws will affect Casino/Poker affiliate payments? As revenue will surely be down for these companies do you think affiliate commissions will be reduced?

They will all most definitely stiff all affiliates.



:td:

 

[Chappy]

It's all over for US gaming

http://news.bbc.co.uk/2/hi/technology/5412980.stm

 

[verbster]

Just like when the 1-900 phone business got regulated, callers now dial numbers that re-route them through off-shore exchanges in other countries. Something like that will happen with online gambling...there is too much money (and too many players) involved to let an internal US law/ban stop the action.

 

[Ronald Regging]

I just wish I had lots of money to invest in those publically traded poker sites, like partypoker.... You know those stock prices will come back up once this all blows over.. Easy money to be had.

Kind of like when MS stock plummeted on the anti-trust controversy... Come on, its MS...

 

[Weber]

How can anyone really believe that congress is acting on our behalf?

 

[cache]

I had visited an online casino many years ago, and now I received an email saying that I should close my account.

 

[gazzip]

Here's something else I found out this morning that may also have some kind of negative impact on online gambling.

Just got this from Master Card, not sure if it is a regional/global decision or not ??

operational from 1st December 2006 -

"we reserve the right to treat gambling transactions as a Cash Advance, apply a Cash Advance handling fee (2.5% minimum £2.50) and charge interest at the Cash Advance rate."

I'm glad my only gambling is in domain names :hehe:

Banks - Don't ya just luv em !


.

 

[kemjika11]

if you wanna know what really happens with these type of things, just follow the money trail. the US govt isn't getting much of this huge multi-billion industry, and thats one big reason they are clamping down slowly.