The Other Shoe Drops: Neteller Completely Exits US Market
Some people asked me yesterday why Neteller was only stopping InstaCash transfers and my response was that because Neteller plans on exiting the market completely and stopping InstaCash helped mitigate the damage since InstaCash involves Neteller fronting the player the money while it waits for the funds transfer from the bank. Without InstaCash they could exit at any moment and their potential exposure to funds in transfer would be greatly reduced. Well, now it appears that Neteller couldn’t wait and has gone ahead and turned off payment processing to US customers completely.
US Member Update
Due to recent US legislative changes and events, effective immediately, US members are no longer able to transfer funds to or from any online gambling sites.
All US members will continue to be able to use their NETELLER e-wallet account to safely transfer funds to and from non-gambling merchants and are not required to close their account or withdraw their funds.
There’s a long list of FAQ’s there as well so if you have any questions on how this will impact you, go check it out.
In other Neteller news, Neteller founder John Lefebvre had bail set at $5 million USD. Lefebvre will had no problem raising that kind of scratch but the high bail amount is certainly being used to further articulate the message that US prosecutors aren’t screwing around.
So for those of you asking what your options are now . . . start getting used to the fact that it’s no longer business as usual! Look at how many wallets have dropped out of the market and they haven’t even published the regs yet. This arrest was for charges stemming from activities long before the UIGEA even was passed in Congress. That means the US gov can go after any company it wants. Only the completely retarded or spectacularly greedy are going to attempt to continue to do business with US customers.
One thing many people say is that because there’s so much to be made that someone will fill the gap. While I can see the merits of such a hopeful view the entire problem is one of size. If I were to decide to get into the money transfer business and go open up shop on some small Caribbean island I would get swamped with business. But now that I’m moving so much money around people are going to start taking notice. Once my activity is noticed US banks can easily just refuse to do business with me. Besides, once you start moving billions of dollars around you can’t risk keeping your money in some nondescript Caribbean bank. You have to use a bank that can handle the volume. Banks that can handle the volume usually are either located in countries were they fear the US or they have other business interests in the US and don’t want your business. That’s why the UIGEA was so damaging. The law won’t allow US banks to turn a blind eye to this kind of activity.
Everybody knows what business Neteller is in. They never fooled anybody. Their rates charged to merchants were so insanely high that only gaming sites could even consider doing business with them. And that’s why I think Neteller previously out and said they would comply with US law. They were just hoping that the regs might leave them enough wiggling room to survive. Now they don’t even have until the regs are published since the US has made it clear that it believes that what Neteller does was illegal even before the UIGEA.
Make no mistake about it, this is the beginning of the end for US online poker players until laws are changed.
For those of you who need your gambling fix, re-check out this post I did about privacy. I’ve also had some other ideas that are more solid but cost a bit. Basically, you still need the proxy servers but rather than trying to get foreign bank accounts and foreign addresses to register with go ahead and shell out about $2000 USD and set up your own offshore corporation. You now have a legitimate non-US entity that can open bank accounts and transfer funds without the stench of American that would likely keep many legitimate foreign banks from doing business with you. Don’t try to avoid taxes on the money though. File all the proper paperwork and pay your fair share but at least you can keep your money moving around. You are simply an employee of the company who (if you use proxy servers and use your corporate physical address) appear to have no US connection and can play on any site you choose.