Amy writes a piece in Poker News which is exactly what I spoke of yesterday regarding those who tell you anything other than what I’m saying are seriously mistaken about how the money transfer business works. Since she’s a friend, I hope she’ll allow me the latitude to correct her writing in public :-)
But if you started a private offshore online funding company today and didn’t allow any transmissions to sports book operations, it’s far less probable that the US would come knocking at your door. Likewise, if you are an offshore online gaming operation that didn’t offer sports wagering, federal prosecution is probably not in your foreseeable future. Obviously, the changing landscape of state law has to be negotiated, but ‘sky falling’ material on the federal front would take passage of a new law, or a vastly different interpretation of the Wire Act then currently exists. While both of those prospects are possible, it would take strong motivation and some heavy lifting from Congress and the courts to walk that path.
While I give Amy credit for boxing her statements carefully, she’s still wrong. As I pointed out in many previous posts, cutting off EFT/ACH transactions really isn’t all that difficult and one of the reasons that people like Neteller and Citadel have thrown in the towel is that there’s a rumor that US banks have already voluntarily started to cut off ACH requests from them. Throw in the problem that the Federal Reserve (which I incorrectly called the US Treasury in yesterday’s post – damn late night posting) owns 85% of all ACH transactions and it’s not very hard for them to figure out who’s sending money to who.
And it doesn’t take a new law. All they have to do is implement the UIGEA. Part of the act called for coding banking transactions. Once they force XYZ Payment Solutions to report the true nature of their business . . . well, they just turn off acceptance of those transactions. Can XYZ claim to be a legitimate eWallet? Sure, but it’s still not major feat to identify them and block them. Most eWallets don’t return a gambling code for Visa/MasterCard transactions but a very small percentage of people can make credit card deposits on Neteller. The banks figured it out and put their own ban in place.
Smaller payment processors often slip under the radar but with the biggest, baddest boy in town out of the market as well as several other major payment solution providers that means all that is happening is the names are going to change. XYZ will become the new 800lb gorilla and banks will begin blocking them like they did Neteller. And when it’s impossible for them to do business ABC payment solutions will spring up to take their place and as soon as they get big enough they’ll get cut off too. It’s a losing battle for payment processors. They’re doomed by their own success.
Amy does make some good points about the motivation of the NFL and NCAA, and how the laws need to change for poker players but I’m guessing she sees posts like mine in the Chicken Little camp. I believe them to be anything but. I called this shot back in October. I have been 100% consistent in my views on how this whole little UIGEA would unwind and so far I’ve been pretty dead on. Save for missing a few things like Neteller exiting the US immediately after turning off InstaCash rather than over the next few months, I’ve always said that the way the UIGEA will kill online poker in the US is be killing the game liquidity via choking off the money.
The problem is, IMHO, people like Amy who tell people that the sky isn’t falling. It gives credit to those saying this is some sort of isolated incident. Just like Firepay was an isolated incident, Party leaving the US was an isolated incident, Paradise leaving the US was an isolated incident, yadda, yadda, yadda. People need to wake up and realize the US government has come to the playing field with their A-Game. We’re bumbling around arguing about whether there’s even a game today or not. The sky IS falling! How can you watch these multi-billion dollar a year companies bolting out of the US faster than you move your hand off a hot stove and think this is something that’s going to easily pass?
We don’t need any more Allyn Jaffrey Shulman’s out there telling us how this is no big deal and how the law is completely toothless. If you have even one iota of knowledge about how money moves around in this business the goals of the UIGEA should have sent cold shivers down your spine. The guys who wrote the bill either by design or by complete fluke figured out how to best kill an online poker company; starve it to death.
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Hi, my name is Bill Rini and this is my poker blog. I've been blogging about poker and the poker industry since around 2003-ish. Like most people I started out playing poker as entertainment in home games whenever we wanted to sit around and smoke cigars, drink beer, and eat pizza, and needed a good excuse. I started playing online shortly after the first online card rooms opened and it wasn't long before I was playing 20, 30, or even 40 hours a week or more. One day I received a phone call about a program manager position at Tiltware which was the company that consulted to Full Tilt Poker on software development and marketing. After Tiltware I spent about 2.5 years working at Party Poker where I was the poker room manager.
{ 4 comments… read them below or add one }
You paint a bleak picture. Would you go as far as saying that the current situation is as serious as the lack of name tags 2 years ago?
Nothing’s that bad :-)
Bill, I lean more towards your camp in the short term … but in the long term, is the sky really falling?
the supply is being cut off, and to some extent, so is the demand … but you know better than most that new demand is being created elsewhere, right?
in the 1980s, the reagan administration cut the flow of marijuana from mexico to a trickle — by enforcing old laws and enacting new ones. the result: new technology changed the way the plant was grown, and as a result america now grows the best in the world.
the marijuana distribution industry changed … but the demand didn’t go away, and in the long run, it gave birth to a newer, stronger industry that found ways to provide an even better product.
I think the short-term situation is changed until the laws change. While it’s very difficult to stop illegal drugs because they are a physical item that can be transported/smuggled, money has other properties. Money is very different and operates in a world with very stringent laws and rules. Drugs are usually an all-cash business. The money doesn’t need to flow from the drug buyer via the banking system to get to the drug dealer. The drug dealer takes cash and then his major concern is transporting large amounts of cash out of the country. This then opens him up to money landering charges on top of the drug trafficking charges.