Someone asked me to explain, in detail, how each type of payment processor could be shut down. I include my post from 2+2 here.
ACH/EFT: Easy to shut off. 80% of all activity goes over a network controled by the US gov. The remaining 20% goes over a small group of networks who are part of the NACHA. NACHA issued the memo that lead to the shutdown of Neteller, Click2Pay, and other payment processors the other week. All they have to do is determine which companies are in the gaming eWallet business. That would be as hard as . . . oh, logging into a poker site and taking a gander at the payment processor page.
Debit/Credit cards: These also travel over a fixed number of networks such. Cirrus and Star are examples. The credit/debit card industry already codes transactions so it’s simple for them to cut off this payment method. Some banks were willing to accept gaming risk but once the regs are published those issuing banks will decline all requests to certain industry codes. If payment processors begin publishing bogus industry codes then Visa and MasterCard would act and completely shut them off as a merchant and/or issuer. This has happened with a lot of other industries say where phone sex lines reported bogus industry codes so Visa and MC already have the facilities in place to address this.
Bank wires are very similar to ACH/EFT. Again, all they need is a list of offenders. I don’t think the DOJ will have too hard of a time supplying a frequently updated list of offenders.
Ewallets are not a payment method, per se. You have to fund them. You fund them via one of the other payment methods (ACH/EFT, debit cards, etc). An eWallet has no value without a way to get money onto and off of it.
Western Union / MoneyGram. WU already doesn’t like people using them to fund online gaming accounts and is more diligent about stopping abuse than is MoneyGram which is why most sites offer some sort of bastardized version of MG under a names like CyberCash. This is more difficult to stop and there will always be ways to slip through but once the regs come out MG will likely be forced to start taking a harder look at all of those cash transfers to the same people in Guatamala, Panama, etc.
Paper Checks are probably the most difficult to stop because they don’t happen via electronic means. The handling of paper checks is actually quite expense compared to other payment methods for this very reason. The biggest problem though will be convienience factor. Paper checks will need to mailed overseas and then cashed by an overseas bank which could take up to a month (for sending as well as funds to clear) though in most cases it would be several weeks.
So realistically the only option that can’t be shut down very easily is paper checks. This is what the banks were lobbying against. They wanted to make sure that they had some wiggle room on paper checks because it would be very expensive (or impossible) for them to come up with a good system to prevent illegal payments to and from online gaming sites.
And that really is the problem. It’s become very public that the US gov thinks online gaming is illegal. That scares away many new players. Now you add in this whole process of having to send checks and waiting for weeks for the checks to clear and that will shut out a large number of new and recreational players.
Plus you have to consider that the government already has a lot of things in place to stop money laundering. Using those same tools against online gaming would make some of the above efforts even more effective.
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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.
{ 2 comments… read them below or add one }
Bill,
While I am in general agreement with you about how the next few years will play out for US online poker players (more and more difficulty funding and withdrawing from accounts), you are destined to be wrong about one thing:
Liquidity will not dry up. Yes, many US fish will no longer bother jumping the hurdles to play online, but the slack will be more than picked up by increasing numbers of European and Asian players. Witness the strong growth of traffic at rooms that banned US players last October in the last few months (most notably Party and Everest).
We are still in the early stages of the poker boom in Europe. The EPT has been growing rapidly, fueled by large numbers of European online qualifiers. And it’s not only the Scandinavians that are jumping on the poker bandwagon – I’m noticing more and more players from many former Communist block countries.
And when the European boom levels off, it will be about time for Asians to enter full force.
As a Canadian, I hope that eventually the restrictions of US players will be lifted. But until then, I will have no shortage of inexperienced players at my table.
Robert,
Yes, my apologies. I do not mean that liquidity will dry up universaly. European and Asian growth is fantastic and only getting better. However, if a site is 90% US and the market begins to dry up why would Europeans and Asians choose to play there? Those players are going to go to the sites where liquidity is increasing, marketing campaigns are kicking in, and a real effort is being put into developing those markets. Right now, the only US room doing any of the above is Stars though they are still so US focused that they are probably 12 – 18 months behind sites like Party, Everest, etc that are focusing on non-US markets.
Bill