I read an article the other day on Casino Gambling Web that quoted online gaming legal expert I. Nelson Rose as saying:
I. Nelson Rose, a gambling law expert at Whittier Law School, has told Matt Richtel of The New York Times, that poker players should not give up their efforts to play online. They should just diversify.
“Now, you not only have to find a way to get money to a place you trust and that’s going to be honest,” Rose told Richtel, “you have to get money back and hope it doesn’t get seized.” Rose went on to tell Richtel that the way to keep playing is to not keep a lot of money in any one account, but to spread the money out over several different accounts.
I really, really hope that was taken out of context because that sounds like one of the most defeatist pieces of advice I’ve ever heard. While I’m a huge proponent of diversification no matter what subject we’re taking about it seems a bit naive to think people can spread their money across enough accounts that the financial impact would not put a ding in someone’s results.
How much should you diversify? 25% in each account? Unless you’re getting a 25% ROI one seizure could wipe out an entire year’s worth of gains.
If that really is the best advice that one of the brightest online gaming legal minds can offer then the industry is in dire straights.
As I’ve hinted at since the UIGEA passed your best protection is to have an offshore bank account. If all your online gaming transactions go into and out of an offshore account the money is fairly clean when it comes back to you via a wire transfer as long as you’ve properly declared all taxes on the money.
As an American citizen I fully understand that many offshore banks aren’t jumping all over themselves to offer services to Americans. The recent mess with Swiss bank accounts have made many banks even more cautious in dealing with Americans.
That said, I set up an account in Malta with nothing more than a passport. Literally I walked into the offices of HSBC and up until the very end of the paperwork the woman helping me thought I was a tourist on one of the cruise ships who wanted a Euro account. When I told her I actually lived in Malta she was somewhat relieved that she didn’t have to fill out the additional forms necessary to open an account for an American.
I also set up an account in Thailand with nothing more than a passport and the address of the hotel I was staying at. In under an hour I walked out with a ATM debit card and an online banking account so I could transfer money in or out of any bank in the world.
At the moment I’m still forced to use an intermediary like Moneybookers for withdrawals because the US facing sites I play on don’t believe that they can credit my UK, Malta, or Thai bank accounts because I’m American (they can) but it’s a fairly painless process with the exception of Netller who are crack-head paranoid about every transfer.
When it comes time that the only option available to American players is that they have to spread their money across enough online gaming sites or payment processors so as not to be devastated by the collapse of a single processor then that is the beginning of the end of online poker in the US.
Like I said, I really hope I. Nelson Rose’s advice was taken out of context because I really respect the man and have read nearly everything he’s written publicly about online gaming. However I can’t get around the fact that diversification seems like a defeatist attitude when so many other viable options are still in play.
Photocred goes to schoschie
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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.
{ 8 comments… read them below or add one }
I agree with you that there are more viable options for US poker players to use then to diversify their bankroll in case of their funds being seized.
-Scott
Bill, once again you hit the mark. I have about 5 poker sites that I like to play but they are not for diversification. Your idea about having an off shore bank is great. I will work towards that goal. I am not sure where the closest off shore bank is to Fremont, NH but I will start looking. Thanks for the tips.
Steve,
Try HSBC. They are used to dealing with Americans. There are many other well recognized banks that will open accounts for Americans as well. HSBC just happens to be one that I’ve heard some other players say they’ve used.
In reality you’ll probably need to go outside the country and open the account personally as you’ll be wanting to convince them that you have a legitimate need for the account.
That’s where things might become a little sticky. If you’re opening an account in a foreign country many banks want to know that you’re in the country legally which means residency and/or work permit. But the whole thing is that many banks don’t have this requirement.
For instance, although I don’t recommend a Thai bank for online gaming transactions since all forms of gambling are illegal in Thailand I was able to ask some expats where they would let me open an account without residency as I am legally only a tourist here until I get a different class of visa.
They recommended a specific bank and a specific branch as being farang (westerner) friendly with minimal questions. Fortunately for me, they didn’t ask for anything other than the basic name, birthdate (seems I was born in 2510 in the Buddhist calendar year), address, and for a copy of my passport.
I think the closest option for you would be Canada. You might try looking at some of the expat communities for Canada and trying to hunt around for some advice on foreigners setting up bank accounts there. It’s a common problem a lot of expats face wherever they move in the world so if you find an expat community you’ll find people talking about which banks are friendly to foreigners.
I’m sure there are some 2+2 threads on this right now and going back to the days right after passage of the UIGEA. They might have some info on banks who will allow you to do it online and never leave the US but if I remember correctly the ones I read didn’t find that option to be very easy.
Bill
I would be surprised if diversification really helped much. I can’t imagine that it would be too difficult for the US government to track down where the funds go to or where they came from.
I you want to guarantee an IRS audit and a spot on the Homeland Security watch list start moving money into off shore accounts. The only way I would consider doing this is if I won a Sunday Major online. I would have the site lock my account, then I would travel to a tax friendly country open a bank account. Then get the site to deposit the funds in my offshore account. From there I can transfer funds to my US accounts while paying taxes with little risk of being “Frozen” pending seizure by a frisky US Attorney facing eventual replacement.
Rob,
That is an very uninformed statement to make. I have had substantial amounts of money in offshore accounts for at least 3 or 4 years now and I have never been audited once. I always declare the existence of the accounts which I am required to do by law and I also accurately declare the balances when I file my IRS forms. All the banks except for my Thai bank asked me to sign a form allowing them to share data with the US government if requested and I signed the forms.
There are plenty of legitimate reasons to have offshore accounts. Many US citizens live overseas. Many have business interests overseas. And the IRS has very easy to follow rules on declaring your money that if followed will do not raise any suspicions with the IRS and especially with the Dept of Homeland Security (where in the world did you ever get that one?).
i am going to play poker in thailand and study in 3 months time i was very happy when i read your posts on this matter and would like 2 ask where was the bank you opened your account as would need the same one for online poker
thank you D
@Dale, I think your worst option would be to try to use a Thai bank account for that. I’m not even sure it it would work for many poker rooms / payment processors. Your best bet is to open an account with a recognizable bank in a first world country.
Or just use your US account but show Moneybookers or a similar sort of payment processor that you are authorized to reside in Thailand and see if they will allow it. Since you’re not in the US they might be agreeable. On the other hand, gambling is illegal in Thailand so they might not be too hip to that.