Looks like the folks who cut paper checks for PokerStars, Chexx Inc, are getting out of the online gaming business this week. That will add yet another online poker site who has very limited ways to process cashout requests. While Stars is probably in a better situtation to replace their paper check processor than other sites it’s not a good sign. Most of these check processing companies aren’t making enough money to want to risk the ire of the US governement.
All of these funding and cashout problems are starting to manifest into worry in the online poker community. Even many of the glass-half-full folks on message boards like 2+2 are beginning to admit that the almost daily pounding of bad news is starting to wear on them. While they aren’t ready to give up on online poker just yet they’re beginning to admit that Neteller’s US exit has radically shifted the entire face of the industry.
Even USA Today is brining the story to the masses so there will likely be an impact on new players who read stuff like this in the press and decide not to risk having their funds tied up.
A small side industry has begin to spring up where non-US Neteller customers are accepting player to player transfers for US Neteller customers and then moving the money onto a site of their choosing or sending them the cash. Fees for such service have gone as high as 10% of funds transferred and more than a few crafty folks have used it as a way to completely rip off the US Neteller customer. Neteller has begun to crack down on this activity because it reeks of money laundering and they’re paranoid about giving the DOJ another reason to come snooping around.
PokerSiteScout has published some research which pretty much says the same thing as I’ve been saying in my graphs. More or less, Stars has been whacked 19% and Tilt 23% Jan. 22-28, 2007 vs. Jan. 8-14, 2007.
Unconfirmed reports have Click2Pay having difficulties processing transactions. If they weren’t on the ACH network watch list before they can probably expect to be there soon so how long they’re able to handle US customers is anybody’s guess.
Rumors have been swirling about new payment processors hitting the market. Full Tilt has added a new processor called WireCard. WireCard seems to be some sort of Click2Pay owned pre-paid debit card. Unfortunately, these will probably be short-term solutions. When the full force of the UIGEA is put in place these onling gaming centric debit card operators will likely run into problems.
Again, the problem with almost any solution that someone can cook up is that at some point the money travels through a US financial network. While you might find people willing to risk going to jail to offer a service to Americans the people who own those financial networks aren’t. They’re risk-adverse by nature and if the choice is cut off a payment processor, bank, or other entity or risk violating US laws, they’ll cut off the payment processor.
For instance, with this new WireCard, you sign up and get a debit card number from them and then you either transfer funds onto the card from your bank or you use your credit card and put money onto the debit card. Now, both funding methods travel over US financial networks. Bank transfers over ACH which just shut down Neteller and credit cards over the Visa and MasterCard networks. At any moment the methods to get money onto or off of the card could be crippled simply by NACHA or Visa/MasterCard issuing a memo identifying WireCard as a company primarily in the business of getting around US anti-gaming laws.
Between when I started writing this post and before I finished it, WireCard seems to have figured out exactly what I’ve stated above and has placed a ban on US players transfering funds to online gaming sites. Of course, being overseas, I can’t confirm this so if anybody wants to go to their site and take a screenshot or something it would be much appreciated.