Kyl Proves To Be A Complete Scumbag

Haley has the text of a letter Sen Kyl sent to President Bush back in March. Of note was this passage:

As we noted in our letter dated October 30 of last year, the best blocking procedures vary by the type of payment system. For instance, credit cards code their merchant accounts by type of business, so they can block certain codes. Internet gambling businesses may be self-identified to the credit card companies, or identified by customers or law enforcement. Other payment systems such as debits from checking accounts do not code transaction types, so they would rely almost exclusively on a government-provided list of prohibited recipients.

This matches up pretty closely to how I thought this would get implemented. Credit cards are a no-brainer to block because they’re already self-identified. Right now lots of people are finding the handful of merchant banks that haven’t already blocked online gaming sites and using debit cards to get money online. Currently the decision to block or allow most transactions happens at the issuing bank level. Each bank has its own rules and procedures I have a feeling the Visa and MasterCard are not going to leave this in the hands of the issuing banks and will likely block the transactions altogether at their level.

Interestingly, Kyl gives some focus to the second arm of money transfer which is stopping checking account debits via a government provided list of banned accounts. I’ve had some who disagree with me on the topic claim that the gov will only be able to update this list once a quarter at most and likely not even that frequently. I think those people are hopelessly optimistic. The problem with any payment system is that in order for people to use it the site has to tell people about it. Once they tell someone how to get around one roadblock they’ve given the gov all the information they need to block this new workaround.

None of the above should really be new news. A lot of this stuff I’ve covered extensively in previous posts. The one thing from his letter that did strike me as new was his gloating over wiping out $7 billion of value of of the London Stock Exchange.

The immediate impact of this legislation on offshore operators was overwhelming: online gambling businesses listed on the London stock exchange lost over $7 billion in market capitalization in one day after the bill was passed by Congress.

First off, what a scumbag to tout that as a major accomplishment. Second, as many of you may remember Kyl, Frist, and the rest all went around saying that they didn’t really think this bill would have any real impact on the industry and they couldn’t understand why people were getting so upset. That led many to believe that the bill was toothless and thus really nothing much had changed. As you may note from reading Kyl’s entire letter to President Bush they didn’t believe a word of it. It was a way to lull people into inaction.

And that’s pretty much what happened. Neteller was still here. Citadel was still processing. Everything was fine and dandy. Then the DOJ landed a January sucker punch and delivered a fairly critical blow by knocking out Neteller. Soon most processors were scrambling to exit the US market. Now. as we can see from Kyl’s letter, he wants to drop the other shoe by using aggressive enforcement of the UIGEA to squash the remaining payment methods.

If he’s at all successful in convincing Bush to make this a serious priority then the worst is yet to come. The only way this can be halted is if people like Barney Frank are successful in getting it postponed.

Bill Rini
Bill Rini is currently the Head of Online Poker for WSOP. He has been working in the online poker industry since 2004 and has held management roles at Full Tilt Poker and PartyPoker.