Wednesday, January 17, 2007

Time To Fold

Internet gambling in the U.S. is dead.

Well, not dead. As with any "vice" with high demand someone will find a way. Somewhere in the ether, the ghost of Al Capone is cackling.

But with the arrest of former Neteller executives Stephen Lawrence and John Lefebvre American gamblers may be forced to visit brick and mortar casinos or seek less legitimate money transfer systems.

Neteller, based in the Isle of Man, offered U.S. citizens a method to tranfer funds to international accounts allowing those funds to then be transferred to popular online poker sites such as Pokerstars, UltimateBet, FullTilt and Bodog. Its InstaCash system offered security and legitimacy previously only seen in cold hard cash transactions in real world casinos.

Since passage of the Unlawful Internet Gambling Enforcement Act, federal agents have struggled with how to enforce the new code. The strategy is now apparent with the arrest of Lawrence and Lefebvre. Attack the money. Follow the old boxing maxim "kill the body and the head will die". Without a method to transfer funds in a secure, above board manner online gambling sites will wither and die.

Maybe. Maybe not.

Certainly online gambling has taken a hit. Since passage of the bill, Neteller's stock price has fallen 60%. All but a few rebel online poker sites immediately stopped allowing U.S. players in cash games. Now the rebels have also folded.

Pokerstars and FullTilt no longer allow cash transfers via NetTeller. Bodog, the most rebellios of the rebels, went further effectively freezing U.S. cash in current Neteller accounts.

So what will poker players do? Most will simply fold the tent. Some will seek other means of funding; possibly less legitimate means. The gamble will not only be in the cards but also in whether they will ever see their money again.

Those like me who primarily enjoy live play will be less effected. However, like me, those players who live in states without casinos will move further and further into the underground live games. It is in these dark places where they will face the volatile mixture of large amounts of cash poured into an illegal operation. It is not rare to hear tales of robbery, intimidation and even visits to the hospital or the morgue.

As for the government? All those who voted for the bill pat themselves on the back, congratulating themselves for saving the poor innocent masses from poverty of the wallet and poverty of the soul. Few will note the massive loss of revenue. It is not widely known, but winnings in gambling, even illict, are taxable. The primary problem with this revenue stream is collection. Maybe, just maybe, one brave politician will wonder aloud how much fiscal benefit could be realized by cooperation with gambling sites to accurately track winnings and ensure they are taxed.

Meanwhile, two businessmen await trial, gambling will continue and somewhere out there, Al Capone's ghost is wringing his hands wishing he could grab a piece of the action.


Pokerista said...

I wonder if most people realize how hard the legislation was pushed by the casino lobby, who of course were exempted from the restrictions on transfers of money for gambling purposes. You can still transfer money to a US casino, and you can still do your off-track horse race betting.

It's a shame the U.S. casino corporations like Harrah's and Hard Rock didn't instead open their own poker sites and lobby for legalization of internet poker through those avenues. Just think of how much money they could have made. They could even have been required to report all winnings to the IRS to raise the odds of taxes being paid on the winnings.

This was just a stupid move.

Anonymous said...

i agree with the legislation which aims to ban credit cards as a payment method for online gambling of any sort... and i think it should be enforced worldwide – not just in America. In fact, gambling with a credit card should be banned full stop. Not just on the internet. It’s a no brainer when you consider you are placing somebody else’s money on an uncertain event happening, with the aim to recoup more than you invested. Chance and credit do not mix well in my opinion, and continuing to allow it would only contribute further to negatively affecting the high levels of personal debt many citizens today find themselves in. I do however, think that the prohibition won't work; or at least it won’t be received well amongst gamblers - i mean what’s the point in banning a credit card payments made on an online poker game, for example, but not online sports betting? Slightly hypocritical no? I mean how can you allow someone to participate in online horse racing betting, but not put any money on a hand of texas hold’em poker? both activities involve a large degree of chance, and neither are guaranteed to yield financial return.
What really infuriates me is that the minority of irresponsible gamblers [those paying with someone elses money!] have now ruined the fun of online betting for everyone else - those like me who pay with money they actually have in their bank!!
At least for the Americans there is always the free online poker games!

Anonymous said...

There is no more luck involved in winning a hand of poker than there is in backing a particular horse to win a race... the outcome of both depends on numerous circumstances which are out of your control. So what is it the point in American government banning a credit card payments made on an online poker game. I disagree with stickyboi because to gamble, and to have a credit card, you must be 18 - and by this age you should know how to be responsible with money...

Anonymous said...

i highly recommend playing internet poker at one of the many free online poker sites first, in order to hone your skills before you potentially lose all your money!!