IGC says: AMERICANS STILL FREE TO GAMBLE ONLINE

[spearmaster]

Just in from the IGC:

October 9th, 2006

AMERICANS STILL FREE TO GAMBLE ONLINE - Congress passes a ban that targets payment mechanisms, but fails to protect the players.



CONTACTS:

Rick Smith, Executive Director, executive.director@igcouncil.org | Phone: 1-604-732-3833
Keith Furlong, Deputy Director, keith@cataniaconsulting.com | Mobile: 1-732-687-0880


9 October 2006 - After a decade of false starts, anti-gambling forces in the U.S. Congress have finally succeeded in passing a specific ban on Internet gambling. Literally in the dark of night, without debate and far from public scrutiny, Republican leaders in Congress added an Internet gambling prohibition bill to completely unrelated, but important, legislation on port security. Without even reading the tacked-on provisions, legislators passed the entire measure before adjourning Saturday, Sept. 30, for their election recess.

But it is important to note, the Interactive Gaming Council says, that individual American players are still free to gamble online. The prohibition bill does not make it a crime for the individual participant. The focus of the bill is on the financial transaction – the transmission of money from the player to the operator of the gambling site.

American players, who are believed to account for half of all online gambling activity, can continue to play without fear of federal prosecution. However, some of their favorite sites may no longer accept their wagers, as many of the publicly traded online gambling companies announced that they would stop taking American bets following the recent action of Congress.

“This bill doesn’t do anything to protect American consumers who choose to enjoy Internet poker and other games,” said Keith Furlong, deputy director of the IGC. “But the immediate effect is to drive the industry further underground. Gambling sites will devise new methods for getting money from / to a market where players have shown a resilient demand for this type of entertainment. The sad thing is, however, that many of the largest and most responsible companies, some of whom are major public companies listed on the London Stock Exchange, are being forced to stop providing real-money games.

“This will prove to be a classic case of unintended consequences. In the guise of protecting vulnerable Americans – minors who want to gamble and adults who can’t control their gambling – Congress has actually heightened the risk to these groups. It has driven away the operators who followed the most socially responsible practices. It has also increased the possibility of online gambling being used for money laundering, because it has outlawed the most easily tracked methods of payment.”

“With few exceptions, U.S. states have demonstrated over many years that they can successfully regulate the bricks-and-mortar gambling industry,” added Rick Smith, executive director of the IGC. “That industry employs thousands of people and generates millions of dollars in tax revenue. The same principles could have been followed in the Internet gambling industry. With licensing and rigorous regulation of online gambling sites, rather than futile attempts at prohibition, governments can ensure that games are fair, operators are honest and solvent and vulnerable players are protected. And the governments could have reaped millions in taxes.”

The IGC recognizes that the Internet provides unique challenges to the regulation of any activity, including simple retail transactions. But Congress demonstrated no interest in even studying such issues. In fact it specifically rejected attempts to include provisions to study the possibility of regulation. Political motives, including presidential aspirations, clearly drove its rush to pass a prohibition bill, as its members left Washington to hit the campaign trail.

“This was a sneaky election ploy,” Furlong said. “It’s no coincidence that a ban on Internet gambling is part of the ‘family values’ platform of the extreme right, which wants to distract voters from real problems, such as the war in Iraq, and at the same time impose its moral agenda on Americans, depriving them of their freedom of choice.”

The prohibition bill, the Unlawful Internet Gambling Enforcement Act of 2006, was criticized in an Oct. 4 editorial by the Seattle Post-Intelligencer. The newspaper quoted from a statement by Rep. Jim Leach, the Iowa Republican who was the bill’s main sponsor: “Gambling from your bedroom or living room or dormitory is not a socially useful activity.” As the editorial concluded, it’s an ominous development when the government dictates which activities in our homes or dormitories are “socially useful.”

Senate Majority Leader Bill Frist of Tennessee, who led the weekend maneuver to pass the ban, said, “Gambling is a serious addiction that undermines the family, dashes dreams and frays the fabric of society.”

But these moral crusaders showed their true political colors by exempting Internet wagering on horse races and lotteries from their bill. In many states, people are free to gamble online as much as they want on U.S. horse races and state lotteries. In fact, in a research report in March, an investment bank stated: “The U.S. horseracing industry now generates over 15% of its revenue from online wagers.” The horse racing lobby is simply too powerful for Congress to oppose.

“What a contrast between the U.S., which after all went through a notoriously unsuccessful attempt to ban alcohol, and Britain, which is methodically preparing to license and regulate online gambling, starting next year,” Smith said.

About the IGC

Formed in 1996, the IGC is the leading trade association for the international interactive gambling industry with its membership operating or supplying services to most of the reputable interactive sites on the World Wide Web. Based in Vancouver, Canada, the IGC champions fair and honest interactive gambling environments. To help parents protect their children, IGC members are encouraged to participate in the self-labeling system of the Internet Content Rating Association. The IGC has developed a Code of Conduct for members, and a program called Helping Hand to assist problem gamblers.

[Casinomeister]

Beat you to it
http://www.casinomeister.com/forums/...s-release.html

[spearmaster]

BARELY.. LOL... and that was only because I posted it somewhere else first

Anyhow, thought I'd stick it in here to reassure players... naturally you can move it if you want

[soflat]

If it is legal, then why did the casinos ban us?

And if they were willing to pay taxes, then how come they located on foreign soil and never did pay US taxes?

I'm too confused by all the different reports and opinions.

[spearmaster]

If it is legal, then why did the casinos ban us?

And if they were willing to pay taxes, then how come they located on foreign soil and never did pay US taxes?

I'm too confused by all the different reports and opinions.

First of all, online gambling is NOT illegal, despite any reports you have read to the contrary. Only sportsbetting falls foul of the law.

The new legislation is designed to inhibit/block financial transactions to/from what they call "online gambling sites".

Many casinos suspended, or will suspend, play from the US - but they chose some pretty poor wording, much like the media did - the words "ban" and "illegal gambling" suddenly became fashionable for absolutely no reason.

Taxwise - some operations have actually publicly pleaded with Mr. Bush to be allowed to pay tax. These pleas were ignored. Furthermore, running a gambling operation of any sort within the US is generally prohibited by state laws - therefore there are few, if any, jurisdictions within the US which would or could currently accommodate an online gambling operation which takes wagers across state lines.

[Simmo!]

That's an excellent PR. Hits all the nails on the head in one go

[The Watchdog]

If it is legal, then why did the casinos ban us?

And if they were willing to pay taxes, then how come they located on foreign soil and never did pay US taxes?

I'm too confused by all the different reports and opinions.

As far as what I understand ...

There is no law saying gambling is illegal. What the US is doing is taking measures to avoid US citizens deposit funds.

As far as you can deposit, you are not been a criminal by gambling online. (except people in washington).

[Addisyn]

I spoke at great length with the manager of Shark Casino a few nights ago. He is originally from CA and we got to talking about this recent bill passed in our Congress.

He was telling me he thought Neteller was on its way out since as stated this doesn't make it illegal for US gamers, but for the money people. Something else he mentioned I thought was interesting. He said PayPal might get back into the business of funding online gambling. That made absolutely no sense to me if this bill is to crack down on legititmate companies handling our transactions.

I guess the lesson here is to vote in November and get some checks and balances back into our Congress.

[jetset]

I think much is going to depend here on whether big [offshore] financial companies decide to bow down and cooperate with US enforcement, because major intermediaries like Neteller are outside US jurisdiction, and the reach of the US authorities is not unlimited, much as they would like everyone to believe otherwise.

Outfits like Neteller are not on US soil; it has no assets there; it is licensed by a sovereign government and controlled by the financial services regulations of that government (in Neteller's case - the Isle of Man)

In a strictly *informal* sense I'm sure determined US authorities could try other tactics to get their way. When it suits these agencies they have shown that they are not averse to using intimidatory techniques and disregarding obligations to the likes of the WTO, or misusing instruments like the anti-terrorist extradition treaty which has to date been used to extradite more white collar alleged criminals than terrorists.

You can be sure of one thing - there will be workarounds. Players will have to assess these carefully to ensure they are using credible companies, in decent and regulated jurisdictions and that's one of the reasons why this silly legislation has the potential to make American players more vulnerable - where there is a demand there is always a supplier.

Regulation is the better option because superior suppliers can be checked out and regulated for the protection of the public.

This is all speculation at present, because this act still has to be given the necessary authorities and regulation in the 270 day period specified. That's assuming the president signs it into law at all, which does seem likely.

Once the US Treasury and AG have framed these regulations everyone - and especially those in the financial services industry - will be able to assess how effective they are likely to be.

My personal opinion is that this is going to be one helluva difficult law to enforce even as things stand today. There is every bit as much expert thinking outside the USA as there is resident in the enforcement infrastructure in the States and alternatives will be available.

This could make life more inconvenient until everyone gets in the swing of things. We've seen that before, too. It may result in some US players abandoning their entertainment of choice but it is not going to destroy the American market or the international industry.

Remember, this legislation does not target the player - it seeks to curtail his or her ability to fund their entertainment through US institutions.

If American players remain determined to play, there will be ways to do so.

What could practically divert US revenues is the legalisation of online gambling in individual states and across consenting state borders. This would imo have the competitive potential to bring the major and fully regulated land casinos in the US into the picture, and who could blame Americans for choosing to play at such safe venues, all other things being equal.

However, that would call for a remarkable about-face by the politicians and the other *interested parties* who seem to be involved and I don't see it happening anytime soon.

[Tailgun]

As the recent article in The Economist pointed out, if anything this will accelerate the learning curve of determined gamblers toward offshore banking. Soon, the most efficient way to circumvent all this will be to simply open accounts outside the U.S. and employ them to make deposits and withdraw funds from gambling sites. Such transactions would be impossible for federal authorities to track or prohibit.

The article pointed out an unintended circumstance of this might be the growing awareness by American citizenry that they can protect any funds in offshore banks from taxation. I for one looked into offshore banking years ago when I first began doing business online.

It looks like I might want to revisit that now.