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New Legislation Regulating US Players

Discussion in 'Casino Industry Discussion' started by kmartinusa, Feb 19, 2006.

    Feb 19, 2006
  1. kmartinusa

    kmartinusa Dormant account

    Occupation:
    Business Owner
    Location:
    Under the Radar
    I've read what the legislators have proposed, but I have yet to read an educated/learned opinion as to what this is likely to mean...Will US internet based gambling grind to a halt? Will this legislation leave work arounds? Are we in the US dead in the water? What do you think?

    I would love to give my opinion, but I just don't have enough knowledge/insight to tell...

    Thank you for your time in responding,

    Kevin
     
  2. Feb 19, 2006
  3. BrianC

    BrianC Dormant account

    Occupation:
    Self Employed
    Location:
    New Jersey USA
    I share in your concerns. It really pisses me off to think the gov't needs to butt into people's entertainment and tell them how to spend their own money.
    This issue has nothing to do with children getting into gaming - it's simply an economic issue for the country because of tax dollars not being collected. Instead of going for regulation, they want complete prohibition. That is just NOT acceptable to me and I will not support any senators or congressman that support this new bill. Hopefully this bill will be shot down (again).

    Brian
     
  4. Feb 19, 2006
  5. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    We're going to see a lot of discussion on this latest move/s (because Leach and Kyl are also planning a Bill and have been collaborating on it to avoid mutually exclusive provisions)

    It seems that at present Goodlatte is trying to leverage the high profile press coverage surrounding lobbyist Abramoff's exposure, but that's just politics, because previous attempts have not focused very much on the activities of lobbyists as a reason for failure.

    These guys always start out full of vinegar, but many previous attempts have failed and it should be remembered that there are many vested interests involved in this, all trying to ensure they are not prejudiced. And the individual states will not want their authority to regulate and control happenings within their states diluted by federal efforts.

    The sponsors of these Bills are trying to avoid the mistakes of the past, especially in regard to unfair exemptions to their proposals, but more interference from diverse interested parties would be pretty much inevitable I would think.

    As you can see from the following - there are a number of other recent developments that could have an impact, too.

    Success is always a possibility with this legislation, especially after so many years of failure for the legislators, but I wouldn't write US online gambling off just yet - and even assuming they get the law through it is going to be very difficult to practically apply, as even the Department of Justice has admitted. Things like ISP blocks are not going to go down well with anyone in a U.S. that guards its freedoms jealously.

    All of this political energy focused on Internet gambling for so many years begs the question - do the politicians really know what their constituents feel about this? There was a survey recently that suggested that 67 percent of respondents felt that online gambling in the States should be legalised, regulated and taxed.

    WILL US BANNING ATTEMPTS IMPACT WTO AND ANTIGUA?

    Is the USA on a collision course with the World Trade Organisation?

    The launch last week of the Internet Gambling Prohibition Act by Reps. Goodlatte and Boucher, and other legislation reported to be about to enter the US lawmaking system could put the United States on a collision course with a World Trade Organisation already eying the Americans over the hotly contested Antigua online gambling dispute.

    If the Bill passes and impacts offshore gaming it may be in contravention of the WTO ruling regarding the prohibition of Internet gambling regardless of whether the servers are located in the US or outside of it, says the BBC, which claims that the bill will put the US on a collision course with the WTO, which has ruled that the US "...must not interfere with online gambling sites based overseas."

    If the bill passes, the US could be subject to WTO sanctions come April for not bringing its laws into compliance with the WTO ruling.

    Antigua has already protested the new U.S. efforts to outlaw Internet gambling and complained that the United States had done nothing to implement a World Trade Organisation ruling against current restrictions. In a letter to U.S. Trade Representative Rob Portman released last Friday, Antigua's ambassador to the WTO, John Ashe, expressed concern about two U.S. legislative proposals to outlaw Internet gambling.

    "Each of the bills is in key respects expressly contrary to the rulings and the recommendations of the Dispute Settlement Body of the World Trade Organization," Ashe said. He also complained that the United States had made no move to comply with the April 2005 ruling.

    Sponsors of the 'Internet Gambling Prohibition Act,' which seeks to update the antiquated 'Wire Act' claim that it was narrowly defeated in previous incarnations due to the influence of disgraced lobbyist Jack Abramoff. That's debateable - just last week the chief of the American Gaming Association, Frank Fahrenkopf pointed out in an interview that up until the media blitz started, very few people had even heard of Abramoff, let alone considered him a top lobbyist.

    Nevertheless, Goodlatte was damning in his indictment of the disgraced Abramoff, saying: "I have previously introduced similar legislation in both the 106th and 107th Congresses only to have them both derailed by Jack Abramoff's campaign of misinformation. Jack Abramoff's total disregard for the legislative process has allowed Internet gambling to continue thriving into what is now a twelve billion-dollar business which not only hurts individuals and their families but makes the economy suffer by draining billions of dollars from the United States and serves as a vehicle for money laundering."

    The last part of that statement is arguable, too in light of the repeated pleas of large Internet betting companies to be legalised, regulated and taxed on US soil. And the old "money laundering and terrorist funding" allegation has repeatedly been disproved.

    The new law as it now stands would be absolutely explicit - any gambling using the Internet is illegal in the US. Additionally, Goodlatte seeks to target US-facing offshore gambling sites by making official the ban on accepting credit cards, electronic funds transfers, or checks from US players. Banks and other American financial institutions have been imposing their own ban for some time, but this will certainly turn the screws tighter if it passes. Penalties for violations have been raised from two to five years in jail.

    The Bill apparently seeks to avoid previous pitfalls that have generated opposition. For example, it does not seek to overthrow or limit the rights of individual states to authorise gambling within their borders. That would appear inconsistent, because if the goal is to stop money from being lost and laundered to 'shady outfits' based offshore, why is Internet gambling banned within the US as well? If the reason is to save the minority of citizens who are prone to addictive behavior, why do legal commercials run on TV every night encouraging citizens to visit Vegas?

    Previous attempts have been bedevilled by wheeling and dealing over exemptions for vested interests in other gambling sectors (such as Indian gaming and horse racing) and politico-religious groupings. Whilst these might not necessarily be friendly toward online gambling per se, they have their own interests to protect and this has been an important factor in the past.

    The progress of the current banning attempt, and those for and agin' it is going to make very interesting reading in the weeks and probably months ahead.
     
    5 people like this.
  6. Feb 19, 2006
  7. sdaddy

    sdaddy Meister Member

    Occupation:
    Retired
    Location:
    Arizona
    Thanks for your thorough reporting on this, Jetset.

    One thing I've always wondered about these bills that target funding going from US players to offshore casinos is how it would affect transactions through third-party payment services such as Neteller. Do you have a read on that?
     
  8. Feb 20, 2006
  9. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    I think in a practical sense this is one of the biggest hurdles for the US authorities - it's one thing to introduce legislation but quite another to enforce it, and as Prof. Nelson Rose has pointed out again just recently there has only, ever been one case of an American citizen being prosecuted for gambling online - a sportsbook better who made significant profits off of it and was probably ratted out due to involvement in some other endeavour and paid a fine.

    Going that draconian route is for sure going to alienate an awful lot of people.

    I share the view that this sort of legislation is more likely to drive online gambling underground than stop it, and that real State regulation is the way to go...or not, depending on the state and its electorate (preferably through state referenda) And the feds have to very sensitively consider the Constitutional power of the individual States as I outlined earlier.

    Regarding Neteller, this is a powerful and profitable Canadian company registered on the Isle of Man and subject to the stringent financial services laws of that country and it's FSB. The US authorities have no de facto power over it. What they could do I guess is force US ISPs to block Neteller but as I said earlier that is likely to create a significant resistance from the American public.

    I believe the US authorities are confronted here with the reality that despite the status of the United States as the most powerful and influential nation in the world, there are areas of international commerce where enforcement of American laws is not possible. That means that counter measures will in general have to be constrained to what the federal authorities can control domestically, bearing in mind the strongly independent and freedom-loving nature of the American populace.

    Work arounds will almost always be found with the application of a little human ingenuity; when these politicians first introduced the concept of crippling the industry by cutting its financial legs off there was huge alarm. When the big American banks followed suit and truncated credit card transactions there was similar disquiet, followed immediately by alternative arrangements. The industry continues to flourish because American players want to play.

    I'm not underestimating the danger of this sort of misguided but determined lawmaking, but there's a way to go yet and many threads in this weave.
     
    Last edited: Feb 20, 2006
  10. Feb 20, 2006
  11. NoMouthToScream

    NoMouthToScream Experienced Member

    Occupation:
    Employed
    Location:
    USA
    Not to move the discussion elsewhere, but you want ideas and explanations and potentials problems, the US will face by legislating this law. Check out this forum.

    You must register/login in order to see the link.

    I'm not sure of the rules in posting outside links and moving discussion elsewhere, but please inform me if this is against any rules.

    Definitely a huge problem would be the lack of funds in going through with
    this law.
     
  12. Feb 20, 2006
  13. Casinomeister

    Casinomeister Forum Cheermeister Staff Member

    Occupation:
    Homemaker
    Location:
    Bierland
    A good way to handle posting external links is to give a synopsis or present several important points so that the conversation in this thread can benefit from any additional information. Some of us choose never to drift away from Casinomeister :D

    Welcome to the forum by the way.
     
  14. Feb 21, 2006
  15. sdaddy

    sdaddy Meister Member

    Occupation:
    Retired
    Location:
    Arizona
    Wouldn't it also be possible to prohibit money transfers from accounts at US banks to an account at Neteller? That was my biggest concern. Or do you only see these proposed laws targeting direct transactions to online casinos?
     
  16. Feb 21, 2006
  17. dominique

    dominique Dormant account

    Occupation:
    webmistress
    Location:
    The Boonies
    I've posted a collection of links to articles concerning this here:

    You must register/login in order to see the link.

    I know it's an affiliate blog, but the articles are still completely on this subject.
     
  18. Feb 22, 2006
  19. sdaddy

    sdaddy Meister Member

    Occupation:
    Retired
    Location:
    Arizona
    Thanks dominique, some good articles I missed there.

    I remember the 60 Minutes piece last fall said that there are now around 12 million online gamblers in the US. That's a pretty sizable voting constituency, if you think about it. I wonder if any grassroots political organization of players even exists. Then again, do you want to reveal in public that you are a "criminal?":)
     
  20. Feb 22, 2006
  21. -z-

    -z- Dormant account

    Occupation:
    retired
    Location:
    usa
    Email fourishes in late 90's- there was a big uproar about how Congress was considering a law to tax email messages.

    Video games came under attack after columbine.. Congress threatened to put X rating on games.

    National ban against using your cell phone while driving. (I wish)

    Spam legislation: Got less spam?
    Now that I think about it.. maybe that email tax would've head the spam problem off at the pass.

    Technology legislation always makes big headlines but when put to the test, the US congress couldn't pass gas let alone an effective law. Congress is only interested in jumping on the bandwagon of the day for votes and getting their hands of more money to waste.

    I'm not worried in the slightest.

    -z-
     
  22. Feb 22, 2006
  23. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    Those are good links that give a good overall perspective. BTW there's a new Nielsen/Netratings study just out that identified over 30 million US based online players, and reports CCA projections for 2006 revenues at $15 billion.

    Just an additional note - it's early days but already the horse racing lobby is pressing its representatives to go after exemptions. There will be others, and these are what tend to bog these bans down.
     
  24. Feb 23, 2006
  25. pokeraddict

    pokeraddict Webmaster

    Occupation:
    Pro Poker Player
    Location:
    Las Vegas
    I'm not 100% versed in the WTO ruling but the horse racing was the big issue why the US lost the multiple rulings right? The US allows states to offer internet gambling but would not allow access to the banking system for Antigua/Barbuda? If they tie horse racing to the bill then they are basically passing a status quo which violates the ruling which will get the U.S. in more hot water if they dont act on the ruling soon.

    Maybe I misunderstood the ruling?

    As for blocking these sites its a joke. I'm sure someone will come up with some proxy that you will be able to gamble over and access your Neteller account if the US ever managed to get this off the ground. Think about how many ISP's would take the government to court over this and how many temporary restaining orders would be filed.

    It would probably affect poker players worse because it would make it harder for the donks to figure out how to make a deposit or even connect to the site hurting the quality of the games.
     
  26. Feb 23, 2006
  27. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    You're right, pokeraddict - horse racing was one of the "carve out" stumbling blocks in past banning efforts, and is at the centre of the current WTO row.

    My understanding of it's current prominence in the WTO confrontation between Antigua and the USA is that interfering with other countries in the trade pact did not exempt online gaming when the USA signed the trade pact. So the US authorities, after first saying that they failed to exempt it from the WTO agreements in error had to fall back on another *acceptable* reason for taking actions which harmed the Antiguan offshore gaming industry.

    There was provision for this on the grounds of moral objections or the protection of one's citizens from harmful practices, and the US went for that.

    Problem was that certain US horse racing facilities are conducted over the Internet. The argument therefore goes that the US cannot object to Internet gaming as immoral and harmful if it allows on its own soil a like practice.

    The last WTO ruling requires the USA to bring its practice into line with its objection by April 3. Initially a US Trade Representative spokesman said that wouldn't be a problem and just required some "tweaking" but it is clearly more complicated than that, and gets more so with any new US "carve outs" that use the Internet as a betting medium.

    The US response on (or maybe even before) April is going to be very interesting.
     
    Last edited: Feb 23, 2006
  28. Feb 23, 2006
  29. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    Blocking ISPs is going to be a major problem, and one that is not popular because it is setting a precedent for interfering with the freedom of the Internet as well as presenting practical hurdles.

    We've already seen the DoJ, and even Kyl himself admit that enforcing an online gaming ban is going to be difficult. Here's a Kyl quote from a recent Morgan Stanley report on this subject:

    "Online gambling would be a difficult kind of activity to regulate, because we don't have jurisdiction over the people abroad who are doing it."

    Morgan Stanley's conclusions after an objective study of this whole situation:

    "Ultimately, we think that the size and scale of the industry will dominate the attempts to moralise and prohibit. It is inconsistent with its popularity to ban online gambling."

    The report touches on regulatory moves within the industry, saying: "Operators have gone to great lengths to legitimise the industry, including initiatives such as eCOGRA, with measures to limit problem gambling, increased security and identity checks, a full audit trail to eradicate money laundering and promoting websites such as Gamcare."

    Mention is also made of the Bet On Sports initiative that shows there are no links between online gambling and money laundering.

    Concluding that the US legal scene is likely to remain "a grey area" for at least the next 18 to 24 months, the report calls attention to developments in the UK, pointing out that online gambling is regarded in that country as a "legitimate leisure activity" to be regulated, and that this view will predominate internationally in time.

    Another question should be occupying the minds of thinking politicians - if there are 30 million or more U.S. online gamblers, and even greater numbers of American Internet users who regard the freedom of the Internet as vital, is it smart to support unnecessary laws that go against the wishes of a significant percentage of the electorate?
     
    1 person likes this.
  30. Feb 23, 2006
  31. dominique

    dominique Dormant account

    Occupation:
    webmistress
    Location:
    The Boonies
    You must register/login in order to see the link.

    Interesting site.
     
  32. Feb 28, 2006
  33. Maple Leaf

    Maple Leaf Dormant account

    Occupation:
    Direct of Marketing
    Location:
    Canada
    I also saw that episode of 60 minutes that Sdaddy was refering to. Was a very interesting piece. I forget the man's name in the interview but he made some very valid points on how Europe, particularly the UK, is taking a much more progressive view point on online gaming. Rather than trying to ask its citiziens to stick theirs heads in the sand, and ban something that has become a worldwide phenomenem, the UK gov't has tried to work with UK firms to find a solution that helps all parties involved. ie Tax revenue in exchange for regulation and compliance.

    When I read about this issue of regulation, I can help but think it draws some striking parallels to early prohibition days in the US. A way back when, the US gov't thought they could eliminate a lot of social problems such as alcohol abuse but all prohibition did was help pave the way for men like Capone who use organized crime to keep the booze flowing. It begs an interested question that if the US gov't could help to regulate the online gaming industry today, maybe it could help to weed out some the shadier operators who now take advantage of unsuspecting players. I know as a online poker player myself, I would feel a lot more comfortable playing at sites that could have a 'US gov't approved' seal on their website.
     
  34. Feb 28, 2006
  35. jetset

    jetset Ueber Meister CAG

    Occupation:
    Senior Partner, InfoPowa News Service
    Location:
    Earth
    That guy interviewed on 60 Minutes was Nigel Payne, CEO of Sportingbet and a longtime proponent of the "regulate and tax us" approach to the US market.

    I agree that US players would be far better off with a state regulated online gaming industry which would probably see the big, well funded and highly experienced US gambling groups playing an active and professional role.
     

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