October 12, 2006

So Was it All Just Hot Air?

More on the whole Internet Gambling Act from one of our favorite news sites, the Casino City Times

The Senate bill approved in Congress last weekend restricting Internet gambling had some local poker players cashing out their online accounts, calling their attorneys and blabbing less about their online play.

In Las Vegas, home to poker pros and businesses that cater to the offshore operators of Web casinos, players had grown complacent with their view that poker is a game of skill that isn't subject to U.S. gambling laws that address games of luck. Others say online poker is legal - or that if it isn't explicitly legal, it's not made illegal under the federal Wire Act, which was a law designed to outlaw Mafia-run sports betting telephone operations that predate the Internet.

Both the complacency and the overreaction that followed have been off the mark.

For Internet poker to truly become legit in the United States and evolve from an offshore enterprise to a business that U.S. gaming companies can participate in, casinos need to mount a legal challenge to the Wire Act or pass legislation in Congress to legalize Internet gambling. The odds are better on the former, though some shift in power away from religious conservatives who have dominated the Internet gambling debate could help legislative efforts.

The bill, like the Wire Act, doesn't criminalize players for gambling online. It applies criminal and civil penalties to institutions such as banks, credit card companies and online cash deposit services that process the bets. It also allows state and federal regulators to shut down Web casinos and halt methods of linking to those sites, including Internet ads and portals.

It's uncertain how actively regulators will pursue such efforts or whether foreign companies will bow to U.S. law enforcement.

The risk for bettors is that their favorite gambling site and payment processor might get spooked by the rules and block access. While there are repercussions for publicly traded companies abroad that don't return players' money, smaller, little-regulated sites could theoretically take the money and run.

Players can rest easy with the feds. The FBI has not shown any desire to arrest gamblers in their homes, nor would the Justice Department have the time or resources to pursue that course of action. The same holds true in Nevada, one of few states that prohibit players and operators from engaging in online gambling. State regulators haven't licensed Internet operators so as not to run afoul of the feds. Busting people who gamble on offshore sites, they say, is outside the state's jurisdiction and a federal concern.

Reading this, makes two things clear. First, the average online player seems to be in the clear with respect to playing on sites that are run offshore, though the risk to a sudden loss of assets will always remain. Second, it seems like the whole thing was just alot of political maneuvering in an election year.

We will certainly still remain cautious, and would advise our readers to do the same, but maybe this bill was more bark then bite.

-- Update: 10/12/06
With Online Accounts like Firepay closing their doors to online gambling payments, maybe the bite *is* sharp!

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Posted by Russell Miner at October 12, 2006 2:07 PM
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