Musings on the new Internet Gambling law

by , Oct 3, 2006 | 12:09 pm

Trying to get my head around the new Internet Gambling law. Read an interesting piece on page 2 of today’s Business section in the Dallas Morning News (sadly, the website does not have the article). In it, the writer suggests that Internet sites might resort to setting up their own banks dealing in gold and silver vs. dollars and cents. It also mentions that the WTO, of which the United States is a member, may have something to say about it. Also saw this article in the Las Vegas Sun which interestingly suggests that the two biggest Casino congolemates (Harrah’s and MGM) stood far more to lose than the other Casinos, who offered little more than passive opposition. It would seem that Harrah’s, with a pending $15 Billion offer, is perhaps even more inclined to seek a poker exemption by clarification or carve-out.

On a related note, does anyone out there with any computer savvy know how a poker site could determine where you are a resident (other than just your have filled out a questionaire)? I could see how US-based or foreign banks could be pretty sure about that, but what about the poker sites themselves? Is is too difficult to imagine foreign-based banks catering to American players? Would they have any concern, though not subject to liability for doing so? I.e. could they face pressure from the US government outside of the anti-gambling law?


4 Comments to “Musings on the new Internet Gambling law”

  1. Jay

    IP Address determines where you are. the prefix of an IP address or the IP address itself can identify what country it originates in.

  2. jeh

    While it might be difficult for a poker site to figure out where you are a legal resident, it can easily determine the country from which you are contacting it via the Internet just by looking at the IP address from which you are contacting the site. That’s extremely easy. You could go through an anonymizer, but to do so while using the poker site’s software would be a huge, huge hassle (and something only the complete hacker could do). Not something for even the dedicated online player, not to mention the fishy.

    But the second idea — foreign-based banks catering to US players — is a better idea. For example, UB says that it holds all player funds in a segregated account with the Royal Bank of Scotland, which is one of the largest banks in the UK. It’s entirely possible that at the end of the 270-day window the Federal Reserve will cite Neteller as one of the entities with which US banks are prohibited from transacting business. After all, a huge percentage (60%?) of Neteller business is moving gaming funds to/from US account holders.

    But what if UB goes to RBS and together they create accounts at RBS for every UB player? RBS is a huge entity with diverse banking operations. The volume of gaming funds moving through there would be significant, but not overwhelming, and certainly not substantial enough to allow for a facile classification of RBS as being primarily a conduit through which flow gaming funds. All it would take is for the larger sites to establish these kind of accounts in conjunction with large overseas banks (with whom they already have relationships) and this entire issue would be mooted. You can bet that if the U.S. tried to move against RBS or Barclays or Lloyds or (you name it), the UK gov’t wouldn’t hesitate to push back.

    The WTO issue is legit, but the sanctions only matter when it’s another economy of size with which the U.S. trades. That’s why the pro-Antigua finding last year didn’t really make much difference, they’re not a substantial trading partner so that penalties on tariffs just don’t matter.

    Here’s the part of the whole thing that just doesn’t make sense to me. How could Harrah’s allow this to happen? It can’t be that they were blindsided, they’ve got lobbyists out the ying-yang. But if online poker in the US is kneecapped, so will be the WSOP at all levels, but most especially the Main Event. I don’t mean to get all tinfoil-hat here, but there just seems to be a big piece of the puzzle that we’re missing in this whole thing.

  3. LAYGO

    Should we be withdrawing our funds?

  4. Rick

    Not really (on the IP address). There are now technologies available that create a scrambled overlay network of IP addresses from around the world. People who want to play online poker will still be doing it! Whenever 70 million people are intent on doing something, they will find ways to do it. The U.S. totally missed the mark on the online poker piece of this legislation. Hey – I’m not supporting sports betting or casino games, that have a negative expectation against the player.

    Poker is primarly a game of skill, not chance. Congress should’ve done their homework on this one, instead of allowing lobbyist groups to line their pockets or whatever else happened to cause this. My prediction is just like the alcohol prohibition didn’t stand (it caused an ugly black market and spurred criminals to run the market), the same exact thing will now happen with online poker. But, it gets worse…

    I’m very disappointed that Congress just lumped online poker together with sports betting and casino games. There’s over 70 million people playing online poker, most of them in the U.S. It’s a shame that Congress actually used a terrorism bill to sneak a prohibition against online poker through! Come on guys – we elected you to do what the people want, and this ain’t it!!

    Poker is a social sport and game of skill, unlike online other forms of online gambling.

    I’m very disappointed at this turn of events. They missed a tremendous opportunity to regulate and tax online poker – money our government could put to better use in lots of ways – like fighting terrorism, for example.

    I just think something this important to so many people should’ve been given more detailed and thorough analysis, rather than making it a pork item on an important piece of legislation that’s mainly about protecting our country and our ports. Very disappointing, indeed.