Six Months After Port Security Bill, Online Gambling Thrives

from the not-going-away dept

Last year, when Congress passed a bill attempting to outlaw online gambling, it seemed pretty obvious that the measure wouldn't have the intended effect. As with most forms of prohibition, the law seemed destined to push the industry in a less reputable direction, as opposed to eliminating it. Six months later, this seems to be the case. While many online casinos took an initial hit, business at many sites is already back to pre-ban levels. This is due in part to the fact that some sites have closed down, leaving more business for the remaining ones, combined with the fact that bettors are finding ways to get back on these sites even after many financial institutions stopped processing payments. One of the biggest payment processors was NETeller, a reputable, publicly traded company that has now pulled out of the US market following the arrest of its founders. In its place, a number of alternative payment schemes have grown more popular, such as services that sell phone cards, which can then be turned in for cash at online casinos. Of course, there's a much higher fee on these kinds of transactions, and they're not nearly as transparent as normal money transfers, so the shift just hurts consumers. One would hope that the failure of the legislation to accomplish its goal combined with the WTO's recent condemnation of US policy might induce some sort of change, but this might be wishful thinking. If anything, the fact that the industry continues to operate is likely to prompt calls of even more draconian anti-gambling legislation.


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  1.  
    identicon
    PNess, Apr 9th, 2007 @ 2:48pm

    Pushed another out of country

    Great pushed another set of companies out of the country.

    NOW you GET nothing in tax monies.


    could have had the big players entering into this once it showed profitablity and you could have taxed them and individuals.

    but noooo, ITS EVIL....well acept in Las Vegas, and NJ, and CT and Lousiana, and lotto, and OTB.......

     

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  2.  
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    Zoli, Apr 9th, 2007 @ 5:15pm

    REDICILUS!

    There are still many websites, that takes US money.
    But since some of the big companies are gone, new ones entered-using some kind of loophole. Now we(poker-player) have to worry about not so secure websites, too!
    What did this law do ?
    Lost revenue from tax collecting, upset ,yet still playing poker players!!!

    PS: They want to tax if I win, but wont chip in if i loose!
    What kind of system is that?

     

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  3.  
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    Len Wickens, Apr 9th, 2007 @ 6:56pm

    Funny how things work

    definitely a dual standard, I am a Canadian who has worked around the world for various online gambling companies as a systems architect. Over half the companies, I have worked for are owned by Americans, right now the current internet company I work for has over 25 Americans out of a staff of 100. Even though we use Ip tracking systems to block us citizens, they get around it. The rest of the world has no problem with internet gambling, we are approached by various countries every week to locate our operations there. I wont even travel to the us anymore because they are arresting gambling executives. The US has to learn they are not the moral police for the rest of the world. We can make up or own mind

     

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  4.  
    identicon
    Len Wickens, Apr 9th, 2007 @ 6:58pm

    Funny how things work

    definitely a dual standard, I am a Canadian who has worked around the world for various online gambling companies as a systems architect. Over half the companies, I have worked for are owned by Americans, right now the current internet company I work for has over 25 Americans out of a staff of 100. Even though we use Ip tracking systems to block us citizens, they get around it. The rest of the world has no problem with internet gambling, we are approached by various countries every week to locate our operations there. I wont even travel to the us anymore because they are arresting gambling executives. The US has to learn they are not the moral police for the rest of the world. We can make up our own mind

     

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  5.  
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    Reed, Apr 9th, 2007 @ 7:13pm

    Re: RIDICOLOUS!

    "But since some of the big companies are gone, new ones entered-using some kind of loophole. Now we(poker-player) have to worry about not so secure websites, too!
    What did this law do ?"

    Welcome to policy and regulation in America. Consumers still want the good, the only difference is now is they have to do it through illegal channels which adds danger. You can see this same effect with the societal issues like drugs and abortions.

    I would even hazard to say that our collective war on terror will likely have the same effect. That is drive it underground and make it far more dangerous than before. This is because in all instances the issue driving the problem is not confronted.

    On a side note, it is a real wonder that there is no check and balance system on regulations/laws that has been created. It's as if they are instantly in stone and can never be altered no matter how short-sighted they were. Taking every unjust law to the supreme court seems ineffective when considering how many new laws are constantly created.

    I would be happy with a review process to make sure the law or regulation is performing correctly, if it is not then get rid of it. Kind of a guilty until proven innocent approach to law maintenance.

    Sure would help make things easier. Instead we have what seems to be a nuclear stockpile of laws and regulations that no normal person could ever understand let alone navigate.

     

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  6.  
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    Bob Marley, Apr 9th, 2007 @ 9:29pm

    No logic as usual

    While I agree that online gambling should not be illegal, I don't agree with your conclusion that the bill didn't have its intended effect.

    Laws usually don't have the effect of stopping illegal activity completely, they just limit it by creating a penalty.

    Sure, some casinos are back to where they were, but that is because many have been shut down. This would seem to suggest that the overall level has of online gambling has decreased.

    Also, because Neteller has been shut down, there are higher transaction costs, and more difficulty for US online gamblers. This should dissuade them from gambling online.

    You say things like "the shift just hurts consumers." It is supposed to hurt consumers because according to the government they are breaking the law. This shows that the law is having the intended effect.

    I agree with you that online gambling should be legalized, but that doesn't mean you can just ignore that the laws are making it harder to gamble online.

    The reason that online gambling isn't legal is because the casinos lobby(bribe) Congress to make laws against it. The result is that US dollars are flying overseas untaxed, which is bad for the nation as a whole. It's a billion dollar industry, and it is foolish that it is illegal, but you're attacking it from the wrong angle.

     

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  7.  
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    reed, Apr 10th, 2007 @ 12:38am

    Re: Extra No logic as usual

    "While I agree that online gambling should not be illegal, I don't agree with your conclusion that the bill didn't have its intended effect."

    If its intent was to eliminate online gambling it certainly has not had its intended effect. If the law was merely to state that online gambling was illegal, then yes I suppose it did just that.

    "Laws usually don't have the effect of stopping illegal activity completely, they just limit it by creating a penalty."

    I would actually say laws make legal activities illegal which is the case here. That is why you must tread carefully on the balance beam whenever you think of this sort of national legislation.

    In this instance no opinions were requested of the public at large and no declarations were made to justify it (at least none I heard of) so I view it mostly as an elitist maneuver to keep the money flowing where they want it.

    "The reason that online gambling isn't legal is because the casinos lobby(bribe) Congress to make laws against it. The result is that US dollars are flying overseas untaxed, which is bad for the nation as a whole. It's a billion dollar industry, and it is foolish that it is illegal, but you're attacking it from the wrong angle."

    Maybe your looking at it from the wrong angle, perhaps Casinos already own the majority of online gambling (makes sense) and it is their intent to keep it illegal to keep profits up and prevent regulation. There is always another angle.

     

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  8.  
    identicon
    Joe Average, Apr 10th, 2007 @ 10:49pm

    New law didnt' make gambling illegal.

    The online gambling clauses attached to the port security bill didn't affect the legality of online gambling one way or the other... it even stated something directly to that effect. Gambling online itself is no more illegal (or legal) that it was before the act.

    The only thing in the act, despite the name (The online gambling enforcement act or something like that) only made illegal financial transactions for online gambling. This brings the possibily of international treaties on money laundering into play, and would have allowed the extradition of corporate officers, even board members, of public companies who owned US-facing online gambling operations.

    It's six months later, yes, but the guidelines for how the banks and other institutions are actually supposed to enforce this new law are still on the table, and not due to be released until later this year. Currently, banks have no way to know if a wire transfer was for gambling or otherwise. Credit cards do have a coding system, but that coding system was internal for their own use, not a legal requirement. Other forms of online payment similarly don't have a way to know what each transaction is for.

    To sound like a conspiracy nut.. once a system is in place to track all financial transactions and their purpose under the guise of this act, will it stop there? One would doubt it.

    One large effect, and possibly what they were really after is the large publicly traded companys on the london stock exchange all got out of the US facing business, putting the industry back underground, at least back to where it was about 8 years ago or so. The legitimacy they brought to this business is now gone.

     

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