White House Gives Banks One Year To Stop Online Gambling Transactions, Despite Protests

from the pushing-through-bad-rules dept

Despite significant questions from other elected officials about the plan, the White House has, in fact, approved new regulations requiring banks to stop any financial transactions dealing with online gambling. They’ve given banks one year to figure out a way to deal with it — which hopefully gives Congress enough time to change the law.

The regulations make little sense for a variety of reasons:

  1. It’s still not clear why online gambling should be made totally illegal, rather than simply regulated, like in many countries.
  2. It makes no sense to put the burden and liability on financial institutions to figure out what transactions involve online gambling.
  3. It makes even less sense to dump this on banks right now, especially as many are struggling merely to survive in this financial climate. Adding an extra burden of making them figure out if every transaction involves online gambling seems unnecessary (and perhaps unusual).
  4. Congress had asked the White House for more time to explore the impact of these regulations, but the White House used a lobbyist to aggressively push for these regulations to be put in place as quickly as possible.

Congress and the new administration will hopefully take up this issue next year, and remove this unnecessary burden from banks before it was set to go into effect.

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Comments on “White House Gives Banks One Year To Stop Online Gambling Transactions, Despite Protests”

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Dionysus444 says:

Online Gambling

There are 2 aspects to this. Online poker sites, and offshore gambling sites.

According to Bush, the poker sites are all funding terrorism, maybe some are, but I won’t go there, I’ll just stick to the offshore… And target a particular industry, horse racing.

Offshore sites have almost 0 overhead, so they can afford to only take 5-10% out of every dollar that gets bet. They pay a couple people in a call center, a janitor, some admin, and a few IT people to maintain servers/code, the rest, is a nice big profit. Also of note, some of these offshore gambling sites do not even pay for the product, instead rebroadcasting an effectively stolen product for profit.

Now compare this to a racetrack. Racetracks have takeouts anywhere from 7-30%, but the money is re-distributed a little more. Half of the take-out goes to pay for the physical building, the teller/cashier, admin staff, maintanence staff, janitorial staff, cooks, servers, etc, etc, with a bit of profit left over. The other half goes to the horseman for racing in the form of a purse, this goes to pay for the stabling, the training, the feeding, the grooming, breeding, etc of the horse. In any given state/province, a racetrack can directly or indirectly create 30000 jobs, or even much more than that. These jobs are currently in trouble at MANY different race-tracks.

Now you tell me, would you, as a government, want to support a technology that creates dozens of jobs but destroys a business that creates 10s of thousands?

Oh, and if you think 10-30% is a high takeout, check your local lotteries and casinos, 30% will seem low after that…

Anonymous Coward says:

Re: Burden?

So if I were to ask you to list every single online gambling and porn site in EXISTANCE then you could just open up a little file and say here they are? And this list is kept up to date with every single site that comes online that contains this content? This list knows the transaction ID that shows up to the banks? I also assume some sites probably use paypal, so this list can help banks know when a customer is using paypal or some other paypal like site to then forward money to an online gambling site?

Dionysus444 says:

Re: Re: Burden?

Hes not saying there IS a list, hes simply saying its easy to tell which sites are gambling/porn sites by the number and value of the transactions they are involved in. To compile a list would probably be fairly easy, however, it may also break a companies privacy policy to compile a list such as that.

This is not as cut and dry as a list, you have to remember how often this list would need to be updated as these sites can simply re-incorporate under whatever name they want whenever they want.

Little Bopper says:

RE: Anonymous Coward

Actually what you asked for can be given, just not by any one company. I have a Credit Card Processing company and we know the details of every transaction every client does. We know from who, to who and the depositing bank. If each credit card processing company, every bank that issues a card wanted to, thy could stop every transaction for any specified purpous such as pizza, or cellphones. Online gambling is one of the easiest things to track. before we allow you to process, we have to have all the details of each type of transaction you intend to process and the discriptor ID. If we look at what you have attatched a descriptor ID to and its for a deposit into a gambling site, we can and do deny you an account. Its that easy. Dont be fooled. Everytime you use a card for a purchase, it is tracked and can be, and might be, monitored. Welcome to the digital age.

Dennis Sieczkowski says:

Online Gambling

The issues at hand here with the whole online gambling thing are rooted far deeper than most people care to consider. I don’t normally comment on this type of rubbish, but feel so inclined to do so now.

Let’s pretend I’m Joe Schmoe, and I make my living by ripping people off.

That bieng said…I just found a texas hold’em site that will give me a 100.00 dollar credit just for signing up. The only thing I need is a valid checking account. So I run down to my closest bank and open up a checking account. With my new checking account, I go online and sign up for a new account, and recieve my 100.00 free US dollars to gamble with however I see fit.

If I win big, I don’t bother the checking account that I just opened up the day before.

But if I LOSE, I go down to the bank the very next day and close the account. When the collecting party tries to get COLLECT the debt….bad news…..no such account exists.

Online gambling should be illegal (in my opinion), simply because the internet makes it far too easy for dishonest people to be dishonest.

Justin Hemphill says:

Re: Online Gambling

You’ve obviously not played much online poker. It’s usually a bit more difficult than that to acquire a sites bonus. And you haven’t been able to use a checking account to access poker sites in a long time.

There are 100’s of ways to get your money to/from the websites. And no one is going to be able to maintain a list of all the different ways to do it. For one reason. They don’t all fall under the umbrella of control of one country or one set of laws.

For every one that has been stopped in the last year, another two have replaced it. And the poker sites aren’t stupid. They switch their providers just as fast.

I don’t have to touch my bank account (except my local ATM machine) in order to put money on any number online poker sites. Once it’s in cash form, you can’t track it without implementing some new functionality in the system. What are they going to do, require me to tell them what I’m using the cash for before they allow me to have it?

Cash -> Money Order -> any 1 of 1000’s of online payment processing sites that are used for a million things besides poker as well.

mike allen says:

it is not illegal

It is not illegal in Europe UK and many other countries here in the UK many sites are ran by the licensed industry, Betting shops and casinos for example but and i think it was covered in techdirt a CEO just happened to land in the USA and got arrested for running a legal licensed in the UK business. USA prohibition never worked remember Al Capone and others.

BoDeeDoe (user link) says:


This is a blatant invasion of privacy. This is just another device being used to monitor and control people. We have already handed trillions of dollars over to the FED, a private banking cartel, and given them governmental powers. Now we’re giving them the authority to police our bills and control what we are doing on the internet in the guise of controling internet gambling? Big brother on steroids if you ask me. IT IS NONE OF YOUR DAM BUSINESS WHAT OTHER PEOPLE DO IN THE PRIVACY OF THEIR HOME! LEAVE US THE HELL ALONE!

Tony Soprano says:

My online gambling site logs transactions as phone card sales, my bank didn’t have any problems with that. Now, which phone card sale charges are legit, and which are hiding gambling? Can your card processing company figure that out? Can your card processing company figure out that the cigars I’m buying from Switzerland are Cuban and not Dominican? I don’t think so. On the racetrack issue, if the racetrack goes out of business, then there are no races to gamble on, so in some manner or other, the racetracks will continue. What we’re seeing is a consolidation. While there used to be tons of tracks, because betting was limited to the local area, now that there are TV simulcasts and global coverage, there simply isn’t the need for so many racetracks, and many have gone out of business because the market simply can’t support them. The major ones will still operate just fine. The main thing I use online gambling for is a sportsbook. I live in a state where gambling is legal, yet I can’t legally place a bet on a football game. That’s ridiculous. The majority of folks then go to organized crime rather than a regulated online sportsbook to place their bets. Which is worse?

Anonymous Coward says:

“It makes even less sense to dump this on banks right now, especially as many are struggling merely to survive in this financial climate. Adding an extra burden of making them figure out if every transaction involves online gambling seems unnecessary (and perhaps unusual).”

It makes little sense for a country but plenty of sense for a political party who is bitter to try and sabotage the incoming POTUS by undermining the banking system.
I know it sounds conspiratorial, but it really DOES make sense that, after loosing both House and Senate, and now the Presidency, the GOP is doing what it can to ensure that it will be fighting fit in 4 years.
No matter the cost.

Anonymous Coward says:

RE: #15

And I’m sure the GOP is conspiring with aliens too. You can’t possibly be serious with that accusation, you are going to try to pre-emptively blame the Bush administration for the possiblity that Obama’s administration wont be able to put the economy back on track?

Bush has been trying to ban online gambling for a long time, in fact gambling has always been a social issue for the GOP. The Republicans are morally opposed to gambling and fight any expansion of gambling at every opportunity. This isn’t Bush trying to harm, control or otherwise regulate the banking industry, this is Bush trying to shrink the gambling industry.

Ginger Snyder says:

UIGEA what a joke

The entire ban is based on control. It is a violation of my first amendment rights. It is my money, why cant I spnd it the way I want. If the government wants to tax me for my einnings that is fine, but to actually ban me from playing because hey dont receive the profits is a complete control issue. I play with skill it has taken me years to develop skills so I can win. Dont these Senators and Congressmen have anything better to do than mess with something they know nothing about. And why would they lay this off on the banks. I dont have to use American banks, I can still go get money orders and send them to Costa Rica, they wont stop me, just make it more difficult. The real beef is they arent and wont make the money off the illegal gambling. Lately, the United States makes you wont to go live in another country. I never thought I would say that. If I dont have the freedoms I used to have I wil seriously consider moving to another country. With the masive recession and no liberties what do we actually have anymore anyway. When people start thinking other countries might be better, and the US is going down the toilet, Canada looks really good right now.

fred says:

Stop Internet Gambling!!

If you do not think internet Gambling is not fixed then you have a screw loose! Blackjack is set with odds like a slot machine and any card can be pulled at anytime! they say itis a random six deck show because there os no way to audit! all these companies are fraud and I hope they all burn in hell!


Gary Krupa says:

UIGEA what a joke

I was planning to use my backgammon skill to make money online at specialized casino sites. Then I found out that banks in the US are prohibited from processing online gambling transactions. So now I don’t see a way of playing for real money unless I move to another country. DAMN!

The US is run by control freaks and those with a holier-than-thou mentality. If my wife didn’t insist that we live here to be closer to relatives, I’d have left a long time ago.

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