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Author : Kevin Muldoon
Article Written : 10th October 2006
The world of poker has been rocked recently with the progression of the Internet Gambling Prohibition Act in the United States. The act looks to stop or at least greatly reduce the number of United States citizens who play poker online.
In this article im going to be looking into the act in more details and will be attempting to answer the most common quetions online players may have. There is a lot of good information on the act readily available on the web and i will be linking to many of these sites and pages.
It should be noted that this article was written on October 10th 2006. The status of the act and individual poker companies stances on the situation are changing on a daily basis so please bear this in mind and check the forums for the latest news.
You can comment on this article in this thread.
Overview of the United States Internet Gambling Prohibition Act
The Internet Gambling Prohibition Act was a bill that came into force in 1999 though its only in the latter half of 2006 that the bill has came to the attention of most online poker players. The bill was beat but it raised it's ugly head again in 2006. You can see the current bill in full here. If the bill is signed by Bush in the next few weeks, dozens of online poker firms will stop taking sign ups from USA players.
The bill was a response to the growth of online gambling in the last 5 years. Those who support the bill say state that it is needed because billions of dollars are sucked out of the economy every year, because online poker makes it easier to launder money and because it undermines the ability of states to enforce their own laws.
Essentially the bill will make it ilegal for usa citizens to deposit using a usa bank account. It will also stop online poker companies from sending funds to a USA based bank account too (ie. if the player wants to withdraw his own cash).
As someone who plays online most days, one of main gripes about the bill is it's double standards. The bill excludes online betting services based in the USA like horse racing and lotteries. You may be wondering at this time why non skill gambling is allowed in the bill whilst a skilled game like poker is not....don't worry, you're not the only one who has questioned this.
It is still unclear how effective this bill is going to be though. If it goes through it will definately reduce the number of Americans playing online however it will be difficult to completely stop them. Banks have already mentioned that it would be impossible for them to stop players depositing and withdrawing via check.
It is also unclear how online payment companies like Neteller and Firepay will handle this. After all most companies like Neteller are based overseas. Would USA banks refuse to do business with Neteller if they did not adhere to this new bill or would the bill just force Neteller's hand to concentrate overseas.
Poker Sites Responses and Views on the IGPA
I'm sure most of you who are reading this have had a barrage of emails from poker sites telling you of their response to the gambling bill and many of you may even have had to withdraw from your favourite site because of their stance on the issue. Most sites will be updating you with developments from week to week however some sites have taken a stance already and have told long serving loyal USA based customers that their accounts are being closed.
Here are some links to some online poker sites responses to the bill to highlight the different responses from poker companies.
Cake Poker - "CakePoker will not restrict access to our players from the United States."
CD Poker - "CD Poker Abandons US Market"
Poker.com - "Poker.com to continue to allow US play"
PokerStars.
Ultimate Bet - "Our strong belief is that poker is a game of skill and therefore is not encompassed by this law."
The Future
Online poker will be heading in a different direction in the next few years because of this bill. Whilst poker is huge in europe and growing in Australasia, the majority of poker companies customers come from the united states. Most public poker companies have seen their shares drop around 50% in the last few weeks due to this announcement. Infact PartyGaming's shares fell around 60%.
Poker companies are already starting to look to other markets. Party for example will be putting more effort into the european market and will no doubt be joining other poker companies in developing interest in other countries around the world (You can see their response on October 2nd 2006 here).
As someone who lives in the UK, this doesn't affect me directly. However, i believe strongly that the IGPA has been very bad for poker and indeed for the internet as a whole. The USA can regulate online poker without the restrictions this bill will cause.
What you can do
THF fully supports the Poker Players Alliance and other poker sites which have petitions to stop this bill from ruining online poker players across the USA. The poker player alliance has full details of every USA state and the laws regarding the bill here. We encourage you to check this information and send a letter to your governor stating your opinion of the bill. You can visit the House of Representatives official website at www.house.gov. You can find your representative from inputting your zip code at the top of the home page.
You can comment on this article in this thread. Let us know in the thread if you know of any other good articles/sites which discuss the act.
Selected Article Thread Comments from this thread
From ScottishBen, October 10th 2006
The key thing that I would mention is the arrest of the guy from Sportingodds. The issue to me is not so much about the rules but rather about the change in tides of the USA courts and legislators in respect of online gaming.
I did my LLB(hons) disertation on specific aspects of the internet and law (reparation and conflict of law based) and I ran into a rather good quote by USA judge Frank Easterbrook that there was no more a "Law of Cyberspace" than a "Law of the Horse" and this is very much true. What this means is that the internet does not negate the pre-existing laws that exist but rather until legislative change the laws that exist in the "real world" must also exist online and must be applied in terms of their formation EVEN though the internet was not predicted when these laws were made.
The position in terms of gambling online in many US states is highly dubious and it is quite possible that it is against the law. Legislators do not like penalising millions of what are often seen as "upright" citizens and this in part accounts for the indirect nature of the legislation.
This piece of legislation came in because of comprimise and was a politically motivated vote winner. Appear tough on gambling to gain votes. Many reputable companies would not want their employees criminalised and get into trouble for visiting USA (or even fear if laws take strange turns) of extridition so I can see why companies with a solid user base outwith USA have said they are leaving but really this has more to do with
a) their bases of opperations - are they linked to the USA, do they have assets that can be ceized there etc
b) there sense of the growing trend to legislate online gaming and take actions in respect of preexisting laws (sportingodds guy for instance)
Online gambling will always exist in the USA without zoning of the internet being introduced and that is fairly unlikely at the moment whilst the focus on the legislator is not on the player. It is more a case of it may be different companies (poker sites that may be the ones servicing the market).
Neteller came into prominence if not into being to service online gamblers who couldnt get credit cards to get involved in online gambling sites and there will be plenty of easy financial options for players to get money into gaming sites. This will remain a fairly simple process and whilst a few fish may be scared away by having to do a little more than type in their credit card details somewhere it will not really have to much of an effect.
The question is more what will they do next (and will they do more to take action on the basis of preexisting laws) rather than the act in itself.
It is also worth pointing out that there will almost certainly be a challenge to the WTO in this regard as the legislation is very much anti-trade. With the moralistic aspects involved I am not certain that they would win a challenge but it is quite possible that they would or that such an action could delay the enforcement of the legislation.
It is not just poker sites that have been affected Intercasino - one of the most respected casinos world wide has stopped taking USA bets. In a month or so the dust will settle and we will know better where we stand but I think the long term effect of the legislation will be much less than some of the hype suggests
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From Grumbar, October 10th 2006
There is a lot of confusion as to what exactly this bill means. First and foremost, it does not define illegal internet gambling. It states that it makes it illegal to transfer funds to a site that engages in illegal gambling as defined by state and federal law. The fact is, there are few laws regarding internet gambling. Washington state has a law that makes gambling online a class C felony punishable by up to a $10,000 fine and up to five years imprisonment. This is the same type of crime and punishment that is defined by Washington for some degrees of rape and child molestation. So someone playing $.01/$.02 poker online is considered by the state of Washington to be as much a criminal as some child molestors. Most states, however, have no laws regarding internet gambling. A few states consider it a misdemeanor offense. Nevada was one of the first states to enact legislation covering internet gambling, undoubtedly to protect their land based casinos.
So since this act does not attempt to further define illegal gambling and most states don't have any such definition, then this law really has no applicability in most areas of the US.
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From xtra, October 10th 2006
The proceeds of any other form of financial transaction as the secretary of treasury may precrscribe by regulations which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of the other person,shall be fined under this title or imprisoned for not more than 5 years.
Does that mean that once this is signed the secretary of treasury can outlaw anything else he sees fit?Basically shuttting everthing down?
Liked that video of the Democrat from Nevada,she pretty much summed it up.
The other video had a sad story in it about what gambling did to an elderly lady Im sorry to hear.(Was it true ?They picked the most helpless defenseless person any one could imagine)
Ive gambled since was 12 or so.Never had more than 2k in the bank and Im 38.Once I found online poker it saved me and taught me control,now I have a bank account.Its not from the money I made online its from the change it made in me.
On a side note my brother was the same way,he gambles online on horses now,unlimited tracks,but he doesnt lose or spend near what he did.Online for us has had a positive effect
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From Scottishben, October 11th 2006
Just to clarify Grumbar just because a state has not enacted a law specifically to deal with internet gambling does not mean that it is legal. Prexisting laws relating to gambling apply to the internet so it is quite conceivable that gambling online in some states of america is actually against the law already. There is a degree of ambiguity due to applying old laws in radically different ways but there is a good chance that people gambling in certain states of the USA are doing it against the law.
It is highly unlikely that prosecutors in the USA would take action against millions of people but the fact that we have this Act and the prosecution of the Sporting Odds man within a short space of time is indicative of a possible turn of the tide in the way that online gambling is treated.
It was a while before the Napsters of this world were attacked (due to copyright infringements) and it is just possible that online poker is next. It is true that the mass panic that is happening is TOTALLLY OTT this legislation is not too significant (aside from not being in force for a good while yet) other than making some providers feel they have to leave the US market due in no small part to the extreme protectionist policies that this Act does enact.
Just to put it in context -someone with 2k or so in online accounts is pretty safe but say that in a state it is believed that online gaming is actually illegal. Lets say a pro has made 100,000$ through online play. That could well count as confiscatable earnings etc so that could well be worth prosecutors time.
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From BIGKILLA, October 11th 2006
I will say this much , The IGPA Infringes Upon the Right to Free Speech
The first step is to determine if the law in question, the IGPA, infringes upon any right. The answer is yes. The IGPA restricts the publishing ability of web sites. The Court in ACLU v. Reno held that the Internet was similar to print publication, and therefore was entitled to First Amendment protections.
The Right to Free Speech is a Fundamental Right and Therefore Requires Strict Scrutiny.
The second step is determining if the rights in question are fundamental, thus requiring strict scrutiny. There is no doubt the law has the effect of censoring a web site owner's right of free speech and freedom of the press. The IGPA provides for the total blocking of all content on the Internet that concerns Internet gambling. The Supreme Court in ACLU v. Reno stated the publishing over the Internet is a fundamental right which should not be restricted. Because Internet gambling web sites contain more information than merely illegal gambling, they are publications. The effect of the IGPA is to infringe upon the rights of the owners of web pages to publish. Therefore, there is a fundamental right to free speech and to publish over the Internet. The IGPA should therefore be subject to strict scrutiny.
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From Grumbar, October 11th 2006
You are correct Ben, the legality of online gambling has been questionable for some time. And it hasn't been tested in the courts yet. The two sports book CEO's that were arrested were arrested under the Wire Act. That act specifically applies to wagering on sporting events, not engaging in games of chance. It was enacted to provide a means to combat organized crime. Attempts have been made to modify that act to cover internet gambling, and they have not passed.
What I'm saying is that this bill that did pass does not make it any more legal or illegal to gamble on the internet. The federal government has typically left the determination of gambling laws up to individual states. Every state with the exception of Utah and Hawaii have some form of gambling legalized, casinos, lotteries, horse racing, bingo, etc.
In order to prosecute an individual for gambling on the internet, it would require that the prosecution be able to prove precisely which computer was connected to the gambling site and the exact date and time of the alleged offense. With all gambling sites being off shore, obtaining cooperation from those entities to turn over there records would be highly unlikely. Further, they would need to prove beyond a reasonable doubt who was at the computer when the alleged offense took place. This would require that the alleged act was witnessed. So even if you won hundreds of thousands of dollars online, getting prosecuted for gambling online is unlikely. Getting the money out of the site and to your bank will raise some questions about the source of those monies, but prosecution even after an investigation is doubtful.
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From wickedroller, October 18th 2006
Nice article Fonz. Here is my take on this new legislation.
First, the legislation in no way deems any form of online gambling illegal. For those who believe it is a ban on online poker- you're wrong. Whatever online gaming activities you were involved in before this bill were either legal or illegal depending on the laws of your locality and remain unchanged by this bill.
The bill instead focuses on the legality of ACCEPTING money for the purpose of ILLEGAL online gaming. I believe the bill does not make it illegal to transfer money to an online poker site, therefore not affectng the online poker player. I believe the bill places the responsibility on the sites themselves to refuse a transfer of money from me the player to them. The bill does, however, impact me as an online poker enthusiast when sites such as PartyPoker exclude me out of fear of prosecution or in the interest of their investors.
So far, ILLEGAL ONLINE GAMING seems to have been defined as games wagered on who's outcome is based on chance. I dont believe poker is a game of chance and therefore should not be included in ILLEGAL ONLINE GAMING. Clearly, poker is like anything else that requires skill to succeed. If you study the game and put maximum effort into it, you will be a successful player. You can work on your pull technique all you want, but slots will always be a game of chance. Does this mean that poker will be deemed not illegal and therefore not subject to IGPA? That seems too easy but one can always hope.
So the big question is- will Americans be able to legally play online poker in 1 year? At this point, no one can really say. With such an ambiguous bill, there is definitely room for movement in either direction. Financial institution's responsibilities will have to be defined. Will middlemen such as Neteller be affected? Will banks continue to be able to process transactions with Neteller? Will ILLEGAL ONLINE GAMING be clearly defined to include or exclude poker? All remain to be seen/ answered in the next 9 months.
What cannot be forgotten, however, is the underhanded way this legislation was allowed to "sneak" through. Many believe that is precisely the reason why it is so ambiguous. The hypocrisy our government has shown in specifically excluding horse racing and state lotteries should also be noted. While it is too late to undo the new legislation, it is never too late to amend and there will be a push for an amendment. Find out how your representatives voted, write to them, and vote accordingly in November. Join the PPA and NROG and contribute if you can.
www.nrog.org & www.pokerplayersalliance.org
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From Zac Ray, October 19th 2006
I have received email from Mermaid poker basically giving information and deadlines for removing funds before they close.
I have also received notice from Absolute poker stating that they are a private site and are not affected like public sites. Here's the link and the message...
http://www.absolutepoker.com/absolutePokerResponds.asp
"Absolute Poker Business as normal! Absolute Poker is a privately held business and its executives today issued the following statement:
“As the 4th largest online poker company we continue to welcome all Poker Players! AbsolutePoker.com is Absolutely confident in its ability to continue to offer US customers the very best in Online Poker with the fastest secure deposit and payout solutions, all new and existing customers should be 100% confident in playing with the very best www.AbsolutePoker.com.”
Importantly Absolute Poker is a privately held operation, which gives our business model more flexibility and creativity in operating that our publicly held counterparts don’t have. Furthermore, the Safe Ports Act passed by the US Congress on September 30th neither prohibits nor makes it illegal for any US customer to transact with AbsolutePoker.com and therefore customers experience at AbsolutePoker.com will no change. Our business continues to run as normal and our executive team expects to see the business to continue to grow in both the short and long term.
We are exploring all of our options with our existing payment processors and ensure any existing or new customer that your funds are safe and secure. Indications are that many of our payment providers will be unaffected by this law and their business will also be able to operate uninterrupted and unimpeded.
We are confident that our business, and that of our partners and suppliers, will be unaffected because while the U.S. Congress efforts potentially could block transactions conducted within the U.S. banking system, many of our payment providers transactions are done within the framework of the international banking system, which the U.S. Congress has no control over.
We will have continued updates and assessments of this situation, but we are confident again, that you will be able to continue to enjoy all of the offerings at AbsolutePoker.com as you always have. We look forward to having you as a customer, and being a part of our site as we grow and experience new heights in the years to come.
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