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We all know that the online casinos, poker rooms and sports books dropped a load when the anti-internet gambling legislation passed in the United States. No one really believed that the US Congress wanted to pass this legislation. Republican Senator Jon Kyl had been trying to get a version of the bill passed for eight years previously and had failed in each attempt. Then there was the Jack Abramoff scandal where lobbyists were accused of illegally giving gifts and making campaign donations to members of Congress in return for votes or support of legislation. Most of the scandal centered on Indian gaming, but Abramoff also helped kill the previous anti-internet gambling bills and Congress was bent on making sure the industry understood that no one has power over them anymore. The amendment which passed focuses its efforts on banks and credit cards. Any financial institution in the United States will be blocked from allowing any withdrawals from internet casinos and will be forced to ban any deposits to online casinos. However, the very nature of the specifics gives the player a loophole. Players residing in the United States should be able to deposit via a third party method, such as Neteller or FirePay. One would think these two companies are watching the proceedings and jumping for joy. This legislation forces US players to rely on them. The players would be breaking the law by depositing and playing, as that is included in the legislation, but it's highly doubtful that the Department of Justice would ever prosecute in a victimless crime. Both FirePay and Neteller's corporate headquarters are located outside the United States, so they would not be forced to comply with the US legislation. I decided it was time to find out what they have to say. FirePay is "powered by FireOne Group plc a publicly traded company on the AIM market of the London Stock Exchange" I did a check on the FirePay website for any information regarding their views on the US legislation and found nothing. I did, however, find a link to the stock exchange which brought me to FirePay's press releases. Finally I found their statement. "On 2 October 2006, the Company made an announcement regarding the passing of the Unlawful Internet Gambling Enforcement Act of 2006 by the United States Congress. The Company today announces that following the approval of the Act by the President of the United States, it will immediately cease to process settlement transactions originating from United States consumers that may be viewed as being related to online gambling. The Company expects the Act to be approved by the President of the United States in the immediate near term." "As previously announced, upon becoming law, the Act will have a significant negative impact on the business and results of operations of the Company, and, consequently, the Company has embarked upon a restructuring of its operations and cost base. The Company will continue to offer its multi-currency credit and debit card and FirePay electronic wallet processing to the online gambling industry originating from non-U.S. consumers and not prohibited by the Act, and will consider additional card-not-present payment processing opportunities outside of online gambling." "The Company's Board will continue to update shareholders as and when appropriate." FireOne is located in Dublin, Ireland. They are a third party deposit method, the loophole which allowed for players from the United States to get around the new anti-internet legislation. They had the potential to make a killing on the new legislation if they so chose. Of course, they would be risking their executives to extradition to the United States for allowing US citizens the ability to bypass US banks, but that hasn't stopped internet gambling executives before. Neteller is taking a different approach. They know they can milk this market for at least a little while during the 270 days that Congress is deciding what to do and how to do it. Today they announced something completely different from FirePay. "NETELLER Plc (LSE: NLR), the leading independent online money transfer business, today announced the latest milestone in its market diversification strategy by formally launching two new country specific versions of its service in Denmark and Sweden. The Company also confirms its position regarding the US Safe Port Act Position" "As stated in an announcement of 2 October 2006, the Company, in conjunction with its advisers, continues to monitor the progress of the Act and likely resultant regulations. The Company expects to have a clearer view of how financial services companies can comply and any possible resulting impact on its business as the regulations are drafted in the 270 days following the signing of the Act. In the meantime, the Company will continue to operate its business to minimise any potential adverse impact, maintaining existing customer and merchant support across all the markets it currently serves." Did you catch that? They aren't going to change a thing, or at least not yet. That means 270 days (I never did figure out if that was total consecutive or working days they were referring to here) where they can milk the players while they change their direction. The only problem now is the fact that none of the big good online gambling establishments will allow for US players to deposit, so there will be no players to milk because they won't be allowed in to play. Neteller has thought of this for their clients. "In an enhancement to the NetDirect merchant platform, the Company has released new capabilities which allow merchants the freedom to define which global markets they wish to operate in. These new features work by enabling merchants to maintain country black-lists that block any money transfers from customers in those countries." Back in the day the country black list would mean Malaysia, not the United States. How sad is that? I do believe that the industry will bounce back. There are a lot of countries outside of the United States to get a profit from. It's just that the US is such a consuming culture and so well suited to internet gambling, it's a shame that it had to end this way. Posted on: October 12, 2006
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