« Neteller Founder Arrested | Main | From a previous comment: »
January 19, 2007
Neteller Suck
So Neteller threw in the towel. I'm not really sure what they hope to gain from doing so. I doubt the US will leave them or any other such institution alone for it. As far as they are concerned Neteller has already committed the crime. Their founders' arrests were put into motion well before the UIGEA went through. Company employees better reconsider their Las Vegas vacation plans for at least the next few years.
Either way, let's hope private equity snaps them up and reverts them back to their former glory. I really couldn't think of a better way to make money right now than that, providing you don't mind living the rest of your life outside of the U.S. There have to be plenty of Europeans with a couple hundred million in the bank who wouldn't mind turning it into a couple billion, even if it means they'll die without seeing the Grand Canyon.
Neteller had a market cap of roughly $400 million USD before shares ceased trading. Revenues for the third quarter of 2006 were in the $66 million range with a net income after tax of around $30m. This is a company that, if left unmolested, would have stood to make around $120m a year in profit.
So they'd be a steal at $400 million (which is probably why Motley Fool and numerous other stock advice givers were recommending them) and their market cap will be well below that when they start trading again. I see no reason why they couldn't get right back to where they were a week ago if they were taken private quickly and reopened to U.S. customers, or at least close enough to make them well worth a few hundred million. I realize many of the bigger PE firms aren't going to touch this one, but it's a relatively small deal for a buyout these days.
Either way as far as poker goes this doesn't have much effect on me, I've been using ePassporte for the last few years. I like it much better anyway. Virtual Visa + Amazon = happiness. Now at least I should be able to convince the sites to raise my ePass deposit limits to something more respectable. Their fees must be high because none of the sites ever seem to want to let you use it much.
Posted by themaroon at January 19, 2007 11:56 AM
Comments
Matt,
I am sure you may have already read the article but pokernews.com put up a recent review of ePassporte. They said that the BBB gave it a rating of F. I trust your advice more than the BBB, I don't really have a good reason for this. I signed up for an ePassporte account today.
Mike
Posted by: Mike at January 19, 2007 2:07 PM
Apologies for being a dunce, but what does "Virtual Visa + Amazon = happiness" mean? Does that mean you can use your ePassporte moneym for buying books on Amazon without going through your bank account first?
Posted by: Gravity at January 19, 2007 2:56 PM
Your idea assumes, of course, that the sites (i.e. Stars and FTP at this point, plus the sportsbooks) stay in the US themselves. It would do you no good to buy NETeller and open business to the US if there are no merchants accepting your business!
Glad to hear you're enjoying epassporte, though. I've heard some mixed reviews. Hopefully many peoples' experiences will be as positive as yours.
Posted by: Terrence at January 19, 2007 4:41 PM
Would a firm like Neteller going the PE route then expose the PE firm execs to potential arrest?
Even then some of them might welcome it as an opportunity to test the law in court with the "game of skill vs. gambling" argument. Think of the "pop" that would give their investment's value!
Posted by: Jeff D at January 19, 2007 6:38 PM
Mike: did the BBB give any reasons why? They might just be leary of overseas corporations. I've had nothing but good experiences with them.
Gravity: yes, that's exactly how it works. Not much else seems to take ePassporte's virtual visa since it's basically a Costa Rican issued credit card from what I understand, and a lot of places aren't set up to handle foreign Visas. But Amazon is.
Terrence: do you think there's any possibility that there won't be a number of online poker site or sports book that caters to Americans? I don't. Even if the current big players step down (which seems unlikely at this point) someone will sprout back up. It's like a drug cartel. You get rid of one and two pop up in their place.
Jeff: yes, if they were Americans, but I'm sure there are plenty of PE firms overseas. Like I said, you definitely have to be willing to live the rest of your life without coming here, but I'm sure there are plenty of billionaires like that.
Posted by: Matthew Maroon at January 19, 2007 10:32 PM
Hi Matt,
Your blog is great. I hope you keep it up. I'm not particularly blog-savvy and doubt I discovered yours in a typical way. You might enjoy the quick version of how it is I came to read all of your entries.
I was googling myself, found a now ancient comment from you about a comment I made about Greg Raymer being the best poker player in the world in 2004 (you missed my point -- not that it matters -- I didn't express it well -- discussion long since not worth having). I found your style compelling and just kept reading until the present day. Great stuff, really.
You have a mercurial personality with regard to poker that makes every month's entry an adventure. Having started from a couple of years ago, I didn't know if I would read an entry saying "I'm done -- for real -- goodbye". I'm glad I didn't.
If you're ever back at Foxwoods let me know. I'd like to buy you dinner and chat about poker. Perhaps we'll cross paths at some poker tournament or event -- though judging by your recent tone I suspect you might not be doing that scene, at least not for a while.
I wish you the best.
Ashley Adams
Posted by: ashley adams at January 19, 2007 11:39 PM
The trouble comes when the UIGEA regulations kick in, and they prohibit financial institutions from transacting with any of these ewallet sites. If this happens we're all screwed. It's for this reason that I think investing in any of the ewallet companies is insanely risky.
Either that development or the fact that someone from Full Tilt or Stars has been arrested will be the next bit of bad news I'm afraid.
Posted by: geoff at January 20, 2007 12:13 AM
My understanding is that the Neteller arrests were for transferring funds to online sportsbooks, not poker sites. There has been NO direct action against any solely online poker enterprise yet that I know of.
Posted by: Ben at January 20, 2007 3:40 AM
In the Netherlands we have an electronic banking system that works allready for 10 years. The last few years it has become very efficient. I can do my banking realtime anywhere in the world, via Internet. Using a bankcard and a reader. I don't understand why this method is not used by the European pokersites. The presently used possibilities seem cumbersome and less secure.
Posted by: ko at January 28, 2007 4:44 PM