The Poker Chronicles

Matt,

Are you trolling here? You realize that ePassporte is virtually guaranteed to stop allowing US citizens to deposit or withdraw from online gambling sites, right (and likely will do so very, very soon)?

Unlike Neteller, processing transactions for online gambling was never ePassporte's main bread and butter. They've got a business to fall back on, apart from servicing online gambling sites, so there's no way in hell they'll continue to let US citizens deposit/withdraw from online gambling sites and run the risks involved in the current climate.

You realize that Neteller, BetOnSports, and Sportingbet PLC weren't banks or US companies either, right? Didn't stop the US from pinching either their current executives or founders when they made the mistake of stepping onto US soil, even if only briefly, in passing.

In a nutshell, the UIGEA prohibits banks from sending money for gambling. That's something of an oversimplification, but it will do for our purposes. Thus any transaction to ePassporte for the purposes of sending to a gaming site is covered by the act.

For the regs to be effective, they will need to have a mechanism prohibiting US financial institutions from sending money to sites like sPassporte. These recent developments make it clear that Neteller and the other eWallets are on the DOJ's radar, and it's more likely than not that the regs will, in some way, cover the big eWallets.

The beauty of the UIGEA is that it does not matter that ePassporte may not be subject to US jurisdiction or that they might not be a bank. My bank that holds my money is subject to US jurisdiction and is without question subject to the UIGEA. If the regs do their job, they will keep my money away from ePassporte (and all other third parties that can be utilized to send money to gaming sites) by keeping my bank from doing business with them. If they can manage to find a way to pull this off, they will slowly squeeze a large portion of the money out of online gaming.

I really hope no one gets arrested, because this is all just so senseless. And I think anyone who tries to fight it through the courts is just going to go broke and lose. I really think our best hope is to have some sort of federally regulated online gaming. Until that happens though, it may be a dark few years.

Scurvy: I don't follow your logic. Pokerstars and many other poker rooms/casinos continue to take Americans because there is a shit ton of money to be made doing so. Many people are more than happy to never step foot in the US again for that sort of cash. I would be for sure if my family weren't here.

As far as ePassporte specifically, what business do they have that is even remotely near gambling in terms of profit potential? What is their bread and butter? I did some Googling around for sites that take ePassporte, and all I found was gambling and a couple porn sites. That was a couple years ago when I started using it, now I search on Google and it's almost all gaming. I have to imagine it's the bigger industry, and porn is legal so they can presumably accept credit cards, meaning ePassporte could never process more than a small amount of their money. Why would anyone use any virtual wallet when they could use their real one?

I just don't see why you think ePassporte is likely to give up their shot at being the next Neteller.

And Geoff: If ePassporte has non-gaming uses, how can the bank know what you are transferring money to it for? The regs would have to have a blacklist of every ewallet that allows gaming transactions. Does the UIGEA provide for such a list and require banks to abide by it?

the regs are pretty likely to include all of the current egaming wallets

the neteller arrests were an effective shot across the bow at such companies to not fuck with the US... there are many ways around anything the regs do but the risk isn't really worth it for most

its agreed that money can be made but generally the e-wallet guys have cut and run when it comes to facing prosecution. to be overly simple you run an ewallet to be safe you run a sportsbook to say i don't give a fuck...if you make the ewallet guy put his balls on the line they usually won't

When there's enough money to be made somebody will. Right now you could probably make more money with a good ewallet than a good sports book, given that there are no serious competitors. It might not be ePassporte in particular, but at this point they and Click2Pay are the leading candidates, and C2P is by far the most annoying ewallet of all time.

Matt,

Things are definitely trending towards the remaining sites accepting US players ceasing to do so in the near future, when the actual regulations affecting banks are drawn up. Pinnacle and Mansion have exited the scene in the last week or two, which is particularly telling in Pinnacle's case, with this time of year being one of their most lucrative with NFL playoffs/Super Bowl. If you make a graph of sites that are available to US citizens and plot it over time, it's not an encouraging trendline. At all.

As much as we all hate it, we can't keep claiming that the UIGEA has no teeth, or that technically it doesn't apply to this, or that technically ePassporte is a virtual pre-paid card and that somehow means they're exempt. It's all a moot point.

ePassporte was a relative latecomer to the gambling e-processing world, so I was guessing that they have substantial business other than gambling. But that's just a guess. You might be right. If it was their bread and butter, they didn't have much bread and butter prior to this, as nearly everyone used Neteller or FirePay or Party's homegrown processing.

I just can't find a reason they won't cave, too. Neteller had zero business outside of gambling, was the clear industry leader, were based outside the US, and were minting money, each and every quarter. Yet they're gone, even before the actual regulations are in place. The only possible reason ePassporte might stay is that they're privately held and Neteller and FirePay were both publicly-traded. Maybe that'll be enough to keep them in, along with the lure of all the money they stand to make in the next few months. I doubt it, but I hope I'm wrong.

Click2Pay has already frozen any new US accounts, and probably will shortly block any existing US account from doing business with gambling sites. Citadel pulled out last week, too. Since last October we've lost FirePay, Neteller, Citadel, and Click2Pay, and the regulations aren't even in place. We've gained zero depositing/withdrawal options since then. Again, not a great trendline.

It's kind of sad that things have come to this, and that the sites still serving the US have no alternative solution of their own in place. Seems like that would have been a high priority since last October, as far as things to be working on.

Well, the UIGEA's intent is for the regulations to enforce the Act. The intent of the Act is to prohibit restricted transactions. Thus, for the Act to be effective, a blacklist (as you put it) of some sort will need to be created via the regs.

Epassporte is interesting, as they apparently have a decent revenue source via non gambling business. It's for that reason many have predicted they will soon stop processing gambling transactions alltogether. If they keep doing business with gaming, they risk getting banned via the regs, and that would mean losing all US business.

But to answer your question, I think that the regs will attempt to block transactions to any third party that does ANY business with gaming sites. The fact that the money could be used for non gambling purposes will have to be unimportant. Otherwise, the Act basically does not work and people could send money to a site that does legitimate, as well as gambling business and then just send it to a gaming site. It's unlikely that the regs will allow for this. If they do, the Act will be worthless.

The DOJ clearly was involved in drafting the Act (they did a pretty good job too unfortunately), and there intent was to kill US online gaming by cutting off all US funding to sites. The regs (the DOJ will be poking its nose into them as well) will likely be drafted to accomplish this purpose.

Here's an interesting link which everyone should look at. It's from a non profit called NACHA, which represents financial institutions, internet payment processors, etc. They make rules for eChecks, electronic payments in internet commerce, etc. They recently put out a memo alerting members that, in this climate, they need to be aware of the identities not only of their customers, but also their customer's customers.

http://www.nacha.org/ACH_Rules/2007%20bulletin%201.pdf

Thus, banks are going to start getting much more careful about who they deal with. Because of the way the Act is drafted, they are much better off declining a transaction if it is somewhat questionable. They have a statutory shield from liability for declining transactions. Wheras letting a questionable transaction go through could give rise to liability under the Act. So we might start seeing problems even before the regs come out, as the banks start to get worried about this stuff.

I will take the over on FT arrests for $100. Next time we run across one another, I'll bore you to tears with some basic education on legal procedure. Trials don't happen in the U.S. Supreme Court.

Oh, yeah: there's a good Chris Hitchens article responding to much of what Steyn says in America Alone. I meant to email you a link, but forgot. Here it is:

http://www.city-journal.org/html/17_1_urbanities-steyn.html

Well, I was just joking about the Supreme Court thing, I knew that. That's about all I know though, so I'll still gladly take all the legal education you can give. I was actually considering law before poker and am considering it once again.

And you're on for the $100. I'm going to have to make a list of these prop bets I keep getting myself into. Now I need Howard to get arrested and Doyle Brunson to not die at a poker table.

Okay, we're booked: if any FTer gets arrested for any offense related to the staute in question within three months of 1/23/07, you get the money. Non-poker related offenses don't count, so that if Matusow gets arrested on a drunk driving charge, I don't have to pay.

I cashed out of all my online poker accounts (well, cashed out of stars and went busto on FTP, to be precise about it), so I might have to pay you in real coinage if I should lose.

I am winning my Bonomo bet, at least for the moment.

I'd have to give you good odds if we were counting Mike's extracurriculars. I feel good about this bet.

I also like your end of the Bonomo bet, though I think it's close. From my play with him I think he's good but not great.