Sunday, October 15, 2006

Gambling prohibition glass is more than half full

According to Jason Ruspini. An excerpt:

  • Only the section eliminating payments to online gambling establishments from US-based institutions was passed in Congress. The broken Wire Act of 1961 was not amended, and the legality of placing non-sports bets online is still ambiguously intact in most States.

  • The commercial banking sector and other financial institutions (which are far larger than the casino and gaming industries) have 270 days to cooperate with the law upon final passage. Because of the high cost of compliance, along with the risk of blocking lawful transactions, it is possible that the eventual procedures may lack effectiveness. Significantly, the prescribed regulations are in the hands of the Secretary of the Treasury and the Federal Reserve Board, who only have to "consult" with the US Attorney General. Since not blocking a restricted transaction is not in itself initially a criminal offense, and might only result in an injunction, it is not hard to imagine that consultations with financial institutions might actually carry more weight than those with the Attorney General. (The financial institutions must not, however, "own" "unlawful" gambling businesses, as we know that many in the past have, in the form of stock.)

  • Even if there is effective implementation of payment blocking, options such as NETeller (NLR.L), FirePay (FPA.L) or MoneyBookers are somewhat untouched by the legislation. In reality, little has changed for US traders. Overseas internet gambling companies will bear the main brunt of the legislation, as US clients may be reluctant to use alternative payment methods, and even if they do so in large numbers, gambling companies will then face increased counterparty risk. At least one alternative payment company might actually benefit from this law.

  • Opponents of online gambling are further disgraced. It was embarrassing enough that they were already catering to the interests of casinos, lotteries and exempted gambling interests in an almost cartoonish fashion. Now they also being called negligent in terms of national security. Anti-anti-gambling animus is growing.

  • There are rumors that "tax haven" nations such as Gibraltar and Antigua, among others, are considering legal action against the United States, which was already in violation of a previous WTO trade treaty ruling.
Go read the whole thing.

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