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Betting Against Online Gambling
conq writes "BusinessWeek.com has an article looking at the possible consequences if anti-gambling legislation is passed. From the article: 'Just how much of a setback is the proposed legislation for the $12 billion industry? While online gambling companies generate half their sales from U.S. gamblers, the industry is operated almost completely by companies beyond the reach of U.S. regulators. [...] It's a lot of smoke and mirrors and misstatements.'"
Financial instutions already deny deposits to online gambling sites. In order to make a deposit one has to set up an offshore account and make transactions from there.
The gambling sites are offshore already, this proposal is an attempt to stop Americans using them by blocking transfers of money to and from them.
You are right that there is too much money at stake to stop it. This is yet another example of the Canute effect where people believe that merely making a new law or regulation necessarily achieves the desired effect. Have the legislators forgotten prohibition?
All of the major card networks (VISA, Mastercard, AMEX, etc.) in every region now have a strict policy that online gaming sites require a valid gaming/casino licence from the jurisdiction they are based in, and must specify the gaming merchant category code 7995 in every authorization request. Merchant banks that do not enforce this rule with their gaming merchants risk losing their card membership. No bank wants to loss its VISA or Mastercard membership. Card networks are also banning the use of quasi-cash merchants from being used to hide gaming transactions.
If the US wants to stop its population from using online gaming sites, all that they have to do is dictate that the issuing banks in their country simply decline all authorization attempts which contain the 7995 category code. The US banks can also look at the merchant country codes, so that it can allow US based gaming sites like horse betting (which is legal in American but illegal in many countries) to be authorized, while still declining the overseas gaming sites.
Problem solved, since the vast majority of people using any type of Internet commerce, including online gaming, pay directly or indirectly with their credit cards.
I am sick and tired of politicians in one country expecting to regulate Internet activity of other countries, using broad extra-territorial legislation. This is impossible for online merchants and banks to enforce, especially since many countries have laws that contradict each other. Should we ban online sales of electronics globally, because they are illegal in North Korea? What about alcohol that is illegal in some Islamic countries? What about mediciations, mod chip, etc.? Even non-physical online software and services, including proxy agents, news & political websites, adult entertainment, etc. are banned in many countries.
Whenever governments try to block capital flows from consumers to producers, money finds a way. Albeit, with some friction, but it gets there in the end.
This reminds me of the invention of Swaps; a financial instrument originally devised by banks as a means to provide a service helping multinationals circumvent capital controls imposed by the British Government (warning: PDF).
I can see the formation of off shore entities that will sell a "service" to US consumers. Whatever the the facade (e.g., email, picture viewing, etc) of this service, the real purpose will be to enable US based consumers of online gambling to move offshore; by paying for the "service" the cash is then off governments radar.
Visit your favourite on-line gambling site and the funds you used to purchase the "service" are now magically available, minus some "friction", of course, to fund your gambling. Later another "service" would be used to repatriate funds back into the US.
There are loads of other mechanisms I can think of to get around this stupid law. Of course the government will find it necessary to establish policing actions to find / stop this avoidance, thus screwing the taxpayer a second time ("No, you CANT gamble online AND you have to pay me to make sure you DONT gamble online)".
Another reason I'm glad I don't live and pay taxes there anymore.
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Playing poker online isn't the same as playing in a casino, for a few reasons:
The strategy is different, because you can't see anyone's face.
There are a lot more clueless players online (read: people you can win money from), because what kind of rookie is going to play poker at a casino when all those table games are placed more prominently and easier to get started with?
In fact, there are a lot more players online in general, which means there are more games: you can always find the game you're looking for, at any bet level and any game type. 50 cent 7-stud? $5 Razz? 90 player Hold'em tournament? No problem. At a brick and mortar casino, you're limited to whichever tables happen to be open at the time.
You can play faster online, and you can play more than one table at once.
But perhaps most importantly, it's cheaper to play online. There's less rake (typically 5% vs. a casino's 10%), and the stakes are much lower: just try finding a live poker game where the minimum bet is 10 cents. Even $1 games are hard to find.
BTW, preventing online gambling won't prevent anyone from having 24/7 access to gambling. The card room down the street from my house is only closed about 4 hours a day. The Indian casino just outside of town is open 24 hours on weekends.
Ridiculous. If that's what they had in mind, they'd regulate online gambling instead of banning it - or they'd ban all online gambling instead of making exceptions for horse racing and state lotteries. (In fact, they'd probably ban state lotteries entirely if they really wanted to keep people from wasting their money on gambling.)
Nope... you know whose best interest is served by this bill (and Washington's recent ban)? Brick and mortar casinos. That's all.
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As soon as a gambler's money ceases to be an expense (like movies or gaming software), and he begins to hope or depend on a lucky streak to solve his financial problems, the gambling becomes an evil addiction. Mathematical ability is not the issue, gambling addiction is irrational. It is a spiritual problem that puts hope of financial salvation in an eventual win.
Sometimes people with excellent math ability can win consistently at games like BlackJack. In my opinion, this is wrong also. An honest casino is a form of entertainment. They would be up front about the house percentage built in to all the games. The card counter again turns gambling into an income rather than an expense. Often successfully, to be sure, but it is like a quick change artist robbing a movie theatre.
In real life, of course, most Casinos seek to exploit gambling addiction for profit, rather like Tobacco companies exploiting nicotine addiction. Casinos with such sleazy motives in turn create a sleazy atmosphere around the Casino. The campaigns to ban gambling have the same motivation as the campaigns to ban smoking.
There have been some attempts to create wholesome Casinos. The main idea is that you buy tokens which cannot be redeemed for cash (same idea as pinball machines), so there is no temptation to look to the games as income. Such a Casino would probably qualify as "not gambling" under anti-gambling laws. Of course, playing this form of "gambling" is like smoking nicotine-free tobacco.
I can do maths, and considering that £1 a week is small enough to effectively be £0 a week, and that several million is enough to retire on comfortably, the odds are infinitely favourable.
A lot of people seem to think that since this internet gambling is hosted overseas, that therefore these companies are immune from the legal consequences of a US law. Not true. A State Attorney General or a Federal Prosecutor could bring a lawsuit against the company in the United States and gain jurisdiction over the company since it is doing business in the US. Once it has obtained a judgment in the U.S., the prevailing party would contact the government where the company is physically located and notify it that it has a judgment, using letters rogatory or treaty provisions to attach and execute on the US judgment in the foreign country. It is complicated, and often takes a few years, but it is effective. How do I know? I've done it.