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Online Gambling Site Bets On Bitcoin To Avoid U.S. Laws
SomePgmr writes with a story about an online gambling site planning to use Bitcoin to sidestep U.S. regulations that effectively ban online gambling. From the article: "Michael Hajduk had sunk one year and about $20,000 into developing his online poker site, Infiniti Poker, when the U.S. online gambling market imploded. On April 15, 2011, a day now known in the industry as Black Friday, the U.S. Department of Justice shut down the three biggest poker sites accessible to players in the U.S., indicting 11 people on charges of bank fraud, money laundering, and illegal gambling. ... Infiniti Poker ... plans to accept Bitcoin when it launches later this month. The online currency may allow American gamblers to avoid running afoul of complex U.S. laws that prevent businesses from knowingly accepting money transfers for Internet gambling purposes. 'Because we're using Bitcoin, we're not using U.S. banks — it's all peer-to-peer,' Hajduk says. 'I don't believe we'll be doing anything wrong.'"
Yep! This'll stop the government from coming after you!
Not!
And good job. Base your business off a virtual currency with ZERO backing and no control whatsoever.
Chas - The one, the only.
THANK GOD!!!
It'll be nice to have an established poker site taking Bitcoins. Not that I want to disparage the current bitcoin poker sites (I like seals with clubs) but they just don't have the polish and finish to which I've become accustomed.
Is 1563649 a prime number?
Because the right people don't make money with it.
Science advances one funeral at a time- Max Planck
Because it doesn't involve horses?
People in cars cause accidents....accidents in cars cause people
yep -and I am sure that Vegas, Atlantic city and the mob are putting their money and politicians into making sure it stays illegal regardless of the currency used
-I'm just sayin'
Sounds like a dumb idea, until you realize that Chuck E. Cheese and similar businesses have, for decades, been using a similar tactic to avoid running afoul of gambling laws: You're not playing for gifts or money, you're playing for worthless tokens!
The fact that said worthless tokens can be exchanged for things with monetary value is, apparently, non sequitur.
An enigma, wrapped in a riddle, shrouded in bacon and cheese
It makes Jesus cry
Not too long after Black Friday I had the same idea of using Bitcoin currency instead of real moolah. A site called Betcoin had already done this using the jpoker/jspoker library. I frequented the site for a while and even went back to it months later. In both cases the volume of people on the site was extremely low and the amount of bitcoin compared to real USD value was paltry even in comparison to the Full Tilt Poker $0.25/$0.50 tables. There just wasn't enough money in circulation on the site and not many people wanted to stake their futures on the volatile Bitcoin currency in the poker world. Plus, anyone that did any decent research just found various overseas and Indian-owned online casinos (harder for the US Gov to prosecute Indian territory casinos in Canada) and could exchange money by select Visa merchants, cash proxy sites, or by money order.
It is selectively illegal. Games of chance are only illegal for those not associated with the government (in most areas). Investment/insurance gambling is legal but regulated enough that you need to be rich to be the "house" (on the good end).
Amazingly, casino games give house odds of 0.1%-20% per roll/hand. But PowerBall games give more than 50% house odds. Make the better ones illegal or limited in availability. And when they are there, tax the crap out of them and make them advertise gambling addiction prevention stuff.
We should not forget about the plutonium.
"No fear. No envy. No meanness." Liam Clancy
Dragon's Tale, an mmo/casino hybrid, has already been doing this for two years. As does seals with clubs(an eu betting site, sealswithclubs.eu).
If you're looking for hold'em style poker, Seals is awesome.
However Dragon's tales(http://www.dragons.tl/) is a bit unique in that it has a LOT of different styles of games. There's the standard "luck" based games, some slot machine style, some complex paytables with various interesting things. Coconut trees are roulette style red/black odds. But they also have quite a few games of skill, which means there are behaviors you can learn about the game to improve your odds, and price adjusts to reflect the average level of play. So if you're good and careful with betting, making money there on a regular basis is possible. I'll also point out they have a rakeback policy that goes up as you play, which they also use to encourage older players to teach younger ones (in the form of the house giving a small part of its share to mentors).
All in all, bitcoin has proven itself to be quite versatile for online gambling. And at $14USD per btc, you can't really say bitcoin is a failed experiment. :P Stop on by dragons or seals if you doubt and i'll show you around. Both have free options (seals does hourly free tournaments, and dragon's offers free seed money through various activities)
How do you know* this?
* Please note that I am using the word "know", not "think".
Hajduk says. 'I don't believe we'll be doing anything wrong.'
Tell that to the US Federal Marshal, FBI, CIA ('I' stands for "It's National" not 'International'), and every other ATF-related or unrelated agency that every existed when they come knocking at your door with handcuffs. With 15 years defending yourself, maybe, just maybe, you'll get out before 2030.
Bitcoin forever, oorah.
When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
Of course the government has to outlaw gambling. It is dangerous and addictive, encourages crime and exploits the poor. Except the state lotteries, of course - those are somehow none of the above.
I don't believe we'll be doing anything wrong
shortly to become
I didn't believe we were doing anything wrong
how many pairs of boxer shorts should you own?
blah blah blah
blah blah blah
you don't have to pay taxes because it's unconstitutional, but the IRS doesn't want you to know that.
blah blah blah
Wesley, they let you have internet access there?
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
There is more to online gambling law than that.
There are different laws for making bets, taking bets, facilitating payments (this is what usually gets prosecuted), accepting advertising for gambling, displaying advertising for gambling, and even differences in regulation between types of gambling (sports betting, gambling machines, card games, etc.)
Then there are issues with corruption (throwing the game), and money laundering. For better or worse, organized crime loves gambling because it is easy to casually shift funds from one account to another without a paper trail.
On top of that, the government wants their cut in tax revenue.
//TODO: Think of witty sig statement
Poker certainly has chance elements to it, but the game involves choices as a hand progresses. You can call, raise, or fold depending of your assessment of the hand and your opponents. Those are choices that take skill if you plan to come out ahead. Make bad choices and you lose overall. Make better choices than your opponents, and you win overall. It is mostly, but not totally, a game of skill.
have a whole department gaming the bitcoin system.
funny how gambling is illegal -- unless you do it with other peoples money
I think BitCoins were poorly designed (from an economic standpoint), and will never be a serious form of payment for anyone NOT wanting to engage in currency speculation on the volatile rate, but for gambling, they totally make sense. That is, as long as they realize that their BitCoin exchange rate will be an additional element of their bet.
> Can anyone remind me as to why gambling is illegal?
To ensure a never-ending supply of new daytraders to supply Wall Street's liquidity needs?
Who could have thought that bitcoins were a disruptive technology and could bypass international banking oversight, like economic blockages or sanctions. Maybe Iran will accept bitcoins for their oil.
BitCoins aren't really a scam. They are a perfectly valid currency, by any definition of the word. Few currencies these days are backed by anything, so that's not much of a criteria. And the supply of BitCoins is very tightly controlled; it's just done with an algorithm instead of a central bank.
However, the expansion curve was designed by somebody with utterly no understanding of economics, and the built-in deflation inherent that would come with expansion in BitCoin use guarantees they'll never become widespread for mainstream transactions because of widespread volatility in the exchange rate vs. stuff you actually want to buy. (You'd have to be utterly nucking futs to take out a loan in BitCoins... this kind of prevents a credit market. And credit is the lifeblood of any modern economy.) The volatility is important because the acceptance of BitCoins is, and will remain, too low, so knowing what kind of value you can get for your bitcoins in the real-world is not really possible.
Bitcoin uses a global distributed transaction history and account book, known as the "block chain" (because it is a series of blocks of transactions). There are many copies of the transaction history - each user of the official client gets one. Therefore it is more secure against accidental loss or forgery than a typical bank database. Transactions have to be cryptographically signed by the account owner, or they get rejected. There also has to be enough balance in that account number, or they also get rejected. To say the Bitcoin network has no control whatsoever clearly shows you don't understand it. Distributed control is still control.
Most US dollars exist in electronic form in various accounts in the banking system. The majority of the backing of Federal Reserve Notes (the paper currency) is by Treasury debt which also only exists in electronic form (the Federal Reserve and the Treasury stopped using paper T-bonds decades ago). Therefore to attempt to say bitcoins are "virtual" being any different than the official US currency clearly shows you don't understand our monetary system either.
You claim Bitcoin is a scam. In that case, someone must be perpetrating a fraud. Who, exactly? The people verifying blocks of transactions (ie miners)? They are performing a useful service, one that every bank has to do. The exchanges that convert bitcoins for other currencies? How is that different than every stock exchange and bank foreign currency desk? For that matter, how is it different than any other commodity that is bought or sold? The network that makes it possible to send funds internationally with low fees? PayPal, Western Union, and bank wires have done that a long time. Bitcoin just does it cheaper.
What it seems like, to me, Chas, is you are projecting your failure to understand Bitcoin onto others. What gives it value is the ease of moving funds, and, for a business, the lower chance of getting ripped off by PayPal or chargebacks. Even if it is not perfect, if it is better than the alternatives, people will tend to use it.
The law is what they say it is. Don't try to use logic to determine what is legal and what is not. See the TV Show "Law and Order" to get the idea. Watch the prosecutors stretch and massage the law to cover anything they want covered, criminalize anyone they want in jail. I believe that represents reality. If he's really going to create and maintain a bitcoin gambling site Michael Hajduk should stock up on cigarettes and practice keeping his mud together because he's headed to jail sooner or later, probably sooner. Being clever with the law isn't clever, it's just stupid.
E Proelio Veritas.
Can anyone remind me as to why gambling is illegal?
it doesn't provide industrial meaningful benefit, so it's free game for the government to tax to hell(and to build monopolies on, just another way of taxing to hell) since there's no productivity involved in it in the first place. it doesn't create eggs for anyones omelet, it produces no milk, it produces no steel girders to be used in building butchering facilities.
you could argue any entertainment to go into this category though.. and largely it's all taxed to hell anyways, whilst some other fields are actively subsidized.
world was created 5 seconds before this post as it is.
No. They are actively trying to get online poker/cards legalized, but only for states that have already approved it (ie: Nevada and New Jersey). They want to control the online gambling market.
indicting 11 people on charges of bank fraud, money laundering, and illegal gambling
Gambling period runs a very high profit margin, to try and increase that through illegal means is just well... messed up. The use of bitcoin shows that the owners of these websites will do just about anything for even potentially earning a buck.
The use of a dubious currency just distracts from the real problem - gambling with an online site that is not certified by anyone. Regulated casinos have to document exactly how much they rigged each game in their favor. An unregulated online site can cheat you anyway it wants to.
Such as?
How does betting my money on the results of a card deal any different than gambling on a stock market? It's all gambling...why is stock market ok, but not cards?
Even betting on currency fluctuations is gambling...And if you want to see about criminal activity due to gambling...Look at the BANKS...
When all is said and done, nothing changes...
1) I didn't appeal to authority.
That would have required me mentioning an authority. I said that the designer had no understanding of economics. Not that he/she was ignorant of the writings of this or that particular set of economists or economic theory.
2) I didn't say deflation led to depression.
What I did say is that the use of BitCoins was going to be constrained by their inherently deflationary nature. As in, if acceptance of BitCoins rises, deflation will occur as demand increases. Expectation of that deflation encourages hoarding, which discourages their use, and therefore, acceptance. Geek Translation: BitCoins are stuck in a Deflation/Acceptance/Supply race condition.
3) Credit IS the lifeblood of modern economies.
Improvements in productivity, technology, agriculture, lifestyle, etc., all require access to capital. There are three ways to accrue capital:
A) Save until you can buy it. While this sounds all wholesome and good, it makes, say, the expansion of a business, the research necessary to bring a new drug to market, or the purchase of an automobile required to transport yourself to a better job rather difficult. Puts you in kind of a Chicken and Egg problem without credit. (I can't make money until I buy/build X, but I can't buy/build X until I have money.) Therefore capital spending of all kinds would be reduced drastically.
B) Borrow it. Bonds, banks, your buddy down the street, whatever.
C) Acquire investors. Wow, is that expensive. Even the most brain-addled MBA can explain that selling a portion of your business is usually the most expensive way to raise money. There's a reason that companies rarely execute stock offerings past their IPO... You only sell stock to either execute an IPO (so your other investors can bail) or to raise money you cannot raise by borrowing it.
Just because a bunch of bankers lent out more money than they should have to unworthy borrowers at unsustainable rates does not mean credit is a bad thing.
I meant to type: "I didn't say Deflation led to Depression"
Damn Slashdot's lack of an edit button!
Money laundering doesn't have to be done with money. Any exchange of value used to obfuscate verboten activity is per-se money laundering
Transferring a bag of coconuts from the trunk of one car to the trunk of another, representing an exchange of value, when done to obfuscate illegal activity, is money laundering.
That's US law, and it's the law in a bunch of other countries too.
"It can't be money laundering if it's not money"
Yeah, enjoy prison, guy.
--
BMO
Casinos seldom use cash. Some never use cash. It's all tokens called chips.
The fact that you can turn bitcoins into dollars means that, yes, the US regulates it.
You should really have a lawyer look into the governments view of token when gambling.
Ever wonder what prostitute don't take a token that can be exchanges elsewhere as cash. A place that also sells tokens?
Cause it's still illegal.
The Kruger Dunning explains most post on
I'm pretty shocked by the generally disparaging remarks regarding bitcoin. Nearly *all* currencies are speculative to some degee, just think of the exchange market. Investing in euro's doesn't seem like such a great idea at the moment but that certainly wasn't the case before the credit crunch. As long as the supply is limited (which it is) and there's a demand, bitcoins will have value. Many of you are assuming there is no demand, clearly you haven't visited the silk road. Bitcoin serves a purpose, it's digital cash, pure and simple. As long as people value *relative* anonimity in digital transactions (and there will always be a section of the population that does), there will be a demand.
Because I saw Jesus and his brother Juan at the track in Miami, and when they lost all their money betting on Castro's Little Bastard to place, Jesus cried like a baby.
We don't have a state-run media we have a media-run state.
Its' a scam becasue by it's nature, it can not be a large economic currency but people who are doing it consistently push it as the next thing, and everyone should get in.
You also have no legal protections with bitcoin.
The Kruger Dunning explains most post on
Gambling doesn't cause broken fingers, loan sharks do.
And if you make gambling illegal, do you seriously think that loan sharks go away? Gambling will still happen, it's just that now it's all illegal, and so all lenders are finger-breaking loan sharks - and their victims have no recourse, since they would be confessing to a crime if they were to go to the police.
The war on gambling is about as societally useful as the war on drugs (and about as successful). The only sane approach is legalization and regulation.
"I don't believe we'll be doing anything wrong." Federal Judges really go for that kind of sentiment. It's the old Steve Martin excuse: "I didn't KNOW it was illegal not to pay your taxes!" - part of his comedy routine in the 70's.
Firstly, if you didn't mean to be offensive, perhaps you should have avoided directly insulting my intelligence and education.
I had a much longer rant planned, but then I realized you misunderstand the nature of my objection to the economic understanding of the BtC designers. (And, to be fair to you, I didn't mention it in my original post.) I have no problem with the idea of an electronic currency of fixed, limited, pre-determined, supply. While unsuited as a national currency, (there's a reason every single modern economy uses fiat currency; though some economies do it better than others) it can, nonetheless, be a very useful tool, and the idea is certainly a worthy experiment in technology and economics. I merely believe that the particular expansion curve chosen was a stupid one. I believe that it ramped up too quickly, leveled off too soon, and the long-term increase in the supply is too low. A better-chosen curve would have struck a better balance between staving off deflation and inflation. (It started too quickly, and then became deflationary/economic growth limiting.) They were too optimistic about the uptake of BtC's, and did absolutely nothing to account for any kind of significant long-term growth in their use after the "intro" phase was complete. This is why the value of BtC's has been so unstable and deflating so much.
Now, on to my (now) shorter rant:
While a large portion of economics is indeed a large pile of untested bullshit, the same could be said about any branch of science. Just as we do not seriously question classic Newtonian mechanics as a useful model for predicting the behavior of masses, nobody seriously doubts things like the fundamental relationship of Supply and Demand (used as a general model.) Conversely, there are many unproven branches of physics (i.e. String Theory) for which the evidence is little stronger than the abstract theories produced by the egg-headed economist of your choice. We CAN do economic experiments to test theories (such experiments are done all the time at the micro level, and are also done at the macro level by central banks, although the results of those experiments take much longer and the results aren't usually very clear-cut.)
I ignore divisibility for the simple reason that I do not argue (as many BitCoin skeptics do) that BitCoins are illiquid simply due to the relatively high value of 1BtC. I know that is incorrect.
I ignore velocity (which is certainly a legitimate means of expanding an economy without increasing the supply of currency the economy is denominated in) because BitCoins have given us no reason to believe that their velocity will be higher than any other currency, (and reasons to think it would be lower, namely the lack of a functioning credit market.) and there is an upper bound to how much of an increase is possible. As a side-note, since the supply curve has leveled off too quickly, and will continue to get even flatter, almost ANY economic growth (over the small value of the BtC expansion curve) will have to come through velocity increases... that rather limits the total size of the economy, and therefore BtC adoption. The ability to adjust the money supply based on the current and expected size of the economy is why every modern economy uses fiat currency, although, as earlier mentioned, some do it better than others.
I don't know if you are one of the people that believe this (I'd like to think you aren't), but large increases in the value of a currency are NOT a good sign if you want it to be a viable currency. Increases ARE good if you are investing in said currency. A currency is most useful when it is STABLE, and, barring that, reasonably predictable and not severely deflating. That is, if you want a credit market at all. (Inflation of a steady doubling per year could theoretically be baked into interest rates, you can't do that with a currency deflating by a similar proportion, like BtC's did last year.) And the current intra-day volatility of several percent make it utt
When I said "it" when discussing capital in the GP, I meant "Capital Goods", not capital itself. As in: "Save [capital (usually in the form of money)] until you can buy capital goods." Or "borrow [capital (usually in the form of money] to buy capital goods." Etc. While this is syntactically unclear, it should have been apparent from context.
Of course I don't think capital itself appears out of thin air. I don't know why you believed I thought that way.
I'm guessing you didn't think that one through all the way. Taxes do not controll the money supply at all. All taxes do is move money around (presumably in a less efficient way than how the free market would move it around, depending on your definition of efficient, but that is a topic for another conversation). In keynesian economics, the money supply is controlled by a central bank, which creates and destroys money by lending it to other banks (more or less).
Fanboy Status: Apache Flex, C#, Eclipse, KDE, Pirate Party, Ron Paul, Slackware, Windows 7
Yeah, right.
"You also have no legal protections with bitcoin."
The only legal protection you have with Dollars (or any other 'approved' national currency), is having more of them than the entity you require protection from.
There's a lot of fancy two-dollar thoughts and three-dollar words on this thread; but reality is I can buy stuff I want with Bitcoin - and I'm willing to sell stuff I have for it, too. It's a currency, and it's a store of value: it works as well as any other between those who are willing to use it. Better, if you deal across national borders.
It just has to be regulated. That is unless they want tontines and ghoulpools.
Reminder: Addiction treatment is no substitute for a policy to prevent addiction in the first place. Addiction treatment is extremely expensive, and of limited use. It rarely works and recidivism rates are high. It is essentially emergency medicine. This goes whether the addiction is to a substance or an activity.
Taxation is also just prohibition light. Any negative consequence from outlawing an activity/substance, you also get with taxation, although probably at a somewhat lower level (see also: garlic smuggling in Europe). People who believe "prohibition never works!" (which, by the way, is a silly thing to believe) cannot honestly promote taxation as an alternative.
xkcd is not in the sudoers file. This incident will be reported.
But if no one participates with small amounts, the institutions that run the bitcoin exchanges will never get equal protection under law. So quit being a DOUCHE, and at least participate with small amounts so that Bitcoins can take off.
Here's some reading for you:
http://en.wikipedia.org/wiki/Nirvana_fallacy#Perfect_solution_fallacy
i think it had more to do with the mass crupption of those online gambling sites.
Not to nit pick, but the ban is on cruel AND unusual punishment. A punishment may be cruel (most are) OR unusual (e.g., requiring a DUI convictee to wok in a morgue), but not both.
> A punishment may be cruel (most are)
Punishment is, ideally, not supposed to actually _be_ cruel; but the problem is, no matter how non-cruel you design your punishment to be, the person who is being punished will tend to *perceive* it as cruel if he hasn't yet repented of the behavior for which he is being punished.
Yes, historically there have been some punishments that were objectively very cruel. Making a man watch while you kill his children and then immediately gouging out his eyes so that's the last thing he saw with them, for example, is undeniably cruel. But that does not make it a good punishment. In fact, I don't think they did that to Zedekiah to punish _him_ (they were carting him off in chains afterward anyway), but to make a poignant example for others.
But you can take a decidedly non-cruel (even restorative) punishment, like having to do a couple of hundred hours of community service to repay society for the harm your vandalism has caused, and it can _feel_ cruel to the person being punished if he still doesn't want to admit, even to himself, that he did anything wrong. This is unavoidable, because the emotional reaction that the punished person is having is not to the specific mode of punishment but to the mere fact of being punished. And you can't maintain a functioning society without punishing crime in some manner or another.
Cut that out, or I will ship you to Norilsk in a box.
If the US DOJ wants to shut down an online gambling site, they will. Agreed, there is far more recourse they can take beyond the Bitcoin "loophole".
This is just a temporary solution that will end up buying his site time if the US DOJ decides to shut it down. While I personally think the security risks of Bitcoin outweigh the conveniences, considering that online poker probably isn't going to be regulated anytime soon in the States - http://onlinecasino.net/blog/united-states-online-gambling-bills-update/ I can't blame him for trying. As long as his poker site doesn't get as big as Poker Stars, it probably won't become a target for the U.S. government. Bovada will be the first if the DOJ decides to still go after operators....although I think they are finished following the DOJ's new stance on the Wire Act.