Are Player to Player Transfers illegal under the UIEGA?

[fleece_me]

You are essentially funding someone's poker account when you do a transfer. I tried to do some research to see if this was discussed anywhere.

According to this article:
http://www.firstamendment.com/UIEGA.html

[ QUOTE ]
In order to establish a violation of the UIGEA, it must be shown that:

(1) A “person” was engaged in the business of betting or wagering;

(2) That person knowingly accepted a financial instrument or proceeds thereof; and,

(3) That instrument was accepted (by the person) in connection with the participation

of another person in “unlawful Internet gambling.”


[/ QUOTE ]

Look at the first one carefully. Does this mean if you aren't in the business of wagering or betting it is ok to do a transfer, but if you file as a professional and it is your sole or main means of support it is illegal to do a transfer?

If this has been discussed before here then I apologize but I think it is worthy of discussion.

What about this site? Are they aiding and abetting the people in the business of betting or wagering (professional poker players) by offering a p2p thread for people to initiate and solicit transfers from others?

If you read that article you can get a good idea of just how [censored] up this law is. It is confusing, which leads to "creative" prosecutions. I'm sure this law will stand for a long time but how can anyone intelligent read it and think its ambiguity won't be used in a way to put innocent people in jail?

[MiltonFriedman]

"Does this mean if you aren't in the business of wagering or betting it is ok to do a transfer, but if you file as a professional and it is your sole or main means of support it is illegal to do a transfer?"

Fortunately, the typical poker site itself is NOT in the business of betting or wagering, AP having been the most notable recent exception.

Also, fortunately, the Wire Act does not prohibit internet poker at the federal level.

A P2P transfer also fortunately does not likely involve the transferee accepting a deposit.

However, your post should open the eyes of any US facing site which hasa "team" or "house" players, whether it is a pro with an ownership interest or just a site offering "Playing with the Pros", where the pros cut the house in on their win.

[DeadMoneyDad]

[ QUOTE ]
You are essentially funding someone's poker account when you do a transfer. I tried to do some research to see if this was discussed anywhere.

According to this article:
http://www.firstamendment.com/UIEGA.html

[ QUOTE ]
In order to establish a violation of the UIGEA, it must be shown that:

(1) A “person” was engaged in the business of betting or wagering;

(2) That person knowingly accepted a financial instrument or proceeds thereof; and,

(3) That instrument was accepted (by the person) in connection with the participation

of another person in “unlawful Internet gambling.”


[/ QUOTE ]

Look at the first one carefully. Does this mean if you aren't in the business of wagering or betting it is ok to do a transfer, but if you file as a professional and it is your sole or main means of support it is illegal to do a transfer?

If this has been discussed before here then I apologize but I think it is worthy of discussion.

What about this site? Are they aiding and abetting the people in the business of betting or wagering (professional poker players) by offering a p2p thread for people to initiate and solicit transfers from others?

If you read that article you can get a good idea of just how [censored] up this law is. It is confusing, which leads to "creative" prosecutions. I'm sure this law will stand for a long time but how can anyone intelligent read it and think its ambiguity won't be used in a way to put innocent people in jail?

[/ QUOTE ]

Well it depends on how the giving party is compensated by the receiver that might run afoul of the new regulation.

In the past I have done P2P transfers for paypal $$.

Under my reading of the proposed rule this would be illegal.

But since checks seem to be exempt, if you are paid by check then you haven't violated the UIGEA law.

Money already on a poker site transfered for money already on another poker site does not add money to the system and IMO would not be covered.


D$D

[fleece_me]

Any gambling illegal under state law applies to the UIEGA. Clearly it is illegal for all the sites to be run stateside, and it is probably only illegal to play poker if you actually profit from it (most of the state statutes I've read define promoting or felony gambling as anyone that profits from gambling).

This law sucks because it is so ambiguous. I think the issue of p2p transfers is more complicated than it would seem and was hoping some of the lawyers here might comment.

[*TT*]

[ QUOTE ]
Any gambling illegal under state law applies to the UIEGA. Clearly it is illegal for all the sites to be run stateside, and it is probably only illegal to play poker if you actually profit from it (most of the state statutes I've read define promoting or felony gambling as anyone that profits from gambling).

This law sucks because it is so ambiguous. I think the issue of p2p transfers is more complicated than it would seem and was hoping some of the lawyers here might comment.

[/ QUOTE ]

2 corrections to your statement.

1) Its is not illegal to run a state-side online poker room provided it is licensed and regulated by the authorizing state. It is illegal for said poker room to conduct business across state lines. The UIEGA has no ability to restrict state rights on this matter, its a constitutional issue - federal laws have no jurisdiction unless the gambling crosses state lines.

2) With respect to the above UIEGA does restrict the funding of state-wide poker rooms. If however a state authorized poker room permitted checks for deposit and withdrawal then this would not be a concern.

Interesting enough the state of Nevada now says:
"The State of Nevada, the State Gaming Control Board and the Nevada Gaming Commission do not regulate, license, control or in any way sanction, endorse or approve any Internet or on-line casino, betting activity, or any aspect thereof. Any statement or reference to the contrary is strictly prohibited and has not been authorized or in anyway approved or sanctioned by Nevada’s Gaming Regulatory authorities."

this is a change from their previous statement which enforced the exclusive right to license internet gaming. I know this because I was speaking with a famous investor who wanted to open a poker room licensed in Las Vegas but facing overseas players only.

[MiltonFriedman]

"since checks seem to be exempt,..."

100% wrong. This is a myth. There is no exemption for checks from coverage under the Act. If a transfer or deposit or other activity would somehow violate the Act, that it was done by "check" does not get any "exemption" or render the transaction "legal", period.

Under the proposed Regs, a Bank may not need to review check transactions, but that does not make the transactions themselves "exempt" or any more legal than they would be otherwise.

I am not interested in posting extensively on this, read the Act if you disagree.

(FWIW, If you are really looking for a category of transaction not covered by the Act, try CASH. Cash itself is NOT coverd by the Act.)

[Skallagrim]

Oh the panic. It would take a very creative DA with way to much time on his hands to prosecute a person to person transfer under the UIGEA. First of all, as has been noted, the defendant must be "in the business of betting and wagering" and that also must be the person accepting the bet. Even if its a pro accepting the transfer, thats not what "in the business" means here, it means accepting the money to place a bet for the person sending it as a primary source of income. No one is ever going to use this for a person to person transfer.

And they havent even tried to go after epassporte yet.

As to what Milton says about checks and the banks, he is pretty much right (a few technicalities left out).

The criminal UIGEA part applies only to the sites, and MAYBE (under aiding and abetting) to individuals who DIRECTLY move someone else's money to the site, so long as they are not a financial institution which are exempt. Affiliates may have some worry here. Again assuming poker is covered by the UIGEA at all....

Skallagrim

[fleece_me]

[ QUOTE ]
Even if its a pro accepting the transfer, thats not what "in the business" means here, it means accepting the money to place a bet for the person sending it as a primary source of income.

[/ QUOTE ]
Walters analysis linked in the OP seems to disagree about what "in the business" means and there are no exemptions in the law for someone that derives income from gambling. I think most judges could interpret "in the business" to mean a professional gambler.


[ QUOTE ]
Again assuming poker is covered by the UIGEA at all....

[/ QUOTE ]
Pretty fair assumption. All the publicly traded sites are gone. Overly cautions? Maybe. According to the statue, if the gambling is restricted by state or federal law it is covered under the UIEGA, which covers TT's statement:

[ QUOTE ]
Its is not illegal to run a state-side online poker room provided it is licensed and regulated by the authorizing state. It is illegal for said poker room to conduct business across state lines.

[/ QUOTE ]

Well, since there are no state licensed online poker rooms then all online poker rooms must be illegal businesses. The DOJ would fire off letters in protest/challenge to any state that were to try - like they've done before - they've already shown a propensity to do this and claim online poker is illegal under the wire act. They just got a judge in the BOS case to agree the Wire Act covers more than sports betting.

Basically, poker has become like sports. No federal law against placing a sports bet. No federal law against playing poker.

But there are now 2 federal laws covering Bookmaking and Online Poker room ownership: the Wire act for bookmaking and the UIEGA for online poker.

Is it illegal in each state to place a bet or play poker online? Depends. As long as you lose, probably not.

To dismiss this issue so casually does not do it justice but clearly no one thinks its a big deal.

Give it time, the DOJ will get "creative" with this sooner or later. No doubt about it.

[Skallagrim]

Sorry fleeceme, this is still bordering on paranoia.

As far as your casual dismissal of my comment, if the "UIGEA applies to poker," perhaps you would have thought to read some of threads already discussing that point. It is actually a VERY complex issue, as is made clear in the master sticky for this forum.

I can come up with a creative interpretation of the law to cover a P2P transaction, that does not mean a court would adopt it as a correct interpretation of the law. This one would be highly questionable for the reasons I have stated, and, at the very least, would be the last prosecution on the list of DOJ gambling prosecution priorities.

Skallagrim

[fleece_me]

Skall, I thought you were an attorney but it must be civil and not criminal. If you do not think paranoia should be the order of the day when considering the DOJ's application of law then clearly you aren't paying attention

[Skallagrim]

fleece, criminal law is my specialty... I dont suggest anyone think everything is fine, I do suggest that the fact that the DOJ has yet to bring a single poker-specific prosecution (especially against a US company that openly funds poker: ePassporte) means that the DOJ is reluctant to test poker in the courts, and that when they get over this reluctance (which they will eventually, unless the law changes or a new administration sets a different agenda), they will not start by prosecuting player to player transfers - they have far better (though still debatable) arguments elsewhere.

Skallagrim

[DeadMoneyDad]

[ QUOTE ]
fleece, criminal law is my specialty... I dont suggest anyone think everything is fine, I do sugest that the fact that the DOJ has yet to bring a single poker-specific prosecution (especially against a US company that openly funds poker: ePassporte) means that the DOJ is reluctant to test poker in the courts, and that when they get over this reluctance (which they will eventually, unless the law changes or a new administration sets a different agenda), they will not start by prosecuting player to player transfers - they have far better (though still debatable) arguments elsewhere.

Skallagrim

[/ QUOTE ]

Skall,

The UIGEA gives the banks liability against over blocking and some under blocking provided reasonable procedures are implementated by the bank or instution. However isn't the main trust of the law against financal instutions for faciliting the transfers of funds, rather than directly at poker sites?

It seems to me the gov't just wants the flow of funds stopped or severly crippled and doesn't really want a legal test.

Or did I miss something?


D$D

[Skallagrim]

D$D, I generally agree with your opinion that the Feds are far more likely to use the UIGEA as a tool to intimidate banks than as an actual vehicle to prosecute poker sites and close down e-wallets.

But the UIGEA did have a criminal provision: up to 5 years for the person "in the business of betting and wagering" accepting a transfer of money for the purpose of engaging in "unlawful internet gambling."

Skallagrim

[DeadMoneyDad]

[ QUOTE ]
D$D, I generally agree with your opinion that the Feds are far more likely to use the UIGEA as a tool to intimidate banks than as an actual vehicle to prosecute poker sites and close down e-wallets.

But the UIGEA did have a criminal provision: up to 5 years for the person "in the business of betting and wagering" accepting a transfer of money for the purpose of engaging in "unlawful internet gambling."

Skallagrim

[/ QUOTE ]

So a bank or finacial instution who isn't in the business of waggering doesn't face criminal penalities? Or both sides?

D$D

[Skallagrim]

Part of the UIGEA specifically excludes "financial institutions" from the category "in the business of betting and wagering." So a bank cannot be criminally liable for a UIG transaction, and cant be held civilly liable for blocking a transaction it thinks is UIG but isnt.

Nice lobby the banks have, dont you think?

Skallagrim

[MiltonFriedman]

The enemy of your enemy can be your friend, "Nice lobby the banks have, dont you think?"

Skall, if you want to thank someone that the proposed regs were not much worse, thank the banking lobbyists. If they do not HAVE to, Banks WILL NOT screen check transactions or ACH transactions. Let's lobby/comment hard to support our "friends".

Also, save your time. A criminal lawyer, whether at DOJ or for a possible defendant, is better equiped than a casual poster to read a statute, understand that the elements of a crime must be stated therein, and that a conviction requires proof. My hypothetical about a poker site which has a "Team" concept inviting you to play the pros, addresses the increased risk of prosecution for such a US facing site, not that a prosecution of an individual player in a P2P transfer was remotely likely.

Milton "Judd for the Defense" Friedman

[rando]

Regarding the OP and P2P transfers, tax-free gifts of up to $12,000 are legal in the US. I always accept cash for P2P transfers; the compensation is untraceable, and you can always say it was a gift. How many people need to transfer more than that? Should I be paranoid about this kind of activity? Fleece? Skall?

[Skallagrim]

Well, you should be paranoid about claiming it was a gift if you are somehow being investigated and it was a transfer, not a gift. It would be a mutual gift if no one made any money on it - if one party made money, its a transfer and saying its a gift would be lying. Lying to government authorities is very bad - we have a 5th Amendment privilege against potential self-incrimination when being questioned by authorities, USE IT!

These transfers are pretty much untraceable, and would never be a priority prosecution anyway, unless you became like the new neteller or epassporte, and even then the legal theory behind a potential prosecution, as I have said, is pretty shaky.

Oh, and that "compensation" you got is taxable income.

Keep it small and friendly and worry very little; let it grow into a real business and they may come after you, if they find out about you, after and if they ever decide to go after epassporte or the affiliates.

Skallagrim