how long before PS UB and FT drop?

[Fight Club]

I havn't read the whole thread, but is there any ideas on how long, if ever, until online poker is fully regulated and legal again in the US and other countries?

[JPFisher55]

Billman do you realize how many treaties the US would violate by blacklisting certain foreign banks and the effects on international banking?

[Sniper]

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When you say that this or that is unlikely and I can show that it's likely people come out of the woodwork to portray me as being in favor of this stuff happening. Telling you that the forecast is for rain tomorrow isn't the same as hoping it rains tomorrow.

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Bill, this is not a problem with the readers... this is a problem with the author... If you truly believe this to be an issue, then you need to examine how you write.

When I forcast a Hurricane in the Neteller thread, no one thought I wanted it to come!

[BluffTHIS!]

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Bluff,

Again, I think you're asking me to defend an argument I did not make. I did not say that they would or could force the Belgium office of SWIFT to conform. What I said is that as long as a US bank has an account number on a blacklist they can ask the US bank to not perform or to decline the transaction.

The privacy issues with SWIFT have to do with people/courts/etc being able to get at the records of transactions conducted. That would be used in a forensic or investigative sort of action. Publishing a blacklist and telling US banks that certain account numbers are engaged in an activity the DOJ considers illegal and to not process transactions to or from those accounts is something that neither SWIFT itself or any EU entity has any control over.

And if we're talking about credibility the fact that you still claim that blocking ACH/EFT transactions is something we'll have to wait 270 days for is proof enough that your take on this subject doesn't mesh well with the reality of what we've seen just happen.

Bill

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1) You are still muddling the diffences between the SWIFT system and the ACH/EFT one, and making a couple assumptions, which from what I have read on the topic aren't true. Your first assumption is that banks can block SWIFT transactions by batch/institution in this manner. Indeed if you examine an example of a SWIFT transaction, you will see that there can also be intermediary institutions in the transaction. And your second assumption is that the SWIFT system won't in turn enact punitive measures against member US banks that fail to honor transactions, especially when such gambling transactions are a minority of a sending bank's business.

If you can prove your assumptions to be true, then please do so. Otherwise don't assert them.

2) Regarding ACH/EFT, I certainly have kept up enough to know that relevant institutions are already voluntarily complying in advance of the published regs. However despite the ACH organization's voluntary compliance and directive to its member processors to cease business with gambling sites, that voluntary compliance is predicated upon the regs mandating same, and also specifying the level of diligence required to identify such concerns. The ACH processors that suddenly cutoff the gambling sites already knew clearly who they were dealing with, and with no intermediary financial institution in between. The level of compliance required for paper checks will likely drive the compliance for electronic processing. I grant however that ACH/EFT is far easier to block in its entireity than paper checks.

[Sniper]

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I grant however that ACH/EFT is far easier to block in its entireity than paper checks.

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Bluff, how exactly do you think a Paper Check "clears"? [img]/images/graemlins/wink.gif[/img]

[BluffTHIS!]

Sniper,

Obviously they clear electronically at some point. But the difference is that a poker site can use a foreign bank account to cut their own checks, and keep making new accounts for same every month instead of being a static target, as long as the banks they use are privately held concerns which do a majority of their business in other areas. Another important difference is that such a manner of distribution reverses the process. Instead of the foreign bank "pushing" the transaction to your bank, it is your bank that is "pulling" same.

And again all a poker site has to do is to create a new account in a different subsidiary name each quarter to defeat a slowly updated blacklist. As well, your bank isn't going to do any more diligence/compliance than required by the regs.

[Billman]

They are not blacklisting banks. They are blacklisting accounts.

[Billman]

Bluff,

Since the real crux of all of this is how viable an alternative is it. So lets say some site uses the method of bank hopping you suggest. First we need to determine whether they do this themselves or use a third party payment processor.

There's a reason most sites don't have an in-house solution already. The costs outweigh the benefits. Neteller charges up to 9% and sites gladly pay that fee. The reason is, is that it's not easy. You have risk management, software, highly redundant and fault tolerant systems and networks, staff, fraud, etc all eating into your profits. Stars is maybe, maybe, maybe the only one big enough to be able to do this profitably. And just to make it clear, that's a big maybe. UB, Full Tilt and the rest would pay more in costs than they would make back in rake on a average per player basis.

So what if they outsource it to a third party? Well, for the same reasons mentioned above we're probably looking at a startup cost of several million and somewhere in the 8 - 18 month time frame to get it up and running**. I'm doubtful that any company would venture into this market without having presold their services to the sites so these deals are already in place or we're 'looking at a relatively long timeframe before we see a viable payment processor.

And that's assuming that it all works as planned. What happens when once a quarter millions are frozen en transit to the new payment processor? How many times will someone get burned before getting turned off to the whole experience? What happens if the DOJ is able to publish updated blacklists more frequently than once a quarter? What happens when the DOJ can publish blacklists almost as fast as the payment processor can set up a new account?

See, I think the reason folks like Bluff have such a hard time with what I'm saying is that I've done a lot of work in system security and designing secure software. Part of that is to stop thinking about how a system should work and to think about how people can break it. What exploit might a hacker look for? What disaster can happen that could bring this system down? What's the worst case scenario and how do you guard against it?

You have to get inside the heads of the people who are likely going to attempt to break your system. If it takes a week to design something it should take 2 weeks to figure out every single angle that someone could exploit.

And when you put on that hat, that's when Bluff and I are going to diverge. Bluff is going to tell you all the ways it's possible while I'm trying to think like someone at the DOJ.

You have to remember that this is the same DOJ who threw Tommy Chong in jail for putting his name on a line of bongs. They're fanatical when they point their eye at something. Right now online gaming is in their cross hairs. If I can think of all of these ways to put a serious crimp in online payment processing how many more do you think a young buck looking to win points with his Bush appointed boss are going to come up with with an nearly unlimited budget?

See there's a certain level of brilliance in the way the DOJ is handling this. Personally, I believe that they never want to file even one case under the UIGEA. They don't need to make a single arrest. In fact, making an arrest could hurt them. So it's much easier to apply pressure to US banks to cripple the online gaming industry. Who's going to sue them if they overstep the letter of the law/ Not the banks. They'll follow any order that doesn't reach too deep into their pockets. Not the online gaming companies. That would mean they would have to come to the US to fight the case and/or turn over all sorts of internal documents as part of discovery. How much you want to bet there's at least one email from one senior exec to another that acknowledges what they're doing is probably illegal?

So people can call me glass-half-empty but those same people ignore the things I've written on how to reliably bypass all of this. Within days of the UIGEA passing I posted (on my blog) how one could completely bypass the US banking system in a legitimate manner and continue to play.

As I said in a previous post here, there's no need to wait for the regs to be published and then hope and pray that you aren't impacted. There are things you can do right now that would completely eliminate this whole funding mess. If you're a pro you should already have your foreign bank account. Why wait and see if the US gov is going to let you keep transferring money when you can open an account that has no restrictions at all?

Bottom line is that the strategy of the glass half full folks is to sit back and wait and hope things don't get bad. My take is that there's enough evidence already that things could get very bad so you are simply being foolish by waiting around for the government to confirm that by writing it into regulations.




** I've built the above sort of system for an existing non-gaming organization just to handle credit cards and ACH and our development costs were in excess of $1.2 million (includes salaries, consultants, hardware/software, etc). Project time from concept to completion was about 8 months. The system being proposed by Bluff is a few magnitudes more difficult so I've tacked on a possible 10 additional months and a few more million in my estimates.


PS. Bluff, I choose to ignore your SWIFT response because you failed to meet the one criteria I put forth which was that you tell me why I'm wrong. Your response did nothing more than tell me, again, that I am wrong but failed to provide any specific details as to why.

[Billman]

[ QUOTE ]
[ QUOTE ]
When you say that this or that is unlikely and I can show that it's likely people come out of the woodwork to portray me as being in favor of this stuff happening. Telling you that the forecast is for rain tomorrow isn't the same as hoping it rains tomorrow.

[/ QUOTE ]

Bill, this is not a problem with the readers... this is a problem with the author... If you truly believe this to be an issue, then you need to examine how you write.

When I forcast a Hurricane in the Neteller thread, no one thought I wanted it to come!

[/ QUOTE ]

I've read your Hurricane post and the difference is more than the author, it's the content. Your post was very vague and hedged it's bets on several key issues. That was intentional on your part and you made that very clear. I, on the other hand, have given very specific information. My information more complete and I'm more willing to back up my assertions (or predictions) with facts that support them.

That's not meant to be disparaging to you as you and I, overall, seem to agree. But the difference is you said "you should be careful because some things might happen" and I have been saying "here's what's likely to happen and here's why."

But my point is the same which is that because you expressed an opinion with very little in the way of concrete evidence, it's much easier to ignore your thoughts as simply being one opinion of many. When I post exactly how ACH transfers can be blocked that is a serious blow to people who are hoping that ACH transfers will get turned back on again or that some other mysterious form of payment processing is going to suddenly appear and save the day.

I understand exactly why that upsets people but it doesn't change the underlying facts.

[Billman]

Bluff,

I apologize. I told you that your post about SWIFT didn't meet the criteria I set forth but I don't believe I did a good job of explaining why. So in the hopes of avoiding another round or two of the same, let me point out why I chose not to respond:

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You are still muddling the diffences between the SWIFT system and the ACH/EFT one, and making a couple assumptions, which from what I have read on the topic aren't true. Your first assumption is that banks can block SWIFT transactions by batch/institution in this manner.

[/ QUOTE ]

See, here you completely misread my assertion. My assertion was that the party on the receiving end of a deposit request has an account number and that that account number could be blacklisted. You say batch/institution which has nothing to do whatsoever with the assertion I made so I refuse to debate the point.

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if you examine an example of a SWIFT transaction, you will see that there can also be intermediary institutions in the transaction.

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And this seems to be the area of your misunderstanding of my criteria. It's all fine and dandy to say that there can be intermediaries but you still haven't shown me why my assertion is wrong. Just mentioning the word intermediaries doesn't invalidate my assertion.

This is exactly why I put that criteria in place. See, unless I do all the work of coming up with every conceivable way an intermediary could get around a blacklist then you're either going to claim victory on this point or that I have failed to address/respond-to it. In actuality, that's not the case at all. You have simply thrown out a word. You haven't offered any examples, evidence or proof that throwing in the word intermediary does invalidate my assertion. That was why I specifically said that you would need to tell me why.

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And your second assumption is that the SWIFT system won't in turn enact punitive measures against member US banks that fail to honor transactions, especially when such gambling transactions are a minority of a sending bank's business.

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I'm not even sure what the transactions being a minority has to do with anything else you said but again, tell me why this invalidates my assertion. The one link you did provide seems to indicate that when banks are caught between the US gov and EU privacy laws that the EU is willing to back down.

Again, tell me why? All you've done is throw out some random bits in the hopes I would do all the leg work of offering up more things you could throw random bits at and keep the debate going without actually putting forth a valid and credible alternative.