Banking system and state law part of proposed regs

[John Paul]

Hello,
Sorry if this has been covered before, but I could not find it discussed elsewhere. I have been trying to understand what the regulations mean, and I hope folks can help me out.

My questions involve the banking system and the state law part of the regulations. As I understand it, the way the money flows from the U.S. to the poker sites is as follows:

1) Player writes a check or makes an electronic deposit to a site.

2) The site tells its foriegn bank about it (lets call it PokerBank) and says that it should get the money from the player's account at his US bank (we will call this PlayerBank).

3) PokerBank has a "correspoding account" set up at a US bank (we will call it Middle Bank) and basically asks MiddleBank to get the money from PlayerBank and send it back to PokerBank.

Is that the way it works?

If so, here is my quesiton. Suppose the regs are released as written, and MiddleBank wants to make a good effort to obey. They get a request from PokerBank to get money from PlayerBank. MiddleBank has already determined that poker is not against federal law, but is against the laws of some states. What does MiddleBank do?

Does it try to find out where the poker player lives and then looks at the laws of that state? If so, would this be difficult for MiddleBank - will they actually have to see the paper check?

Or does Middlebank look at where PlayerBank is located and look at the laws of that state. Presumably MiddleBank can easily find out where PlayerBank is located, but it is also easy to have a bank account in a different state from where you live.

Also, should the relevant law be that of the state where the player is in when he makes the deposit to the poker site? I realize that that is unworkable as nobody would know where the player is, but is also seems like that should be more important that where the player happens to live.


Thanks for any insight you can provide

[MiltonFriedman]

Simple, any and all "Middlebanks" will block all outgoing transactions they have any reason to think may involve illegal (read all) internet gambling.

The Regs allow them to do that with impunity, so long as they meet the miminal good faith structures/practices which the Final Regulations will describe.

Banks block lawful transactions every day, this Act sheilds them expressly from any liability for doing so.

[DeadMoneyDad]

[ QUOTE ]
Hello,
Sorry if this has been covered before, but I could not find it discussed elsewhere. I have been trying to understand what the regulations mean, and I hope folks can help me out.

My questions involve the banking system and the state law part of the regulations. As I understand it, the way the money flows from the U.S. to the poker sites is as follows:

1) Player writes a check or makes an electronic deposit to a site.

2) The site tells its foriegn bank about it (lets call it PokerBank) and says that it should get the money from the player's account at his US bank (we will call this PlayerBank).

3) PokerBank has a "correspoding account" set up at a US bank (we will call it Middle Bank) and basically asks MiddleBank to get the money from PlayerBank and send it back to PokerBank.

Is that the way it works?

[/ QUOTE ]

Pretty much. For propoer FED RES. Terms see page 10 of the proposed rule titled "3. Check collection systems"

Proposed Rule

[ QUOTE ]
If so, here is my quesiton. Suppose the regs are released as written, and MiddleBank wants to make a good effort to obey. They get a request from PokerBank to get money from PlayerBank. MiddleBank has already determined that poker is not against federal law, but is against the laws of some states. What does MiddleBank do?

[/ QUOTE ]

That is the 365 Billion dollar question!

[ QUOTE ]
Does it try to find out where the poker player lives and then looks at the laws of that state? If so, would this be difficult for MiddleBank - will they actually have to see the paper check?

Or does Middlebank look at where PlayerBank is located and look at the laws of that state. Presumably MiddleBank can easily find out where PlayerBank is located, but it is also easy to have a bank account in a different state from where you live.

Also, should the relevant law be that of the state where the player is in when he makes the deposit to the poker site? I realize that that is unworkable as nobody would know where the player is, but is also seems like that should be more important that where the player happens to live.


Thanks for any insight you can provide

[/ QUOTE ]

IMO it gets even more complicated than that for the banks.

Congress tried to get cute and try a quick fix to the '60's Wire Act to expand it to the 2000 world of the internet.

IMO they failed completely.

Back then the person answering the phone was the bookie, if you were talking to him it wasn't about the weather. Prety much any conversation about betting, wagering, gambling and the Gov't had a conviction. It didn't matter where you were standing when you made the call, you used MaBell to make a bet you were guilty.

Fast forward to today.

I suggest that the UIGEA foundation the Wire Act is in trouble here.

Poker site accounts are in effect just another pocket to hold your money in. If I want to rat hole $1,000.00 just to keep it from my wife, I can burry it in the back yard. Uusally I hide it in my golf bag.......

No laws of any kind broken, a marital vow maybe.

So the Gov't now unlike in the 60's doesn't even have proof of the intent of a crime by me making a deposit.

Heck some sites in the past have given away things if you make a deposit. Sort of like the old banking days and getting a toaster.

The issue gets even wierder when the government tries to make a case that a law was broken. For the gov't to prove a gamble took place they have to first defeat the "skills game argument", good luck with that given bridge!

Now even if they defeate the skills game claim, as you rightly pointed out there is the question of jurisdiction and applicable State Law.

Lets take a State where the State went to the trouble to pass an anti-gambling on-line law. I don't know if any did but lets assume they specifically included poker.

I may bank in that state and even live in that state, but wouldn't the State or Fed Gov't have to prove I was in that state when I gambled to prove I broke a law?

I could be looking for a Poker "toaster"!

I could be planning a visit to another state or Country to do my gambling. Would the same State or Federal Gov't stop me, or my bank, from sending money to LV or AC to open a cash account for an upcomming poker holiday no matter what or how restrictive the gambling laws were where I banked or lived?

Not on your life!

You also IMO get to make two Constitutional arguements.

1. Determining the legality of almost anything is a "uniquely governmental activity."

2. The UIGEA not only doesn't set up any "due process rights" it explicitly says we as poker players DO NOT have any. If a bank, credit card company, or anyone else in the system causes us "harm" by having to have to pay EXTRA to go around their stupid law, and proposed reg., we have no rights at all. Congress explicitly said the banks and credit cards would be held harmless!

Now I am not a lawyer.

I'm just a post whore...

But that is MPO. (my personal opinion)


D$D<--loves the new avatar!

[JPFisher55]

When MiddleBank refuses the transaction from PokerBank, PokerBank threatens to sue MiddleBank in a court of the PokerBank's country for breach of contract. UIGEA and its regulations won't help MiddleBank in the foreign court.
So if MiddleBank has assets in PokerBank's country, MiddleBank can honor transaction and risk UIGEA violation or not honor it and risk liability to PokerBank. In addition, once foreign banks don't trust MiddleBank how does MiddleBank conduct interntional banking. Eventually I will draft a comment urging all cross-border transactions be exempt from the regs because it is not feasible or pratical to regulate them.

[DeadMoneyDad]

[ QUOTE ]
When MiddleBank refuses the transaction from PokerBank, PokerBank threatens to sue MiddleBank in a court of the PokerBank's country for breach of contract. UIGEA and its regulations won't help MiddleBank in the foreign court.
So if MiddleBank has assets in PokerBank's country, MiddleBank can honor transaction and risk UIGEA violation or not honor it and risk liability to PokerBank. In addition, once foreign banks don't trust MiddleBank how does MiddleBank conduct interntional banking. Eventually I will draft a comment urging all cross-border transactions be exempt from the regs because it is not feasible or pratical to regulate them.

[/ QUOTE ]

Damn I like the way you think!

Classic act locally think globaly!


D$D