Beyond UIGEA, regs, Kyl et al., etc.

[justaPlayer]

I would like to introduce a topic and ask a few questions which I think will gain the most traction in this, the legislation forum, and certainly be met with the most informative feedback.
I'd really like to compliment some of the forum's regulars like Skallagrim, OldBookGuy, a few others, and particularly The Engineer not only for their intrepid work in advocating for the cause, but also simply for their continuous thought-provoking posts and ideas. It is to these individuals primarily that I am addressing this post, and to the others who have read, used, and enjoyed this forum as sort of a "safe haven" from the rapidly increasing retardation and pettiness which most 2p2 forums are beginning to typify. Thank you all again for your presence.

I guess the best way to begin is by saying that I am a poker player and not much else, and I am proud of that. As such, I am not planning to stop playing, at any cost, no matter what law is passed or what politician [read: whore] is in office. I know a lot of other players who feel exactly the same as I do.

It is obvious to me that what is being attempted in this country is simply thinly-veiled fascism. To say that I am disgusted by it is an understatement of the highest order. The main difference between myself and the posters I referenced in my introductory paragraph I guess is that I do not believe it can be stopped or counteracted in any way. I am very deeply ashamed of what this country is becoming, not to mention the world at large, and I have determined simply to live my life as I see fit, subtly, quietly, "off the radar". It sickens me that the assumption implicit in all spheres of American life nowadays is that we are subjects of the state.

I am wondering what, as of right now, you guys think is going to happen. I am not going to stop playing poker. Lawmakers are no longer even relevant to me. I just want you guys to tell me what I can expect. Will there always be a way to cash out? To move money between sites? Or is it these utilities that they are actually targeting? I'm looking for some reasonable future projections. I'd like to get several takes and envision several scenarios. Thank you all.

[OldNantucker]

First, i believe future legislation can be influenced in favor of online poker if banks (not wanting to police how people spend money) & casinos (can make tons of $) have a vested interest. In addition, while I am cynical about politics, I have faith that an angry, organized group of poker players who has been unfairly screwed by the govt. can fight back (see Wexler, Frank bills).

Second, even with the worst case scenario of strict regulations, there will be ways to get $ in and out for dedicated players. The problem will be that casual, recreational players may not want to jump through hoops and it will be hard to attract new players so the games will get worse and worse.

My personal opinion is that the regs will not have any significant impact on the status quo.

[JPFisher55]

I think that if no action succeeds in changing the present course, including a change of administration, the US sites like Poker Stars will intensive their efforts to evade and circumvent the UIGEA. They will work with foreign banks etc. to find a way to enable their customers to move money. Of course there is always paper checks and the sites may simply make processing them much quicker than at present.
However, I think that by 2009, court cases, WTO, change of administration or legislative action will improve the situation for US online poker players.

[justaPlayer]

I think about the same as these 2 responses. I don't see it going anywhere, really. And look at how stalwart Pokerstars and Tilt have been in remaining in the U.S. market. For this I will ALWAYS play on their sites, even if 10 new, better ones come up which I will play a lot on.

I also think Stars and Tilt have pretty much the right idea by just sort of ignoring the legislation that was passed. Like me, and how I encourage others to do.

[counthomer]

Unfortunately I disagree with the general sentiment on the probable impact of the regulations. As someone who works in the industry, I've seen first hand the steady passing of payment options, and I can see the red sunset in the horizon when you read some of the scattered reports that are starting to appear.

At the moment it feels like we are ok, but I would suggest that is merely because the demise has slowed to a crawl in advance of the publication of the regulations. Look at some of the things that have happened in recent history:

-The loss of PayPal.
-The early loss of NETeller (originally they were intending to stay until the regs).
-The withdrawal of FirePay and Citadel.
-The decline in Visa and Mastercard acceptance.
-The rise and now decline of pre-paid cards.
-The introduction of new payment options which are vastly more expensive than before.
-The freezing of funds in the NETeller case.
-The refusal by certain banks to cash gaming cheques (limited in scope I know, but a potential omen for all those who claim it is technically impossible).
-Reports of banks refusing to open new accounts for gaming companies in the Isle of Man, Antigua and Gibraltar.
-The withdrawal from the gaming market of some of the most risk averse banks when the UIGEA was passed.

All of these represent a slow tightening of the screws, and there is no reason to assume that the regulations will simply rubber stamp the current halfway house arrangement. Here are some general insights that I here quite often from other people in the industry which may be of interest:

1. The regulations as published may be ineffective in wording, but the implementation of zero risk strategies by banks with any links to the US markets is a massive (if the the fundamental) concern. It would be infeasible for the gaming operators to end up relying on the few banks with no US presence (as it would make shutting the payment flow down simple).
2. The owners of some of the major sites do not have a limitless appetite for risk, and that appetite is directly proportional to business sustainability in other markets. I don't work for any of the big companies, but I think it is common knowledge that you will see Pokerstars leaving before the likes of FullTilt. The question is then what the implications of a cascade of new players will have on any remaining payment options at the remaining sites.
3. There are 'unknowns' in the UIGEA, specifically the site blocking provisions. Again, these are technologically impractical, but the reality remains that they don't have to operate perfectly to do huge damage. If you can knock out access to a site for even a day or so, you are going to put a lot of pressure on the owners and force a lot of casual players to ask questions.

I am therefore one of a large group of people in the industry who think the publication of the regulations will be the end of poker (as it currently exists).

But...

I am also one of the people in the industry who thinks that once the bloodshed is over, a new dawn awaits. I have personally been working in a small team of specialists for the past six months on new products which specifically respond to the UIGEA. I expect that my company will have something available by early 2008, and I fully expect some other 'new poker' initiatives to appear by then as well.

I can't talk about specifics, but the solution to the problem (in the short term) was always going to be entrepreneurial. The smart companies went away, hired the right people and got to work. The rest tried to leverage the WTO angle (which anyone with half an interest in international trade knows is the domain of big politics, and was therefore always likely to result in a negotiated settlement which was unlikely to help us - not that Jay Cohen wants to answer any difficult questions on that), or got involved in initiatives like iMEGA (which I am told has always been viewed by the background architects as a long shot).

I would also like to put on record my admiration for the likes of Engineer, Skallagrim and OBG who have posted and rallied people when it seemed all hope was lost. While I never believed that the short term solution lied in legislation, I have joined in the email/phone/letter push at every opportunity, not least as it is a major point of principle.

In the long run it is vital we fight for our rights, and push for a scenario where we do not fear the next stage of the fight. Getting our opinion out now will certainly help if/when Kyl and Goodlatte try to go after these new products.

Upon reflection I must therefore be an optimist (despite my pessimism at the immediate effects of the regs), but I think it is important people get a sense of perspective on the short term challenges (hence my post).

[xxThe_Lebowskixx]

"I am also one of the people in the industry who thinks that once the bloodshed is over, a new dawn awaits. I have personally been working in a small team of specialists for the past six months on new products which specifically respond to the UIGEA."

huh?

[counthomer]

[ QUOTE ]
"I am also one of the people in the industry who thinks that once the bloodshed is over, a new dawn awaits. I have personally been working in a small team of specialists for the past six months on new products which specifically respond to the UIGEA."

huh?

[/ QUOTE ]

Not sure what you mean by 'huh' - there are teams of people in most gaming companies that work on new products. I happen to be part of (a small) one at my company, and I'm sure that there are similar teams at all the better companies.

It should also be no stretch of the imagination to assume that these teams have been working on variations which will survive the UIGEA regs. We have two or three initiatives in the works; I'd be shocked if some of the poker companies weren't in a similar position.

[MiltonFriedman]

"I am therefore one of a large group of people in the industry who think the publication of the regulations will be the end of poker (as it currently exists)."

Counthomer is very accurate regarding payment options and efforts to facilitate US players' business. I would add that as US Banks acquire smaller foreign banks, additional doors have closed over the last couple of years ... add in HSBC, RBS and Barclays to the exiting Banks and you get a better picture of the squeeze on handling US players' transactions.

However, I am one of an apparently smaller group of people who agree with everything counthomer says, EXCEPT that I believe the publication of the Regs will NOT be the end of poker (as it currently exists). I happen to think that the Regs will have a couple of exemptions which will be exploitable. Also there are poker operators who will not abandon the US market, as the poker industry is NOT outlawed under Federal law.

I do think that one or more of the big 3 poker operators in the US market WILL exit, but definitely not all 3.

I also think you WILL see US Brand Name operators handling poker by early 2009.

[justaPlayer]

I'd like to thank everybody so far who has replied in this thread. I guess everybody's predictions are about what I expected.

Now I'll attempt to segue into a few related topics, as this issue is actually becoming more and more concerning to me.

The first is, and please everybody forgive me if this answer is common knowledge (I am not at all politically savvy/connected/informed, nor do I care to be, really), but, WHAT IS THE REAL REASON THIS LEGISLATION IS BEING ATTEMPTED IN THE FIRST PLACE? The root cause? I find it very hard to believe that this is simply a moralistic crusade by some zealots. I mean, the industry has made such staggering sums of money, and we all know how venal at the core those types actually are, so I'm having trouble even piecing together the real motivation for this. I'd love to hear some opinions, and I think the discussion will turn interesting.

Second, I saw another post sort of buried in another thread that I don't think got enough treatment, where somebody suggested some strategic alliances. He mentioned a homosexual group. I have to say, I think this is a brilliant idea. Not necessarily with the group he mentioned, I think he just put it out there as an example, but what about with some sort of unionized organizations? Could that be explored? I am thinking that this could be a subtle way of even gaining broad Republican beneficence, or at least in some key districts. Again, I am not politically savvy at all, so I don't know, but the idea could be worth exploring.

Third, if the climate toward online poker is truly trending as negatively as a few of the later posters indicate, does anybody have any idea the best place to move? Is there technology that would allow me to continue playing from within the U.S. even if it is completely outlawed? Just need some takes.

Thanks again everybody.

[Hock_]

I haven't read the whole thread, but one thing that counthomer seems to ignore is the safe harbor provision in the UIGEA. That provision states that banks cannot be held liable so long as they are in compliance with the regs. This means that if banks block transactions beyond the scope of the regs, or block them in a way not proscribed by the regs, then they can be held liable. [E.g., if they block a legitimate, non-illegal internet gambling transaction, and damages flow from that action]. Therefore, the conservative, risk-averse, approach of any financial institution would be to comply with the regs to the letter, but not the slightest bit more. If I were a banks' lawyer, that's certainly what I would advise it to do.