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#1
10-04-2006, 05:12 PM
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One more thing about the 270 days
There have been a number of interesting posts lately about how the legislation probably won't actually stop anyone from depositing or withdrawing from the sites. I tend to believe that's almost definitely right.
But even if it weren't, my guess is that it'll still be at least 18 months or more before banks stop blocking any transactions. First, as I've mentioned in other posts, I'd be somewhat surprised if the Fed actually managed to promulgate final regs within the 270 days "mandated" by the statute. But also, unless the banking industry has been lying about the technological and other difficulties associated with screening transactions, and/or the Fed comes up with some miraculous way to allow the screening to happen, the regs almost certainly won't require transactions to be blocked for some time (6 months+), in order to allow banks to develop the necessary technology and processes and implement whatever rules the Fed comes up with. Right now, I'm not too concerned about the financial transaction side of things. I'm more concered with the possibility that the government will seek to block access to the sites altogether. And then my next biggest concern is simply that misinformation about the legislation will scare away players and the remaining player base will become so diffused across sites that it will become harder to find the number of games, particularly at the mid- and high- limits, that we've enjoyed in the last year or so. 
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#2
10-04-2006, 05:26 PM
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Re: One more thing about the 270 days
Good post, as usual.
[ QUOTE ] Right now, I'm not too concerned about the financial transaction side of things. I'm more concered with the possibility that the government will seek to block access to the sites altogether. [/ QUOTE ] I thought your earlier read was that this was probably not a strong possibility from the legislation? Or do you think the government will seek to block access through mechanisms that are perhaps beyond the scope of the legislation? [ QUOTE ] And then my next biggest concern is simply that misinformation about the legislation will scare away players and the remaining player base will become so diffused across sites that it will become harder to find the number of games, particularly at the mid- and high- limits, that we've enjoyed in the last year or so. [/ QUOTE ] There will almost certainly be some deterioiration in game quality -- the question is exactly how much. One thing that's going to be very important IMO is how aggressively the sites that remain in business will advertise. If FullTilt is still running plenty of ads on ESPN, then the traffic will come. But I don't know what will happen there. FWIW, I think low limit players and mid-high players will face slightly different problems. While there should still be plenty of low limit games going, taking out some of the casual player base could be fairly crippling when coupled with the relatively high rake. I do think it would behoove the remaining US-facing sites to reduce rake in the medium term, just like the Fed reduces interest rates to stimulate growth. Mid-high players on the other hand will probably face more problems with game selection than game quality. The people that lose a lot of money at these limits are, frankly, degenrates who are probably going to find away around this. So I think there will be some pretty good games going, but I don't expect the sort of 24/7 access to them that we enjoy now.
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#4
10-04-2006, 05:40 PM
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Re: One more thing about the 270 days
[ QUOTE ]
I thought your earlier read was that this was probably not a strong possibility from the legislation? Or do you think the government will seek to block access through mechanisms that are perhaps beyond the scope of the legislation? [/ QUOTE ] I did say that the statute's provisions relating to site-blocking were weird and probably ineffective -- if push came to shove. But I was also confident that sites wouldn't just voluntarily leave the US market when it'd cost them $2.5 billion in market cap overnight ;-). Seriously though, I think it will be difficult for the government to get a judge to order a site blocked (although it depends on the particular case and the particular judge). However, if the government started pressuring ISPs to block sites, the ISPs might do so without a court order. It would be interesting to see what would happen in that situation, though, because if a site with some cojones were blocked by an ISP without a court order the site might well sue the ISP. If Iwere an ISP I don't know what I'd do -- what I do know is that the telecom lobby is strong and they'd probably be able to exert political pressure to prevent getting caught in the middle. Overall I still think it's pretty unlikely, but if it did happen it'd be bad, bad, bad.
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#5
10-04-2006, 06:09 PM
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Re: One more thing about the 270 days
[ QUOTE ]
the regs almost certainly won't require transactions to be blocked for some time (6 months+), in order to allow banks to develop the necessary technology and processes and implement whatever rules the Fed comes up with. [/ QUOTE ] If this happened, would the government be paying for the development of these new technologies? Or are the banks expected to pay out of their pockets to figure out to comply with the laws?
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#6
10-04-2006, 06:11 PM
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Re: One more thing about the 270 days
[ QUOTE ]
If this happened, would the government be paying for the development of these new technologies? Or are the banks expected to pay out of their pockets to figure out to comply with the laws? [/ QUOTE ] That second part will *never* happen. You can, pun intended, bank on that much.
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#7
10-04-2006, 06:26 PM
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Re: One more thing about the 270 days
The banks; cost of doing business. But there is that nifty exception in the statute that I've focused on a number of times that allows the Fed to exempt categories of transactions if it proves impractical (i.e., too expensive) to screen and block them.
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#8
10-04-2006, 06:39 PM
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Re: One more thing about the 270 days
i think the whither or not the banks are willing to spend their own money depends upon how strictly they feel the government will enforce the fines, etc. it was my understanding that the banking industry spent quite a bit of its own money post 9/11 to help the government try to track terroist activity via their funds. i think a good analogy might be similar to the situation where certain states barred smoking in bars. many bar owners refused to comply with the law and said, "fine me i'll lose more money in revenues if i don't allow smoking than if i just pay the fines." the bar owners changed their tune when their licences were threatened. so the question is more of a bottom line thing for the banking industry unless they feel like their licences will be threatened -- which very well may be the case. also are there any smaller u.s. financial institutions that are not governed by the fed that would not really have any significant government agency forcing them to comply with the law?
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#9
10-04-2006, 06:40 PM
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Re: One more thing about the 270 days
[ QUOTE ]
does the government block us from any sites right now? [/ QUOTE ] yes. there are certain google videos you cannot access from the US. not sure if this is directly the gov., but it's gov. copyright law that makes google do it.
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