My Summary of the Legislation and Related Events

[ZeeJustin]

This is crossposted from my website. I think it is important to spread the word that things are really ok, and there is no reason to panic.

On September 30th, Congress passed the conference report for the SAFE Ports Act of 2006. Why am I writing about a Port Security Bill? Well, the benevolent Senate Majority Leader Bill Frist managed to tack on a few pages about Internet Gambling to the end of the bill.

Much to my dismay, this is being referred to as the “ban on internet poker”, but this is not the case at all. Poker players are panicking like crazy, when this may actually be a reason to rejoice. I’ll explain why.

The document in question is actually titled the Unlawful Internet Gambling Enforcement Act of 2006. First and foremost, it is a “prohibition on acceptance of any payment instrument for unlawful internet gambling”.

“Rule of Construction – No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States.”

This essentially means that, the bill does not declare anything to be legal or illegal. It is simply coming up with enforcement measures for what has already been deemed illegal. This is important.

Here is how Unlawful Internet Gambling is defined in the bill: “To place, receive… a bet or wager… which involves the use… of the internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.”

Again, it is important to note, that nothing new is being defined as unlawful.

The bill then institutes a “Prohibition on acceptance of any financial instrument for unlawful Internet gambling.” Again, not much is new here.

The major part of the bill is the next section, “Policies and procedures to identify and prevent restricted transactions.” Ok, this is the bad part, but it’s really not that bad. “Regulations – Before the end of the 270-day period… the Secretary and the Board of Governors of the Federal Reserve System, in consultation with the Attorney General, shall prescribe regulations… requiring each designated payment system, and all participants therein, to identify and block or otherwise prevent or prohibit restricted transactions through the establishment of policies and procedures reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of restricted transactions in any of the following ways…”

This sounds bad, but in reality, nothing has been done yet. Within the next nine months, these regulations will be written, but as of now, there are no regulations in place. There are several possibilities of what they can do.

1) They can require banks to check all online transactions and make sure none of them fall under the category of “Unlawful Internet Gambling”

The good news here is that these measures would be very expensive, and could possibly bankrupt some of the smaller banks, and would cost the larger banks even more money. This means that essentially every bank is on our side. They certainly don’t want to have to shell out all that cash. Expect major litigations to be filed if such a measure is passed.

2) They can require ISP providers to block links to sites involved in “Unlawful Internet Gambling”

This could be bad, but I just don’t see this happening. When is the last time you tried to access a site, and your access was restricted due to federal regulations? In my humble opinion, this is a blatant invasion of privacy. This is something that goes on often in other countries, especially ones in the middle-east to prevent them from seeing “United States Propaganda” and to encourage loyalty to their governments. Also, there will always be counter-measures to these blocks.

For the most part, I see the actual language of the bill as good news, however, the possibilities in the section entitled “Policies and procedures to identify and prevent restricted transactions” are open-ended, and impossible to predict at this early stage.

Ok, now here is the worst news of all of this. Several sites have already publicly stated that once Bush signs the bill (which he is expected to do within two weeks), they will have no choice but to deny US players the right to play on their sites. This includes PartyPoker and Pacificit/888 Poker.

PokerStars, Paradise Poker, and Poker Room have all announced that it is too early to tell, and they are undecided.

Most sites, including True Poker, Paradise Poker, Ultimate Bet, Absolute Poker, Full Tilt, and Bodog, have stated that they will allow US players to play on their sites. Some of these sites like Paradise are making statements in the short term, while other like Ultimate Bet are making very strong statements such as, “The new law does not change the legality of playing online games. The law does not impact people who play games from their computers… Our strong belief is that poker is a game of skill and therefore is not encompassed by this law... We do not undertake to assess the legality of play in any particular case as our users may access us from around the world.”

Also, virtually every site has assured its players that their money is safe and is in a segregated bank account. Although those specific words aren’t very assuring, I don’t find much reason to worry. Many players have been cashing out of PartyPoker in a frenzied panic, but this is not necessary. Don’t forget, PartyGaming is a publicly traded company, and any drastic move would kill their stock. Rest assured, your money is safe at PartyPoker, even when the time comes where they will no longer allow US players to play on their site.
Neteller has a somewhat unique position. But they have stated they will wait for the regulations to be written before making any decisions.

Now if you followed everything I have said so far, you should be asking one question, “Well, is internet poker legal, or is it considered unlawful?” Unfortunately, the answer to that is up for debate. There was a 20/20 special recently claiming it to be illegal, but I am not sure where any legal documents are backing that claim up. Many people reference the Wire Act of 1961, but that is obviously a bit outdated since it was before the internet was around. It is also worth noting that several state governments explicitly outlaw online poker. To me, that seems to imply that in the other states, it is still legal. I will continue to assume online poker is a legal activity until I see any documents stating otherwise.

If you didn’t read through all of this, I can’t really blame you. It’s a lot of information to absorb, so here’s a brief summary:

Good news: This bill only refers to Unlawful Internet Gambling, and internet poker has never been declared to be Unlawful throughout the United States.

Potentially bad news: Banks and ISP providers may be required to provide blocks on sites they deem unlawful. It is too early to tell exactly what this will entail.

Good news: We can expect to have close to nine months before those measures are set forth.

Better news: Since we have major banks on our side (as well as the $12 billion industry of online gambling), we can expect major litigations to be filed, which are likely to at least delay these measures, if not prevent them indefinitely.

Bad news: Party has already stated that once Bush signs the bill, they don’t see how they can possibly allow US players to keep playing on there site.

Good news: Party’s stance is a gross overreaction intended to ensure their investors that they are not doing anything illegal. Most sites acknowledge the fact that this bill does not explicitly refer to online poker and will continue to allow US players.

In conclusion, things are looking just fine for online poker, and there is absolutely no reason to panic at this early stage. If you want to help out our cause, please call your senator, and express how important your freedom to do what you want in your own home is to you.

[DrewOnTilt]

Justin I like your optimistic view of things, but I wish that the major sites shared your optimism.

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Don’t forget, PartyGaming is a publicly traded company, and any drastic move would kill their stock.

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Their stock is already dying.

[ZeeJustin]

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Their stock is already dying.

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Of course it is. They accounced they are banning 80% of their customers.

[PairTheBoard]

LOL. Is this the same analytic legal ability you applied just prior to having over $100,000 of your funds on Party Poker confiscated?

PairTheBoard

[crookedhat99]

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LOL. Is this the same analytic legal ability you applied just prior to having over $100,000 of your funds on Party Poker confiscated?

PairTheBoard

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bluffthis gimmick account?

[beachbum]

Maybe, but IMO he pretty comprehensively summarized how incomplete and unspecific this bill is. Enforcement will be an uphill battle.

The bill implies "oh horseracing, fantasy sports, and lotteries are legal, so all other IG by default is illegal". It is this vague on a lot of other finer points too.

[Zele]

ptb,

Please use another forum or PM for this kind of thing.

[CaptDrew]

congress needs a raging goblin and fireball to the dome.

[PairTheBoard]

[ QUOTE ]
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LOL. Is this the same analytic legal ability you applied just prior to having over $100,000 of your funds on Party Poker confiscated?

PairTheBoard

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bluffthis gimmick account?

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Look at my other posts regarding ZJ. If he was my best friend I would give him a dig on this one.

PairTheBoard

[ZeeJustin]

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LOL. Is this the same analytic legal ability you applied just prior to having over $100,000 of your funds on Party Poker confiscated?

PairTheBoard

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I have no legal background obviously, but I know how to read. I went through the entire bill, as well as many different interpretations on the bill, and I feel like I have a good handle on it. If you disagree with my views or interpretations, please tell me exactly where you disagree.