Dark minds can only create dark results:
"It's just a runt of a bill...." say the experts
Commenting that, knee-jerk reactions aside, there seems to be a general lack of confidence in the effectiveness of the new US anti-online gambling measure Interactive Gaming News set out this week to ask independent experts what they thought the consequences might be.
Legal expert Martin Owens told the publication:
It will not wipe out U.S. Internet gambling.
The lion's share of a $12 billion dollar market is not going to disappear. Alternative payment systems are already commonplace. In plain English, someone will find a way, and probably has already.
As policy, this is a giant step backward on the part of the USA.
It hurts the industry in its best places. The investors ready in the U.K. will be scared off, but these are precisely the kind of people that were coordinating with existing government regulation to streamline it into the existing scheme of things. Moreover, these are just the people who can be counted on to really care about things like responsible gambling, screening out the underage and the problem gamblers, giving back to the community and, yes, paying taxes.
But if you drive these top-of-the-line, socially acceptable and responsible parties away with strong-arm tactics and legally questionable overreaching, who will profit?
The very people the DOJ and the Republicans claim to be fighting - the pirates, the wise guys, the fly-by-night brigade - these residents of the shady side feel no responsibility toward the public. They're there for the money, period.
And Bill Frist has just handed them a new lease on life.
Peter Wilson, a partner at the Tarlo Lyons firm in London, is a specialist in the areas of gambling and licensing, and said:
Assuming the President signs the Safe Port Act, the "Unlawful Internet Gambling Enforcement" provisions in the Act are likely to cause radical changes in the online gambling market. It is already happening. Several large operators have declared that they are moving out of the U.S. market. Others are bound to follow. Even if smart legal analysis finds loopholes in the Act, the Department of Justice will still feel emboldened, whilst the boards of public companies, institutional investors and the financial services industry, may all feel that the U.S. Internet gambling market has become too risky and pull out.
Supporters of attempts to ban Internet gambling will be smiling, but the Act may prove to be a sizeable step backwards. A number of the large and reputable Internet gambling companies have started to, if not embrace, at least accept, the principles of social responsibility. We have seen the introduction of more effective age verification and the use of tools to implement spending limits, restrict periods of play and offer self-exclusion. Some operators have recruited professionally trained staff to formulate and implement policies to identify and assist suspected problem gamblers.
On the payment side, the reputable banks and payment providers adhere to strict "know your client" and anti-money laundering procedures.
What will happen if all or most of the reputable and well funded operators and payment providers pull out the market? There will still be a market. There can be no doubt about that as the appetite to gamble online in the U.S. was responsible for the growth of many of the largest Internet gambling companies. The answer is that there may be a vacuum created and, in the nature of things, others will move in to fill it--others who are prepared to operate below the wire, to use less transparent and reliable ways to acquire and hold customer deposits. They may not be so concerned about public reputation, social responsibility and financial accountability. In short, rather than combating the so called evils of Internet gambling, the new Act may leave the U.S. consumer exposed, thereby reversing the advances made over the last few years.
The U.K. government knows well the problems that may arise from excessive or uncontrolled gambling and it has chosen the route of regulation rather prohibition. It has formally recognized gambling as a legitimate leisure pastime. As we run up to the implementation next year of a new remote gambling licensing scheme in Britain, the U.K. and U.S. governments appear to be in direct conflict on the issue of Internet gambling and it will be interesting to see what if any effect the U.S. government has on influencing U.K. policy in the coming months.
Lawrence G. Walters, Esq., is a partner in the national law firm of Weston Garrou, DeWitt & Walters, www.GameAttorneys.com. He says the new legislation will likely drive the larger companies out of the U.S. market. The law is poorly drafted and subject to challenge by the industry, but the consensus appears to be to comply and block U.S. financial transactions. That will make room for the smaller, unregulated operators to acquire U.S. players seeking a new home for their betting activities. Internet gambling will not go away, and U.S. players will find a place to bet. The real question remains: What will companies like NETeller do? Will they buckle under the pressure of U.S. authority or rely on their host country's sovereignty and continue business as usual?
Certainly, U.S. players will find it somewhat more difficult to wager online, in the short term. But as smaller operators flock to the space opened up by the exiting of larger companies, the void will be filled. This is a remarkable change from just a year ago, when consolidation and acquisition were the words of the day, and the smaller operators found it hard to survive in an industry of multi-million dollar behemoths.
A final variable is the potential for judicial review of the legislation. Perhaps one of the industry's trade groups or a larger company that has ceased offering services to U.S. players may decide to pursue a legal challenge to the legislation. Given the way this law was rushed through passage, it may be vulnerable to a legal challenge. Then it's anyone's guess what a court may do.
Other experts were asked for their views in a Times article by Edward Fennell, opining that the impact of the Senate's Bill is psychological more than anything else.
The article quotes British lawyer Hilary Stewart-Jones, who says that too much is being made of the Senate’s Bill.
“We are reeling at the amount of misinformation that has been circulating in the past few days,” Stewart-Jones says. “It’s just a runt of a Bill which, contrary to reports, does not make it a criminal offence for the banks to handle these transactions. There are clear lacunae [an empty space or a missing part] in the proposed legislation, which means that internet gambling may still be legal. The impact of the Bill is psychological more than anything else.”
The Times says that the problem is that following the arrests this summer in the United States of British gaming industry executives, the sector is feeling fragile and vulnerable. As Stewart-Jones points out, the move in the Senate is largely protectionist in motivation from a country which, in gambling terms, is “like Sodom and Gomorrah”.
“They are making loud noises and using a kind of guerrilla enforcement to get their way,” she says. “Yet in many respects it suits them that this remains a grey area of the law.”
So while the attempt to scare off the British has worked temporarily, the voracious appetite of American gamblers will bubble up elsewhere. And there continue to be ways, legally, for UK companies to continue to do business with their American customers.
Another lawyer, Julian Harris says: “It’s a case of unjustified panic. For example, the Bill does not affect payments by cheque and customers will still be able to use overseas payment systems. So if you want to gamble you can use an intermediary as your method of payment. Now, of course, it may take some time for customers to adjust but it does mean that the operators will be able to regroup and find ways of dealing with the new position.”
What undermines the American position even further, according to legal expert Craig Pouncey, is that in April last year the Appellate Body of the World Trade Organisation (WTO) found that the United States had made “specific commitments to allow market access for gambling and betting services supplied from outside its borders”. Additionally, Pouncey says, the Appellate Body found that the US had “...violated the resulting obligations of international law by prohibiting non-US internet gambling, inter alia via the Wire Act of 1961. The new law exacerbates the US violation of WTO law. It is openly discriminatory and constitutes a clear violation of the US’s international obligations.”
The piece concludes with the observation that no matter what one's personal feelings may be about gambling, many lawyers in this field say it is far better that it should be established legally, regulated properly and taxed effectively rather than fall into the hands of professional criminals.
"The irony is that America now stands alongside China as one of the two principal countries in the world trying to fend off international internet gaming despite the fact that the addiction to gambling is deep in both their cultural psyches. Will they be successful in the long term? I wouldn’t bet on it," the author closes.
Commenting that, knee-jerk reactions aside, there seems to be a general lack of confidence in the effectiveness of the new US anti-online gambling measure Interactive Gaming News set out this week to ask independent experts what they thought the consequences might be.
Legal expert Martin Owens told the publication:
It will not wipe out U.S. Internet gambling.
The lion's share of a $12 billion dollar market is not going to disappear. Alternative payment systems are already commonplace. In plain English, someone will find a way, and probably has already.
As policy, this is a giant step backward on the part of the USA.
It hurts the industry in its best places. The investors ready in the U.K. will be scared off, but these are precisely the kind of people that were coordinating with existing government regulation to streamline it into the existing scheme of things. Moreover, these are just the people who can be counted on to really care about things like responsible gambling, screening out the underage and the problem gamblers, giving back to the community and, yes, paying taxes.
But if you drive these top-of-the-line, socially acceptable and responsible parties away with strong-arm tactics and legally questionable overreaching, who will profit?
The very people the DOJ and the Republicans claim to be fighting - the pirates, the wise guys, the fly-by-night brigade - these residents of the shady side feel no responsibility toward the public. They're there for the money, period.
And Bill Frist has just handed them a new lease on life.
Peter Wilson, a partner at the Tarlo Lyons firm in London, is a specialist in the areas of gambling and licensing, and said:
Assuming the President signs the Safe Port Act, the "Unlawful Internet Gambling Enforcement" provisions in the Act are likely to cause radical changes in the online gambling market. It is already happening. Several large operators have declared that they are moving out of the U.S. market. Others are bound to follow. Even if smart legal analysis finds loopholes in the Act, the Department of Justice will still feel emboldened, whilst the boards of public companies, institutional investors and the financial services industry, may all feel that the U.S. Internet gambling market has become too risky and pull out.
Supporters of attempts to ban Internet gambling will be smiling, but the Act may prove to be a sizeable step backwards. A number of the large and reputable Internet gambling companies have started to, if not embrace, at least accept, the principles of social responsibility. We have seen the introduction of more effective age verification and the use of tools to implement spending limits, restrict periods of play and offer self-exclusion. Some operators have recruited professionally trained staff to formulate and implement policies to identify and assist suspected problem gamblers.
On the payment side, the reputable banks and payment providers adhere to strict "know your client" and anti-money laundering procedures.
What will happen if all or most of the reputable and well funded operators and payment providers pull out the market? There will still be a market. There can be no doubt about that as the appetite to gamble online in the U.S. was responsible for the growth of many of the largest Internet gambling companies. The answer is that there may be a vacuum created and, in the nature of things, others will move in to fill it--others who are prepared to operate below the wire, to use less transparent and reliable ways to acquire and hold customer deposits. They may not be so concerned about public reputation, social responsibility and financial accountability. In short, rather than combating the so called evils of Internet gambling, the new Act may leave the U.S. consumer exposed, thereby reversing the advances made over the last few years.
The U.K. government knows well the problems that may arise from excessive or uncontrolled gambling and it has chosen the route of regulation rather prohibition. It has formally recognized gambling as a legitimate leisure pastime. As we run up to the implementation next year of a new remote gambling licensing scheme in Britain, the U.K. and U.S. governments appear to be in direct conflict on the issue of Internet gambling and it will be interesting to see what if any effect the U.S. government has on influencing U.K. policy in the coming months.
Lawrence G. Walters, Esq., is a partner in the national law firm of Weston Garrou, DeWitt & Walters, www.GameAttorneys.com. He says the new legislation will likely drive the larger companies out of the U.S. market. The law is poorly drafted and subject to challenge by the industry, but the consensus appears to be to comply and block U.S. financial transactions. That will make room for the smaller, unregulated operators to acquire U.S. players seeking a new home for their betting activities. Internet gambling will not go away, and U.S. players will find a place to bet. The real question remains: What will companies like NETeller do? Will they buckle under the pressure of U.S. authority or rely on their host country's sovereignty and continue business as usual?
Certainly, U.S. players will find it somewhat more difficult to wager online, in the short term. But as smaller operators flock to the space opened up by the exiting of larger companies, the void will be filled. This is a remarkable change from just a year ago, when consolidation and acquisition were the words of the day, and the smaller operators found it hard to survive in an industry of multi-million dollar behemoths.
A final variable is the potential for judicial review of the legislation. Perhaps one of the industry's trade groups or a larger company that has ceased offering services to U.S. players may decide to pursue a legal challenge to the legislation. Given the way this law was rushed through passage, it may be vulnerable to a legal challenge. Then it's anyone's guess what a court may do.
Other experts were asked for their views in a Times article by Edward Fennell, opining that the impact of the Senate's Bill is psychological more than anything else.
The article quotes British lawyer Hilary Stewart-Jones, who says that too much is being made of the Senate’s Bill.
“We are reeling at the amount of misinformation that has been circulating in the past few days,” Stewart-Jones says. “It’s just a runt of a Bill which, contrary to reports, does not make it a criminal offence for the banks to handle these transactions. There are clear lacunae [an empty space or a missing part] in the proposed legislation, which means that internet gambling may still be legal. The impact of the Bill is psychological more than anything else.”
The Times says that the problem is that following the arrests this summer in the United States of British gaming industry executives, the sector is feeling fragile and vulnerable. As Stewart-Jones points out, the move in the Senate is largely protectionist in motivation from a country which, in gambling terms, is “like Sodom and Gomorrah”.
“They are making loud noises and using a kind of guerrilla enforcement to get their way,” she says. “Yet in many respects it suits them that this remains a grey area of the law.”
So while the attempt to scare off the British has worked temporarily, the voracious appetite of American gamblers will bubble up elsewhere. And there continue to be ways, legally, for UK companies to continue to do business with their American customers.
Another lawyer, Julian Harris says: “It’s a case of unjustified panic. For example, the Bill does not affect payments by cheque and customers will still be able to use overseas payment systems. So if you want to gamble you can use an intermediary as your method of payment. Now, of course, it may take some time for customers to adjust but it does mean that the operators will be able to regroup and find ways of dealing with the new position.”
What undermines the American position even further, according to legal expert Craig Pouncey, is that in April last year the Appellate Body of the World Trade Organisation (WTO) found that the United States had made “specific commitments to allow market access for gambling and betting services supplied from outside its borders”. Additionally, Pouncey says, the Appellate Body found that the US had “...violated the resulting obligations of international law by prohibiting non-US internet gambling, inter alia via the Wire Act of 1961. The new law exacerbates the US violation of WTO law. It is openly discriminatory and constitutes a clear violation of the US’s international obligations.”
The piece concludes with the observation that no matter what one's personal feelings may be about gambling, many lawyers in this field say it is far better that it should be established legally, regulated properly and taxed effectively rather than fall into the hands of professional criminals.
"The irony is that America now stands alongside China as one of the two principal countries in the world trying to fend off international internet gaming despite the fact that the addiction to gambling is deep in both their cultural psyches. Will they be successful in the long term? I wouldn’t bet on it," the author closes.
