Wednesday, April 04, 2007

Online Poker in Limbo

The Unlawful Internet Gambling Enforcement Act recently passed by Congress has been an exercise in hypocrisy - all under the murky guise of protecting American citizens and their values. Somehow U.S. financial institutions will be required to block all transactions that might be connected to online gambling. Credit card companies have already done this by virtue of a built-in code that easily identifies such transactions. In the case of other transactions such as electronic checks this will likely prove to be a logistical nightmare. In a country already rife with widespread legal and illegal gambling including Las Vegas - the greatest mecca to gaming and vice ever created by man, you might think that online gambling would be considered as just one of many frivolous ways to risk money. This doesn't mean that unregulated, off shore Internet gaming doesn't raise serious concerns and questions, but most of those issues could be dealt with in other ways. Instead of criminalizing a form of entertainment that millions of U.S. folks participate in, and for better or worse one that's not going away, why not come to terms with the situation in a realistic, practical fashion. The U.S. gaming market is huge with billions of dollars going to Internet gaming sites. It's likely that many of these sites would be willing to cut some deals with the Department of Justice and other federal authorities in order to maintain "legal" access to U.S. patrons. For example, these sites could kick back 5-10% of their revenues to the government as a form of taxation for being allowed to offer their wares within U.S. borders, and still make tremendous profits. Rather than arresting executives of e-wallet companies (see Neteller news) the government could tax these third party transaction companies as well. In a regulated environment many aspects of Internet gaming could be scrutinized and monitored - such as the integrity of the gaming sites and their owners, preventing under age gambling, mandatory spending limits by customers, audits of financial transactions and prevention of money laundering. Personally, I think the spread of electronic gaming is wrong in many ways, but Pandora's box was opened long ago, and trying to hide behind ill conceived laws will only complicate the situation. The Department of Justice must have more important enforcement issues and investigations to spend tax payers money on. Since poker is perceived to have a significant skill component, it's likely that poker players will be the most resistant to legal attempts at restricting access to gaming sites. They have already joined to form a significant lobby group called the Poker Players Alliance that is actively lobbying the government to legalize online poker. In view of recent developments, it would seem that high profile online poker players are now at risk for potential arrest by the DOJ, by being nabbed for illegal online transactions, and possibly tax evasion unless they have been scrupulous in their win/loss records of playing. Of course, those who enjoy betting on horse races can rejoice, since there is a specific exemption in the act that allows legal Internet betting on horse races within the U.S. - as stated before, an exercise in hypocrisy.

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