With all of the swirling speculation and decisions of some of the major online poker sites to cease all U.S. operations, I thought this deserved its own thread.
The Communications Director for pokerstars.com has resigned, and provides a heated and dooming analysis of the new law and the market....
"Nolan Dalla on the Internet Gambling Prohibition Act
by Nolan Dalla filed under Poker News
[Originally posted to the BARGE Mailing list]
I have read many public forums over the past few days. Until now, I have not spoken out publicly on the Internet Gambling Prohibition Act, and the new version of this law which was attached to the Ports Security Bill on Friday night, although my views are probably foreseeable.
I do not believe most of the members here quite understand the degree of damage this new legislation will have upon the online gambling industry — including sports wagering, poker, and affiliated businesses such as MadJacks, et. al.
Before I comment upon this legislation and its detrimental impacts, first I should disclose that I have been involved in the poker business for more than a decade. I was and am the Media Director for the World Series of Poker. I was, until yesterday, the Director of Communications for PokerStars.com — the second-largest online poker site in the world. I resigned my position based on legal advice. In 2004, I was the Editor of a sports betting magazine published by SportingBet USA. I also served as a guest handicapper at MadJacks for four years. Please note that the opinions expressed here are not those of the World Series of Poker, PokerStars.com, or anyone else I have been affiliated with. They are my own.
Once this bill is signed into law (possibly as early as Wednesday, Oct. 4), it becomes effective immediately. This is why 888, PartyGaming, and others are suspending US operations, effective immediately. News has already been released that .COM (money) poker games will not be available to US residents. However, .NET (free) games will continue uninterrupted according to reports.
I expect this to have a ripple affect across the entire industry. Most of the larger poker sites, and likely offshore sportsbooks as well, will be forced to block wagers from US residents. Otherwise, all operators/employees are subject to arrest and prosecution if they enter US territory. Those here and elsewhere who have stated this new law “only applies to financial transactions” have a narrow and tragically misguided view of the legislation. It essentially makes any employee or agent of the offshore site a criminal under US law — UNLESS they block transactions from US residents. In short, an executive from an offshore sportsbook could enter the US and not fear arrest, provided that company is not doing business inside the United States.
Hence, the impetus is on the sites themselves to shut down US operations and links to US clients. I expect that most of the larger sportsbooks and poker sites will follow this trend for a few reasons which follow:
1. First, many of the larger, more established companies will take a long-term strategic view. They will decide it is better to operate within the law, rather than break it. This is especially true for public companies subject to gaming law and regulations, such as Party, 888, etc.
2. Companies which comply with US law now will be in a better position to re-enter the US market, provided online gambling is eventually legalized.
3. While profits will decline in the short-term, these companies will be forced to expand into new markets (Asia, Latin America, and so forth) or perish. Those companies with diversified products (non-US sports on the betting menu, for example) will be in better position to make the adjustment.
4. I expect a number of rogue sites to pop up and circumvent the law. Clearly, some sites will emerge and take the risk of accepting US wagers because of great potential profit. Sadly, I expect some of these rogue sites will be poorly run and mismanaged and scandal will result, which impacts the entire industry, and this makes legalization in the US even more difficult.
5. I expect that most of the majors in the sports betting market will continue to operate through the end of football season (the most profitable time of the year) and use the 270-day enforcement discussion period as a gray area which can be exploited to their advantage. However, as arrests and prosecutions continue to make news (Caruthers, Dicks, etc.) some of the majors will be forced to confront the prospect of blocking US traffic. I also expect US officials to put pressure on some governments such as Costa Rica, Antigua, and others to regulate their own sportsbooks, in the manner that the US government is involved in drug policy in counties like Mexico, Columbia, and so forth.
6. I predict that most of the majors will conduct themselves in a professional manner, by refunding deposits and paying (winning) players upon request. More to the point, I am not withdrawing my money from any poker or sports betting account at this time. However, those sites which openly violate US law will risk eventually being targeted in international court. I admit to having less knowledge on this issue than any other. But I do not fear that well-established sportsbooks will run away with money. I can say with absolute certainty that the big poker sites will act in good faith. I think I know this industry well enough to express this confidence.
..... (continued in next post)....
The Communications Director for pokerstars.com has resigned, and provides a heated and dooming analysis of the new law and the market....
"Nolan Dalla on the Internet Gambling Prohibition Act
by Nolan Dalla filed under Poker News
[Originally posted to the BARGE Mailing list]
I have read many public forums over the past few days. Until now, I have not spoken out publicly on the Internet Gambling Prohibition Act, and the new version of this law which was attached to the Ports Security Bill on Friday night, although my views are probably foreseeable.
I do not believe most of the members here quite understand the degree of damage this new legislation will have upon the online gambling industry — including sports wagering, poker, and affiliated businesses such as MadJacks, et. al.
Before I comment upon this legislation and its detrimental impacts, first I should disclose that I have been involved in the poker business for more than a decade. I was and am the Media Director for the World Series of Poker. I was, until yesterday, the Director of Communications for PokerStars.com — the second-largest online poker site in the world. I resigned my position based on legal advice. In 2004, I was the Editor of a sports betting magazine published by SportingBet USA. I also served as a guest handicapper at MadJacks for four years. Please note that the opinions expressed here are not those of the World Series of Poker, PokerStars.com, or anyone else I have been affiliated with. They are my own.
Once this bill is signed into law (possibly as early as Wednesday, Oct. 4), it becomes effective immediately. This is why 888, PartyGaming, and others are suspending US operations, effective immediately. News has already been released that .COM (money) poker games will not be available to US residents. However, .NET (free) games will continue uninterrupted according to reports.
I expect this to have a ripple affect across the entire industry. Most of the larger poker sites, and likely offshore sportsbooks as well, will be forced to block wagers from US residents. Otherwise, all operators/employees are subject to arrest and prosecution if they enter US territory. Those here and elsewhere who have stated this new law “only applies to financial transactions” have a narrow and tragically misguided view of the legislation. It essentially makes any employee or agent of the offshore site a criminal under US law — UNLESS they block transactions from US residents. In short, an executive from an offshore sportsbook could enter the US and not fear arrest, provided that company is not doing business inside the United States.
Hence, the impetus is on the sites themselves to shut down US operations and links to US clients. I expect that most of the larger sportsbooks and poker sites will follow this trend for a few reasons which follow:
1. First, many of the larger, more established companies will take a long-term strategic view. They will decide it is better to operate within the law, rather than break it. This is especially true for public companies subject to gaming law and regulations, such as Party, 888, etc.
2. Companies which comply with US law now will be in a better position to re-enter the US market, provided online gambling is eventually legalized.
3. While profits will decline in the short-term, these companies will be forced to expand into new markets (Asia, Latin America, and so forth) or perish. Those companies with diversified products (non-US sports on the betting menu, for example) will be in better position to make the adjustment.
4. I expect a number of rogue sites to pop up and circumvent the law. Clearly, some sites will emerge and take the risk of accepting US wagers because of great potential profit. Sadly, I expect some of these rogue sites will be poorly run and mismanaged and scandal will result, which impacts the entire industry, and this makes legalization in the US even more difficult.
5. I expect that most of the majors in the sports betting market will continue to operate through the end of football season (the most profitable time of the year) and use the 270-day enforcement discussion period as a gray area which can be exploited to their advantage. However, as arrests and prosecutions continue to make news (Caruthers, Dicks, etc.) some of the majors will be forced to confront the prospect of blocking US traffic. I also expect US officials to put pressure on some governments such as Costa Rica, Antigua, and others to regulate their own sportsbooks, in the manner that the US government is involved in drug policy in counties like Mexico, Columbia, and so forth.
6. I predict that most of the majors will conduct themselves in a professional manner, by refunding deposits and paying (winning) players upon request. More to the point, I am not withdrawing my money from any poker or sports betting account at this time. However, those sites which openly violate US law will risk eventually being targeted in international court. I admit to having less knowledge on this issue than any other. But I do not fear that well-established sportsbooks will run away with money. I can say with absolute certainty that the big poker sites will act in good faith. I think I know this industry well enough to express this confidence.
..... (continued in next post)....