New Online Gambling Law Criticised
Published: Tuesday, October 03, 2006 Online-Casinos.com
NEW ONLINE GAMBLING LAW CRITICISED
"In 2010 online gambling might be worth over $24 billion. You can't eradicate it," says law professor.
Agence France Presse carried some positive views in contrast to the doom and gloom that dominated the media on Monday.
The high-stakes and morally charged offensive on Internet gamblers by US legislators was compared to the 1920s Prohibition against alcohol....and had about as much chance of long term success the service quoted several industry experts as saying.
Analysts said a potentially lucrative regulation, rather than prohibition, was still the most likely outcome for Internet gambling once November 7 elections to Congress are out of the way.
Ken Weitzner, who runs the Eye on Gambling website, said the bill "...doesn't seem enforceable." Gamblers could, for instance, wire money to offshore banks to replenish their poker accounts, or bet through third-party agents out of reach of the US law.
"This is a Republican initiative, to please their religious base," he said. "It is very possible that a Democratic administration will tax it rather than prohibit it, which would be like leaving the Dark Ages for the 21st century."
Critics noted that gambling on horse-racing and state lotteries, which enjoy powerful political patronage, was exempted from the new bill.
Some have also queried that it might bring the US government afoul of the World Trade Organization, which last year ruled in favour of the tiny Caribbean state of Antigua and Barbuda over other US restrictions on cross-border gaming.
Joseph Kelly, a law professor specialising in gambling at Buffalo State College in New York state, likened the new law to the widely ignored US ban on the manufacture and sale of alcohol that lasted from 1920 to 1933.
"Once this is clear, in some years Congress will legislate and tax it. In 2010 online gambling might be worth over $24 billion. You can't eradicate it," he said. "You can't prohibit it in just one country, we need international regulators for the Internet," he said.
Speaking to The Guardian newspaper, Jason Chess, a partner at gaming law specialist Wiggin LLP, said that paradoxically, the nuts and bolts of the new law are not important because its intention is all too plain.
"You would have thought that with a new piece of law the whole point would be to give precise, clear-cut and clearly defined words so that anyone who has got a business to run can look at that business and ask 'is what I am going to do legal or illegal?' But actually they are waving a big stick; they are acting in a political and, to be frank, intimidatory way.
"They are not saying 'here are detailed laws which we are giving you as something you can live with and work with'. They are saying 'we don't like internet gambling full stop. Even if you are lawfully and legitimately licensed, say in Alderney or Gibraltar or Malta, we will nevertheless regard you as committing a crime in the US every time a US citizen bets and we reserve the right to throw you in the slammer'."
Michael Bolcerek, president of the Poker Players' Alliance, said Congress had squandered the chance of reaping billions of dollars in taxes on legal gambling websites.
"If the goal of Congress is to protect people from the possible dangers of gambling, a prohibition is the worst way of achieving it. All it will do is push poker underground," he said.
Analysts at Dresdner Kleinwort said: "We do not believe this [law] is the end game. This could be construed as a violation of civil rights and promoting a chilling effect on free speech in the US." Experts highlighted that the bill includes carve-outs for a number of other online gambling activities including horse racing, Indian tribes, intrastate activities and fantasy sports.
"This represents protectionism and is in contradiction of the World Trade Organisation ruling in the US versus Antigua and Barbuda case," said Dresdner. The WTO ruled in 2004 that the current US administration was infringing on the trade rights of Antiguan online gaming and poker sites.
Dresdner was also unclear on whether the bill included poker, which resides in a legal grey area on whether it is a game of skill or chance. It also noted that the bill potentially exempts certain financial instruments if it is not reasonably practical for transactions to be blocked, giving the industry a back door. Clarity on these issues may take up to 270 days to arrive.
In the US, Gregory Wierzynski, a spokesperson for Iowa Congressman Jim Leach, told eGaming Review: “There is no question that the President is going to sign it (the bill). However, we are under no illusion that this will (not) stop gambling offshore. The internet is too vast and too adaptive."
Some analysts insisted they were remaining upbeat about the gaming sector. "Obviously the share prices have collapsed and they're discounting all the U.S. business but I think there is still a lot of non-U.S. business there and it is not as if these companies are going to disappear," Richard Carter, of Numis Securities, told AP. The online gaming business last year generated around US$15 billion globally.
Even the American Gaming Association, which represents the traditional casino industry in gambling mecca's like Las Vegas and Atlantic City, said the new bill was a "bad idea." AGA chief executive Frank Fahrenkopf said his group wanted a federal commission to study whether the technology exists to go after under-age gambling on the Internet while regulating and taxing above-board websites.
"I still think the next Congress will pass such a measure," he said.
