Local Paper Says Gambling Wont Slow Down

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From http://www.startribune.com/154/story/779395.html

Gamblers might look over their shoulder now, but experts say a new Internet gambling ban won't keep bettors from anteing up, just turn them on to overseas payment services out of the law's reach.

"It has put a terrible scare into people," said I. Nelson Rose, who teaches gambling law at Whittier Law School. "But it won't by any means wipe out Internet gambling."


The fright swept through the $12 billion industry on the heels of the recent arrests of two gambling company executives and a law that President Bush signed on Oct. 13 that seeks to ban most online gambling and criminalizes funds transfers.


The law has wiped out billions of dollars in shareholder value of British companies, leaving the industry's future in doubt as U.S. lawmakers initially trumpeted that they had found a way to halt bets coming from the United States.


But serious questions remain about whether the legislation can be effective in stopping U.S. residents from playing poker or betting on sports.
The Unlawful Internet Gambling Enforcement Act goes after the money, not the millions of players, which would be nearly impossible.


It will essentially try to choke off the way Americans fund their gambling habits, hoping to prevent the transfer of dollars to the popular Internet sites.


It's also widely understood that the law has online poker in its gunsights, identifying it as a game of chance, something the poker companies dispute. They contend that poker is a game of skill and therefore not subject to the new rules.


But they're fearful nonetheless.


"Their mission is to kill the funding of online poker, and that's what this law does," said Mike Sexton, who hosts the popular World Poker Tour and has won millions as a professional player.


The new law comes amid an explosion in online gambling, fueled by the Texas Hold 'Em craze and widespread access to the Internet. In addition, dozens of websites have sprouted up that allow any gambler with a credit card to bet on any sport he chooses, for any amount of money he wants.
Industry experts say an estimated 2,000 Internet sites take bets for sports and poker. American players have fueled Internet gambling, supplying $6 billion of the $12 billion in revenue generated annually.


"The time has been one of rapid growth," said Sebastian Sinclair, president of Christiansen Capital Advisors, a gambling consultant. "This industry was well on its way to becoming mainstream in a great part of the world. Capital was tripping over itself to fund these companies."


The new law gives the Treasury and Federal Reserve, along with the attorney general, 270 days to establish policies and procedures.
"The regulations are clearly going to prevent banks from doing electronic fund transfers to gambling sites, but that is no big deal," Rose said.
Clamping down on the banks is no panacea, Rose said. In some cases, banks simply move the money to payment processors, known as e-wallets. Non-U.S. payment processors such as the widely used Neteller then transfer the money to the Internet gambling sites.


The government has no authority over processors like Neteller that are operating legally.


Anthony Cabot, a well-known gambling lawyer in Las Vegas, thinks language used in the bill provides a loophole for the payment processors and the U.S. banks that want to be free to do business with them.
"Unless you have some fairly draconian measures ... the likelihood of stopping payment to them is small," Cabot said.


This isn't the first time the industry has faced a serious setback. In 2001, Visa and MasterCard and other merchant banks stopped allowing money to be sent to Internet gambling sites.


Like then, Sinclair thinks Internet gambling will recover again. It's simply too lucrative.


"There will be a big hit to the industry," Sinclair said. "A big hit. But it's not going to be long term, it's transitory until somebody finds a solution to whatever roadblocks are put in their way. There's too much money for it to go away."