What's NOT Included in the New Anti-Gaming Legislation? A Legal Perspective

After midnight on Friday, Sept. 29, 2006, just before Congress recessed, Senate Majority Leader Bill Frist (R-Tenn.) finally snuck the mildest form of anti-gaming legislation into an unrelated bill. The Safe Port Act provides $3.4 billion for U.S. port security, and attached to that bill is a section making it unlawful for banks to send money to Internet gambling sites or their intermediaries.

The bill passed both the House and Senate, meaning that it awaits only the president's signature before becoming law.

Do not panic. First and foremost, this bill does not criminalize playing poker. In fact, the bill does not speak to the poker player at all.

After 10 years, Congress finally passed something relating to online gaming. The bill basically makes it more difficult for players to put their money into an offshore site. However, these sites are not just going to walk away from a $12 billion-a-year industry. Since the gambling businesses are beyond the hold of U.S. laws, when one funding source is blocked, they will open another.

Next, most banks and credit-card companies already refuse to send money to offshore sites. Therefore, there are already offshore third-party companies in place that are more than happy to handle our financial transactions. The bill attempts to forbid financial institutions from sending money to intermediaries, as well.

However, the government cannot stop its citizens from sending money out of the country for legitimate purposes. For example, if I want to buy a widget offshore, the Constitution protects my right to do so. As long as there is a third party that's not involved in gaming, I am permitted to place my money in that receptacle from a U.S. financial institution and then spend it. Once my money goes to NETELLER, I can buy a watch, or pay for a trip. Because there are legally allowable things that can be done after sending the money to NETELLER, the government cannot tell my bank not to send my money there. Our Constitution protects one's personal right to send money from a U.S. bank or financial institution to a business outside the United States.

Other companies like NETELLER will soon appear on the horizon. NETELLER happens to be a publicly traded company on the London AIM Exchange, with a user base of more than 2.3 million customers. More than 1,700 online merchants accept payments through the NETELLER system, and most of those companies are not gaming sites. With corporate headquarters in the Isle of Man, the company processes billions of dollars yearly. Companies like NETELLER are not going to pack up and disappear. This legislation merely encourages more of the same.

If our government tries to stop U.S. financial institutions from sending money to a place like NETELLER, it would surely be fodder for a lawsuit.

The issue will probably be decided from a business perspective. If NETELLER makes millions from nongaming-related sources and it would hurt its business if it lost U.S. customers, it may voluntarily stop sending money to offshore sites. But, if a large portion of its business is online gaming, a lawsuit is in the making if NETELLER is blacklisted.

The secretary and the board of governors of the Federal Reserve System have 270 days after the bill is signed by the president to develop enforcement policies and procedures.

You can be sure that during this period, there will be lawsuits here, while abroad, there will be plans to protect the $6 billion-a-year industry by circumventing this new law, which is applicable only in the U.S. Our government cannot make laws that apply to offshore companies that are regulated by the government where they are located.

I wouldn't be surprised if the offshore sites come up with programs to put large sums of money into their sites now, prior to enforcement of the bill. They could offer interest or other large incentives to keep substantial sums online.

Poker Players Alliance President Michael Bolcerek told me that he is "outraged at the way Frist attached the anti-gaming bill to unrelated legislation at the 11th hour." The Poker Players Alliance is a grass-roots organization of more than 110,000 members. Bolcerek said: "During the 270-day period, we will continue to fight to exempt poker."

There are many interesting twists and turns in this new legislation, which I will be analyzing on an ongoing basis at CardPlayer.com.