Wednesday, October 04, 2006

Quasi-Legal Ramble

Today, I don't have any screenshots for the blog. Today, no tournament histories, and no bad beat stories (though I did go out a respectable 14th in the WWdN last night). Right now I just have a quasi-legal ramble on the recent anti-gaming legislation. So here goes.

The more I think about it, the more I can't help but believe that online poker in the U.S. isn't actually going anywhere. I simply cannot get around the fact that the feds explicitly did not make a law that states that it is illegal for anyone in the U.S. to gamble online. Clearly they could have done that, but they chose not to. Instead, they're trying to attack the financial mechanisms by which online poker is most often played by Americans. As I mentioned yesterday, the action that this new bill prohibits is not the actual playing of online poker in the U.S., but rather the transfer of funds by financial institutions in to or out from online gaming sites.

Under current federal law, the Wire Act, passed by Congress in 1961, prohibits making gambling wagers over the telephone. Since the Internets came along, it has not been legally clear if the Wire Act actually applies to the Internets, a situation that the House addressed head-on when they approved the anti-gaming legislation this past summer, including explicitly expanding the Wire Act to include things like non-exempted wagers over the Internet. But then the Senate took this bill from the House -- the one which explicitly extended the Wire Act to online gaming activities not subject to the lottery / horse racing and other seemingly arbitrary or lobbying-related exemptions -- and gutted it, changing its entire focus from officially making you and me criminals for playing online poker, instead to preventing the electronic funds transfers that currently make online poker go in the U.S. As I said above, if the Senate truly wanted to criminalize actually playing online poker, they could have. They would have. It was already done for them by the House of Representatives! But the Senate affirmatively changed the entire focus of the House-approved bill, to ensure that it does not actually make playing online poker illegal.

Why would Frasshole et al do this in the Senate? To me, there seems to be only one likely answer. Frasshole doesn't actually care about preventing online poker. There is no doubt that making it an official crime for anyone in America to play poker online would have a far more chilling effect on the popularity of online poker here (and therefore around the world) than instead only making the financial institutions liable for online gaming transfers. To think that Frasshole actually went out of his way to change the existing bill as it came out of the House of Representatives, to specifically eliminate the criminalization of online poker for U.S. players, is really saying something. And what it's saying to me is that Bill Frasshole is just interested in pleasing the religious right freaks who are most in control of him winning the next Presidential primary for the 2008 elections in Iowa. How can he do this, without actually being the guy who actually makes online poker actually illegal? He publicly calls the bill "anti-gaming legislation", and he tacks it on to a non-gaming-related bill to make sure it gets passed. And he doesn't actually criminalize the act of gambling online. He opts instead for this focus on financial institutions as the criminals of online gaming, instead of the players who could potentially be voters in the upcoming elections where he wants to be President.

So to me, the Senate does not really want to outlaw online gaming, at least not right now. Bill Frasshole does not really want to outlaw online gambling, and risk alienating all those potential voters who either like to play a holdem tournament a few times a week, or who like to bet on the occasional NFL game on a Sunday during the colder half of the year in most of the U.S. Frasshole just wants this to look like he is anti-gaming, like he is doing something that the highly conservative political elements of his state will like to see and will remember during primary time in 2008. It's that simple. And that to me means that this bill -- this whole movement to ban online poker -- simply does not have the teeth behind it to stick. Nobody here with actual power actually cares enough to ban online poker. If they did, they would have banned it with this bill this past weekend. But this is a political thing, not an actual desire to turn millions of Americans into criminals overnight. And with nobody actually caring to actually stop online poker, I am becoming more and more confident, the more I think about it, that some workaround will be found.

And I'd also like to take a few minutes to discuss those workarounds. As I mentioned yesterday, I am still not clear whether a company like Firepay or Neteller, which is not based in the U.S. and has no operations here, is even subject to U.S. jurisdiction when it comes to the new anti-gaming law.

Here is a very quick, very basic legal primer. In order for anyone to be subject to prosecution for violation of a U.S. law, the U.S. has to have both subject matter jurisdiction and personal jurisdiction over the intended target. Subject matter jurisdiction basically exists in this case to the extent that any online poker site, funds transfer site like Neteller or Firepay, or any other party, is actively enabling United States players to play online in violation of the new bill. Personal jurisdiction, however, is another matter. The U.S. can't in most cases just send some officials over to, say, France, barge in on some French dude's dinner with his family, and arrest him for violating a law in the United States and then take him away. We can't do that because we don't have personal jurisdiction over that guy when he is sitting in his home in France. In order to have personal jurisdiction over someone violating a U.S. law (again this is a very basic discussion and clearly glosses over a number of key nuances), that person most likely needs to be here, in the United States. This is why we've seen the highly-publicized arrests of the CEO of UK-based Sportingbet PLC and another online sportsbook over the past month or so -- because these guys made the mistake of taking a plane and landing somewhere in a U.S. airport, and in both cases U.S. officials were waiting for them at the jetway to take them away, arresting them with clear personal jurisdiction over them because those people voluntarily stepped foot on U.S. soil, and were thus subject at that time for past and present violations of U.S. laws.

So here's the thing. I've heard and read a lot of people this week saying that it is not likely that officials at a place like Neteller or Firepay would be willing to continue to allow Americans to circumvent the U.S. laws (pretty clearly "aiding and abetting" these violations under U.S. laws) by continuing to allow money transfers to and from U.S. players and online gaming sites, because that would mean that these officials could not travel to the United States for fear of being arrested and detained while here (which they probably would be). People argue that it's bad for these companies' businesses for their officials and management not to be able to travel to the U.S. People also argue that most people desire to travel to the U.S. at some point, and they will not want to give up this possibility. But let's be honest here. How many of you out there are placing bets these past couple of weeks on NFL and college football games? Unless you live in Vegas, almost all of you are using (illegal) online sports books to place these bets.

But how can that be? Do you mean to tell me that, even after the highly-publicized arrest of the head of sportingbet plc last month as he disembarked from his cross-Atlantic flight at JFK airport right here in New York, that there are still one or two online sports books willing to take on all these risks -- not being able to travel to the U.S. for personal reasons, giving up the ability to make personal business contacts here, etc. -- and continue to accept wagers from U.S.-based bettors? No, there aren't one or two of these sites. There are hundreds. Maybe thousands, I don't know. All I do know is, it doesn't actually match up with practical reality that managers of offshore financial institutions or other companies will be too afraid of giving up their ability to enter U.S. soil to continue to provide a mechanism for Americans to pursue a legal activity in the U.S. Rather, every bit of evidence I have indicates to me that, while online gambling itself remains affirmatively not illegal in the United States, there will continue to be a significant demand for such services here. And where such a demand exists, especially when we're dealing with the multibillion-dollar industry of online poker, offshore institutions have shown time and time and time again that they are always -- not often, but always -- willing to step up to the task.

So, don't get me wrong. As of yesterday, I have almost nothing left in Partypoker since those asshats with the worst software in the entire online poker world have publicly stated that they will "block" all U.S. players (whatever that means, exactly) as soon as President Bush signs this anti-gaming bill into law, which is going to happen any day now. I've dropped my pokerstars and full tilt balances down to amounts which I could accept losing if I had to. But I think the odds of that happening are exceedingly low, at least anytime soon. I still think it is more than 50% likely that the online poker sites and the offshore financial insitutions will come up with another way for U.S. players with an interest in online gaming to get the job done. I believe that based not only on all the historical evidence I find in this industry, but also on what I perceive to be a clear lack of legislative intent to actually follow through in keeping U.S. players from playing poker online. What I see is one Senator who has made a purely political move by pushing through a bill -- one that he has purposely gone out of his way to remove the actual teeth from -- and a demonstrated history in this industry of finding a way. The U.S. pressured the major credit card companies not to accept and receive funds for online gaming activities, so what happened? Firepay and Neteller were born. Something else will pop up, or the Firepays and Netellers of the world will find another way themselves, or they will just take on the risk. That's what I think is the most likely outcome here. If the U.S. legislators actually gave two shits about preventing online poker from actually occurring right now, I would be more concerned. But they don't. So I'm not going to get my panties in a bunch.

I will close today with a quote from one of the greatest writers/bloggers out there in my view, Change1OO. Change said it best on her blog, and I could not agree more with this sentiment:

"I don't have a lot of faith in my government anymore. We go to war with a country that never attacked us while 9/11's mastermind still drinks tea and eats llama with his cronies in a cave somewhere. 50 million Americans don't have health insurance. 37 million live below the poverty line. There is a hole in the sky that is slowly giving us all cancer and Republicans with their hands in the oil industry's deep pockets are still telling us that global warming doesn't exist. People can still get weapons and explosives on airplanes. A bodybuilder-turned-action star governs the state I live in. And our elected representatives are jerking off to IM conversations with 13-year old boys."


Blogger Blinders said...

One word - Extradition. Did I spell it right? Party caved because the US has Extradition agreements in place with the UK. Yes, the US can't enforse its laws oversees, but it can demand the Extradition of gaming executives to the US to face prosecution. And, the UK almost has to comply.

The survivors will be the companies run out of Antigua and Barbados. No extradiction treaties, and countries that fully embrace online wagering. World Poker Exchange (WSEX is the parent) has a WTO ruling in place against the US, is going nowhere, and the site is rake free. Win, Win, Win. There are other poker sites located there as well. It will quickly become the center of the online poker universe as a result of all of this.

11:04 PM  
Anonymous Anonymous said...

I don't agree with your extradition theory blinders. You only get extradited if you broke a US law in the US and then fled. How does a gaming/finanical exec working for a British company in the UK, break a US law while not having any operations in the US? There is no grounds for extradition in this case.

If that exec runs a US based company and then leave for the UK, it's a different story.

Hoy - I totally agree with your take on the latest developments. I especially like the Neteller business model. I've been trying to find a downside but can't. I am still being cautious myself when it comes to where I keep my money (not that much to begin with).

I decided to follow your lead and play the 40K guaranteed last night and saw you donk away your stack with QJs on a missed flush draw. I guess you were busy with other things? Anyway, I am really enjoying the blog and have gone through most of the highlights and hot hands.

I can't find your definitition of a hoy and a reverse hoy anywhere though. Shed some light?
Also, how does a married guy get so much time to play? If I played this much I would be single again.

11:17 PM  
Blogger Hammer Player a.k.a Hoyazo said...

Kaja, you are right on, my youngest daughter woke up about 817 times last night, and when that happens and I am in one of these big mtt's, I find myself 9 times out of 10 just pushing with whatever dumb hand I'm looking at, because I know I'm going to have to disappear for an hour and don't want to bother playing under those circumstances unless I can get a big stack right away. It's a horrendous set of circumstances under which to be playing large mtt's, but it's how I roll nonetheless. Believe me as much as I feel for you having to watch me make a move like that when I had been doing well in the 40k, think how it feels for me to have an hours' worth of successful hard work go to waste like that. But when duty calls, it calls.

Here is the post where I first defined the Hoy:

The reverse hoy came not too long after this one -- rather than find that link (though you can search the archives for the couple of weeks after the above link and it should be in there), the reverse hoy is when you bet enough to leave your opponent with just one chip left if he calls your bet.

And lastly, not sure how long you've been reading the blog, but you will notice that I basically never get online before 10pm or so. Except for the WWdN on Tuesday nights which is at 8:30pm ET. Otherwise I am never, ever online until after my kids and my wife are in bed. I don't even try to play during the day or early evening, Ever. I don't even try to play on weekends except after 10pm. Ever. So that's how I pull it off. When I make a deep mtt run, I am up until 5am on a work night because I don't start until 10 or so most nights, when everyone else is asleep or very close.

Thanks for the comments.

11:25 PM  
Blogger Pokerwolf said...

The reason for Frist's actions is really simple:

He's trying to play both sides.

He pushed the "anti-gaming" rider through to please the hardcore right wingers. He gutted the bill to please the gambling lobby (Harrah's is 13th on his campaign donation list).

Both sides. Not surprising for a guy who's dreaming of becoming President.

11:36 PM  
Blogger Alceste said...

Even the original proposed bill in the House didn't make gambling itself illegal - it's focused on those running a gambling business (or some similarly named entity) - I suspect there's a worry that the law would be subject to additional challenges that would hold it up if it went after gambling itself (note that even the Wire Act only applies to those who are in the business of gambling and not to casual gamblers)

even if Neteller doesn't have to comply though, won't the banks start preventing transfers to Neteller once it's identified as a gambling business? obviously, there are work-arounds through depositing funds in foreign banks, but the law may not be as toothless as it appears

1:28 AM  
Blogger Hammer Player a.k.a Hoyazo said...

Although certainly anything is possible, I do not foresee a large e-payments company like Neteller being automatically cut off by all U.S. banks. Not when a service like Neteller is used for so many other non-gambling purposes. As I mentioned in my post, it is like Euro-Paypal. I'd be surprised (not shocked, but surprised) if a general e-payments company that happens to do some online gambling payments were automatically shut down by all U.S. banks as a result of this law. Just my two cents.

1:51 AM  
Blogger smokkee said...

you can pull money out of Neteller with their ATM card. that's what i use when i play live games.

i'll be glad when this storm blows over so we can get back to reading about sick beats, suckouts and nice MTT scores.

2:23 AM  
Blogger Hammer Player a.k.a Hoyazo said...

Sorry Smokkee but I haven't sucked out on anyone in about 18 straight months of online play. The only suckouts you're likely to read about here are you or CC taking my pocket Aces down with 2 live cards when you call my allin reraises ;)

2:46 AM  
Anonymous Anonymous said...

Thanks for getting me the definition (and for enabling your archives which I couldn't see before).

I know the exact feeling of a baby waking up when you're doing well in an MTT. I used to have a Monday night game that started at 8pm and sometimes the baby would cry her head off instead of going to bed. I used to call that "baby tilt".

As for starting late after the wife goes to bed - I tried that and got the "we might as well just sleep in separate beds if you poker is so important" story. Now I only get to play if she goes out "with the girls" or when I am away on business.

Hope to see you at the tables.

4:02 PM  
Blogger The Poker Enthusiast said...

Good game last night. It was great playing with you.

8:36 PM  

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