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Author Topic: GOP Successfully Passes Bill in House Banning Online Gambling
akhockey
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http://news.com.com/2100-1030_3-6092852.html

I'm not entirely sure I really understand the point of all this? I am by no means an expert on gambling, I don't even play poker with my friends because I *know* I will lose my money so I don't see the point, but I don't really see how this will help anything.

1) Why is betting on horses and lottery-playing considered okay, and yet betting on whether you have a better set of cards than other people is not?

2) Is it even possible to enforce this? What's to stop someone from pushing the money through an intermediary 3rd party?

3) What's the point? I know gambling, if abused, can ruin the lives of everyone involved, but so can many other things that are also harmless by themselves. Look at Happy Gilmore...his dad's love of hockey split up his parents. Should hockey be outlawed too? [Roll Eyes]

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TomDavidson
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1) Tradition and lobbyists
2) No.
3a) Well-meaning nanny-statism
3b) Sure.

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Corwin
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quote:
Originally posted by akhockey:
Should hockey be outlawed too? [Roll Eyes]

Have you seen them fight? YES it should be outlawed. [Razz]

Gonna go to sleep before I type something I'm gonna regret tomorrow. Today. Whatever.

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Jay
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Published: July 11, 2006
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Lyrhawn
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Outlaw hockey?

What's next? Outlawing breathing?

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Lupus
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Well, racetracks and such are regulated...the same with casinos...and lotto money goes to the government.

My guess is the real problem with online gambling is that the government doesn't get its cut.

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aspectre
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If ya outlaw hockey, only outlaws will play hockey.

Online gambling had always been illegal.
This is just congressmen giving payback by making online gambling legal for the political contributors who paid the largest bribes, while reducing competition from offshore gaming establishments which simultaneously grants those contributors strong leverage to buy foreign gambling assets at firesale prices.

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Lyrhawn
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This whole thing is ridiculous.

Millions of people gamble online. Good luck enforcing it, good luck making it stick.

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Lalo
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Morons.

As much as I'd like to dismiss this as such, it's a bad sign of times to come. I would really hate it if the era of Myspace is ever considered the Golden Age of the Internet.

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Mig
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quote:
Originally posted by Lupus:
Well, racetracks and such are regulated...the same with casinos...and lotto money goes to the government.

My guess is the real problem with online gambling is that the government doesn't get its cut.

BINGO!
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Storm Saxon
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I'll bet you 3:1 odds you're right, Mig.
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FlyingCow
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Here is my original thread about it from July.

So far, it has only passed in the House, albeit by a large majority. It still needs to be passed in the Senate for it to become law.

Even so, it only bans US banking institutions from transfering money to and from offshore online gambling sites. If you use an offshore online banking institution, it doesn't really change much.

It'll just end up being electronic money laundering, and the government will never get their cut.

Seems very silly to me.

Good ol' Puritanical country that we live in. [Roll Eyes]

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FlyingCow
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I'm guessing that akhockey just posted an incorrect link in his original post of this thread.

The onling gaming bill was indeed passed by both houses on Sept 30th. Senator Bill Frist decided to do an endrun around actually having to debate the topic, tying it to the port security bill that was voted on Saturday night.

What a wonderful thing our system is that a gambling amendment can be put on a national security bill. [Roll Eyes]

Here's one lawyer's take on it, who says he'll be surprised if the ban still exists in 3 or 4 years.

If Dagonee is reading this, I'm curious about the legalities of this. I mean, it doesn't appear to be an enforceable law. If the gaming sites and the banks are offshore, how exactly can the US government legislate against them? Would that then mean they'd be able to prevent US citizens from engaging in ecommerce with offshore agents?

Personally, I think that tying it to the port bill was a pretty scumbag move - but that's what we expect from politicians these days, isn't it?

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Dagonee
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quote:
If Dagonee is reading this, I'm curious about the legalities of this. I mean, it doesn't appear to be an enforceable law. If the gaming sites and the banks are offshore, how exactly can the US government legislate against them? Would that then mean they'd be able to prevent US citizens from engaging in ecommerce with offshore agents?
It's commerce with the U.S. - the federal government basically has plenary powers to regulate interstate and foreign commerce.

And "commerce" is a very broad term. If money changes hands, the definition is almost always met.

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FlyingCow
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I'm going to assume that a foreign bank cannot be told by the US government that it is banned from doing business with a gaming company.

I'm going to also assume that a US citizen can have an account in a foreign bank (since I have two).

If both of those assumptions are correct (which they may or may not be) then I don't see how this law really does anything other than force the demand to go underground for its supply.

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Dagonee
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It can ban foreign banks that do business in the U.S. from transferring money from U.S. citizens' accounts (or, at least, accounts that have deposits tracing the U.S.) to gaming companies.
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BlackBlade
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Part of the reason Native Americans are allowed to run casinos is because its a very good way to create revenue.

Online gambling certainly lowers the number of people who will visit a casino for their gambling needs.

Thats just a reason for why I could see native Americans being opposed to it.

Definately not a reason the government wants to stop it. I think Lupus was right on the money (no pun intended.)

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FlyingCow
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I guess, Dag, my specific question is whether it is legal to hold an offshore bank account and to use it for commerce.

If it is legal to use an offshore account for commerce, then is it legal for the US to regulate that commerce - since neither the bank nor company has any ties to the US? The owner of the money has ties to the US, but the bill does not target individuals, only banking/credit institutions.

This seems like a scary sounding bill that has enough loopholes to drive a mack truck through.

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Dagonee
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quote:
since neither the bank nor company has any ties to the US
That's not true. Both bank and company have customers in the U.S.
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FlyingCow
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So, if a company has a US customer, that means that the US government can tell them who they can and can't do business with? That seems like a lot of power to affect international trade.

Does that mean France can tell US banks not to deal with a US company, because those banks have french customers?

I'm very confused about this aspect of law. Where do our government's rights end and the rights of other governments begin? I didn't think that a foreign government could regulate US commerce, just as I didn't think a US government could regulate foreign commerce.

Does having customers from a country give that country the right to regulate that company? If so, does just one customer give jurisdiction or is there a set number?

The reason I ask is because the online banks are in a tizzy over this. Doyle's Room and Neteller are going "business as usual" and saying that the US government has no way of holding them to this new bill - they are offshore companies and do not have holdings or employees inside the US. On the flip side, PartyPoker has said it will suspend all US accounts as of a certain date and will do no more business with US customers.

It seems like very muddy waters, and the bill itself seems vague and unclear - specifically in that it does not address online banks or US users of foreign banks.

I suppose the next several months will see what shakes out, but in the mean time I'm totally lost.

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Sterling
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I suspect the better reason for such a ban is that there's really no easy way to regulate online gambling like there is the physical reality of a physical casino or a horse track (or a deck of cards or a horse, for that matter.)

If you find that your dealer is rigging the deck, but that deck exists only as a series of bits at 192.57.253.1, and only there for a heartbeat, what do ya do?

[ October 06, 2006, 04:25 AM: Message edited by: Sterling ]

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Lyrhawn
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Does the federal government regulate Indian reservation casinos? I'm pretty sure the answer is no, and if it is, I don't see how this is any different.

Two, how is the federal government really regulating ANYTHING online? If I buy a phony something or other through some nameless faceless seller on Ebay (who btw, may or may not even be in the country) is the federal government going to protect me? No, so why don't they ban online auction houses? or online retail? Yeah right, not with online retail jumping by the billions every year.

This kind of thing is almost better done through consumer regulation than anything else. Word of mouth is the best way to advertise for onling gaming houses, I firmly believe that. My brother plays all his online games at Ultimate Bet. He wins, and loses there, frequently (I'd say he about breaks even for the most part). All his friends play there too, after years of trying out different sites, and choosing to stay away from some for various reasons. For poker players anyway, they aren't stupid. They know when they are losing more than they are making, and many times they'll jump ship because of it.

The internet is the land of no regulation. Either ban it all, or let it all roam free. Shades of grey are silly.

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rivka
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quote:
Originally posted by Lyrhawn:
Does the federal government regulate Indian reservation casinos? I'm pretty sure the answer is no, and if it is, I don't see how this is any different.

No, because it's not interstate commerce, so it's under the purview of individual states (which certainly do regulate them). However, any online casino which does business with customers in multiple states is practicing interstate commerce. Voila, the federal government has the power to regulate.
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fugu13
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Indian reservation casinos also enjoy protections due to special status (a certain degree of independent sovereignty) in relation to the United States: http://www.racing.state.ny.us/indian/indian.html

For instance, the big Congressional act regarding Indian gaming

quote:
"provides that in the exercise of its sovereign rights, unless a tribe affirmatively elects to have State laws and State jurisdiction extend to tribal lands, the Congress will not unilaterally [sic] impose or allow State jurisdiction on Indian lands for the regulation of Indian gaming activities."
And they are federally regulated, its just a hands-off approach for reasons like the one above.
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Mig
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It is not accurate to say that Indian gaming is federally regulated. Indian tribes regulate themselves and independently run their casinos without day-to-day state or federal oversight.
Gaming is divided into three classes. Class I gaming is essentially traditional tribal games, Class II games are typical parimutuel games (horses, dogs, bingo, etc.), Class III gaming is what you usually assoiciate with casinos (slots, cards, roulette, etc.) Under 29 USC 2710 the Indian tribes have exclusive jurisdiction over Class I gaming. The same law sets forth standards for the Indian tribes self regulation, ie., stards relating to revenue allocation, audits, contracts, etc. If they meat this standards the tribe gets issued a certificate of self regulation. Thats it.

As for class III, the feds sets forth procedures for state compacts. The best way I can think to discribe the Fed's role in Class III, is to say that the federal government only regulates the relationships between the states and the tribes. The law requires that the tribes meet certain and the states negotiate state compacts for Class III. Typically these state compacts usually relate to ancillary issues, e.g., road improvements, emergency services, and other support issues, and the tribe could negotiate to be state-regulated.

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fugu13
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The very act of dividing up gambling into classes is regulating it [Smile] . Regulating does not mean prescribing every detail of how it something is done, it means setting up rules within which something must operate. The federal government has set up several rules under which indian gaming must operate, that you outline. That these rules are lenient does not make it unregulated, merely leniently or little regulated.

As I said, federal regulation of Indian gaming is hands-off.

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fugu13
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Furthermore, these are actual regulations and not reciprocation requirements (for instance, many schools can avoid most federal 'regulations' by not taking federal funds, since the federal government theoretically has little/no power to regulate education). Indian tribes cannot avoid these regulations. If there is gambling, that gambling must follow the (extremely loose) guidelines, period.
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FlyingCow
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quote:
If you find that your dealer is rigging the deck, but that deck exists only as a series of bits at 192.57.253.1, and only there for a heartbeat, what do ya do?
See, this is exactly the problem the online gaming bill will cause instead of prevent.

As it stands now, there are some very well known gaming sites on the web (PartyPoker, PokerStars, PokerRoom, Doyle's Room, FullTilt, ParadisePoker, etc). These are companies that have been around for a long time (some upwards of 10 years) that have independent auditors come in to check their randomness (fairness) of their mathematics, their security against cheating, their rake procedures, etc.

These are "legit" companies, in that they are very large and not "fly by night" operations. They rely on word of mouth and their respectability to make money. Trust me when I say that running a legit game with 5% rake and good word of mouth is far, far more profitable than running a rigged game or stealing people's money. The largest online poker website PartyPoker will apparently lose more than $6 billion just by closing its US operations - and all of that is just from taking 5% rake on pots over $1.

The thing is, by forcing these legitimate websites out of the US market, you are removing the supply without doing anything to curtail demand. People will still want to play real money online poker, and will turn to the "next best thing" - which are online sites that are not as legit as the big ones.

People will then be playing under the radar, looking for "backalley" online gaming sites that may or may not be around in a few months or a year. The legitimate auditing of the major international companies gone, the US gamers will be more likely to end up playing a "fly by night" operation.

Or, alternately, US players will seek real life games in far less secure environments (most people don't live within convenient driving distance of a casino).

What the government should have done is find a way to regulate and tax these sites. Take a percentage of all US credit card transactions or transactions with US banks. Allow federal oversight and certification by a governmental gaming board, which sites can advertise. Maybe only allow transactions to sites that have such certification.

There are many ways to increase the safety of online players, and banning the legitimate sites is not one of them.

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Mig
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I understand your point, and I think that you understand the relationship. I had lunch this afternoon with one of my colleagues who represents some gambling interests and a tribe and I asked him about the use of the word "regulation" to discribe the fed and state role. He said that technically you are right, and you could call it regulation if you want but that no tribal member or indian gaming official he knew would ever use the word to discribe the relationship because in the administrative law context regulation usually means more than what this entails. He said that if he ever refered to federal regulation of their casinos, the Indians would look at him funny and think he'd lost it.

For example Florida is about to start slot machine gambling at Broward County race tracks and jai alai frontons and the state and the paramutuel facilities have been trying to work out extensive regulations for these new casinos for everything from what types of machines they have to have to where they can place the ATM machines. State law also prohibits smoking inside these new casinos. But none of these new regulations, or the state's smoking ban can apply to the Indian casinos.

I don't know about the tribes and education federal loans.

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fugu13
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*nods*

I'm speaking regulation in a public policy/political economy context. They're probably speaking regulation in a gaming context (that is, in comparison to the rules imposed on non-Indian gaming).

And the education example wasn't anything to do with tribes. Any school system can avoid complying with many federal acts (including NCLB) by passing up federal money. The problem is, federal money is substantial enough, and state/local money usually tight enough, that that's not considered an option.

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BlueWizard
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I'm sure you are all familiar with Internet Only Banks. For example, Neteller.com is on on-line bank located in Isle of Man, Britian. Betfair.com is also located in Britian, and is a well established betting site. Now any American can sign up for a Neteller account and use Neteller as their standard bank; credit card, debit card, checking, savings, etc....

So, what is to prevent me from transferring money to my Neteller account and using that to gamble with. The bank is in the UK and the gambling establishment is in the UK. How is that any different than for me to personally going to the casinos of Monte Carlo or Rio or the UK and using that same Neteller Credit/Debit card to gamble? Even more so, what is to prevent me from using my credit/debit card from my local bank to gamble at casinos around the world on the assumption that I am personally at that geographic location?

Now I suppose they could try to block access from any IP address registered in the USA, but there are many many annonymous servers that for free or for a small monthly fee will hide your personal or ISP's IP number. Now, for all intent and purposes, I have separated myself from any contact with the USA. Functionally, I am not in the USA. I am in whatever country the annoymous server is in. (There used to be a really big one in Finland.)

So, functionally I am not in the USA, and I am transferring funds from a UK bank to a UK business. How is the USA government going to be able to stop that, or how can they regulate it in any way?

Further be aware that it is possible to send a bank check or presumably a money order to BetFair, they will deposit it into a gambling account, and you are free to gamble until your money runs out. Is congress going to try to prevent that too? And, if they are, exactly how are they going to prevent it?

Simple, without international cooperation and mutual agreement, they can not.

The thing that Congress keeps forgetting is that the Internet makes us all citizens of the world. I can make a friend in the UK, Africa, or South America just as easily as I can make a friend down the street. I can do business directly with funiture makers in Indonesia. I can purchase products directly from manufacturers in India. I can purchase products at stores on High Street or Main Street of virtually any city in the world.

And... how can Congress stop me? Answer: they can't.

Further and more importantly, if Congress mandates the ISP providers should block access to gambling sights, how is that not censorship? If they can legally block gambling sites, what is to stop the from blocking sites with information that they deem inappropriate for the sensitive eyes of Americans? Once that is done, what it to prevent them from blocking access to political and social opinions they don't agree with? When and where does it end? If you give them an inch they will surely take a mile, and if you give them a mile they will surely rob you of everything.

I have no doubt that this is a ploy to create some kind of economic advantage to people who have made huge political contributions to members of Congress. It is a way for Congress to earn the bribes that they have been paid. Sad, but, at least I feel, true.

Steve/BlueWizard

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