Wednesday, October 25, 2006

Congress has passed a provision outlawing payments to Internet gambling
sites by banks and credit card companies. Congress approved a bill to
bolster port security Sept. 30, and attached to this "must-pass" bill is a
special provision that would make it illegal for credit card companies and
banks to transfer funds to online gambling companies. The law has been
described as a "must-pass" after the controversy over a Dubai-based company
controlling some of the country's major ports. Internet gambling has long
been a target of conservatives and, in particular, Republican Majority
Leader Bill Frist of Tennessee. The House passed a similar provision earlier
this year, but the measure stalled in the Senate where Frist supported it.
The bill is currently awaiting President George W. Bush's signature. Bush is
not expected to veto the measure. "I think this is just a smokescreen
because they're afraid of the backlash," senior Jason Rose said. "Instead of
just coming out and passing a law that makes it illegal for anyone under 21
to gamble, they stick it on this port bill because they're scared." In fact,
Internet gambling has been a target of Congressional conservatives for some
time now. Similar measures have been proposed and passed but have always hit
roadblocks in the past. As of late July this year, the House passed a
provision that would have banned online gambling, but the Senate rejected
it. While the bill would make it more difficult for people to gamble online,
there are ways around the restrictions imposed by the bill. Credit card
companies and banks are banned from making direct payments to gambling Web
sites, but services such as the popular NETeller are not expected to be
impacted as of now. The company provides a money transfer service.

It is doubtful that the United States will ever be successful in outlawing
Internet gambling, especially under pressure from the World Trade
Organization (WTO). The WTO has instructed the United States to refrain from
blocking players in the country to use the mostly Antigua-based gambling
sites, located around the Dominican Republic and Puerto Rico.

Most of the companies associated with the industry are based off shore and
thus are exempt from U.S. regulations and laws. This includes both gambling
Web sites and money transfer sites, causing the new legislation to have a
minimum impact on the online gambling business.

"Why should NETeller comply with U.S. regulations?" professor I. Nelson
Rose, author and a leading expert on gambling law, asked. "The U.S. and
state Attorneys General can get court orders preventing ISPs [Internet
Service Providers] from hosting sites that transfer money, but NETeller is
not hosted by a U.S. server. Foreign nations are not usually required to
enforce U.S. injunctions."

It seems that while the bill will make it harder for more casual gamblers to
place their bets online, the majority of more seasoned players will remain
unaffected and any who so desire can still gamble by signing up for one of
these money transfer sites.