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Professor Rose explains the new UIGEA regs
The statute does create a new crime, being a gambling business that accepts money for an illegal transaction.
That’s not really good news. So any casino accepting US bets after that gets passed is going down a very risky path.
edit: ah just saw this
The most interesting part of the new rule, for me, is that unlicensed Internet gaming operators can set up business relations with U.S. financial institutions, if the operators “provide a reasoned legal opinion that it does not engage in restricted transactions.” That means if I, as a licensed attorney and an expert on gaming law, give a legal opinion that a gambling operator is not violating federal or state laws, that should be good enough.
really dodgy but good for us I guess.
There is so much opposition against this law. By the time Dec 1st 2009 (deadline for implementation) rolls around there will be very few people who actually favor this law.
“Rep. Barney Frank, D-Mass., has said he will seek to overturn the law, pointing out that even the most ardent fans of the regulations have said they will be difficult to interpret and enforce.”
Actually, the way I read this, it’s very good.
As already known:
Financial institutions are affected by the UIGEA. Operators and players aren’t.
Under the proposal:
* Credit card companies need to create a new code to replace 7995
* Banks are NOT required or asked to scrutinize individual transactions
* If Professor Rose, or any other legal entity deemed “reputable” says it isn’t gambling, then it isn’t gambling… LOL… and Professor Rose has already given a number of opinions stating that poker is not gambling.
* If a player uses an overseas credit card, there isn’t much they can do about it.
* If a player uses an overseas bank, there isn’t much they can do about it.
* If the funds pass through a correspondent bank, there isn’t much they can do about it.
* Checks, wire transfers, overseas financial processors (ie. Neteller) are okay.In other words, the Treasury Department had been asked to create impossible regulations – and they’ve not been able to do anything but say the above, which is practically no different from the status quo pre-UIGEA with the exception of a new CC transaction code.
I predict that if this is passed, it will be scrutinized VERY carefully by the software providers – because it in fact may give them enough confidence to RE-ENTER the US market.
The only better thing that could possibly happen would be for some law to strike down the UIGEA – but that would have minimal effect.
Of course I am not a lawyer and thus what I have posted above should be taken with a grain of salt and is in no way authoritative. And I haven’t read the actual proposed regulations, nor have I double-checked what Professor Rose said in his article. But I doubt I’ve missed too much.
* If a player uses an overseas credit card, there isn’t much they can do about it.
* If a player uses an overseas bank, there isn’t much they can do about it.Actually personal bank accounts are completely exempt from this mess. It applies only to commercial bank accounts opened in the USA.
*hopes like hell you guys are right*
@Stupid 186604 wrote:
Actually personal bank accounts are completely exempt from this mess. It applies only to commercial bank accounts opened in the USA.
I don’t believe this is entirely correct.
The regulations apparently say that a bank is not required to monitor individual transactions. It does not say that they *cannot* monitor an individual transaction, and thus are not actually exempted from anything. They certainly aren’t required to process your transaction.
Checks are okay because the bank cannot monitor them until they are presented, which is usually well after the fact. I do think it’s strange that wire transfers are ok (particularly as the Wire Act prevents this for the purposes of wagering, though this can be said to only apply to a sports wager).
In any case, the point I was trying to make is that a transaction through an overseas institution or processor is beyond their control. Most importantly, this means Neteller, which is domiciled in the Isle of Man, cannot be subjected to US regulations, provided they don’t use a bank in the US for processing their transactions.
Now – the question is – will a Neteller debit card work again in the US? Will Neteller even re-enter the US market?
*oops* – I meant Neovia, since Neteller changed its name on Tuesday.
Be that as it may Spear, we know from experience that even if the law doesn’t make something illegal, the US just go ahead and arrest people, nice and publically of course, on some trumped up charge simply to scare everyone else away. Worked like a charm before, would do again.
A new definition for the term “commercial customer” was added to the final rule in response to comments that suggested that the final rule should clarify that the regulation was focused on due diligence procedures relating to commercial customers, rather than consumer accounts.35 As noted above, other than for payment systems with a transaction coding functionality, the Agencies are suggesting that the efforts of participants in designated payment systems be focused on preventing restricted transactions primarily through due diligence on commercial customers. The Agencies have revised the provisions of the regulation to provide more clarity on this point. To facilitate this, a definition of the term “commercial customer” was added to the final rule.
And you can see that all regulations apply to and reffer to “commercial customers”.
Also:Several commenters suggested that the final rule should clarify the Agencies’ intent that the non-exclusive examples provided in the proposed rule were focused on relationships with commercial customers and not with respect to consumer accounts.65 The Agencies recognize the problems with designing and implementing procedures focused on consumer accounts. For example, except for card systems, a participant would generally not know the purpose of a consumer transaction and often the payee information on a transaction, such as a check, is not in automated form. In response to the comments requesting clarification on this point, as a general matter, the non-exclusive examples in §___.6 have been revised to make it clear in each instance that the policies and procedures to be implemented to prevent restricted transactions are with respect to commercial customer accounts only.
Now, we are not talking about credit cards, since they are coded, but other than UK-facing websites, no other online gambling website is using gambling-coded transactions.
This is one of the most important things, I believe, as people will continue to be able to cash their winning checks (granted they don’t bounce for insufficient funds)
Let me further elaborate:
Consumer accounts are not specifically exempted – rather, “commercial accounts” are being targeted and procedures only need be applied to commercial accounts.
This does not preclude the possibility that a consumer account can be used for commercial purposes. A consumer account is not specifically exempted – just not within the requirements.
The law always has a gray area – and this is clearly gray. You wouldn’t be targeted if you were making a deposit or receving winnings, or even affiliate earnings – but if your account was thought to be processing transactions, rightly or wrongly, a bank may determine that your account is being used for commercial purposes and thus apply the law according to its own interpretation.
Maybe it’s a question of semantics. “Exempt” to me means specifically excluded. I do not believe that, under this definition, a personal or consumer account is automatically exempt.
