Tuesday, October 03, 2006

Congress Passes Bill Banning Online Gambling

$8 billion: The amount wiped off the value of online gambling shares on Monday after the U.S. Congress passed legislation to ban Internet gaming.

Not since the cancellation of Seinfeld have I cried so much over a news story.

I heard "the news" last night after returning home from a poker-plagued weekend in Denver. There, I was surrounded by a bunch of poker fanatics, even a few professionals. After talking poker for 3 straight days & taking 2nd place in a tournament with these studs, I was finally getting the poker itch back - this after playing virtually every single day the last 4 years before burning out this summer. But this time I was ready to up-the-stakes with my newfound enthusiasm.

Then the bombshell...

Congress yesterday passed a law banning the use of credit cards, checks and electronic fund transfers for Internet gaming basically making it impossible for American citizens to gamble online. We’re not just talking poker, but all forms of internet gambling excluding horse racing. President Bush is expected to sign the Unlawful Internet Gambling Enforcement Act in a few weeks.

I discussed the hypocrisy when the bill was originally proposed in the House back in July. But not one single person, including myself, took the bill seriously! Thus, the surprise passage threw the online gambling industry into a tailspin Monday. Shares of publicly traded companies PartyGaming, Sportingbet and 888 Holdings tumbled in heavy trading on the London Stock Exchange, wiping out nearly $8 billion in market value. The companies immediately announced they would stop taking bets from the millions of active U.S. customers as soon as Bush signs the proposed law.

This news hurts a lot of people: investors saw 50% of their investment sliced in one day, professional online gamblers saw their career ripped away, and the online gaming companies saw the majority of their players banned. Is this fair?

It reminds me of the city-wide smoking ban in my hometown of Madison, Wisconsin. Many of the affected bars & restaurants never recovered after the ban took effect. Should they have seen this coming? The government is essentially telling us what we can & cannot do in our private time. Alcohol good, smoking bad. Lotteries & horse racing good, poker & sports gambling bad.

Don’t panic yet. Many poker players are already preparing for ways to skirt around the law. Setting up offshore bank accounts may be a way to continue gambling online through these foreign websites. The gaming sites themselves are also going to offer gold & silver as an alternative to paying out in cash…

Remember how the music industry reacted too slowly to the mp3 revolution? If they would have embraced the technology instead of resisting it, both record labels & artists would be in much better shape today. In this instance, if the government would have learned to tax & regulate online gambling, both gamblers and the government would be happy.

(To sign an online petition against this ban, click here)

5 Comments:

At 6:38 AM, Blogger Eric Bergen said...

There is hope! It appears that outlawing online gambling violates the US agreements with the WTO. We better get a Democrat in office soon

 
At 11:15 AM, Blogger CSG said...

Hey, thanks for dropping by my blog with some advice. It does seem that there are quite a few loopholes in the law, but it strikes me as incredibly silly to make people jump through hoops to make a living. Oh well. Hopefully the impeachment proceedings start soon after the Dems sweep the mid-term elections.

 
At 12:24 PM, Blogger Kerwin said...

Congress was within their power but your idea to tax and inflate may also has had merit. It would still be protectionism.

The WTO is an unconstitutional organization as the federal government has no legal power to give other organizations their power to judge, legislate, or execute the laws of the U.S.

The Dems favor the U.N. which detests the WTO so looking to them may not be any help on this issue. The corporatists are mainly Republicans.

 
At 10:25 PM, Blogger Easy E said...

Thanks for stopping by, Eric! I signed the petition. Too much government is rarely a good thing.

 
At 7:29 PM, Blogger Eric Bergen said...

Bodog's vague response:

Thank you for contacting Bodog Customer Service regarding your
question. We are aware of the recent Internet gambling legislation passed by the U.S. This bill still has to be passed by the executive branch of government before it is enacted
into law.

Regardless of the outcome this time, the online gambling industry will continue to
flourish and Bodog.com will remain at the front and center of this
digital entertainment industry for years to come.

You should take comfort in knowing that Bodog.com is well situated to
adapt to any change in the legislative environment. Bodog.com considers online gambling to be legal under international law and complies with the laws within all of its jurisdictions where it carries out its operations.

We would encourage you to consult a legal expert to ensure that you are properly informed about local, state and federal laws with respect to online gambling.

You may care to know that Bodog.com has been in business for more than 10 years and was the first online gambling operation licensed in Costa Rica. Bodog.com is now also licensed in Kahnawake and by the government of the United Kingdom.

Bodog.com is committed to openness and transparency, and we thank you
for taking the time to write to us. Should you have any further questions, please don't hesitate to contact us at any time.

Our highest priority is to offer you a safe and enjoyable wagering
environment.

Please note that we are committed into ensuring that our clients' funds are safe and secure and should President Bush sign the new law into effect, there is still a 270 grace period for the banks to comply to the new law. This gives us ample time to explore alternative methods in addition to the contingency plans Bodog already has in place.

 

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