WizardofEngland
WizardofEngland
Joined: Nov 2, 2010
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July 16th, 2011 at 3:08:42 PM permalink
For the benefit of myself and others in the UK, or people who just dont get it.

Can someone explain what black friday, the unlawful gaming law etc all means?
There seems to be a big mis-conception here that on-line poker is illegal in the US.
That stars and full tilt were siezed because poker is illegal (although I think its more about fraud).
Yet Bodog is still offering US poker, are they flauting the law? or are they legal through some sort of loophole?
And why are sites here, are not allowed to take US players? Surely a British business is not accountable under US law.
http://wizardofvegas.com/forum/off-topic/general/10042-woes-black-sheep-game-ii/#post151727
WizardofEngland
WizardofEngland
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July 16th, 2011 at 4:37:45 PM permalink
20 views, and no reply. You guys must be as clueless as the rest of the world then.
http://wizardofvegas.com/forum/off-topic/general/10042-woes-black-sheep-game-ii/#post151727
Nareed
Nareed
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July 16th, 2011 at 4:39:13 PM permalink
Quote: WizardofEngland

20 views, and no reply. You guys must be as clueless as the rest of the world then.



Yup.

As far as I know, "Black Friday" is the term used for the start of the Christmas shopping season in the US, starting the day after Thanksgiving. Sorry.
Donald Trump is a fucking criminal
matilda
matilda
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July 16th, 2011 at 5:01:05 PM permalink
I believe black friday was the last day that players could legally take money out of their casino accounts. The unlawful gaming act does not make gambling illegal, it makes it illegal for banks to be involved in the transfer of funds. The legality of the gambling itself is a matter for individual state law, not federal law.

If I am wrong about this, I am confident it will be pointed out by the smarter members of this forum.

Matilda
WizardofEngland
WizardofEngland
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July 16th, 2011 at 5:07:40 PM permalink
Quote: matilda

I believe black friday was the last day that players could legally take money out of their casino accounts. The unlawful gaming act does not make gambling illegal, it makes it illegal for banks to be involved in the transfer of funds. The legality of the gambling itself is a matter for individual state law, not federal law.

If I am wrong about this, I am confident it will be pointed out by the smarter members of this forum.

Matilda



I think your could be correct, but if banks cannot be used, how do bodog customers get money on and off the site?
http://wizardofvegas.com/forum/off-topic/general/10042-woes-black-sheep-game-ii/#post151727
matilda
matilda
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July 16th, 2011 at 5:09:40 PM permalink
I have no idea. Maybe the Wiz knows.
PerpetualNewbie
PerpetualNewbie
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July 16th, 2011 at 8:39:51 PM permalink
The Unlawful Internet Gambling Enforcement Act of 2006 is a piece of legislation that specifically makes the act of funding illegal gambling activities through the use of credit, electronic funds transfers (EFTs), check (or check-like instruments) or any other financial transaction. Of specific note, the UIGEA does not make the placing of wagers online any more or less illegal than it was previously.

Ever use the PocketCasino in Lagasse's Stadium in Vegas? These payment processes are legal because the gaming that it's being used to fund is legal in the state of Nevada. UIGEA is a federal law that only affects payments related to gaming that is already illegal by other statute.

The UIGEA specifically restricts itself from being applied to investing (anything governed by Securities Exchange Act (1934), including stocks, bonds, derivatives, etc.), Commodities trading, insurance (not the BJ variety), online banking with a FDIC-insured institution, non-cash-redeemable points (think POGO.com), fantasy sports (so long as the prizes are fixed and not deterministic on size of membership of the pool of players AND the outcome is not derived by either the score of the game or the statistics of an individual (think under/over bets on rebounds in a basketball game or yards run in a football game)), and transactions that fund gambling within or between Native American Tribal lands.

The term "Black Friday" (April 15, 2011) was meant as a tongue-in-cheek reference to "Black Thursday," October 29, 1929 when people's investment values vanished into thin air as the Great Depression began. The term came about because when the FBI raided the financial institutions and took control of the internet name spaces of 4 major players in online poker (PokerStars, Full Tilt Poker, AbsolutePoker, UltimateBet), people's online deposits with these institutions were frozen and made unavailable. In the end, PokerStars had proven that it had an independent financial backing for the deposits held in that system. When the light was shined on Full Tilt Poker, however, it was shown that they did not keep an independent accounting of the deposits on reserve (and not even a fractional reserve) and that there was drastically insufficient funds to pay off the run on the 'bank.' People have still not been paid from FullTilt.

There are 9 charges brought against the 11 defendants in the Black Friday indictment (United States vs. Scheinberg, Bitar, et al). The include:
  • UIGEA Conspiracy: The defendants knowingly attempted to present financial transactions meant for illegal gambling as something else. When a player made a deposit with a poker site, he never actually did business directly with that site. He engaged a payment processor who brokered funds between the player and the poker entity. This processor would make up all sorts of crap to tell to the issuing bank Credit Card/ACH account so that they would pay the processor. Golf Balls, Prepaid Calling Cards, bicycles, generic shopping sites were all used and often at the same time. A high-volume player making many deposits might have 5 transactions from 5 different processors in 5 different countries all in the same month. In turn, the processor took a cut and sent the payment to the poker site. That $ amount was reflected in the player's account and was used for poker playing. When the FBI was closing in and they couldn't get anyone to willingly play ball, they would find failing banks that were about to be taken over by the FDIC in a bank failure and offered them a way out of their failed state - by processing these illegal transactions
  • UIGEA - Pokerstars: Pokerstars is alleged to have, in fact, made or been a principal part of financial transactions for the purpose of online gambling
  • UIGEA - Full Tilt: Ditto, for Full Tilt
  • UIGEA - Absolute Poker: Ditto, for Absolute/UltimateBet
  • Operation of an Illegal Gambling Business - Pokerstars: The interesting part about this is that they cannot cite a Federal law that PS was in violation of. Instead, they reference a NY State law (this indictment is filed in the southern district of the state of NY)
  • Operation of an Illegal Gambling Business - Full Tilt: Ditto, for Full Tilt
  • Operation of an Illegal Gambling Business - Absolute: Ditto, for Absolute/UltimateBet
  • Conspiracy to Commit Bank and Wire Fraud - This charge discusses the details of the fraud entailed when lying about the nature of the transactions presented for payment
  • Money Laundering Conspiracy: This charge discusses the intent of processing financial transactions within and across the borders of the United States to fund an illegal activity


There is no Federal Law that makes online gambling illegal (save for the Federal Wire Act (1961) that made taking sports betting over the phone illegal). One could argue that the reason this indictment was brought in the Southern District of NY is that online gambling that's in competition of the city's off-site race books is illegal, increasing the likelihood of the UIGEA charges sticking. Poker advocates would go so far as to say that poker is a game of skill and not purely a game of chance, as Black Jack, Craps, Roulette, etc. are. This is still very much new ground in technology, public opinion/acceptance, regulation and law.

(editorial) I believe that Bodog was not affected in the roundup for a few reasons: First is, Bodog doesn't have the visibility that PS or FTP had. Their poker site only has a couple thousand people on it at any time. Who knows how many people are playing in the casino or on their sportsbook. There's no one screen that advertises "125,320 players!" like PS/FTP had. Secondly, Bodog made moved their internet preesence to a Top Level Domain (TLD) not controlled by American authorities. The proper address for Bodog is: https://www.bodog.eu. Even if they wanted to, the Americans can't touch this TLD and because online gaming is more accepted in Europe, it's unlikely that their .eu domain will be confiscated. Lastly, after UIGEA was passed, Bodog's former principal, Calvin Ayre, sold off the operations of the Mohawk/Kahnawake Native Canadians (? What's the PC term for "Indians" in Canada, eh?) Because of the affiliation with native peoples - with which the US has had a history of being laissez faire about when it came to gambling - it might have been politically advantageous to leave them out of the which hunt.

To your last question - if a British business or citizen processes a payment from an American intended for the purposes of an illegal gaming activity, he would be in violation of the UIGEA and potentially money laundering and/or bank & wire fraud as well. What we (as Americans) are going to do about it is another matter, entirely.

Some more reading material:
Wikipedia Article on UIGEA
UIGEA of 2006 text
US Dept. of Justice indictment of poker principals
whatme
whatme
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July 16th, 2011 at 11:49:38 PM permalink
Black Friday is the day after Thanksgiving, It is the day that retailers turn a profit for the year. As for it beeing the busiest sales day of the year that is a diffrent story. Black in business is a profit, Red is a loss.
WizardofEngland
WizardofEngland
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July 17th, 2011 at 3:59:09 AM permalink
Wow, thanks for the amazing reply Newbie. That was just what I was looking for, it makes a lot of sense (or sorts). But I will never understand why, here gambling is legal and non-taxed, health care is free, but we survive. Are the US government just greedy? or are the UK government too soft?
http://wizardofvegas.com/forum/off-topic/general/10042-woes-black-sheep-game-ii/#post151727
PerpetualNewbie
PerpetualNewbie
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July 17th, 2011 at 9:07:12 AM permalink
I think that, right now, internet gaming is still in its infancy - perhaps moreso in the States than in UK/EuroLand. The nuances of American law - gaming has always been a State's rights issue, except for very few exceptions - might keep us a couple of ticks behind you folks on that side of the Pond. As I said somewhere in that big post above, there is no federal law against gambling online. For that indictment, the government will need to convince a jury that a company in the Caribbean or British Isles taking bets from an American in Houston is somehow in violation of New York state law (counts 4-6). Further, the government will need to convince said jury that payments processed on behalf of these companies were to fund illegal gambling. Reading the indictment, I don't see how counts 1-4 can stick if counts 5-7 don't. If the actual gambling that took place was not illegal, how can the processing of funds (and only the processing of funds for these counts) be considered against a law that is predicated on the intent of said funds? That said, I think they will get nailed to the wall on counts 8-9. And, just like the mob bosses of 80 years ago, you'll see big headlines "POKER SITES CONVICTED," but they'll conveniently leave out that they got off on all but the most technical of charges.

The fact that this form of entertainment directly competes with established American gaming companies (Harrahs/CET, Sands, MGM Resorts, etc.) that are well connected, well-funded and are currently getting 0% of this action isn't helping any. If I were to place a prop bet in the future of American e-Gaming, I would expect that you'd see 1-2 of the better accepted e-gaming platforms licensed and branded by 1-2 of the big American companies and put to market on a state-by-state basis. Some states will adopt this, others won't. Just like you can't gamble in Utah or Hawaii, today. I wouldn't expect that to change.

There is also an issue of taxing 'large' gambling winnings. If I win a large enough poker tournament or hit a big enough slot/VP win, the house *will* keep a certain percentage and report it on a W-2G (Gambling-related Income tax form). This is not currently done in today's version of online gaming. I imagine that any solution that brings e-Gaming to the States will require a transparency to American (whether federally or state-by-state, I don't know) tax authorities to ensure that they get their cut, too.

Anyway, just my humble thoughts.

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