It is a tossup which task would be harder -- developing a U.S. exit strategy from Iraq or deciphering all of yesterday's fallout from Congress' attempt to throw up a few roadblocks to online gambling. I'm going to try to tackle the latter, even though I'm sure I will not provide anywhere near a complete picture.
First, the so-called online gambling "ban" isn't a ban. The act passed last week does not address the act of players wagering online. Instead, it simply attempts to curb such activity by making it more difficult to fund accounts, and by requiring ISPs to block access to online gambling sites. But as the impact of this act continues to shake out, the first requirement is filled with so many loopholes as to be rendered meaningless, while the second is by all accounts impossible to enforce.
Some players will indeed find it more difficult to fund their accounts, particularly if they currently do so via credit cards or electronic fund transfers. However, the bill's language strictly defines the prohibited transactions to be between U.S. residents and gambling sites. Services such as Neteller and Firepay, which act as middle men between the banks and gaming sites, appear to be unaffected. However, an even larger loophole is
language in the bill that exempts checks from the ban. Banks had protested applying the ban to checks because compliance with such a requirement would have been extremely costly and/or impossible, since each individual check would have to be inspected manually.
Now, these financial prohibitions will certainly hurt business for the poker sites, because they will require players to jump through a few extra hoops to get their money into play. Having worked with the public to solve technical issues in the past, I know that many people will give up rather than attempt to learn something new, and I also know that quite a large number of people will be suspicious of giving bank account information to services such as Neteller. And we all know that Americans are wholly motivated by instant gratification, so waiting for a check to be delivered overseas to fund an account will be almost entirely out of the question. The true test of whether this law will have much long-term impact will lie in the status of so-called "e-checks." I personally do not know whether these would count as checks or EFTs, and I can find no clarification of that issue. But if e-checks will be allowed, then there will have been virtually no impact on Americans' ability to fund their accounts instantly.
As for the requirement for ISPs to block access to gaming sites, that provision, I believe, is meaningless. Technology moves much faster than either legislation or bureaucracy, and I am certain that the gaming sites will have 10,000 workarounds ready before the first site is blocked. Beyond that, it seems evident that the ban is an unconstitutional prior restraint on free speech and free press guarantees in the First Amendment that will ultimately be overturned by the courts, at least once someone challenges it.
Now, those are the theoretical implications of the act, but more pressing are the practical effects, which we began to first see yesterday. First, Party Poker and 888 (Pacific Poker) announced that they will be pulling out of the U.S. market. Pokerstars and Pokerroom have issued statements that they are still determining what action to take, which leads me to believe that the likelihood of them following Party and Pacific's actions is about 75 percent. Others, however, have announced that they plan to continue to serve U.S. customers. Those sites include:
Full Tilt Poker
Ultimate Bet
Absolute Poker
Paradise Poker
Bugsy's Club
I am certain there are more, but I've not personally seen them yet. Some sites are even viewing the pullout of Party and Pacific as an opportunity to capture players.
Absolute Poker started offering a five-time reload bonus this week, allowing players to get up to $300 in reload bonuses each day for the next five days.
All in all, I think history will look back on this period not as the Death of Online Gambling, but as the Great Hiccup of 2006. Yes, there will be a short-term decline that could drive some smaller sites under, and the panic-driven actions of Party and Pacific, I believe, have probably doomed those companies to shadows of their former selves. But online gambling in general, and online poker in particular, appear to have taken a licking, but they're going to keep on ticking.
