White House Gives Banks One Year To Stop Online Gambling Transactions, Despite Protests

from the pushing-through-bad-rules dept

Wed, Nov 12th 2008 4:52pm — Mike Masnick

Despite significant questions from other elected officials about the plan, the White House has, in fact, approved new regulations requiring banks to stop any financial transactions dealing with online gambling. They've given banks one year to figure out a way to deal with it -- which hopefully gives Congress enough time to change the law.

The regulations make little sense for a variety of reasons:

It's still not clear why online gambling should be made totally illegal, rather than simply regulated, like in many countries.
It makes no sense to put the burden and liability on financial institutions to figure out what transactions involve online gambling.
It makes even less sense to dump this on banks right now, especially as many are struggling merely to survive in this financial climate. Adding an extra burden of making them figure out if every transaction involves online gambling seems unnecessary (and perhaps unusual).
Congress had asked the White House for more time to explore the impact of these regulations, but the White House used a lobbyist to aggressively push for these regulations to be put in place as quickly as possible.

Congress and the new administration will hopefully take up this issue next year, and remove this unnecessary burden from banks before it was set to go into effect.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: enforcement, online gambling

27 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Dionysus444, 12 Nov 2008 @ 6:04pm

Online Gambling
There are 2 aspects to this. Online poker sites, and offshore gambling sites.

According to Bush, the poker sites are all funding terrorism, maybe some are, but I won't go there, I'll just stick to the offshore... And target a particular industry, horse racing.

Offshore sites have almost 0 overhead, so they can afford to only take 5-10% out of every dollar that gets bet. They pay a couple people in a call center, a janitor, some admin, and a few IT people to maintain servers/code, the rest, is a nice big profit. Also of note, some of these offshore gambling sites do not even pay for the product, instead rebroadcasting an effectively stolen product for profit.

Now compare this to a racetrack. Racetracks have takeouts anywhere from 7-30%, but the money is re-distributed a little more. Half of the take-out goes to pay for the physical building, the teller/cashier, admin staff, maintanence staff, janitorial staff, cooks, servers, etc, etc, with a bit of profit left over. The other half goes to the horseman for racing in the form of a purse, this goes to pay for the stabling, the training, the feeding, the grooming, breeding, etc of the horse. In any given state/province, a racetrack can directly or indirectly create 30000 jobs, or even much more than that. These jobs are currently in trouble at MANY different race-tracks.

Now you tell me, would you, as a government, want to support a technology that creates dozens of jobs but destroys a business that creates 10s of thousands?

Oh, and if you think 10-30% is a high takeout, check your local lotteries and casinos, 30% will seem low after that...
[ link to this | view in chronology ]
James (profile), 12 Nov 2008 @ 6:25pm

Burden?
I work for a credit card processing company. We know exactly who our gambling sites are, and porn sites. To say it is a burden to figure it out is silly.
[ link to this | view in chronology ]
- Anonymous Coward, 12 Nov 2008 @ 7:02pm
  
  Re: Burden?
  So if I were to ask you to list every single online gambling and porn site in EXISTANCE then you could just open up a little file and say here they are? And this list is kept up to date with every single site that comes online that contains this content? This list knows the transaction ID that shows up to the banks? I also assume some sites probably use paypal, so this list can help banks know when a customer is using paypal or some other paypal like site to then forward money to an online gambling site?
  [ link to this | view in chronology ]
  - Dionysus444, 12 Nov 2008 @ 7:41pm
    
    Re: Re: Burden?
    Hes not saying there IS a list, hes simply saying its easy to tell which sites are gambling/porn sites by the number and value of the transactions they are involved in. To compile a list would probably be fairly easy, however, it may also break a companies privacy policy to compile a list such as that.
    
    This is not as cut and dry as a list, you have to remember how often this list would need to be updated as these sites can simply re-incorporate under whatever name they want whenever they want.
    [ link to this | view in chronology ]
ECA (profile), 12 Nov 2008 @ 6:29pm

WTO
Yes, this is going to be fun..
You have even posted comments from the WTO, about the USA NOT having ONLINE gambling..
to the POINT the WTo has FINED the USA for not allowing ONLINE gambling..And those other countries can STILL bring case against the USA for NOT allowing it..
[ link to this | view in chronology ]
Allen (profile), 12 Nov 2008 @ 7:36pm

The larger problems are too hard or simply cant be solved before the next election.

If they don't go after things like on line gambling then they might not have any accomplishments to thrust at an impatient electorate.
[ link to this | view in chronology ]
Little Bopper, 12 Nov 2008 @ 7:43pm

RE: Anonymous Coward
Actually what you asked for can be given, just not by any one company. I have a Credit Card Processing company and we know the details of every transaction every client does. We know from who, to who and the depositing bank. If each credit card processing company, every bank that issues a card wanted to, thy could stop every transaction for any specified purpous such as pizza, or cellphones. Online gambling is one of the easiest things to track. before we allow you to process, we have to have all the details of each type of transaction you intend to process and the discriptor ID. If we look at what you have attatched a descriptor ID to and its for a deposit into a gambling site, we can and do deny you an account. Its that easy. Dont be fooled. Everytime you use a card for a purchase, it is tracked and can be, and might be, monitored. Welcome to the digital age.
[ link to this | view in chronology ]
- klins, 16 Jun 2010 @ 2:25pm
  
  help
  I deposited 200 with my debit card and my statement shows full tilf poker, I decide to chargeback but i told the bank I did deposit that but wanted to be chargeback because I am not sastify with it. I told her is an online gambling site, will I get in trouble?? what else should I do?
  [ link to this | view in chronology ]
charlie potatoes, 12 Nov 2008 @ 8:50pm

last gasp of the dying neocons
Our white trash president at work. He stings like a dead wasp. Hopefully our new president will override every payoff riddled executive decree the miserable pretender foisted off on us. The clock is ticking.
[ link to this | view in chronology ]
Dennis Sieczkowski, 12 Nov 2008 @ 11:46pm

Online Gambling
The issues at hand here with the whole online gambling thing are rooted far deeper than most people care to consider. I don't normally comment on this type of rubbish, but feel so inclined to do so now.

Let's pretend I'm Joe Schmoe, and I make my living by ripping people off.

That bieng said...I just found a texas hold'em site that will give me a 100.00 dollar credit just for signing up. The only thing I need is a valid checking account. So I run down to my closest bank and open up a checking account. With my new checking account, I go online and sign up for a new account, and recieve my 100.00 free US dollars to gamble with however I see fit.

If I win big, I don't bother the checking account that I just opened up the day before.

But if I LOSE, I go down to the bank the very next day and close the account. When the collecting party tries to get COLLECT the debt....bad news.....no such account exists.

Online gambling should be illegal (in my opinion), simply because the internet makes it far too easy for dishonest people to be dishonest.
[ link to this | view in chronology ]
- Anonymous Coward, 13 Nov 2008 @ 5:16am
  
  Re: Online Gambling
  It does not work that way. The $100 they give you is a credit on THEIR system. They never put the money in your account. And you can't withdraw it until you have made a certain number of wagers.
  [ link to this | view in chronology ]
- Justin Hemphill, 13 Nov 2008 @ 8:42am
  
  Re: Online Gambling
  You've obviously not played much online poker. It's usually a bit more difficult than that to acquire a sites bonus. And you haven't been able to use a checking account to access poker sites in a long time.
  
  There are 100's of ways to get your money to/from the websites. And no one is going to be able to maintain a list of all the different ways to do it. For one reason. They don't all fall under the umbrella of control of one country or one set of laws.
  
  For every one that has been stopped in the last year, another two have replaced it. And the poker sites aren't stupid. They switch their providers just as fast.
  
  I don't have to touch my bank account (except my local ATM machine) in order to put money on any number online poker sites. Once it's in cash form, you can't track it without implementing some new functionality in the system. What are they going to do, require me to tell them what I'm using the cash for before they allow me to have it?
  
  Cash -> Money Order -> any 1 of 1000's of online payment processing sites that are used for a million things besides poker as well.
  [ link to this | view in chronology ]
- billy, 17 Feb 2009 @ 2:04am
  
  Re: Online Gambling
  with that line of thinking, would not the stock market be outlawed. when was the last time someone bought stock and received the certificate in hand after purchase?
  [ link to this | view in chronology ]
mike allen, 13 Nov 2008 @ 2:54am

it is not illegal
It is not illegal in Europe UK and many other countries here in the UK many sites are ran by the licensed industry, Betting shops and casinos for example but and i think it was covered in techdirt a CEO just happened to land in the USA and got arrested for running a legal licensed in the UK business. USA prohibition never worked remember Al Capone and others.
[ link to this | view in chronology ]
BoDeeDoe, 13 Nov 2008 @ 4:30am

privacy
This is a blatant invasion of privacy. This is just another device being used to monitor and control people. We have already handed trillions of dollars over to the FED, a private banking cartel, and given them governmental powers. Now we're giving them the authority to police our bills and control what we are doing on the internet in the guise of controling internet gambling? Big brother on steroids if you ask me. IT IS NONE OF YOUR DAM BUSINESS WHAT OTHER PEOPLE DO IN THE PRIVACY OF THEIR HOME! LEAVE US THE HELL ALONE!
[ link to this | view in chronology ]
Tony Soprano, 13 Nov 2008 @ 5:08am

My online gambling site logs transactions as phone card sales, my bank didn't have any problems with that. Now, which phone card sale charges are legit, and which are hiding gambling? Can your card processing company figure that out? Can your card processing company figure out that the cigars I'm buying from Switzerland are Cuban and not Dominican? I don't think so. On the racetrack issue, if the racetrack goes out of business, then there are no races to gamble on, so in some manner or other, the racetracks will continue. What we're seeing is a consolidation. While there used to be tons of tracks, because betting was limited to the local area, now that there are TV simulcasts and global coverage, there simply isn't the need for so many racetracks, and many have gone out of business because the market simply can't support them. The major ones will still operate just fine. The main thing I use online gambling for is a sportsbook. I live in a state where gambling is legal, yet I can't legally place a bet on a football game. That's ridiculous. The majority of folks then go to organized crime rather than a regulated online sportsbook to place their bets. Which is worse?
[ link to this | view in chronology ]
Anonymous Coward, 13 Nov 2008 @ 5:19am

Any bets that this law will stick? Oops, did I just gamble online?
[ link to this | view in chronology ]
Anonymous Coward, 13 Nov 2008 @ 6:11am

"It makes even less sense to dump this on banks right now, especially as many are struggling merely to survive in this financial climate. Adding an extra burden of making them figure out if every transaction involves online gambling seems unnecessary (and perhaps unusual)."

It makes little sense for a country but plenty of sense for a political party who is bitter to try and sabotage the incoming POTUS by undermining the banking system.
I know it sounds conspiratorial, but it really DOES make sense that, after loosing both House and Senate, and now the Presidency, the GOP is doing what it can to ensure that it will be fighting fit in 4 years.
No matter the cost.
[ link to this | view in chronology ]
mdmadph (profile), 13 Nov 2008 @ 8:14am

Why make it illegal and not just regulate it? Because it's a sin!!

Seriously, quite a few decisions are still made in American with regard to religion. Not necessarily _controlled_ by religion, but definitely made with the religious voting block in mind.

You see, Iran and the US have more in common than everyone thought!
[ link to this | view in chronology ]
Anonymous Coward, 13 Nov 2008 @ 8:14am

RE: #15
And I'm sure the GOP is conspiring with aliens too. You can't possibly be serious with that accusation, you are going to try to pre-emptively blame the Bush administration for the possiblity that Obama's administration wont be able to put the economy back on track?

Bush has been trying to ban online gambling for a long time, in fact gambling has always been a social issue for the GOP. The Republicans are morally opposed to gambling and fight any expansion of gambling at every opportunity. This isn't Bush trying to harm, control or otherwise regulate the banking industry, this is Bush trying to shrink the gambling industry.
[ link to this | view in chronology ]
- nasch, 13 Nov 2008 @ 9:52am
  
  Re: RE: #15
  They're morally opposed to gambling all right. Unless it's locally at a horse track. Or a dog track. Or it's a state lottery. Or a casino. OK, they're PARTLY morally opposed to gambling.
  [ link to this | view in chronology ]
Anon Cow, 13 Nov 2008 @ 5:26pm

The funny part about taxing gambling is that all table games favor the house. If everyone was taxed on their winnings and loses, the net effect on personal income tax would be a reduction while the corporate tax would stay the same.
[ link to this | view in chronology ]
Ginger Snyder, 14 Nov 2008 @ 7:52am

UIGEA what a joke
The entire ban is based on control. It is a violation of my first amendment rights. It is my money, why cant I spnd it the way I want. If the government wants to tax me for my einnings that is fine, but to actually ban me from playing because hey dont receive the profits is a complete control issue. I play with skill it has taken me years to develop skills so I can win. Dont these Senators and Congressmen have anything better to do than mess with something they know nothing about. And why would they lay this off on the banks. I dont have to use American banks, I can still go get money orders and send them to Costa Rica, they wont stop me, just make it more difficult. The real beef is they arent and wont make the money off the illegal gambling. Lately, the United States makes you wont to go live in another country. I never thought I would say that. If I dont have the freedoms I used to have I wil seriously consider moving to another country. With the masive recession and no liberties what do we actually have anymore anyway. When people start thinking other countries might be better, and the US is going down the toilet, Canada looks really good right now.
[ link to this | view in chronology ]
- Gary Krupa, 18 Sep 2013 @ 11:14am
  
  Re: UIGEA what a joke
  I was planning to use my backgammon skill to make money online at specialized casino sites. Then I found out that banks in the US are prohibited from processing online gambling transactions. So now I don't see a way of playing for real money unless I move to another country. DAMN!
  
  The US is run by control freaks and those with a holier-than-thou mentality. If my wife didn't insist that we live here to be closer to relatives, I'd have left a long time ago.
  [ link to this | view in chronology ]
D, 30 Nov 2008 @ 2:00pm

internet gambling
Make Internet gambling ILLEGAL and shut the companies DOWN!!!!
[ link to this | view in chronology ]
Sportsbook Review, 3 May 2009 @ 2:38am

bank gambling
Banks cannot stop these transactions. Not without infringing upon the rights of their customers! Sportsbook Review
[ link to this | view in chronology ]
fred, 25 Aug 2010 @ 2:34pm

Stop Internet Gambling!!
If you do not think internet Gambling is not fixed then you have a screw loose! Blackjack is set with odds like a slot machine and any card can be pulled at anytime! they say itis a random six deck show because there os no way to audit! all these companies are fraud and I hope they all burn in hell!

CHARGEBACK THE HELL OUT OF THEM UNTIL THEY GO OUT OF BUSINESS! GEORGE BUSH WAS PROTECTING AMERICANS BY SIGNING THE LAW! YOU DON'T WIN IN ONLINE CASINOS AND IF YOU DO ITS JUST A MATTER OF TIME BEFORE THE BANKRUPT YOU!
[ link to this | view in chronology ]