Understandably, most people are in a state of despair and hopelessness right now over what happened a week ago today. However, all may not be lost.

I listened carefully to episode 168 (the "Black Friday" episode) of the PokerCast. Several of the guests, especially Todd Terry, were pessimistic about the prospects for legalization in the wake of the DOJ indictments. (I believe Todd's exact words were internet poker legalization would "never" occur in the United States - which was quickly modified to "not in the next ten years" - since a lot of things would have to fall into place in order for legalization and regulation to occur.) I'm not going to dispute Todd's gloomy assessment since he is much more astute than I am on such matters and he has direct courtroom experience.

Be that as it may, but there was one other highly knowledgable and well informed guest on the program who offered a ray of hope. If you listen very carefully to the segment with Professor I. Nelson Rose, there is a point where professor Rose asserts that "Prohibition is not regulation" and goes on to point out that there is an unmet demand for a service that is not being provided to a large pool of American poker players. Are American poker players going to quit playing online poker? Professor Rose doesn't think so and he goes on to point out that "foreign nationals, using foreign banks, foreign credit cards and [foreign] payment processors with no physical connection to the United States whatsoever ..." will spring up to fill the void. According to Professor Rose, there will be little that the United States Government (or the DOJ) can do to stop it. What Professor Rose seems to be saying is that the U.S. banking system can be totally bypassed, although I imagine it will be more expensive for "foreign" poker sites (and "foreign" banks) to service the U.S. market. (I suppose this explains why Poker Stars and Full Tilt used the American banking system for cash outs to their American players - it was cheaper.)

If what Professor Rose seemed to be intimating is essentially correct, then this puts our lawmakers (and the DOJ) in a bit of a quandary. (This may also spell trouble for the AGA and the land based U.S. brick and mortar operators here in the United States.) To wit, if Congress doesn't move (and fairly soon) to legalize and regulate internet poker in the United States, our lawmakers may wake up to find new "foreign" poker sites and banks rising to take the place of Poker Stars and Full Tilt. I suspect the AGA and their brick and mortar gaming company members are well aware of this possibility and will be pressing hard to inform members of Congress that this "problem" isn't going away. The brick and mortars also have a tremendous financial incentive for seeing legalization occur, (especially with their primary competition now essentially liquidated), so they should be highly motivated to try and make something happen.

I suppose Professor Rose could be mistaken about foreign operators being able to totally bypass the U.S. banking system. I don't know if that is in fact possible, but I'm not an expert and I certainly know a lot less about the law (and the gaming industry) than Professor Rose. What I do know is that if all this informed speculation is essentially correct, then the clock may be ticking on our lawmakers. If they don't move to make internet poker legal and regulated, they may lose any possibility of ever collecting the tax revenue. Further inaction could result in a lost opportunity. Professor Rose correctly points out that something very similar to this was tried with prohibition - and we all know how that worked out.

The outlook is gloomy and depressing right now, but maybe there is hope after all.

Former DJ

maybe you should go back to DJing. It seems you have too much time on your hands making all these threads

Lawmakers better hurry up and regulate poker or else. . . =/

Good read, as usual. I really don't see something happening within at least 1 year. That time frame even seems way too optimistic given how much has to be worked out and the rate at which the legal system operates.

Keyser112:

You're right of course, but Professor Rose's point is that our elected representatives may not have forever to contemplate legislation and move at their usual glacial pace. If overseas "foreign" operators see an opportunity to make serious money, I don't think they'll be sitting on their duffs for very long.

Former DJ

Way to criticise a well thought out and informative post... why don't you go back under the bridge and collect tolls from the peasants.

I would rather use the foreign banking channels than allow (my country) USA to recieve one dime of legalized poker revenue, not after the way they handled things, both in 2006 and present. Afterall i never have reloaded and I am willing to pay a premium on my withdrawals.

Not to worry. It's all going exactly as planned. The big U.S. gaming corporations have gotten the DoJ to knock out the foreign competition (that had several years' head start and a huge and loyal following) in one stroke.

Now all that remains is to decide how they want the new online poker law to read and spread around enough money to ensure quick passage.

You probably won't be playing at Stars or FT, but it won't be long until you'll be playing online once again, licensed, regulated, and taxed, with exceptionally easy money transfer and backup withholding sent directly to the IRS.

Thats a pretty picture you paint, fit right in sync with how the US undermines to its benefit around the world. There is the majority public vote at large that feels gambling shouldnt be legalized.

Of course they won't keep people from playing. We can still play today. They just knocked out the top sites. They created a vacuum and it will get filled if they don't fill it with regulation.

The thing is we need a site that learns from the mistakes. If they do create a system that's entirely based on foreign banking systems then it seems like the DOJ would not have much chance of stopping them.

I'm no lawyer but it seems like if they just give everyone a joint foreign bank account that you can deposit to and withdraw from as you like and they can do the same. Then really there's no US gambling transactions for them to stop. Everyone would have to file their FBARs with the IRS if their account is over a certain amount and all that, but I don't think there would be anything illegal going on.

We may have to pay decent fees on deposits and withdrawals but I'd think a system like that would be fairly stable.

I hope someone is working to make income derived from poker to be treated by the IRS in the same way income from other businesses are taxed. By that I mean, there MUST be loss carry forwards and the ability to recoup taxes paid in profitable years against the years in which losses are sustained.

Imagine having a banner month at the end of the one year (December) where you net a profit of say $500,000 and have to pay tax on these winnings, only to find yourself losing the entire $500,000 back over the following year. Combine the two years and you just broke even, but if you had to pay 30% tax on your $500,000 winnings in your up year, you would be down $150,000 simply because you paid those taxes when over the period in my example you were nothing more than a breakeven player (and more likely a losing playing since your profitable year was the result of one big score).

Other expenses should be deductible as well. Internet fees, monitors, PC's, training, etc. Just like they would be expensable if it was a say a landscape business.

As I understand it, losses do not carry forward and that is completely unfair imo.

i thought his 10 year comments were regarding pokerstars/ftp/ub, which makes sense since these companies are not going to be in the good graces of the u.s. gov for a while

Couldnt you just delete all of the op and put Washington DC has legalized online poker?


http://www.pokercommercials.com/wash...-online-poker/


just Google it and there are tons of better articles then that...

wow very interesting post OP, I read it all and felt transcended by it, I'll never look at online poker the same from now on.

I too felt I. Nelson Roses' comments were the most encouraging for the future, and he also seemed to be the most educated and experienced opinion on the subject. Rest assured, some company will pop up with new ways around all this and online poker will continue strictly b/c there is just too much money to be made, and too much demand for the game, for this to be ignored.
The only question is how long is it going to take for the US Govt to wake up before someone outside US jurisdiction finds the ways and means to fill the void.

Imagine this, Poker Stars teams up with Swiss bank for use by American poker players? Poker Stars could link to the bank in their cashier, where it redirects Americans to their website to open up an account. It is not illegal for Americans to have foreign bank accounts, remember this. The only illegal thing is not paying taxes income that you put in such accounts, or not reporting aggregate foreign bank accounts totaling $10K or more. Please send me my Swiss debit card today.

They can even send the U.S. government 1099s or whatever, I don't care. I'll pay my taxes, just leave me the f)*k alone U.S. government.

I hope that foreign poker sites set up shop straight away in the US. It would suck for Stars and FTP, but you guys could start playing again and it would be a hearty piss in the face of the DOJ.