Somebody correct me if I'm wrong: It's widely accepted that internet offshore sports betting is illegal, not gray. The truth of the matter is it's very hard to enforce actions against offshore companies. The key is the size of the companies. The big 3 were too big to ignore. A smaller sports betting site/poker site/bingo site/whatever is not worth the time and effort.

It resolves legally by making any money involved in a transaction in violation of section 103 site forfeitable to the government.

Section 103 makes it a crime to operate an unlicensed online site. Under the "aiding and abetting" doctrine this would also apply to entities, such as payment processors, that directly facilitate the operation of an unlicensed site. Section 103 cannot be violated by a mere player, consistent with all other existing Federal gambling laws.

So, while you cannot be charged with any criminal offense, any money of yours that is used in connection with the operation of unlicensed site is subject to forfeiture.

What this explicitly means, and what this is explicitly designed to do, is to eliminate any possible claim you, as a non-criminal player, have to any and all money seized from an unlicensed operation or one of its accomplices (meaning payment processors).

One other thing this makes clear is that other property which may be used to play on an unlicensed site is NOT subject to forfeiture - your computer is completely safe even if you continue to play on unlicensed sites.

The wording of the statute is not explicitly clear as to whether money an unlicensed site sends to you after you receive it can still be seized by the government. Accordingly, the full reach of this provision will be subject to court interpretation. There are 3 very strong reasons to conclude that this will not be a problem: 1) under traditional forfeiture law once "tainted property" is in the hands of someone other than the criminal, that person can claim "innocent ownership" - and here you can claim to be innocent because the only criminal is the operator, not the player; 2) as a practical matter, to be able to seize money in your bank account the government would have to show not merely that it came from an unlicensed site operator, but also that it was actually used by the operator in the operation of that site; and 3) traditionally, once winnings have been actually paid to a mere player those winnings are no longer considered "proceeds" of the illegal activity (running the gambling site).

Federal authorities have never shown an inclination to go after money in the hands of players and it is highly unlikely this law will change that in any way. But it will certainly prevent players from having any claim to any money seized from an unlicensed site or its processors.

The direct threat to players is simply this: if you send money to an unlicensed site and the government finds it, kiss it goodbye.

Skallagrim

You cant have protection w/o regulation. If online poker became unregulated then you would have no way to fight for your money if some site decides to simply pack up and rub all of your BR on its titties like Kingdom of Poker did with its users. It would turn US online poker into a speakeasy, with the mob writing all the rules.

I do not think it is a matter of "too big to ignore" but rather a matter of "too big to hide."

When that sports book either takes in money or sends money out it does a lot of things to hide the true nature of what that transaction is about. On a small scale these efforts at deception seem to work: a handful of "internet greeting card" transactions is unlikely to draw attention; a few hundred thousand such transactions, however, is certain to draw scrutiny.

I suspect the same will be true of unlicensed online poker even if this bill passes. SOME of the current sites will conclude it is not worth the effort, SOME will be found out and have their assets seized, and SOME will continue to fly under the radar.

Skallagrim

This is precisely what I meant. I just chose awful words. Essentially what I was trying to say is small offshore sites have an easier time b/c of transaction quantity/amounts.

Thanks for the explanation Skall. We are still keeping assets subject to governor/court whims, but that provides enough comfort that I'll sit on my hands as opposed to writing/calling to oppose the bill. Glad I held off on contacting my Senator to support this though.

EDIT: the player penalties would have been a deal breaker, I'm not convinced enough that states will opt in as structured to ask my Senator to pass this. This bill could wind up great for poker or terrible, I'm pretty meh on the whole package.

Your welcome.

Actually, I am pretty "meh" on the whole package too. But I support it (though there are still some changes I hope to see).

The difference, I think, is that I see this bill as first step rather than a lasting deal. I believe that with this bill it will be easier to convince states to have online poker (opt-in) and that once online poker starts to happen under a clearly legal market it will grow in both popularity and acceptance. With a few years worth of legal growth and acceptance I think the poker community will be in a position of much greater strength and can achieve changes in the Federal law that lead to even more growth, more acceptance, and thus laws that make the games even better for players.

This bill is our foundation, in my view. And in my view it is a "meh" foundation. But just having a foundation will be a great improvement and, in my view, an overall game changer. This is not where we end, this is where we start.

In simple terms, accepting this bill now makes us far likelier to get a better deal in, say, 5 years than would rejecting this bill now.

Skallagrim

Odds on passing?

I don't see how you reach this conclusion. The provision states that any property (real or personal) involved in such transactions or any property "traceable to such property" is subject to seizure. How does this exclude your computer or other personal property?

Actually, to be able to seize the money, the government only needs to get a seizure warrant. It will then be up to the player to contest it in court to get the property back.

But here we have a provision that directly authorizes the government to do exactly that. It is titled "Bettor Forfeiture". Maybe history says that the government doesn't go after players, but that's history, not the future. I'm concerned about what will come after this provision becomes law. As you say, it is hard for the government to go after the offshore sites. It will become a lot easier for them to go after US players once this provision is in effect. It's a tool to stop illegal online gambling which the government may well decide to put to use.

Some portion of players in opt-out states that can't relocate will still want to play online poker.

My guess is that there will be some sites that refuse to quit serving US players.

Those players will know the penalties involved and if they choose to risk it, it's on them.

This is one of the more bizarre clauses in a bill I've ever seen, if internet gambling is so harmful that it needs to be prohibited retroactively, why is everything authorized prior to May 1, 2012 grandfathered in?

The obvious answer is Nevada sports betting, but what is the constitutional justification for an ex post facto prohibition with a grandfather clause?

The purpose of a grandfather clause is usually to avoid causing a retroactive effect, but this bill will be retroactive on what some States authorized after May 1, 2012 (Delaware, e.g.), while arbitrarily respecting what other States authorized before a random calendar date.

They try to get around the unconstitutionality of ex post facto laws by making the date at which the penalties take effect the date of enactment:

So any gambling authorized after May 1, 2012 is prohibited, but only gambling introduced by States after enactment of this bill would be criminal, meaning Delaware would be in violation of this law if it passes, but could not be punished if they choose not to comply?

That's insane.

I wish that instead of passing a new bill we would just amend/repeal the laws that made ipoker and its $$ transactions illegal in the first place. Let the market work.

Politically, of course, that would never happen.

Because the phrase "traceable to such property" is not a term that means anything that ever touches money used in operation of an unlicensed site is subject to forfeiture. If so, pretty much everything in the world is subject to forfeiture. What it means is if an operator takes in $500,000 and then spends it on a yacht, the yacht is subject to forfeiture (or at least $500,000 of the value of the yacht - it is amazing how expensive yachts are these days). "Traceable" is not the same as "interacted with."


To initiate a seizure the government must get a warrant. Sometimes, in "emergency" situations, they can apply for the warrant shortly after the actual seizure, but there must be a judicial finding of probable cause to believe the property is subject to forfeiture before the warrant is issued. The Probable cause requirement means there must be some basis to believe the property was used in a transaction that constitutes part of operating an unlicensed site.

Yeah it is titled "bettor forfeiture" but the title means nothing unless a court needs to look at Congressional intent and even then it is only one thing that is looked at. Also, the fact that this section is titled "bettor forfeiture" rather than "player forfeiture" or "winnings forfeiture" is some slight support for concluding that money already returned to players is not what is subject to forfeiture.

And yes it is a statute that makes it easier for the Feds to go after money they find being used as part of operating an unlicensed site since it removes any legal doubt that money in possession of an unlicensed site or an accomplice is subject to forfeiture.

But the idea that such a doctrine is going to be used to seek out money that may once at some time have been used as part of the operation of an unlicensed site is a significant stretch. Although it will have to be litigated to have certainty, I would predict that the most likely court interpretation of this statute is that once money or other property has left the control of the operator and any accomplice it is no longer subject to forfeiture. I could be wrong. But quite honestly I doubt we will ever have an actual resolution of this interesting legal debate. As I said before, the Feds have never investigated players or their bank accounts for forfeiture proceedings in the past, they have always simply taken all the money they could find in transit. Accordingly, I do not foresee them doing so in the future just because this bill passes.

But their will also never be another FTP remission case, nor an DOJ approved agreement allowing indicted unlicensed sites to return money to players.

Skallagrim

Just because the gov hasn't done it before does not soothe the fears of some people. They say you cannot grow wheat to feed your family or drink milk that is healthier in many respects. Before those things happened I assume it was safe to say, but they have never used those laws to do such a thing. Again we are relying on the govs interpretation of their own laws. Tamiller said one person contested his money being seized and this was the likely reason player penalties were put this into the bill, to prevent that from happening. Thousands upon thousands affected and one person says hey wait a minute. Oh noes! What happened because of the action by this person? What was the outcome?

How do the player penalties in this bill compare to those of the California bill that was opposed by the PPA because of those penalties? I do not remember what was in the Ca. bill. The comparison may shed some light.

Thank you Skallagrim.

Which is odd because in NV it seems restricted licenses (15 slot machine bars) would be able to have remote online poker on site. I figure that must be why Golden Gaming applied for a license. I am surprised that language fell into this, especially since so many states have legalized bar/truck stop video poker that might fit perfectly into that business model.

The sports book in NV get your SSN before you can open an online or mobile sports betting account.

As for the discussion about there still being non regulated sites, several current U.S. poker sites are basically sports books. This isn't stopping them. I suspect though that states that opt in will not have the choice of playing on unlicensed sites. For example, once Nevada online poker is live I would not be surprised to see most U.S. poker sites leave NV.

The "bettor forfeiture" kicks in on "Any property, real or personal, involved in a transaction or attempted transaction in violation of section 103."

Players can't violate sec. 103. Only operators can be in violation of sec 103.

It's poorly titled but I don't see how it can apply to player funds, winnings etc.

I live near a border between two states and it will be interesting to see what happens if one opts in and the other doesn't.

It's an in rem forfeiture, meaning that the money is 'guilty' of the crime, even though it technically belongs to the mere bettors.

It's the same legal argument they've been using for three years to seize player funds from processors, the only difference is that now there is actually a law that justifies doing it.

Though it was only one player it may as well have been one million, they had to make their argument against his claim, answer his response, the judge said their response was too long, rewrite the response, and hope the judge agrees.

In this case one reason the judge cited for agreeing to deny the claim was that the player had the option of applying for remission - which will also be off the table under this law.

Yes. We at PPA discussed this yesterday, Sec. 103 applies to operation of a site.

EDIT: Great discussion by Patrick on this above!

Calvin Ayre is going to burn through a lot more domain names then, under the current UIGEA the DOJ had to spend months (years?) either gathering evidence that a site was accepting US deposits through financial system or posing as a processor to mount a sting operation.

Now, all they have to show a judge is that a site is still accepting bets (play) from US players - it won't even matter if it's bitcoins - and they can seize the domain under the strengthened UIGEA.

Here we go again.

Ugh, so frustrating that people have been led to have beliefs like this. Your analogy says it all. Mobs and speakeasies flourish in a HIGHLY REGULATED environment or you could even say totally 'controlled' environment where you make something illegal and so the black market flourishes with a ton of really shady behavior.

Markets like TVs and laptops are examples of how things can go in an unregulated climate. Prices continue to fall, quality continues to rise, and the companies that survive and thrive need to actually try and make customers satisfied. Don't blindly believe what they tell you and don't just assume the government is not only well intentioned (usually their intentions are at least to some extend a lie to help a corporate interest), but capable of achieving the ends that it seeks (usually they are inept at what they seek to help). You could easily have a totally unregulated but legal online poker market where those that screw customers could be legally on the hook for fraud, theft, whatever...It is true in the first 10 years of online poker there have been many sites going bust, and players screwed but part of the reason their was no legal recourse was because it was a black market, not just an unregulated market. Also, you have to remember it was such a new market. As something develops, the quality and safety will go up over time as these bad events drive customers to better pastures. There is a reason Stars was bigger than every other site combined. In 20 more years of a free and unregulated market you would expect to see an improved landscape of sites that survive with the ones with worse rake or less safe climates going under. What we don't need at all (but clearly sounds like we have no choice but to accept) is the government trying to run the industry through their genius 'regulators' in NV. What we will get is worse sites, higher rakes, and less choice and competition all in the name of 'protecting' us. Sweet.

I imagine they used the fact that the player had the option for applying for remissions because it was the easiest way to deny the claim. If not for that I am sure they would have found another way of denying the claim. With this provision they now have a slam dunk and we can only hope they don't stop us from growing wheat in order to feed ourselves.

As Skallagrim is ignoring my question, JUST KIDDING, I will ask the same question to anyone who can knowledgeably answer the question as to how the current proposed bill differs from the old proposed Ca. in regards to player penalties. The Ca. bill was not supported by the PPA because of the penalties.

PPA - What republican senators are in favor of this at the current time? My research shows only Heller/Kyl/Paul seem to be confirmed. Is there already a long list of democrats for this or are we just assuming Reid can rally the troops?

Nice summary/cliffs posted at QuadJacks:

http://quadjacks.com/2012/10/19/the-...d-in-8-points/