JFC, lawdude, we haven't played unregulated internet poker in YEARS. The fact that it is not regulated by the United States does not mean that it is unregulated.

The arrogance behind calling "unregulated by the US" "unregulated" makes me ashamed to be an American.

Skalla:

1. "They didn't send me a checkbook" is beneath you (as was the earlier Treasury regulation argument). You really think that anyone in a million years would be persuaded that money you have on deposit offshore and which can be paid on your demand is not in an offshore bank because they didn't send you a checkbook?

You are throwing out completely dumb, formalistic statements about what a bank is. They have NOTHING to do with the DOJ's concerns. The DOJ's concern is 15 million Americans have put their money offshore. Not that 15 million Americans were sent checkbooks. If you choose to pretend not to understand this, that's your problem.

2. Moving money offshore has never been a right. Never. It isn't now and it hasn't been in the past. It's not protected by the Fourth Amendment (as is what happens in your bedroom) and people have no legitimate interest in not disclosing their offshore financial activities to the government.

Arguments like this give poker players a bad name. "We want an exemption from the scrutiny that everyone else's offshore transactions get because we don't think we should have to be subject to governmental regulation." Sorry, no dice. If you do business across national borders, the federal government is entitled to know what your money flows are. There's never been a time in American history when that has not been true.

Mpeth, I don't care how many times people say it, Canadian First Nations tribes and tax havens are not effective regulators. Neither Russ Hamilton nor the Chinese double or nothing bot operators went to jail. No site produced their records or filed 1099 forms to ensure tax compliance. No executives have been required to sell their stakes or leave employment because of regulatory violations.

And, of course, all the records of the poker sites and all the executives are kept beyond the reach of the US justice system.

Online poker is EFFECTIVELY unregulated, because when the word "regulated" is used, it means regulations that actually have teeth.

Please explain to me how the chinese bot operators would have gone to jail if the poker sites were subject to US regulation???

i was never doubting supported legal regulated poker (and by regulated I mean subject to taxes and the judicial system) and obviously we should support that. But I think that people who really support the government being able to monitor their financial transactions at this level are crazy. there is a big difference between the IRS monitoring your offshore banking to make sure you are paying taxes, and the DOJ monitoring how you use your money to make sure you aren't a terrorist. One of these things is a violation of individual privacy the other is not. The IRS doesn't care what you do with your money, as long as you pay your taxes. the DOJ does care and apparently is willing to enforce absurd laws to make sure that they can find out what people are doing.

again the feds use the war on terror as justification to strip away more of our rights and invade our lives. at what point do we as americans decide that we've had enough?

1. You called it a bank account, not me. It is not a "bank account" and so does not automatically deserve the same treatment as a back account. A real bank account has a lot more to it than a poker account and all those other aspects, like checkbooks, are precisely what make a true bank account subject to money laundering, terrorist financing, and income tax evasion. You assume that an offshore poker account SHOULD be treated just like an offshore bank account. I ask why. And if you say because it could be used for "x" it SHOULD be up to you (or the DOJ) to justify that concern. As many people have pointed out, poker accounts are highly unlikely to be used for money laundering or terrorist activity, and the DOJ has publicly admitted that it has no evidence of either of those things occurring (except to the extent that they consider moving poker players' money "money laundering").

If you want to argue that the DOJ should have the right to open access to your poker account because it wants to make sure you pay your taxes, then how do you distinguish that from giving the DOJ the right to open access to all your financial accounts?

If you want to argue that the DOJ should have subpoena and warramt power, you ignore the fact THAT IT ALREADY DOES. The only catch is that the subpoena or warrant must be one that, by treaty, the foreign authorities would compel the company honor or otherwise enforce. Lawdude seems to assume that the UK authorities in the Isle of Man or Aldernay would never honor such a subpoena or warrant. I believe the opposite is the case if the information was relevant to a crime other than "illegal gambling." Since it has never occurred, who knows the correct answer. But it seems to me that the one wanting the extra power over the individual is the one who ought to provide evidence to support their position.

2. Actually, moving money offshore was considered a "right" for a long time (those natural property rights that were recognized early in the US but have now been discredited), it was just the right of government to lay a "duty" on it, not prohibit it outright. And to this day money is moved over international borders on a regular and routine basis. Regardless, The question is whether the current legal structure and practical reality regarding foreign online poker accounts is sufficient to satisfy any rational concerns of the US government. I think it is, but I'm a lefty-libertarian; Lawdude thinks it is not and therefore the shutdown of the online poker industry was justified, but then he appears to be a control freak.

Skallagrim

My problem is when you suggest that the DoJ has some sort of moral high ground.

It is not just that they "haven't done enough" WRT the sub-prime mortgage scam, they have done nothing. It would be like ignoring the destruction of the WTC and instead focusing on street level pot dealers "because drug money funds terrorism". If you are going to claim the moral high ground then you have to prioritize your tasks according to moral gravity.

IMO, the DoJ first saw a whale that they could out play and all that stuff about them trying to fight organized crime and money laundering by shutting down iPoker is just after the fact rationalization.

They are playing a self serving game like so many others. The rules of their game happens to be the criminal code and the career recognition that seizing big bucks brings.

Say that they are with in their legal rights to do what they are doing and leave it at that and I won't be so cranky.

FWIW, I'd say that a poker account is closer to a bank account than it is to NOT a bank account simply because it has so many similarities with a bank account, even if you can't draw a check from it.

Funky:

Just to be clear, the DOJ has no moral high ground. They had the option of being more reasonable on the wire act, giving the sites real guidance on what states have effective prohibitions that trigger the UIGEA, or seeking jurisdictional consents in exhange for agreements not to prosecute. I can imagine a number of ways the DOJ could have acted better here.

I do not, however think that because they don't occupy the high ground that this means they are in the gutter either. They have a legitimate concern about offshore money flows, which, if allowed to continue, would interfere both with tax enforcement and efforts to stop money laundering and crime financing.

What I am resistant to is the characterization of these guys as anti-poker zealots or tyrannical fascists. They are neither.

Great point. Massive financial black hole my ass. Even the CEOs of the Wall Street firms didn't and don't know their exposure in the derivatives market. That market is in the trillions of dollars, whereas simple poker transactions are in the 10s of millions at any one time. And they have the nerve to call poker account processing a massive financial black hole?

Skalla:

The issue isn't that a subpoena would never be honored. It's that the US government has no obligation to allow offshore money flows at all absent a procedure where no permission fron a foreign state is required at all.

Having said that, you'd be really naive if you think that the tax haven and indian tribe nature of the relevant jurisdictions here has nothing to do with the DOJ's concerns. Both these kinds of states have told us to go screw ourselves in the past when we have requested financial records.

Again, even the CEO's of the financial firms do not have the ability to monitor what is going on in their derivatives markets. Why isn't the DOJ stepping in there? (rhetorical question, obv. you can't step on any financial toes and survive politically. Plus the shakedown value of the poker sites is much larger even though it is a significantly smaller market.)

Because they would not be allowed in the pools without a reciprocity agreement with China.

mpethy,

do you seriously think that the US could not regulate poker better than the IOM, KGC, etc? you are giving these groups way too much credit. if you have not read through the entire UB scandal sticky, please do.

do you think that Russ Hamilton et al would have even attempted to cheat customers out of millions of dollars if UB were regulated in the US and they were subject to clear criminal penalties in the US? and, even if you think they would have done it anyway, do you think they would have gotten away with it to the same extent that they have?

edit: i think there are good arguments here against the DOJ's actions. i personally don't think they overstepped their bounds but i understand some of the arguments.

that said, the argument that these other groups could regulate poker as well as the US could is ridiculous. you can argue that they regulated it "well enough", but i would disagree and point to some of the same examples that Lawdude is pointing to.

Source?

And you have been taken to task before for denigrating the integrity of the Isle of Man and Aldernay, both being territories under UK jurisdiction.

At least until recently, and maybe still, US companies got a tax break for locating operations in Puerto Rico. Did that mean PR was also prone to ignore other US law and lacked integrity?

I will not defend Kahnawahke on this same point, however. So don't bother using them as an example.

Skallagrim

Online gaming legalization a hot topic. Where does Nevada fit in?

The Mr. Lipparelli quoted below is Mark Lipparelli, Chairman of the Nevada Gaming Control Board:

Skalla, indian tribes have litigated tribal sovereignty cases over business records subpoenas. (Not gaming cases, but other issues.) And tax havens routinely do not turn over information that violates their secrecy laws.

Why would Pstars T$ trading be included in the indictments or have anything to do with this? Their whole T$ trading facility is shutdown ugh

I am not aware of any "secrecy laws" in any UK jurisdiction which regulates gaming. Have you a source for this claim or is it just an assumption?

Skalla:

You might want to check out the Isle of Man banking act, which requires secrecy. The British crown is entitled to override it in criminal investigations under the Financial Services law, but that is a higher bar to clear than a regulatory investigation.

Ummm no.

From what I have read "The Banking Act (as amended) recognizes the contractual duty of a banker to keep the affairs of his customer confidential and the customers’ entitlement to confidentiality. There are very few limited exceptions to these principles, set out in the Financial Supervision Act 1988, and these include circumstances where disclosure is required to assist criminal proceedings or to enable the FSC to discharge its statutory functions." http://www.myoffshoreaccounts.com/of...-bank-account/

I fail to see how this is any different from what is true with US bank accounts. The DOJ has no ability to just look into my US bank account without a warrant (or one of those Patriot Act letters). US regulation of banking does not include the ability to peer into accounts on a whim, nor does the Isle of Man.

"Regulatory violations" is a weird term to use here and I fail to see how it means anything in this context. Usually, if you are violating some regulation you are violating the law.

There are a lot of regulatory violations or inspections that are not crimes. And yes, regulators in this country do not need warrants or national security letters to see records of international financial transactions for regulatory purposes. An ordinary subpoena is sufficient.

Again, bear in mind, we are talking about the DOJ's motives here. The whole point of jurisdictions like the Isle of Man is to facilitate tax evasion by making it harder to get access to the money or the records. That's the Isle of Man's selling point to companies incorporating there.

The DOJ is never going to assume that this sort of jurisdiction is going to give them access to records when they need it.

They aren't, but the powers that be who direct them arguably are. This is where you tell me the DOJ acts on its own with full discretion and without predjudice. This is where I tell you that's bull****, because we all know politics are always at play.

I am familiar with the UB/AP scandals.

The Isle of Man is not a "group." It is a political subdivision of the UK (sort of). Dismissively calling the Isle of man a "group," is akin to calling Guam or Puerto Rico a "group." It is "ignorant Americanism" at its arrogant worst.

I would point out to you that Stars is regulated by IOM and Stars players have already received their money back. Why was this possible? because IOM REGULATIONS required player funds to be kept segregated from operational money; thus, it was not identified as Stars money when the DOJ started asking for accounts to be frozen.

So a combination of good business practices and good regulations by IOM resulted in most player funds on stars being available for swift repayment.

No, of course Russ et als would not have attempted to violate US law. It is common knowledge throughout the world that once the US regulates on a subject, no one ever tries to violate US law.


Why is it ridiculous to suggest that Aldernay or IOM can't regulate as well as the US? To me, it is ridiculous to suggest that the US could regulate as well as IOM or Aldernay. the difference between your position and mine is that i actually have evidence to support my position, to wit:

IOM is batting a thousand on its gambling regulations' effectiveness. Stars ran a clean game, and followed the regulations it was subject to, and the result was that when DOJ froze accounts, player funds were available for immediate refund. Chalk that up as a win for IOM's competence (and the business ethics of the Stars ownership).

By contrast, look at almost any industry/sector that is regulated by the US government, and look at how completely ****ed up it is. For example, think about the recent housing and banking meltdowns. Both of those sectors are intensely regulated by the US gov't; in both cases, gov't regulation was instrumental in creating the bubble--this was especially true in the housing market where banks were basically required by regulation to make sub-prime loans.

Look at how long it takes a new prescription drug to come to market, and look at how many of them wind up in class action lawsuits (as evidenced by the late night lawyer commercials). You call that effective regulation?

****, the gov't can't even get its head out of its ass enough to effectively regulate frozen pizza, which is subject to the jurisdiction of the USDA if it is a regular cheese pizza, or subject to regulation by the Dept. of Agriculture if it has pepperoni on it (or vice versa, it's too stupid to keep straight).

The US government has a long and storied history of ****ing up pretty much everything it tries to regulate. The real question here is why in the world anybody thinks US gov't regulation will be anything but a nightmare for internet poker.

For my part, I pray every day that Congress passes a law granting enforcement authority to Nevada and/or NJ; if it winds up being regulated by the US gov't, iPoker will die under the weight of all of the ridiculous regulations and reporting requirements federal regulators will invent to give themselves job security.

Your view that the US is inherently more capable of regulating iPoker is basically just prejudice, and is demonstrably counter-factual.

Also, +1 to the posts quoted below.