misty113
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Reply with quote | #1 |
An excellent book on online gambling prohibitions is Dave Schwartz's 'Cutting The Wire'. Dave Schwartz has written a comprehensive piece on the specifics of the bill: Do you want to know just what the “Unlawful Internet Gambling Funding Prohibition” is? I’ve printed out all 107 pages of the “Security and Accountability For Every Port Act of 2006,” AKA, the SAFE Port Act, and, skipping ahead to page 94, I’ll summarize the relevant bits for you. Section 801 of the SAFE Port Act says that this section can be called the “Unlawful Internet Gambling Enforcement Act of 2006.” Good for us. Section 802 starts getting substantive. It declares that Chapter 53 of title 31 (not Section 31, so Star Trek fans everywhere can calm down) of the United States Code–that’s federal law–will be amended by adding “Subchapter IV–Prohibition on Funding of Unlawful Internet Gambling.” The new section 5361 (of title 31, remember), starts with a preamble, saying that Congress, an investigatory apex, has found that internet gambling is primarily funded through payment systems, credit cards, and wire transfers. Congress has also found that Internet gambling leads to debt collection problems. Also, nothing in the new law alters any existing law banning or permitting gambling within the US.
Section 5362 defines a bet, chiefly as risking something of value on “a contest of others, a sporting event, or a game subject to chance,” with the expectation that, if you win, you win something of value. This includes, specifically lotteries (and obviously sports betting) but not poker. It doesn’t include:
a) buying stocks legally,
b)insurance,
c) banking,
d) games where you don’t risk anything but your time, or free credits
e) fantasy sports, where the result is NOT based on the performance of a single team, or combination of teams. Fantasy football is kosher, parlay cards are not.
This section further defines these terms: betting business, desginated payment system, financial transaction provider, Internet (wow!), interactive computer service, restricted transaction, secretary (of the Treasury), and state. It further defines unlawful Internet gambling, which means, surprise, using the Internet to place, receive, or transmit a wager that is illegal under federal or state law. This does not include intrastate transactions that are specifically legal within that state, and use appropriate age and location verification systems (which are not defined). It also does not inlude specified horseracing transactions “allowed under Federal law,” or bets on tribal land, subject to federal law and state compacts. So betting within states, within tribal lands, and on horseracing across state lines might be legal, but betting on sports across state lines is definitely prohibited. Section 5363 ( is the meat of the bill. This declares that no one in the betting business can knowingly accept credit, EFTs, checks, or any other kind of payment, for gambling reasons. Period. Section 5364 charges Treasury and the Board of Governors of the Federal Reserve System with developing policies and procedures that will let payment systems (banks, etc), identify and block “restricted transactions,” i.e., bets. This is long on responsibility and short on specifics, so it seems that Congress has ruled, and it is up to the money guys to figure out just how to identify gambling transactions. Notably, one subsection indemnifies anyone who blocks a transaction that is actually restricted, or that they “reasonably believe” to be restricted. In other words, if your credit card company won’t send funds to someone, and you are hurt (if, for example, you lose out on a auction), you can’t sue them, if they say that they reasonably thought it might be a gambling transaction. This section will be enforced by federal bank regulators and the Federal Trade Commission. Section 5365 lays out the Civil Remedies that U.S. district courts–and states–can seek. The feds can apply for injunctions to block what they think are restricted transactions, and so can states’ attorneys general. On Indian lands, the feds have enforcement authority, but nothing in this law supersedes the Indian Gaming Regulatory Act. “Interactive Computer Services,” (we call them web sites) can be subject to “relief” if they don’t remove, or disable access to a link to a site that violates this act. This can be done after they are served notice and given a chance to block access. Sites don’t have to “affirmatively seek facts” (in other words, they don’t have to jump in the Batmobile and start looking around Gotham for links to gambling sites), but when told that they have to shut down access. They aren’t considered to be violating the Wire Act (section 1084 of Title 18) unless they are the people actually running or owning the gambling website. Section 5366 tells all the scofflaws, in plain black print, that, if you violate section 5363, you can go to jail for as long as 5 years and fined; you can also be subject to a permanent injunction that prevents you from accepting bets. Heading into the homestretch, section 5367 declares that, 5362 (2) notwithstanding, financial transaction providers, site owners, and service providers are liable if they actually own or control gambling sites, as opposed to just linking to them or processing their payments. Section 802 then wraps up with a bang. In this case, it’s a “technical and conforming amendment” that amends the table of contents for good old section 53 of title 31. But wait! There’s more! Section 803 finds that the feds should work with foreign governments to see if Internet gambling can be used for money laundering “or other crimes,” and encourages the Financial Action Task Force on Money Laundering to study how Internet gambling is being used for money laundering. Finally, the Secretary of the Treasury is charged with submitting an annual report to Congress on any deliberations between the U.S. and other countries concerning Internet gambling. This, I would assume, means the Antigua/U.S. WTO case, and anything else that crops up. And that’s it. After about an hour of reading and summarizing, I’m done. I’ll leave further analysis to others; comment away.
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| | misty113
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Reply with quote | #2 |
Prohibition II: Good Grief When government restricts Americans' choices, ostensibly for their own good, someone is going to profit from the paternalism. By George F. Will Newsweek Oct. 23, 2006 issue - Perhaps Prohibition II is being launched because Prohibition I worked so well at getting rid of gin. Or maybe the point is to reassure social conservatives that Republicans remain resolved to purify Americans' behavior. Incorrigible cynics will say Prohibition II is being undertaken because someone stands to make money from interfering with other people making money. For whatever reason, last Friday the president signed into law Prohibition II. You almost have to admire the government's plucky refusal to heed history's warnings about the probable futility of this adventure. This time the government is prohibiting Internet gambling by making it illegal for banks or credit-card companies to process payments to online gambling operations on a list the government will prepare. Last year about 12 million Americans wagered $6 billion online. But after Congress, 32 minutes before adjourning, passed its ban, the stock of the largest online-gambling business, Gibraltar-based PartyGaming, which gets 85 percent of its $1 billion annual revenue from Americans, declined 58 percent in one day, wiping out about $5 billion in market value. The stock of a British company, World Gaming PLC, which gets about 95 percent of its revenue from Americans, plunged 88 percent. The industry, which has some 2,300 Web sites and did half of its business last year with Americans, has lost $8 billion in market value because of the new law. And you thought the 109th Congress did not accomplish anything. Supporters of the new law say it merely strengthens enforcement; they claim that Internet gambling is illegal under the Wire Act enacted in 1961, before Al Gore, who was then 13, had invented the Internet. But not all courts agree. Supporters of the new law say online gambling sends billions of dollars overseas. But the way to keep the money here is to decriminalize the activity. The number of online American gamblers, although just one sixth the number of Americans who visit real casinos annually, doubled in the last year. This competition alarms the nation's biggest gambling interests—state governments. It is an iron law: When government uses laws, tariffs and regulations to restrict the choices of Americans, ostensibly for their own good, someone is going to make money from the paternalism. One of the big winners from the government's action against online gambling will be the state governments that are America's most relentless promoters of gambling. Forty-eight states (all but Hawaii and Utah) have some form of legalized gambling. Forty-two states have lottery monopolies. Thirty-four states rake in part of the take from casino gambling, slot machines or video poker. The new law actually legalizes online betting on horse racing, Internet state lotteries and some fantasy sports. The horse-racing industry is a powerful interest. The solidarity of the political class prevents the federal officials from interfering with state officials' lucrative gambling. And woe unto the politicians who get between a sports fan and his fun. In the private sector, where realism prevails, casino operators are not hot for criminalizing Internet gambling. This is so for two reasons: It is not in their interest for government to wax censorious. And online gambling might whet the appetites of millions for the real casino experience. Granted, some people gamble too much. And some people eat too many cheeseburgers. But who wants to live in a society that protects the weak-willed by criminalizing cheeseburgers? Besides, the problems—frequently exaggerated—of criminal involvement in gambling, and of underage and addictive gamblers, can be best dealt with by legalization and regulation utilizing new software solutions. Furthermore, taxation of online poker and other gambling could generate billions for governments. Prohibition I was a porous wall between Americans and their martinis, giving rise to bad gin supplied by bad people. Prohibition II will provoke imaginative evasions as the market supplies what gamblers will demand—payment methods beyond the reach of Congress. But governments and sundry busybodies seem affronted by the Internet, as they are by any unregulated sphere of life. The speech police are itching to bring bloggers under campaign-finance laws that control the quantity, content and timing of political discourse. And now, by banning a particular behavior—the entertainment some people choose, using their own money—government has advanced its mother-hen agenda of putting a saddle and bridle on the Internet. Gambling is, however, as American as the Gold Rush or, for that matter, Wall Street. George Washington deplored the rampant gambling at Valley Forge, but lotteries helped fund his army as well as Harvard, Princeton and Dartmouth. And Washington endorsed the lottery that helped fund construction of the city that now bears his name, and from which has come a stern—but interestingly selective—disapproval of gambling.
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| | misty113
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Reply with quote | #3 |
First FIREPAY pulls out now this............... | NeTeller Announcement
| | Online gambling money-transfer company NeTeller accounced today that they will end transactions with U.S. players sometime within the 270 day period outlined in the recently passed Internet gambling prohibition bill. They said once the Secretary of the Treasury and the Attorney General's office implement restrictions on transactions, NeTeller will follow suit. NeTeller has been the most common money transfer option for U.S. players so a change like this will likely significantly curtail U.S. players' abilities to participate in real-money online gambling sites.
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| | misty113
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Watch out! With studies like this its only a matter of time before BIG BROTHER starts thinking about limiting use of the internet. First it was Online gambling, what's next?? Stanford: Internet as addictive as drugs Oct. 19, 2006 04:30 PM PALO ALTO, Calif. - Like a roll of the dice or a sip of bourbon, the glow of the computer screen has an irresistible and dangerous allure to many people, according to a new nationwide study by Stanford University.
A random survey of 2,500 adults - the first-ever attempt to quantify "Internet addiction" in the general population - found that between 6 percent and 14 percent of computer users said they spent too many bleary-eyed hours checking e-mail, making blog entries or visiting Web sites or chat rooms, sometimes neglecting work, school, families, food and sleep.
The Stanford team, led by psychiatrist Elias Aboujaoude, isn't worried about people who spend their lunch hours cruising travel sites for a summer vacation in Tuscany. Rather, they look for signs of compulsion."We worry when people use virtual interactions to substitute for real social interactions - and seeing their real relationships suffer, as a result," he said.
"Sneaking out of bed, once your partner is asleep, to go online. Missing deadline after deadline at work, while visiting chat rooms. And when you cut back, feeling irritable, anxious or restless. Those are red flags," he said.
Aboujaoude grew interested in the problem when he started to see a small but growing number of habitual Internet users visiting the university's Impulse Control Disorders Clinic (http://ocd.stanford.edu/).
"Over the last two to three years, more people have come in with this specific complaint, saying, I spend way too much time online, but I can't help it,' " he said. "They characterize it in terms that sound like almost a substance abuse problem."
Internet overuse is an easy trap because computers offer immediacy, a sense of connection and anonymity, Aboujaoude added. Connections are increasingly fast and wireless, and computers are pervasive in life.
In downtown Palo Alto, it's not hard to find need-the-Net folks. In a Starbucks on University Avenue, high-tech salesman Ron Jennings of San Rafael, Calif., used a Treo handheld computer to check his e-mail while he waited for his laptop to finish sending a work document.
When he goes on vacation, he said, the laptop and the Treo go with him. "So things don't build up." Three other nearby tables also hosted laptop users.
At Coupa Cafe around the corner, five laptop users were settled in, including Stephanie Chen of Palo Alto. She laughed easily when she was asked how addicted she is to the Net.
"Oh, I'm a 10," she said. "I can't live without the Net. I wake up and it's the first thing I do. I do everything on the Net."
For his survey, which was published in the October issue of CNS Spectrums: The International Journal of Neuropsychiatric Medicine, Aboujaoude sought to measure the problem in the general population, outside hyper-wired Stanford and surrounding Silicon Valley.
To his surprise, "the survey suggests that it's not an isolated problem - it is relatively widespread, and deserves more attention."
Pornography and gambling sites are just one part of the problem, he said. Other sites - chat rooms, shopping venues and special-interest Web sites - are also habit-forming.
Psychologist and computer engineer Kenneth Woog of San Clemente, Calif., welcomed the study, saying too little research has been done on the problem.
Woog, who specializes in treating teenagers, is most worried about massive multiplayer online games. One such game, EverQuest, is referred to by many players as "Evercrack," because of its addictive nature, he said.
Some games "are deliberately designed to be addicting," Woog said. "They're very compelling. You do something and get a reward. With enough rewards, you start to feel good about yourself. And you're part of a team of people on a common quest." Because games operate on a "subscription" model of sales, the most addicting games are the most lucrative for companies, he said.
Other therapists say they also increasingly see youths with unhealthy gaming habits, who neglect schoolwork and sports for online games.
It's not known whether so-called Internet Addiction is a clinical disorder, Aboujaoude said. More research is needed to identify whether Internet overuse is a distinct condition or an expression of another psychopathology, such as depression, anxiety or obsessive-compulsive disorder, he said.
The best label, for now, is "impulse control disorder," Aboujaoude said. More research, based on one-on-one interviews, will better define the problem, he said.
"The Internet can be both helpful and isolating," Aboujaoude said. "It becomes a problem when it isolates, substituting for a real social life."
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| | misty113
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Reply with quote | #5 |
| Bodog to Buy Betcorp
| Apparently un-fazed by the recent US legislation banning on-line gambling, Bodog.com Entertainment Group announced today a deal with Betcorp Limited to acquire the company's European- and Asian-facing business. The agreement, conditional only on shareholder agreement, will include Betcorp's gaming products, international customer base, technology, licenses, and the group's Antiguan offices, and is just the latest chapter of Bodog's aggressive expansion into international markets.
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| | misty113
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New law sends tremors through online gaming industry Gamblers may look over their shoulder now, but experts say a new Internet gambling ban won't keep bettors from ponying up, just turn them on to overseas payment services out of the law's reach. "It has put a terrible scare into people," said I. Nelson Rose, who teaches gambling law at Whittier Law School. "But it won't by any means wipe out Internet gambling." The fright swept through the $12 billion industry on the heels of the recent arrests of two gambling company executives and a new law President Bush signed Oct. 13 that seeks to ban most online gambling and criminalizes funds transfers. The law has wiped out billions of dollars in shareholder value of British companies, leaving the industry's future in doubt as U.S. lawmakers trumpeted they had found a way to halt bets coming from America. But serious questions remain about whether the legislation can be effective in stopping U.S. residents from playing poker or betting on sports. The "Unlawful Internet Gambling Enforcement Act" goes after the money, not the millions of players, which would be nearly impossible to enforce. It will essentially try to choke off the way Americans fund their gambling habits, hoping to prevent the transfer of dollars to the popular Internet sites. It's also widely understood that the law has online poker in its gun sights, identifying it as a game of chance - something the poker companies dispute. They believe poker is a game of skill and therefore not subject to the new rules. But they're fearful nonetheless. "Their mission is to kill the funding of online poker, and that's what this law does," said Mike Sexton, who hosts the popular World Poker Tour and has won millions as a professional player. The new law comes amid an explosion in online gambling, fueled by the Texas Hold 'em craze. In addition, dozens of Web sites have sprouted up that allow any gambler with a credit card to bet on any sport they choose, for any amount of money they want. Industry experts say there are an estimated 2,000 Internet sites that take bets for sports and poker. American players have fueled Internet gambling, supplying $6 billion of the $12 billion in revenues generated annually. "The time has been one of rapid growth," said Sebastian Sinclair, president of Christiansen Capital Advisors, a gambling consultant. "This industry was well on its way to becoming mainstream in a great part of the world. Capital was tripping over itself to fund these companies." The new law gives the U.S. Treasury and Federal Reserve, along with the Attorney General, 270 days to establish policies and procedures. "The regulations are clearly going to prevent banks from doing electronic fund transfers to gambling sites, but that is no big deal," Rose said. In some cases, banks will simply move the money to payment processors, known as e-wallets, he said. Non-U.S. payment processors such as the widely used Neteller then transfer the money to the Internet gambling sites. The U.S. government has no authority over processors like Neteller. Anthony Cabot, a well-known gambling lawyer in Las Vegas, thinks language used in the bill provides a loophole for the payment processors and the U.S. banks that want to be free to do business with them. "Unless you have some fairly Draconian measures ... the likelihood of stopping payment to them is small," Cabot said. Much damage has already been done to the offshore sports betting industry without the looming regulations. British BetOnSports PLC folded after its chief executive was arrested in July by U.S. authorities. David Carruthers faces 22 counts of fraud and racketeering charges and remains under house arrest. And the London-based Sportingbet chairman was detained last month in New York on a warrant charging him with illegal online gambling. He eventually was freed. Both arrests sounded alarm bells for those running sports wagering sites. The new legislation has already had a dramatic effect. It supposedly clarifies the 1961 Wire Act, explicitly outlawing Internet gambling, including online poker. This isn't the first time the industry has faced a serious setback. In 2001, Visa and MasterCard stopped allowing money to be sent to Internet gambling sites. Like then, Sinclair thinks Internet gambling will recover. It's simply too lucrative. "There will be a big hit to the industry," Sinclair said. "A big hit. But it's not going to be long term, it's transitory until somebody finds a solution to whatever roadblocks are put in their way. There's too much money for it to go away."
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| | misty113
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Reply with quote | #7 |
Well well. Seems to me even the BIG dogs want a piece of the online gambling monies to be had WHILE our mental politicians went along with the ban on U.S. people and online gambling. Here is something worth noting: | LV Sands to Launch Online Casino
| | Las Vegas Sands Corp. today announced plans to enter the online casino and poker market, with a product initially aimed exclusively at players in the UK. The project will be a joint venture between the owner of the Venetian, Sands, Palazzo, and Paiza brands and Cantor Gaming, which is already in partnership with Sands Corp. via its deal with the Venetian to be the first casino to offer mobile gaming devices in Nevada. The site is expected to be launched in the second quarter of 2007 and offer all the most popular casino games, including blackjack, roulette, baccarat, video poker, slots, and online poker, and will offer customer age and location verification, online payment processing, and customer service. The project won't be the first time that a US land-based gaming company has dipped a toe into European waters: Previous attempts by MGM Mirage and the Hard Rock to launch online casinos across the pond proved unsuccessful, as did a similar foray by Playboy magazine. But back then online gambling was not at peek levels as it has been in the past few years esp. with online Poker sites and the ever growing Poker tourney's. We'll await future developments of the Sands' project with interest.
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| | misty113
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Reply with quote | #8 |
Its become very clear.....the land casinos have banned together to outlaw online gaming so they can get a bigger piece of the pie and in several cases, open up online gambling in their name in other countries in order to corner the market and curb who can play online. 
We all knew it was $$$$ driven and not the moral outrage and terrorists money laundering that was spouted when the bill was presented by Ex-Sen. Frist. It just goes to show that BIG money speaks the loudest and everyones rights are trampled on in the process. (like Harrah's and others arent making enough money off their brick and mortar casinos) I'm all for making a profit, I resent when Corporations stack the deck and eliminate any competetion to meet their huge profits. Thats called GREED.
Harrah's $100,000 Lobbying RevealedTarget Issues Included Internet GamblingWASHINGTON -- Senate records show that Harrah's Entertainment paid U.S. Strategies Corp. $100,000 in the first half of 2007 to lobby the federal government. The Senate's public records office released the information earlier this month. It said the firm lobbied Congress on issues related to Internet gambling and a bill to provide tax credits for companies who offer employees anti-smoking and wellness programs. Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.
Harrah's Paid Lobbyist $100,000Thursday August 23, 6:04 pm ET Harrah's Paid U.S. Strategies $100,000 to Lobby Federal Government in First Half of 2007 WASHINGTON (AP) -- Casino giant Harrah's Entertainment Inc. paid U.S. Strategies Corp. $100,000 in the first half of 2007 to lobby the federal government, according to a disclosure form. The firm lobbied Congress on issues related to Internet gambling and a bill to provide tax credits for companies who offer employees anti-smoking and wellness programs, according to the form posted online Aug. 6 by the Senate's public records office. Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying. Harrah's is based in Las Vegas.
Gambling Companies Spent $1.3M Lobbying for Internet RegulationWorldwide gambling companies spent more than $1.3 million lobbying politicians in Washington D.C. in the first half of 2007, presumably to persuade them to pass Bill HR 2046, ie. the Internet Gambling Regulation Enforcement Act. According to our research of the US Senate of Public Records PartyGaming PLC spent $140,000, Harrah's spent $100,000, World Poker Tour spent $20,000, Station Casinos Inc. spent $60,000 and the American Gaming Association (who represents over 50 gambling companies) spent $900,000 in lobbying efforts the first half of this year. All companies are required by federal law to release papers on their lobbying efforts every six months. The numbers for the first six months of 2007 have just started to be filed and it is apparent that there is a great deal of lobbying going on behind closed doors to persuade politicians in Washington to pass Barney Frank's bill to legalize, regulate, and tax online gambling. Of course, it does not say what side of the issue the company is lobbying, but it is assumed that these companies who list HR 2046 as one of their efforts are lobbying for the passing of the bill because they would all benefit. It goes without saying that PartyGaming and World Poker Tour are in favor of US legislation to legalize the industry, and Harrah's and MGM have stated earlier in the year that they would jump all over an opportunity to release their brand online to US customers. Although many companies have a vested interest in the industry getting regulated in America, in September Casino Gambling Web representatives will head to Washington D.C. to lobby on behalf of the American people, who are desperate to gain one of the freedoms back that was stolen from them by a corrupt senator late last year. The Casino Gambling Web reps that are headed to Washington D.C. will not be spending money to persuade politicans, rather they will be presenting facts about the industry to politicians and aids in hopes of enlightening them about the issue. August 24, 2007
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| | misty113
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Reply with quote | #9 |
New U.S. Tax Law Takes Bite Out of Tournament WinningsLaw Will Require Casinos to Take 25 Percent of $5,000 or More A new tax code has been released that spells out just how much money the government will take from those who are lucky enough to cash for $5,000 or more in poker tournaments.
Starting March 4, 2008, casinos and cardrooms are supposed to start withholding 25 percent of any poker tournament winnings of $5,000 or more. This will particularly affect the poker hobbyists who go deep in tournaments with buy-ins that range from $100 to $550, and of course those who make their living humping the tournament poker trail.
Language in the new tax code pointed to a tax court ruling that took place earlier this year. The ruling held that tournament poker is not a skillful competition and should be considered a gambling activity, at least for the purposes of taxation. The law requires casinos and cardrooms to withhold and report the winnings from a player if it amounts to $5,000 or more in a tax year. The code does not address winnings from online poker sites or from casinos off U.S. soil. Here’s an example of how much money the government will be making off of poker tournaments after March 4, 2008. If the law was in effect earlier this month, the top seven finishers of the $500 event that took place Aug. 7, at the Legends of Poker would have paid a total of $40,221 in taxes. The runner-up of this tournament, which attracted a healthy 460 entrants, would have taken home $27,972 after taxes ($37,295 before). The winner received $74,585. If the law was in place, that amount would’ve been $18,646 less. The notice that was released to accounting firms this week follows:
Background. Under Code Sec. 3402(q)(3)(C)(i), payers must withhold 25% on proceeds of more than $5,000 from a sweepstakes, wagering pool, or lottery (other than a state-conducted lottery, covered by another withholding rule). Proceeds from a wager are determined by reducing the amount received by the amount of the wager. (Code Sec. 3402(q)(4)(A)) Facts. A poker tournament sponsor charges an entry fee and a buy-in fee for each participant. In exchange for paying the buy-in fee, a participant receives a set of poker chips with a nominal face value for use in the specific poker tournament. The sponsor pays amounts, which exceed a participant's fees by $5,000, to a certain number of tournament winner(s), out of a pool made up of all the participants' fees. Poker tournament sponsors must withhold. Rev Proc 2007-57, which is effective for payments made on or after Mar. 4, 2008, says poker tournament sponsors (including casinos) paying amounts to winners in a manner substantially similar to the facts above, must under Code Sec. 3403(q) withhold and report on payments of more than $5,000 made to a winning payee in a tax year. They must furnish a copy of the information return to the IRS on or before Feb. 28 (Mar. 31 if filed electronically) of the calendar year following the calendar year in which the payment is made. Rev Proc 2007-57 cites legislative history for the proposition that the term "wagering pool" includes all pari-mutuel betting pools, including on- and off-track racing pools, and similar types of betting pools. It also cites a non-tax case (U.S. v. Berent, (CA 9 1975) 523 F.2d 1360, 1361), holding that in common usage "pool" means "a particular gambling practice, an arrangement whereby all bets constitute a common fund to be taken by the winner or winners." The IRS said it won't assert any liability for additional tax or additions to tax for violations of any withholding obligation relating to amounts paid to winners of poker tournaments under Code Sec. 3402, as long as the poker tournament sponsor meets all of the requirements for information reporting under Code Sec. 3402(q) and its regs. RIA observation: Earlier this year, the tax court held that tournament poker is a wagering activity for purposes of the Code Sec. 165(d) limit on gambling losses. See Federal Taxes Weekly Alert 03/01/2007.
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Is it safe to play poker online or any online casino?Most online poker players were merely annoyed when the failed politician, Bill First, used his position as Senate Majority Leader last year to ram his Unlawful Internet Gambling Enforcement Act through the Republican-controlled Congress. Sites run by publicly traded companies, including the largest, PartyPoker, stopped accepting players from the U.S. But privately owned Internet poker rooms found their businesses doubling. Similarly, when first PayPal and then FirePay announced they would no longer send or receive funds from gaming sites, players poured even more money into the leading e-wallet, Neteller. Then the founders of Neteller were arrested and the company, without warning, dropped the American gaming market. Neteller compounded the crisis by freezing all American accounts. Online poker players have had to turn to other means to load funds on websites. But most banks decided years ago not to allow their credit cards to be used for 7995 transactions, the merchant code for online gaming. The Department of Justice also sent subpoenas to the investment banks, accountants, and even law firms, responsible for taking Internet gaming companies public on the London exchange. Business for many Internet poker sites has dropped by 25% or more. Players are not only finding it difficult to get funds transferred. They are scared. I receive e-mails every day from players who want to know if they are going to be arrested because they have played poker online. Some have asked for and received checks from poker operators and are now afraid to cash the checks. So, to answer these concerns: 1) You are not going to go to jail for merely playing poker or online casinos online. It is not a federal crime to make a bet. Half the states do have ancient laws on the books making it a crime, sometimes, to make a bet. But these are never enforced. I have been unable to find anyone who has been charged, let alone convicted, for playing Internet poker or online casinos. 2) It is safe to cash or deposit checks from online poker operators. Be aware that Americans are supposed to report and pay taxes on virtually all income from any source. The only crime the federal government really cares about when it comes to gamblers is tax evasion. 3) Your money can get tied up if a gaming operator or e-wallet decides to stop dealing with Americans. It has been more than six months since the CEO of BetOnSports was arrested changing planes in Dallas, and the money in its American former patrons' accounts is still tied up. Players will probably get 100% of their money back. Eventually. Without interest. So, do not keep too much money in any one place. 4) Be careful about new sites. Unscrupulous operators can jump in to fill the vacuum. The danger is greater with e-wallets than with gaming operators. Today, a crooked poker site would be slammed by players all over the blogosphere. But a crooked bank could act legitimately, until its operators disappeared with all the funds. 5) Although there is virtually no chance of getting arrested, you can get into trouble by playing poker on the Internet when you use someone else's computer. The company you work for owns the office computers and can legally spy on what you are doing. While it is not a crime under federal law to make a bet, it is grounds for dismissal if you are a federal employee gambling on federal property. Similarly, some colleges don't want gambling to take place in their dorms on their central computer systems. Remember, even though there is money involved, it's not worth losing your job for or getting kicked out of school - it's only a game. | |
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