The government is fighting a losing battle

Republicans have been blamed for most of the online betting industrys recent woes.  Republican John McCain spent years trying to outlaw betting on college sports right here in Las Vegas.  Republicans Jim Leach and Bob Goodlatte were instrumental in bringing legislation outlawing online gaming to the forefront of the Congressional agenda.  And former Republican presidential candidate Bill Frist was able to attach the ‘Illegal Internet Gambling Prohibition Act to a port security bill this past October, forcing huge players like Party Poker, Sportingbet and Pinnacle out of the US market. But Democrats are just as much to blame as Republicans.  Jay Cohen, founder and co-owner of WSEX, a leading offshore betting site, was indicted, tried, convicted and jailed thanks to prosecution from Janet Renos attorney generals office, with tacit approval from the Clinton adminstration in the late 1990s.   The latest fiasco is also Democratically induced.  Former New York attorney general and current governor Elliott Spitzer was responsible for the indictments and arrests of a pair of former Neteller executives this past week, on charges of money laundering. Last night, Neteller announced that they would be leaving the US market, not willing to risk more arrests and indictments from the US government.  The publicly traded company processed more than $7 billion in financial transactions last year, nearly ¾ of which came from the US.  The announcement came one day after the owners of Citadel Commerce, another online gambling financial facilitator, announced it was shutting down. Over the past decade, the U.S. government (both Democrats and Republicans) has put immense pressure on banks and credit card companies to refuse online gambling transactions. But even with the latest string of arrests and indictments, smaller companies that provide funds transfer services like Click2Pay, InstaDebit and eCheck are still alive and flourishing. David G Schwartz, from UNLVs Center For Gaming Research: The (UIGEA) doesn’t seem to have really impacted how much people gamble. It has hurt the companies that were publicly traded or the companies that have more exposure legally, but I don’t know that it has really changed behaviors that much. The government is fighting a losing battle.  They know it.  We know it.  And the smaller offshore operators, already outlaws, know it as well.  The current string of setbacks to the industry has made it slightly more difficult for bettors to bet offshore, and to transfer their money offshore.  It has not closed down the industry.  It has not stopped people from gambling.  And it has not changed the overall attitude among American bettors – gambling will continue, unabated, despite these recent legal setbacks. The general public couldnt care less about the state of the online gaming industry.  The Neteller arrests barely registered in the national media; the Pinnacle pullout last week didnt make a single headline other than among bettors in online forums.  While things look dark at the moment, particularly for publicly traded online gaming companies, there are still dozens – no, hundreds – of smaller online sites poised to experience tremendous growth following the pullout by industry behemoths. What the politicians and attorney generals dont seem to realize is that you cant legislate human behavior.  People are going to find a way to do what they like to do, regardless of poorly written and poorly thought out federal laws.  As big companies go down, smaller companies will rise up and become big companies. When religious zealots were able to ram through a Constitutional amendment banning alcohol back in 1919, people continued to drink.  After the law was routinely ignored, and the effects of the law increased corruption and violence around the country, Prohibition was repealed 14 years later.   The current laws arent changing anybodys behavior – its nothing more than harassment for the bigger companies that have made the most money in the offshore world.  The industry will adapt, survive, and thrive, because of one reason and one reason only: There are tens of millions of honest, hard working American citizens that enjoy placing wagers and playing poker online.  Thats not going to change because of federal, state or local politicians trying to make headlines.  Lets hope that it wont take 14 long years before the political climate changes enough for online gaming to be licensed, taxed and regulated here in the USA.