A number of readers have contacted Gambling911.com concerned about whether they will be able to continue playing poker and betting sports online.  As nearly all of our sponsors have declared: "It's business as usual" or perhaps "It's business as unusual".

First off, one of the things we are stressing is that this piece of legislation related to online gambling attached to a completely unrelated port security bill doesn't change much.

The US Justice Department has long stated that offshore gambling enterprises accepting bets from its citizens is an "illegal activity" regardless of whether operators are Americans or not and the Justice Department has never discriminated between poker and sports betting (remember, they ordered the Discovery Channel to remove its ads for Paradise Poker). 

The US Justice Department has viewed internet gambling from a more hardened stance.  This bill does nothing to change that stance - whether it is a proper interpretation of the laws or not. 

According to prominent gaming attorney, Lawrence Walters:

“The version of the legislation that finally passed is an arbitrary, poorly-drafted, vague set of prohibitions that only serve to further complicate the muddled mess that is online gaming regulation in the [U.S.],” said Walters.

He told this to WinnerOnline and we tend to agree wholeheartedly.

Following the arrest of BetonSports.com CEO David Carruthers in Dallas, it became abundantly clear that the underlying reason for his arrest was that the US government had determined that millions of dollars were leaving the country and not being accounted for. 

We will attempt to put ourselves in the shoes of US Attorney Catherine Hanaway for a moment and remove ourselves from the online gambling industry for a moment as well. 

Imagine if there is an industry....Let's say marijuana.  Millions of people are sending millions of dollars to some offshore Marijuana processors (maybe in Amsterdam).  This Marijuana processor decides to go public and discloses that it is taking in millions of dollars from US citizens, none of which is being taxed.

Now for a hypothetical: What if EVERY COMPANY decided to operate in this fashion?  US citizens conducting business with firms outside the country to avoid paying taxes.  The country would go broke.  We would all be broke (no more companies left in the US, hence unemployment hits a whopping 100%).

When this amount of money is leaving the US unaccounted for, flags are inevitably raised pertaining to money laundering.  And it is "money laundering" - not online gambling - that sits at the top of the US Justice Department's priority list.  But by its nature (as a cash business that takes in substantial amounts), the internet gambling industry is seen as a vehicle for money laundering (whether that is true or not). 

Now let's get back to the bill for a moment.  Gamblers are concerned that they will be targets of this new bill.  Neither the US Justice Department or this latest piece of legislation are designed to go after gamblers.  Nevertheless, there are states that explicitly prohibit individuals from gambling online and do in fact make this activity a felony.  The one state where Gambling911.com has had to actively deter its readers from betting online is Washington State.  It is our opinion that the Washington State law is designed to go after the casual poker player.  It is a draconian law in today's society - even by China's standards - but for now the law exists and whenever possible we try to stress this to our readers in the state of Washington.

While some would argue this latest piece of internet gambling legislation will assist the US Justice Department in going after offshore gambling companies, in a way it does just the opposite.

The Justice Department built part of its case against BetonSports by reviewing public disclosures from the company on the London Stock Exchange.  This is where they determined X amount of dollars are owed back to the United States government.  Internet gambling companies that trade on the London AIM must disclose their financials.  Private companies have the luxury of keeping such numbers behind closed doors.

With the passing of this bill, nearly every company on the London Stock Exchange pulled out of the US market, thus making it more difficult for the Justice Department to monitor monies leaving the US.  The publicly traded companies did not provide the full picture, but they did give something to go by at least. 

What stands out in this latest piece of legislation is that the banking industry will be left to monitor and police online gambling.  But three Congressmen attaching an extraneous provision to a highly important port security bill cannot force banks to do the impossible.

As Independent Community Bank lobbyist Steve Verdier was quoted as saying, “It's very tempting to think the banking industry can stop this kind of stuff because people pay for it through banks, but the fact is the system just wasn't really designed to do it."

Senate Majority Leader Bill Frist was the individual who ensured this "prohibition" made it through Congress and onto the President's desk.  Imagine if Frist, a former heart surgeon, decided to tack a piece of legislation onto the port security bill that required all doctors to ensure their patience were not prone to heart attacks by the year 2008 as a means of cutting down on health insurance.  We suppose the Health Care industry would be thrilled with Bill Frist and his cronies (not to mention those with heart disease would get his vote).  But drafting a bill that would essentially require the medical community to come up with a cure for heart attacks within the next two years is an impossible task.  Likewise, the banking industry claims that monitoring online gambling transactions is an impossible task.   Assuming it is, the bill in question simply cannot be enforced. 

And while the banks are told to do this, there are no criminal penalties that will be lodged against the banking institutions.

So as a quick summary, regarding this latest bill:

Will gamblers themselves be affected by this bill?  

The gamblers will be inconvenienced to some degree as a result of third party payment processors leaving the industry and some major international banks announcing they will no longer do business with online gambling establishments.  Some internet poker rooms, sportsbooks and casinos were scared off as well, which will leave gamblers scurrying for new places in which to play.

Despite what you may have been reading in the press, the online gambling industry is among the best "self-policed" industry in the world, more so than the airline industry we might add.  The industry had only begun to expand into the public sector over the past two years and that sector made up a very small portion of the overall industry. 

The one concern we do have is that even the bigger of these privately held companies will cut back on their advertising.  Heavy branding by PartyPoker, Sportsbook.com and Bodog.com helped reel in gamblers and would-be gamblers to the online market.  These individuals would often become familiarized with the industry and other less visible - but reputable - brands that were out there.  Without this type of heavy marketing and media exposure drowning out various "fly by nights" the pop up regularly (as they do in nearly any industry), gamblers could be exposed more to disreputable betting shops.  It is more important than ever to review our certified online sportsbooks section. 

Will online gambling companies be affected by this bill?

Prior to the bill's passing, the US Justice Department had already offered its own interpretation of the law in regard to accepting bets offshore from US citizens.  This bill does little to change that hardened stance other than to eliminate some of the resources used by the Justice Department in tracking monies leaving the US (i.e. via public company disclosures). 

The chief concern we feel for online gambling operators will be more reliance on unscrupulous third party payment processors located in countries with extremely lax banking laws.  This has long been a problem for operators but we foresee it becoming an even bigger problem as opportunists enter the industry en masse. 

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Christopher Costigan, www.gambling911.com

Originally published October 14, 2006 12:26 pm ET