Online Gambling Sites Still Struggle With Deposit HurdlesFor affiliates in particular it has been a brutal past 6 months. While the Unlawful Internet Gambling Enforcement Act (passed last October) did some damage, few would disagree it was the payment processors following Neteller's lead out of the US market in January that caused the most significant damage to online gambling. Neteller was the top payment processor catering to this sector.
"I know an affiliate who has gone from making $30,000 a month to barely making $8000," said one online gambling affiliate who wished not to be named. "That is pretty much the norm. These guys were used to making a whole lot of money and now their barely able to make ends meet."
The affiliate who offered us this quote was about to give up his day job before the online gambling industry went haywire back in January. Today, he is fortunate to have kept his regular 9 to 5 job.
"This (his day job) is what pays the bills. There is no way I can survive just owning a (online gambling) website."
Such would not be the case had the status quo remained.
"I was looking at tripling my income from the site by this time," he told Gambling911.com.
The main problem: online gambling sites have had a tough time turning signups into conversions (depositing customers). Potential online gamblers are left with very few methods for depositing funds. Credit cards readily get declined. Western Union transfers are not feasible for the average web surfer. And the third party payment processing companies left standing are considered "shaky" at best.
Rumors have been circulating that ePassPort, one of the few third party processors still serving the online gambling community based in the US, may be about to pull out. Others have suggested the California-based company is simply changing its name.
The US government has aggressively gone after those companies engaging in money transfers with online gambling enterprises.
Two co-founders of Neteller, arrested last January, entered pleas of "conspiracy" within the last couple of weeks.
Stephen Lawrence, whose company, Neteller PLC, was once one of the primary ways US citizens placed bets with offshore bookies, acknowledged in a federal courtroom in Manhattan that the operation was illegal.
"I came to understand that providing payment services to online gambling web sites serving customers in the United States was wrong," he told the judge.
His lawyers said he was cooperating with US investigators and also had agreed to be at least partly responsible for the $US100 million ($A118 million) the government is seeking in restitution.
John David Lefebvre, 55, another Neteller co-founder, entered the guilty plea in U.S. District Court in Manhattan one week later.
In a plea deal, the former happy-go-lucky hippie and philanthropist agreed to cooperate with prosecutors and testify if necessary. He also agreed to be partly responsible for the $100 million the government is seeking in restitution.
Although the conspiracy charge carried a potential prison term of up to five years, cooperation in the case was likely to greatly reduce any potential sentence.
Neteller is yet to pay several million dollars owed to US customers, claiming that funds were froze. They now insists all monies will be returned in the coming weeks. There remains little evidence that this is occurring however.
But Neteller may very well pay. Just this week it was announced the money processing firm would be among the premium sponsors at The 6th Annual European i-Gaming Congress and Expo for which Yours Truly will be a speaker. This demonstrates an intention to move forward and continue operations, albeit outside the US.
For many online gambling affiliates though there remain bumps in the road ahead. The most important date on our calendar perhaps: September 4. This is when a Federal Judge in the state of New Jersey has assigned a hearing date for its lawsuit against U.S. Attorney General Alberto Gonzales that seeks to have an new online gambling law, the Unlawful Internet Gambling Enforcement Act (UIGEA) overturned.
“We’ve laid out our argument on the merits of granting a TRO for the enforcement of UIGEA for the Court,” said Joe Brennan Jr., iMEGA’s founder. “From iMEGA’s standpoint, we did not want the defendants (US Dept. of Justice, Federal Trade Commission and the Federal Reserve) to use the allowed 60 days in their summonses in order to stall and give themselves more time to promulgate the regulations for UIGEA.”
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Christopher Costigan, Gambling911.com
Originally published July 26, 2007 11:54 pm ET
