The expansion of the online gambling market has been facing various challenges since its inception, where the U.S. government tried, unsuccessfully, to shut down offshore gambling sites, claiming that trade agreements were being violated. Since then they have used several tactics to look to limit this, although the online gambling sites have been up to the challenge, or at least enough of them have been to keep the market going.
The United States represents at least half of the overall online gambling market, and we have to look to a time where gambling online was easier than it is today to get these figures, and at one time the American market did make up a full half of the worldwide market.
The potential here is probably even greater than that, given that the U.S. government has maintained since the dawn of online gambling that it was not legal in their country, and whether or not this was actually true, it did serve to keep at least some people out of the market, and probably a good percentage of potential business.
The truth or lack of truth of their claims has never been an impediment to the U.S. government using rhetoric in an attempt to misinform and intimidate people, and to this day they still claim that individuals are breaking the law, federal law, when they gamble online. This is quite ridiculous actually as even when they were trying to sell the idea that the Wire Act applied to poker and casino gambling, this law never applied to individual gamblers and no federal law ever has.
Still though, you can still visit official sites that will tell you that gambling online is a federal crime, and they use FBI logos in the hopes that this will scare people more, perhaps the FBI will come beating down your door with arrest warrants and such, better think twice about logging in to that online gambling site then.
So the misinformation game is one of the ways that the government seeks to at least try to limit the number of its residents who gamble online and while the popular media is generally not much of a help in combating this, the online community has been pretty good at looking to correct people’s views and get them more in touch with the realities here, and therefore the more savvy players tend to be much more in the know here.
So when people realize the truth here more, and find out that there are no federal laws that apply to poker and casino gambling, and while there is a law that applies to sports betting it only applies to bookmakers. Only one state has a direct and clear law against online gambling, and no one has even been arrested for online gambling anywhere in the country, let alone convicted, and there’s no practical way for them to enforce laws against online gambling anyway.
So once people learn this, they do tend to become much more comfortable with online gambling, but there are a lot of people who may otherwise become involved in it if they didn’t have some false beliefs and fears that U.S. authorities have been more than happy to create and foster.
Operators are left to relying on the free flow of information on the internet to handle this, and to a large degree this has been successful, although this continues to restrict things.
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Warding Off Intimidation
So the first tactic that is used here could be called a propaganda campaign, against both players and offshore operators, and much has been done to confuse and intimidate operators as well.
Intimidation is a perfect word to describe the U.S. actions against foreign online gambling operators, because they have few other tools to use. So they can indict people for instance for breaking U.S. laws, even though in a lot of cases it’s doubtful that convictions could be even obtained, but no matter because these people do not live in the U.S. so U.S. law doesn’t even apply to them, and since their activities are legal where they live, it’s not that extraditions are even possible here.
Still though, this is designed to scare them, but not only them, it’s also designed to scare domestic companies, financial institutions in particular, and this was the reason that the UIGEA was passed.
The UIGEA did scare off most offshore gambling sites in fact, even though there may not have been any good reason for them to become scared. Prior to that, they managed to scare Party Poker into paying a huge fine for violating the Wire Act, at a time where it was clear that this law did not apply to poker at all, and certainly did not apply to persons or entities outside the United States in any case.
Party Poker paid up though, many sites left the market, and many financial processors steered well clear of U.S. gambling. The two founding members of Neteller made the unfortunate mistake of visiting the United States and both were arrested on money laundering charges, so this intimidation had bite, and this led to Neteller exiting the lucrative U.S. market.
Credit card companies had been reluctant to process online gambling transactions in the U.S. for many years, and it was a hit or miss affair until the UIGEA, which was sufficient to scare them off almost completely, and turn over the credit card business here to the prepaid sector.
PayPal, once playing a significant role in the market, had left several years before all of this, and PayPal is an American company so they approached this more cautiously. One by one, payment processors dropped off, and in the end all of the major internet wallets stopped doing business in the U.S.
Keeping The Business Flowing Anyway
All of this paints a rather dim picture, especially after several of the biggest online poker sites were driven out by the events of Black Friday, when the government received inside information about where these companies hid their money within the United States, resulting in hundreds of millions of dollars being seized.
This all ended up shrinking the market considerably, as it received significant media attention, and the specter of having your money seized was plenty enough to scare a lot of people from depositing further.
The U.S. market was far from dead though, but the online poker market took a particularly big hit here, as players could no longer play at the big sites and had to settle for some smaller ones. Some of these smaller ones are no longer so small, and have grown quite large, the ones that successfully navigated the new and more challenging landscape.
It’s not really that difficult to get money out of the United States, as people can still use prepaid cards and person to person transfers which both can be rendered pretty anonymous, it’s the getting the money in the country that has proven more difficult. While this has been a challenge, it hasn’t been all that big of one, although some operators weren’t up to the task and ended up going out of business due to player dissatisfaction with long wait times for withdrawals, which shrank their business.
So things run pretty smoothly these days among those who have prospered through all this, and the increasing popularity of Bitcoin promises to make things even easier, as Bitcoin is completely off the grid and completely anonymous and this serves to put financial transactions completely out of the reach of meddling authorities.
So in the end, the Americans waved some big sticks and exploded some impressive looking smoke bombs, but the online gambling industry did take some damage but when the smoke cleared, they have emerged victorious.