Over the past few days I’ve been constantly bombarded with ridiculous headlines regarding the new SAFE Port Act which also contained certain provisions known as the Unlawful Internet Gambling Enforcement Act of 2006 (the Act).
The SAFE Port Act was passed through Congress late Friday night. The current idea is to limit online gambling within the US. The act does not apply to any person physically gambling online; the concept is to make it more difficult for players to fund their online sportsbook, casino and poker accounts. As far ISP’s (Internet Service Providers) are also under no obligation to monitor their customers activities. The act will mainly affect Visa and MasterCard transactions which are already a fairly restricted transaction method for many online gaming sites.
Regulators have 270 days to present a full resolution. Regulations will not start effect until the beginning of July 2007.
In 2001 Visa formed the 7995 merchant code to prevent their customers from using their credit cards for online gambling. Banks must control all electronic transfers from sending funds to any gambling site who uses a 7995 credit card merchant code.
The act will require a large bank number of banks such as the CitiGroup bank to comply. However eWallets like NETeller are based in the Isle of Man which is outside the control of US regulation. NETeller was relatively small until PayPal stopped accepting such transactions in 2002. NETeller is already massively common in the gambling industry as a source of payment and gamblers are frequently offered large bonuses because of its accessibility.
On Monday NETeller dropped 60% of their value in a state of panic and shortly the following statement was released “we are considering the potential impact of the Act at this time” and “will continue to monitor the progress of this legislation and to energetically plan and adapt NETeller’s business to minimize any potential adverse impact.”
Also a number of large online gambling PLC’s such as 888.com have already started shut their doors to US market due to vast drops in the stock market.
The act has caused large hysteria throughout the gambling industry however to stop online gambling completely for US players will be almost futile due to the so many payment processors and gambling companies who are based overseas.
Those that will be most affected will be affiliates and search engines. There has been a lot of speculation that any American operative can be charged with aiding and abetting.