Poker Profits Vs Legal Activity

According to an article in IDD (Investment Dealers Digest), several top Wall Street investment banks have financial stakes in a number of international businesses that have online gambling ventures in their own operations. The article says this is due in large part to the fact the online gaming industry has grown to US$12 bln/yr as of 2005, and will likely exceed $24 mln in a few more years. This includes online poker games such as Texas Hold’em, amongst other games.

Throw in the fact that there have been over $50 bln in mergers and acquisitions in the industry since 2000 and various IPOs - both a source of fee revenue for investment banks - and you can see why these American firms have ignored the US Department of Justice’s claim that online gambling in America is illegal.

Now, given that various US Deputy Assistant Attorney Generals have implied the possibility of organized crime and terrorist infiltration into online casinos, these big investment banks are enabling potentially dangerous people in order to make a buck. There’s also the “1961 Wire Act, which prohibits the transfer of betting information across state lines using wire communications, such as the telephone.”

There’s something wrong here, hypocrisy at the least.

As I understand it, US state law overrules federal laws. So the Washington state government can declare it illegal for Washington state citizens to write about online gambling, or for Washington newspapers to publish such articles. But if the DOJ, or whichever federal department is most appropriate, got their act together and allowed existing authorized casinos to conduct online gambling, U.S. citizens might more likely be drawn to brand-name casinos (online). If that is the result, Washington and other states might not take the drastic action that they have.

There are all kinds of ways, via technology, that online gamblers can be verified for age and still retain a level of anonymity. For example, a special smartcard or USB dongle could be issued anonymously to players, upon proof of identification, through registered vendors across the USA. If there is a concern that said players would provide the e-pass to minors, an alternate method would be a one-way biometric scan. Any data stored would simply verify that the person was legally allowed to gamble, not their name or address, etc. This would allow the user to remain anonymous, but would be more expensive to implement.

Regardless of the solution used, being able to retain anonymity means that citizens are less likely to object to regulated online gambling. This means more revenue for US casinos, and likely more jobs.

other sources: (free subscriptions may be required): Investment Dealers Digest [found via FierceFinance Newsletter], US DOJ  ECommerce Cybercrime: Internet Gambling.

Related Link: Online Pokern

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