Sportsbooks stay ahead of Uncle Sam
Reed Holmes
It’s fitting the U.S. government’s proposed legislation to stop Internet gambling has the word “prohibition” in its name.
Less than a century ago, America experimented with another type of prohibition – the prohibition of alcohol. Like that hapless experiment, the prohibition of Internet gambling is likely doomed to failure, if it’s actually attempted.
“The facts are that people don’t generally don’t like to be told they can’t do something,” John Coates, chief executive of bet365. “People will find way to get money to bookmakers.”
The Senate banking committee passed the Internet Gambling Prohibition Act on Thursday. The bill will now be considered by the Senate at large. Similar legislation has already passed in the House.
The legislation seeks to ban Americans from using credit cards, checks and electronic fund transfers to pay for online betting transactions, including sports bets.
The onus will be on U.S. financial institutions to enforce the legislation.
In anticipation of the legislation, banks across America have already begun to decline attempts by Americans to conduct transactions with online casinos and sportsbooks using their credit cards, namely Visa and MasterCard.
Rob Gillespie, president of BoDog Sportsbook and Casino, figures up to 90 percent of American banks are now declining credit card transactions with online sportsbooks and casinos, which are identified by the account code 7995.
“There’s going to be a point here in probably inside a year that it won’t even be worth us even having Visa and MasterCard accounts,” he said.
Up until now, the action by the banks has been a mere inconvenience for most online sportsbooks. There are still a multitude of ways bettors can set up accounts and place wagers online.
“There’s all the standard ways that guys have always been able to deposit money with us, be it a Western Union transaction, a cashier’s check or bank wire,” said Brad Mitchell, president of Jaguar Sports.
Other traditional payment methods include things like personal checks, banks drafts and money orders. Then there are the emerging online money handlers that are profiting from the crackdown on credit cards.
“There are a number of good, viable other methods of Americans loading up their accounts, including the Nettellers and the FirePays of this world who have seen a strong niche market and gone after that processing business,” said John Coates, chief executive of bet365.
(PayPal, which enables users to send and receive payments through credit cards or bank accounts, used to be a favorite of online gamblers. But online auctioneer eBay bought the company last year and shut down the company's gambling business because of regulatory issues.)
Most sportsbooks still accept credit cards, especially since most gamblers outside of the U.S. are not prevented from using them to place bets online.
bet365 is based in the United Kingdom where sports gambling is legal and regulated. The company takes bets from about 120 countries around the globe. Most gamblers are able to place bets online using their credit cards, as long as they’re not American.
“I’m not saying that there aren’t areas of the world where it isn’t more difficult. As soon as you go outside the U.K. it’s more difficult, but nothing like the U.S.,” said Coates.
Gillespie is not entirely disappointed to see American banks prevent gamblers from using credit cards to place bets online.
“It doesn’t bother me very much at all,” he said. “There are higher cost fees (with credit cards), there’s more fraud, more random charge backs, and there are still more stolen credit cards.”
The anti-Internet gambling legislation that’s currently before the U.S. Senate is a wide-ranging bill that not only targets credit cards, but also targets checks, electronic fund transfers and other financial instruments.
Among the instruments likely included in the legislation would be things like Netteller and FirePay, both of which have become popular with online gamblers.
“There is no certainty the bill would go through but if the bill did go through, I would think that it’s likely (the government) would try and prevent as many different methods as possible,” said Coates.
Because of the aggressive nature of the proposed legislation and politicians who back it, several sportsbooks are trying to stay ahead of the government by developing their own financial instruments that would not be affected by the bill, should it pass.
“Part of the battle is not just finding ways to kind of circumvent the situation, but instead to come up with solid reliable solutions,” said Mitchell.
Based in Costa Rica, Jaguar has developed a relationship with a European-based company called moneybookers.com that will handle financial transactions much like Netteller.
bet365 is also working on new software that would allow customers to quickly transfer money from their bank accounts into the book’s bank account. The system should be ready in August, said Coates.
BoDog already has its own system called eBanx. In fact, about 70 percent of deposits made to BoDog are now made through eBanx, which acts like an intermediary between bank accounts.
“We have been able to gain huge amounts of market share because we have been one of the few that have found easier ways around the credit card problems,” said Gillespie.
Gillespie says his company is continuing to develop other mechanisms it can roll out if the anti-Internet gambling legislation passes. Not surprisingly, he's keeping tight-lipped on the details of those mechanisms.
“We’ve got a half dozen other pokers in the fire, things we’re working on, contingency plans,” he said. “We’re going to keep pretty closely under wraps so those things don’t get included in any legislation.”
Gillespie did hint that a number of offshore sportsbooks could potentially join forces and create their own credit card system.
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Reed Holmes
It’s fitting the U.S. government’s proposed legislation to stop Internet gambling has the word “prohibition” in its name.
Less than a century ago, America experimented with another type of prohibition – the prohibition of alcohol. Like that hapless experiment, the prohibition of Internet gambling is likely doomed to failure, if it’s actually attempted.
“The facts are that people don’t generally don’t like to be told they can’t do something,” John Coates, chief executive of bet365. “People will find way to get money to bookmakers.”
The Senate banking committee passed the Internet Gambling Prohibition Act on Thursday. The bill will now be considered by the Senate at large. Similar legislation has already passed in the House.
The legislation seeks to ban Americans from using credit cards, checks and electronic fund transfers to pay for online betting transactions, including sports bets.
The onus will be on U.S. financial institutions to enforce the legislation.
In anticipation of the legislation, banks across America have already begun to decline attempts by Americans to conduct transactions with online casinos and sportsbooks using their credit cards, namely Visa and MasterCard.
Rob Gillespie, president of BoDog Sportsbook and Casino, figures up to 90 percent of American banks are now declining credit card transactions with online sportsbooks and casinos, which are identified by the account code 7995.
“There’s going to be a point here in probably inside a year that it won’t even be worth us even having Visa and MasterCard accounts,” he said.
Up until now, the action by the banks has been a mere inconvenience for most online sportsbooks. There are still a multitude of ways bettors can set up accounts and place wagers online.
“There’s all the standard ways that guys have always been able to deposit money with us, be it a Western Union transaction, a cashier’s check or bank wire,” said Brad Mitchell, president of Jaguar Sports.
Other traditional payment methods include things like personal checks, banks drafts and money orders. Then there are the emerging online money handlers that are profiting from the crackdown on credit cards.
“There are a number of good, viable other methods of Americans loading up their accounts, including the Nettellers and the FirePays of this world who have seen a strong niche market and gone after that processing business,” said John Coates, chief executive of bet365.
(PayPal, which enables users to send and receive payments through credit cards or bank accounts, used to be a favorite of online gamblers. But online auctioneer eBay bought the company last year and shut down the company's gambling business because of regulatory issues.)
Most sportsbooks still accept credit cards, especially since most gamblers outside of the U.S. are not prevented from using them to place bets online.
bet365 is based in the United Kingdom where sports gambling is legal and regulated. The company takes bets from about 120 countries around the globe. Most gamblers are able to place bets online using their credit cards, as long as they’re not American.
“I’m not saying that there aren’t areas of the world where it isn’t more difficult. As soon as you go outside the U.K. it’s more difficult, but nothing like the U.S.,” said Coates.
Gillespie is not entirely disappointed to see American banks prevent gamblers from using credit cards to place bets online.
“It doesn’t bother me very much at all,” he said. “There are higher cost fees (with credit cards), there’s more fraud, more random charge backs, and there are still more stolen credit cards.”
The anti-Internet gambling legislation that’s currently before the U.S. Senate is a wide-ranging bill that not only targets credit cards, but also targets checks, electronic fund transfers and other financial instruments.
Among the instruments likely included in the legislation would be things like Netteller and FirePay, both of which have become popular with online gamblers.
“There is no certainty the bill would go through but if the bill did go through, I would think that it’s likely (the government) would try and prevent as many different methods as possible,” said Coates.
Because of the aggressive nature of the proposed legislation and politicians who back it, several sportsbooks are trying to stay ahead of the government by developing their own financial instruments that would not be affected by the bill, should it pass.
“Part of the battle is not just finding ways to kind of circumvent the situation, but instead to come up with solid reliable solutions,” said Mitchell.
Based in Costa Rica, Jaguar has developed a relationship with a European-based company called moneybookers.com that will handle financial transactions much like Netteller.
bet365 is also working on new software that would allow customers to quickly transfer money from their bank accounts into the book’s bank account. The system should be ready in August, said Coates.
BoDog already has its own system called eBanx. In fact, about 70 percent of deposits made to BoDog are now made through eBanx, which acts like an intermediary between bank accounts.
“We have been able to gain huge amounts of market share because we have been one of the few that have found easier ways around the credit card problems,” said Gillespie.
Gillespie says his company is continuing to develop other mechanisms it can roll out if the anti-Internet gambling legislation passes. Not surprisingly, he's keeping tight-lipped on the details of those mechanisms.
“We’ve got a half dozen other pokers in the fire, things we’re working on, contingency plans,” he said. “We’re going to keep pretty closely under wraps so those things don’t get included in any legislation.”
Gillespie did hint that a number of offshore sportsbooks could potentially join forces and create their own credit card system.
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