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SAFE Port Bill - Good News, Part 1

October 8th, 2006

While we know many are forecasting the “end” of online gaming resulting from the passage of the SAFE Port Bill, expected to be signed into law by October 14, 2006, those in the know, know better. So, we begin our multi-part series on the ways in which the SAFE Port will still preserve online gambling for those who want to partake, will in some ways make online gambling easier and will even create new opportunities for betting.

Remember that the SAFE Port Bill does NOTHING to change existing law. All definitions in the Bill are merely utilized for determining which financial transactions will be deemed to be “restricted transactions”, and therefore subject to being blocked. They do not attempt to define words and phrases used in the 1961 Wire Act, which is the most often source of support for arguing for the criminalization of the operation of online gambling. In fact, Section 5362(10)(A) states that the term “unlawful Internet gambling” only means a “bet or wager” which utilizes the internet “where such bet is wager is unlawful under any applicable Federal or State law….” Nothing new. And it also goes on at length to define a “bet or wager”. So activity, to be objectionable under the SAFE Port Bill, must first satisfy the definition of a “bet or wager” set forth in the Bill, and THEN be deemed to be unlawful under a previously existing Federal or State law.

Good news Number 1 is that “bet or wager” under the SAFE Port Bill can not include a deposit to an insured depository institution. So a transfer to a bank account cannot be deemed to be connected with a bet or wager. So, as a result, there is a clear path to permitting transfers to deposit accounts outside the U.S., where such deposit accounts could be used to make transfers to gambling businesses.

And we expect some or maybe many enterprising folks will be able to set up foreign accounts for players on the fly, as they explain in their terms and conditions, where funds are actually transmitted to a foreign account, which will then be used for the direct transfer to the gambling company. And you might even be able to accomplish the double transfer in the terms and conditions and have it be seamless for the player.

We imagine these protections were established to protect banks from any restriction on transferring funds from one bank to another bank. And they certainly do. In fact, Section 5362(2) also creates protection for the financial institution by providing that a financial transaction provider’s activities do not constitute being in the “business of betting or wagering”.

Entry Filed under: U.S. Legislation

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