Monday, January 22, 2007

The Enemies of Freedom

Two Canadian citizens, Stephen Lawrence and John Lefebvre, were arrested by the FBI on January 15th, , Lawrence in the U.S. Virgin Islands, Lefebvre in Malibu (both of which are barely in the USA). Their crime was money laundering, specifically, transferring money from offshore gambling web sites to users bank accounts, through their company, Neteller. This is a necessary move by our government to crush online gambling without actually attacking it directly. You see, they aren’t going to stop you directly from doing anything, just make it impossible by other means. In the interest of full disclosure, I used to use Neteller to transfer money in and out of poker sites, which was necessary because our government stopped credit card companies from allowing direct deposits. The really scary part here is that our government is arresting people for doing things which are perfectly legal in their country. In fact, they have long since stopped being active participants in the company, they are just 5% shareholders. It is very clear that our government will use whatever power they have to destroy individual freedom, including the secret police arresting foreigners who have broken no law in their own country. This is a precedent which should scare any American who travels abroad. If you publish something on the Internet that can be construed as attacking Islam, you’d better not travel in an Muslim country. If you attack the government of China, stay out of their territory. This is an immensely dangerous precedent.
I had hope that others around the world would rise up in opposition. I had some hope the EU, where most of the Internet poker and gambling sites are located, would protest this attack on their local businesses by a right-wing extremist government. I was wrong. They are actually moving in the opposite direction. They are about to pass a law stating that all Internet businesses must follow the laws of the country of the customer. The UK has protested this, saying that for a small internet business it is an onerous burden to have to research the laws of 27 countries in order to do business. Worse, it risks the dream of expanding freedom through the unfettered dissemination of information. In essence, if a book is banned by a country, no one in that country can purchase it on the Internet. That is a horrible precedent for a world full of repressive regimes, some even worse than ours.
Many of us had hoped that the Internet would break down barriers, would increase the availability of products and information around the world. That dream is dying and, in a desperate attempt to hold on to their power over their own people, the governments of the world seem to be happy with it. Bombs will not take away our freedom – but the government will.


Blogger Lynette Warren said...

This comment has been removed by a blog administrator.

12:00 AM  
Blogger Lynette Warren said...

The move on the part of the US government is a strategic blunder. They mean to gain control of their citizens' overseas financial transactions, but the government's draconian actions will serve to drive a large number of Americans further into shadows of gray financial markets. There have already been successful workarounds developed in the course of the past few days to fund offshore gambling accounts and it's only a matter of time before the new funding methods are perfected and into common usage.

In short, the Justice Department is turning average citizens into increasingly adept money launderers. Our half-smart statist masterminds are likely to have this backfire big time on their grand control fantasy.

12:30 AM  
Blogger Barry Rubinowitz said...

Thanks for joining the conversation. The problem with workarounds is that people have already been scared off. When Party Poker went down, a lot of people on other sites stopped playing because they thought it was illegal -- many regular players just disappeared. Last night I played in a regular tournament on Full Tilt which normally draws 85-100 players and there were only 68. While many will find workarounds, the average person doesn't want to go to that much trouble and tangle with our government at the same time. I must admit to being a little nervous myself -- money I pulled out of Neteller last week has still not arrived in my bank account.
There is a theory that it isn't just religion involved here, that domestic gaming interests have collaborated in this to take down the foreign gambling sites, with the expectation that the law will be reversed eventually and then they can jump in with "legal" domestic sites run by Harrah's or Bally and American players will come running.
Until then, the rest of us will have our fun impacted by those who believe less in freedom and more in power.

9:54 AM  
Blogger samG said...

Now I understand why I could not transfer out of my Neteller account last week. For the moment, I seem to be left with no alternative but Western Union which is a cumbersome pain in the ass. Having spent 10 days this past summer in Ireland, where there are legal betting parlors on every block in even the smallest of towns, and where I may have placed a successful bet on Man United to win the Premiership this year, the efforts by the federal government are maddening. I'm inclined to agree; I wouldn't be surprised if the NFL is winking at these efforts to inhibit gambling on line.

11:21 AM  
Blogger Lynette Warren said...

Admittedly, it is easier to win when casual American players exist in abundance on any given night at the online sites, but a good many Americans do, in spite of mounting restrictions, still prefer the offshore game and all the trappings that go with it. To them, the workarounds barely amount to speedbumps on their road to entertainment and monetary agility.

With so much going into the mix - McCain's Indian Casinos, Frist's Bible Belt, Gonzales's Drug/Terror War, Chertoff's Terror/Drug War - it's hard to keep your eye on the ball, but when it's all said and done, it's all about not allowing the sheep to move their money beyond the reach or the prying eyes of their fleecers.

The treatment of Lefebvre and Lawrence is appalling, but this crackdown could end up being a milestone in the progression to financial flexibility and freedom. There is so much money in online gaming and the financing of online gaming that for every Neteller bust there could be a dozen smaller operations across the globe ready to move in on the market to provide services. The USDOJ is an 800lb gorilla, but it can't stop everyone. By crushing above board companies like Neteller, they leave the market open for less compliant companies to handle American assets. This means more anonymity for investors and less exposure to the IRS and the DOJ.

The pots are getting bigger and bigger in this game.

11:54 AM  
Blogger Barry Rubinowitz said...

I wish I shared your optimism, Lynette, but I guess it only comes with your pure libertarianism. As a frequenter of poker sites, I can tell you the first wave of departures (Party Poker and Firepay)had a serious negative effect on the depth of games.
Losing Neteller is far worse, as they handled 80% of the transactions. Your theory that smaller companies will jump in is not convincing. I, for one, prefer a larger company, with some history of integrity when trusting them with my money. I chose Neteller for the simplicity and the clear mutual dependence between it and the gaming community. Its replacement by smaller companies would not encourage me at all. There is one company, Epassporte, which seems to be the one people will go to, but they haven't had to deal with the kind of volume they would have to with this kind of migration.
As for the quality of players affected by this, yes, casual players will depart, as they may choose to stop playing rather than set up a whole new process for depositing their cash. But the Party Poker crash took a number of good players away too. Players who I used to see in tournaments and money games all the time simply stopped playing. Whether that was due to their thinking it was illegal, or whether it was a certain nervousness about the added trouble it was going to be to deal with, I don't know. But if a weak player doesn't want to be bothered putting more money in, I can tell you from my own point of view, a good player is leery of a system where getting money out could be hard. I accept the risk inherent in playing, but I'm starting to feel a risk involved with actually getting my hands on my winnings, and that is destructive to the game.

1:19 PM  

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