So, into the fluid situation today came striding Neteller to add disruption and change. A while back I wrote that I thought Neteller would withdraw from the market or start scrambling to resolve major issues that threatened it. The rumors had them meeting with Barclay bank-their banker. So, I wrote my opinion and the very next day they had a new conference and press releases and the jist of it was "We are here to stay." I was shocked but have been wrong before.
Today that bold statement was dramatically reversed. And, in light of what I wrote then I am strangely optimistic at the proceedings.
I wrote that Barclay is a bank. Well we all knew that. As one of the large, international banks they have relationships with every government and finacial market in the world. Their presence is large in the U.S. They are interested in cordial relationships and being Netellers bank was going to disrupt things and could possibly even lead them to litigation between them and the U.S. Attorney General. The easy course is to dump Neteller as a client.
Neteller expressed a desire to stay with its market. The alternative is to shrivel and maybe not survive. They thought they had an agreement where they could continue their banking relationship. That appears to have sundered. The world is a big place. There are banking areas such as Hong Kong where a new deal might be negotiated. We'll have to wait to see what happens but it isn't as dead as it might appear.
The sad part of all this is that this silly Online Gambling Bill is a part of an important Port Security Bill that Homeland Security said it wanted/needed. Another thing the Congress remarked on was that these poker transfers could involve money laundering for a group of entities-including the terrorist. So, one part fights terrorism and the other creates a scramble to less cooperative sources than a Barclay Bank This will lead to muddier situations than the current arrangements and make money laundering easier.
Now that we've covered the Fluid situation, lets move toward something positive.
Antigua-Barbuda is a dot on the map. It has an area about 2.5 times the size of our nation's capital and just over 69,000 inhabitants. (The population of Utica, NY) They are a convenient banking location with relatively loose corporate standards. It isn't quite Switzerland but it tries to accomodate business that might not find favor in a more audited climate. (Neteller should take note.) I seem to recall Enron might have used it a bit. So, it is a convenient home for poker sites to locate and any number did. When the U.S. got nasty about poker-and this was much earlier in 2003-the country had the moxy to go the the WTO (World Trade Organization) and enter a complaint. And they proved their case and won a judgement. The U.S. was to stop harrassing their poker companies. As victories go it was pretty hollow. Economic sanctions are what are authorized. In the past we had whizzing contests with places like France and were allowed to place a tax on French wines to punish them. It is hard for 69,000 stalwarts to affect our GDP.
So along comes the Unlawful Internet Gambling Enforcement Act of 2005 which creates loopholes for those who like the ponies, Indian casinos and all the other campaign contributors and special interest groups-remember it is an election year. Well, the WTO ruled because of just such exceptions citing the rights of various states to allow gambling to occur. So, what the law appears to do is exascerbate the very foundation of what the rulling sought to correct. If you would like you can look at all 287 pages of the finding. I'm going to take others word for the facts presented.
Today, it appears other are taking an interest in the four year old ruling. The attorney for Antigua-Barbuda has met with EU conference representatives, Japan, and China. And he had briefings with Brazil, Barbados, Jamaica and Trinidad and Tobago. These are also members of the WTO.
The following is the time line for all this:
- 2003 The original complaint was filed that the U.S. Was affecting Antigua-Barbuda commerce
- 2004 the WTO agreed with them that the U.S. Was interferring with such commerce.
- 2005 the WTO upheld the appeal against enactment by the U.S.
- Next week, third parties will be allowed to enter comments and form a panel.
- In three week the WTO panel will hear rebuttals by Antigua-Barbuda
- Two weeks later there must be a response by the U. S. Justice Department
- The panel will reconvene in November to prepare their finding.
- The findings will be released early in 2007 (LESS THAN 270 DAYS!)
The U.S. has used the WTO to bludgeon friend and foe alike. There isn't a country that hasn't-at some point-been nailed by our American industries. Japan is still smarting over steel tarriffs. The French over their wine. The list is near endless.
The U.S. had mostly ignored those fine 69,000 folks in Antigua-Barbuda. We were too big a dog to scratch that flea. Then along came Possible Presidential Candidate and All-Around-Nice-Guy Bill Frist and his election year legislation. And he turned that shakey ground the Justice Department was standing on into quick sand. Just for good measure, he brought in interested parties with economic clout that have more than 69,000 friendly street vendors making a living off the cruise boats.
So, before it is all over, we just may be raising our glass to the most inept politician in the U.S. That is a difficult sobrique to garner in the crowd he hangs with but it looks like he just might pull it off.