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Poker News | Gambling and the Law

Neteller Announcement – What does it really Say?

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So by now you've either read my article about the press release from Neteller, the press release itself, or you have no idea what I'm talking about. If it's #3, go read Prevo's blog, it's far more entertaining than the gloom and doom I'm about to lay on you.

So what does the Neteller press release mean, in English? Let me start by saying that I am not an attorney, although I have played one on stage. So this interpretation is based purely on my life experience and the months I've spent following this legislation and gambling witch hunt.

First, it means that Neteller is not intending to fold and run away with poker players' money. That's been the monster under the bed ever since they shut down most of their services to US citizens; that Neteller was going to go all Dutch Boyd on us and steal millions of dollars from US gamblers. That is not going to happen.

The release clearly states that deposited funds are still segregated from operating funds and that there is plenty of operating capital to keep the business going. I'm not necessarily one to believe everything I read in a press release, but the actions of the company seem to back up their statement.

The continued suspension of trading makes perfect sense in this scenario. A company that was going to fold up shop and run to Uruguay with your money wouldn't care what the stock was going for; they'd be on the first plane to somewhere warm and sandy. A company that plans to deal with an unpleasant situation and return to business with a new direction suspends stock trading until they can figure out what's going on, and then announces the new plan and reopens trading on their stock.

So Neteller isn't going to steal your money. The US government, however, has already stolen your money, and there's no guarantee that you'll see it again. $50 million goes a long way, and that's roughly the amount seized by the US Attorney's office.

The US government has a policy that any money or property acquired by committing an illegal act can be seized, sold and that money put into the governmental coffers. You can search any state surplus website for drug seizure property to see the truth of this statement. I'm pretty sure nobody's ever used a Playstation 2 in the manufacture of crystal meth, but when a dealer's house is raided, the electronic toys end up for sale - with the money going to the state.

And the position of the US government is that gambling on the internet is an illegal activity. Look at the Richard Lee raid this summer. Cars, televisions, home stereos and computers were all seized from five houses in San Antonio because they were believed to be running an online sports book. I'm pretty sure a Lexus has nothing to do with sports betting, but because it was allegedly purchased with receipts from this illegal enterprise, it was seized. Lee has, for the record, not been convicted of anything.

So there is a good chance that your poker or sports book revenues are gone. The glimmer of hope for some people is the hiring of a "forensic accounting firm" to go over Neteller's books to determine the source of the seized funds. This may mean that some funds will be returned to Neteller customers who did not make that money gambling. Peer-to-peer transfer money, money earned by working for companies outside the US, money earned by writing for websites that pay through Neteller are all possible sources of revenue that may be released back to Neteller customers.

But not until the information about what was in your Neteller account is turned over to the IRS. If you have not been diligent in paying taxes on your winnings and recording your losses in online poker, it could very well be a rough year for you. The tax man will be coming, and he will want his pound of flesh. And yes, I just referenced O'Neill and Shakespeare in the same sentence. And I can do that, note the literary moniker.

Some of you have posted repeatedly about how to account for all your winning and losing online, and you'll end up okay. Those of you who have been reading forums on how to avoid paying taxes on your internet winnings are in for a bad year. Al Capone never went to jail for killing anyone, he went to jail for tax evasion. I doubt the Department of Justice is interested in arresting a bunch of poker players for tax evasion, but I would be very surprised if a few hefty tax bills didn't make their way out in the mail over the next six months.

So do I think you'll ever get your money out of Neteller? Maybe. I think your poker winnings are gone, seized in the war on gambling. I think you might be able to get non-gambling money back after a period of several months. And make no mistake; I think the WSOP 2007 will be underway before anything is resolved. The wheels of justice turn slow, and some unfortunate gamblers are going to get flattened.

Do I think it's Neteller's fault? No. They are a large corporation whose first responsibility is to their stockholders, then their employees, then their customers. And they simply do not have the might to fight the US government.

Do I think you're a little crazy if you're on the hook for a huge chunk of money? Yeah, a little. With everything that's been written on the topic, if you've kept more than a few buy-ins on Neteller since October of last year, your glasses are definitely spotting a rosy hue.

I'm not gonna crow about my great financial planning, I got lucky and moved all my money out mere hours before the Neteller cards were shut off. But I'm talking $500 here. I wouldn't be missing mortgage payments if it had gotten swiped by the feds. Those of you with tens of thousands of dollars floating around were living in a state of some denial, and now you're in the unfortunate position of being the primary funding source for the trial against Neteller founders Lawrence and Lefebvre. I hope I'm wrong. But I doubt it.

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