VIENNA, Austria, October 14 LAWFUEL – US Law News, US Law Jobs — On 30 September 2006 the US Senate passed the “SAFE Port Act” which also contains a section referred to as the “Unlawful Internet Gambling Enforcement Act of 2006”.
The new act primarily affects online payment transactions for games of
chance, which have been deemed unlawful under US American law, and aims to prevent these by threatening severe punishment, court sanctions and
regulatory action. This statute adds a new subchapter to Chapter 53 of the United States Code stating that online games of chance are primarily
financed through credit card payments and money transfers and that new
enforcement tools have become necessary for the Internet. Not only sports
bets, but also games of chance and lotteries, are affected by the “bet or
wager” definition. The law makes payment transactions related to unlawful
online games of chance virtually impossible, listing all payment options
affected in detail as is customary for US legislation. In addition, section 5367 also contains a provision about the liability of any company or person involved in such transactions. This also applies to operations owned or controlled by someone who accepts unlawful bets and wagers.
Ongame, one of the companies in the bwin Group is also affected by the bill which was signed into law today by President George W. Bush.
bwin regrets that the US has taken this step which will make it
virtually impossible for listed, strictly regulated and transparent
operators to offer real money entertainment to US customers. bwin is
doubtful whether US authorities will be able to achieve their stated goals – protection of minors and the prevention of gaming addiction – by
introducing such legislation. Past experience with restrictive measures to prevent the abuse of alcohol has shown that such prohibition did not have the desired effect, merely driving consumers underground and contributing to the rapid growth of an entirely unregulated black market. The online gaming industry is unanimous in its view that the creation of forward-looking regulation can more effectively address issues such as consumer protection, the protection of minors, the prevention of gaming
addiction, or the prevention of money laundering. Such a policy, if
properly monitored by the authorities, would be much more effective than
this general ban.
Following an in-depth analysis of the situation and extensive legal
consultation, bwin has decided to comply with the new legislation and will no longer accept any new US-resident customers for its real money gaming products, effective immediately. The company is working on technical
arrangements that will prevent existing customers from accessing its real
money games. Until further notice, bwin will only be offering a “play
money” line-up to the US market. The greatly increased risk of prosecution by the US authorities, the considerable pressure on banks and payment providers coupled with the requirements for publicly listed companies leave the company no other option.
For the year 2006 the Ongame customer base also includes some 177,000
active real money customers not resident in the US. In addition, the
majority of customers in Ongame’s poker network are from Europe. In Q2
2006, the former Ongame customer portfolio generated gross gaming revenue
of EUR 29.0 million. EUR 9.3 million or 32 percent of the gross gaming
revenue were generated from customers not resident in the US. Cumulative
gross gaming revenue of the bwin group amounted to EUR 94.3 million in Q2
2006; as leading provider of online gaming entertainment in continental
Europe, bwin generated 79 percent of its gross gaming revenue through
customers not living in the US in Q2 2006.
bwin customers not resident in the USA are not affected at all by these
legislative changes in the United States, and can continue to enjoy the
full range of bwin products.
Karin Klein, Corporate Communications
bwin Interactive Entertainment AG
Borsegasse 11, 1010 Vienna, Austria