Tuesday, October 03, 2006

If You Live in the US and Have a Single Link to a Online Gaming Site, Read This

First things first, I apologize for being Captain Bringdown here. This is kind of doom and gloomy. But no one is really talking about this and it potentially affects many people reading this.

We're obviously still working our way through the wastelands, as far as what the online gaming ban in the US means to everyone. I'm not a lawyer. I have no idea how all of this is going to play out. But I do have a vested interest in the affiliate side of things, so I've been reading many threads and discussions on many sites. Most posters there are also not lawyers. So none of this comes from anyone with a legal background and none of us know how this will play out. So realize that what follows is largely hypothesizing and conjecture.

Do not be fooled by the fact that the bulk of the legislation is aimed at financial institutions and online operators. Don't simply focus on that very large facet of the bill and ignore other pieces that may indeed directly impact you. It doesn't just address banks and poker sites. While it doesn't attempt to criminalize the act of playing poker online for US citizens, it most definitely takes a broad swipe at criminalizing anyone that aids and abets someone from the US potentially gambling online.

If you have a simple text link to an online gaming site, that's you. It applies more directly to affiliates who are being paid for such services, but it literally can apply to anyone that resides in the US, who places something as simple as a single, solitary hyperlink to an online gaming site.

Below is lawyer Nelson Rose's analysis of this facet of the law:

"The Act provides for limited civil remedies against “interactive computer services.” An Internet service provider can be ordered to remove sites and block hyperlinks to sites that are transmitting money to unlawful gambling sites. ISPs are under no obligation to monitor whether its patrons are sending funds to payment processors or even directly to gambling sites. But once it receives notice from an U.S. Attorney or state Attorney General, the ISP can be forced to appear at a hearing to be ordered to sever its links.

But the statute has an interesting requirement: The site must “reside on a computer server that such service controls or operates.” This would limit the reach of this statute to payment processors, affiliates and search engines that are housed on that particular ISP. The same problem of going after foreign operators and payment processors affects this section. Foreign ISPs are difficult to serve and not necessarily subject to federal court injunctions.

The greatest danger here would seem to be with affiliates. Any American operator can be easily grabbed. This includes sites that don’t directly take bets, but do refer visitors to gaming sites. If the affiliate is paid for those referrals by receiving a share of the money wagered or lost, it would not be difficult to charge the affiliate with violating this law, under the theory of aiding and abetting. Being a knowing accomplice and sharing in the proceeds of a crime make the aider and abettor guilty of the crime itself. The federal government could also charge the affiliate with conspiracy to violate this new Act."

The potential penalties include fines and/or up to five years imprisonment in a Federal prison. No, I'm not kidding. And I haven't even gotten to the really scary part yet.

As soon as Shrub signs this into law (which could happen in a day or two), the clock starts ticking. If you reside in the US and you have affiliate links up, you're breaking the law. If you've been paid for a banner or text link to an online gaming site, you're breaking the law. All logical arguments go out the window. The US no longer is ruled by logic. I doesn't matter that you're accustomed to certain freedoms of speech, and that it makes no logical sense that supplying a simple hyperlink can't be illegal, as the ultimate decision to click or not (not to mention the secondary decision to gamble online for real money, once the link is clicked). You're breaking the law.

Hosting your site on a server located outside the US changes nothing. Employing redirect scripts changes nothing. If you live in the US and you use HTML to link to online gaming sites, you're breaking the law.

By this point you're asking the million dolar question, which no one really has an answer to. Okay, you say, but come on, is anyone really going to enforce that? How would they enforce that? The US government has considered playing online poker to be illegal for years but has never even tried to enforce tha stance, so why should I worry about them getting off their inefficient asses now?

And it's a very valid question. And I can't pretend to have an answer for it. But before you go too far down that road, take a step back. Who would have thought we'd be standing at the current brink that we are now? Stuck in a quagmire of our own making in Iraq with a smirking President trying his best to ensure that we can openly torture "prisoners of war", as opposed to doing it on the sly? That our largely conservative elected officials would see fit to decide for us, as to whether or not we can play poker online for real money without spiralling into debt and bankruptcy? Really? You expected this? Is it that irrational to imagine a world in which the government comes after you, for something as simple as having links to online gaming sites on your blog or website? Or, more accurately, a world in which the current US government comes after you for such a thing?

What should scare you is how transparent all of our blogs are. It'd take someone no more than a few hours of surfing blogs to compile a hefty list of scofflaws to serve as easy examples. Then it'd take some arm twisting of ISPs, but they'd likely cough up the information necessary to pinpoint the identities of the US citizens responsible for posting content to each blog. Making arrests would then be pretty trivial.

For the record, I personally do not think the above is likely. I'm not trying to scare anyone and I don't think the feds are waiting to beat down your door. But I do believe that you need to be aware of these issues, so that you're making an informed choice, whatever that choice may be.

If you've never made substantial money from affiliate links or keyword/ad placement deals, you're probably better off simply gritting your teeth and removing any links, when the bill is passed into law. I know. It's fucking ridiculous. It should not happen in this country. But it just did, and the best thing you can do is protect yourself and be rational about it. If you've only made $23.98 off those links, remove them. It's just not worth the potential risk.

If you're making substantial money from affiliate programs, well, you're in a tough spot. It's the same spot I'm in, and I still don't know what I'm going to do. One thing to note is that being incorporated offshore doesn't provide you with protection, as long as you still reside within the US. Hosting your websites offshore doesn't provide you with protection, if you reside within the US. It's still unclear if you can even legally accept payment of recurring revenue from your player base moving forward, once the bill is signed into law.

My plan is to hang loose for the moment and see what transpires, but to work up a contingency plan to quickly (and legally) transfer my affiliate assets to a sympathetic foreign party. Keep in mind that this doesn't necessarily have to be a permanent sale of your assets. If you're working with a sympathetic person you trust, it's up to you, as far as the contract you enter into. You could legally sell your affiliate assets to your uncle in Vancouver for $1, let it run as is, and come to some sort of arrangement as far as splitting the profits (which could be very legal and trasnparent or involve him giving you an envelope full of cash at Christmas). If the dust clears and it's legal to be an affiliate in the US, it's easy enough for him to sell you the assets back for $1. Or any variation thereof, as you likely get my drift.

Long story short, make sure your cornhole is covered, if you have any affiliate links on any website or blog and you live in the US. You're potentially in the gunsights of the new legislation as well, as it's not solely directed at banks and online sites.


Michael said...

Good and very prudent advice, Scurvy.

sooted said...

The way I'm reading this post, it sounds as if the links (or ads) need to be to a gaming site, right? Sounds like links or ads for other blogs would not be covered under this, as they are not gaming sites. What about links to rakeback sites and things like that - sites that then link you to gaming sites and allow you to get a referral fee if anyone signs up for a gaming site through them?

chipper said...

Seeing how we're getting booted off the poker sites, why should we bother being affiliates to them any longer? Time to remove the flashy clutter from our blogs. Keep the links to fellow bloggers but head the advice and remove direct links to online pay poker sites.

Drizztdj said...

My one affliate banner will come down I guess since its never been a huge success.

But what about my ads for Poker News-type sites or PSO?

I don't directly get money for referrals to them nor are they direct links to poker sites.

Falstaff said...

I'll see you boys in the big house! I hope that nobody gets that rabid about it, but I think the font of free money we were all drinking from will certainly dry up.

Grinder said...

What you say is true, as true as it was 15 years ago when my lawyer looked into the situation when I was a sportsbook affiliate.

Nothing has changed in that respect.

HOWEVER - I am wondering about the kind where I am payed NOT by the click but on a monthly flat fee!

According to Bill Rini there will be no poker in a year anyway so it's all moot.

SeanSkill said...

Damn all this doom and gloom can you point me to the pineapple post I want to tilt off some dough

Wwonka said...

I will see you all in the
Big House since I am Refusing
to take down my links.

Fuck the republicans.
its time for a change in 2008