Bad news, but not unexpected: NETeller announced today that the company intends to comply with the UIGEA's provisions "as if it were subject to the Act's jurisdiction," even though it is not incorporated within the U.S.
Bully to them. Note that NETeller won't be shutting down immediately --- they plan to wait until closer to the end of the 270-day period the UIGEA allows for writing the banking regulations that will be used. However, NETeller was simply on the wrong side of the publicly-traded, UK-based equation.
So what does this mean for online gamblers? Expect a surge in the use of e-wallets based in non-UK jurisdictions, out of the direct reach of the U.S.-regulatory tentacles. A few e-wallets already exist that are based in the island nations that are directly opposing the U.S. actions through the World Trade Organization dispute that's currently pending. (Another method that's gaining popularity is the use of cash cards, which allow deposits to be made independently of the banking-system network under siege from the U.S. government.) Were one to consider using one of these new sites immediately, it's probably worthwhile to check into: (a) the location of incorporation of the e-wallet site, to avoid running into another UK-based e-bank that's just going to go away; (b) the current assets of the e-wallet site; and (c) the number of major poker sites servicing the U.S. that consider it a reliable and viable service. It's clear that we're in the middle of a major restructuring, so now you'll know what to expect.
Remember, elections in three weeks. Vote early, and vote often.
19 October 2006
Update on US position
Further to the Company's announcement on 12 October 2006, NETELLER Plc today announced the following update in the light of the action on 13 October 2006 by US President George W Bush to approve and sign into law the SAFE Port Act incorporating the Unlawful Internet Gambling Enforcement Act of 2006 ("UIGEA" or the "Act") which includes certain provisions to prohibit "unlawful internet gambling" by restricting gambling sites from accepting certain payments from US residents.
NETELLER, a company registered outside the US, will comply with the Act and its related regulations as if it were subject to the Act's jurisdiction. This action is intended to ensure that the Company is able to continue to operate with the support of its principal commercial partners and to protect its shareholders, business partners, employees and reputation.
Various provisions of the Act, including the obligations of financial transaction providers such as NETELLER, remain unclear. This uncertainty should be largely resolved when the Secretary of the Treasury and the Board of Governors of the Federal Reserve System issue the regulations they are required to prescribe within 270 days.
In view of the importance of these issues, NETELLER has accelerated its review of the Act and all other relevant laws and pertinent developments. The Company also continues to closely monitor the regulatory situation and is determining what actions to take well before the conclusion of the 270-day rulemaking period.
In the interim, US-resident customers are able to use the NETELLER service as normal. The funds of US-resident customers are held in trust accounts and will be available for withdrawal, on demand. The ability to withdraw funds will exist regardless of the customer's location or ability to transfer to any site.
NETELLER customers not resident in the US are not affected at all by the legislative changes in the US, and the Company will continue to operate its non-US business as normal, maintaining existing customer and merchant support across all the other markets it currently serves.
NETELLER remains focused on developing its business in line with its stated strategic objectives including geographical and product diversification. The Company continues to launch localised services within the European market, most recently in Sweden and Denmark, and has plans for three further launches later this year. As well as focusing on the gaming sector outside of the US market, the Board considers the development of additional products and services for wallet users to be integral to its diversified market strategy. We expect to share more information on these initiatives in the coming months. The Company is committed to maximising shareholder value both in the short and longer term, and will explore all possible strategic alternatives, including utilising its substantial resources, to ensure the achievement of its strategic objectives.
The Company's trading update for the third quarter will be issued on Tuesday, October 31st, 2006. In the meantime, the Company will endeavour to keep shareholders informed of any material developments as and when appropriate.