Issue N28, 2007

July 19, 2007

Deal Reached with Neteller

After months of investigations and negotiations, it was announced earlier this week that a deal has finally been reached between the United States Department of Justice and Neteller PLC, the online banking company that has been accused of fraud and illegal gambling activities. The deal involves the payment of $136-million by Neteller to U.S. authorities and in exchange, the DOJ would forfeit its right to prosecute Neteller’s two founders, Stephen Lawrence and John David Lefebvre. The two were arrested early this year and charged with violating U.S. laws against internet gambling. They later pleaded guilty in a plea bargain, saying that they were aware that they were breaking U.S. law during their time with Neteller.

According to the deal signed on Wednesday, Neteller would also release the frozen funds of all its American account holders, totaling an amount of $94-million. This is good news for U.S. gamblers who have been waiting with baited breath for negotiations to result in a satisfactory deal. It is estimated that U.S. gamblers made up the bulk of the $5.1-billion generated through the company in the first half of 2006, with only a small percentage of this money paying for non-gambling services. After the arrests this year, Neteller stopped providing online banking services to customers from the United States.

Neteller management and employees seemed relieved with the news that a deal had finally been reached. A lawyer speaking for the firm said “…the company hopes to put this behind us. We look forward to getting money back to our customers and growing the business.” At the height of its success, Neteller employed over 140 people from around the globe and reported over 600,000 registered account holders. John David Lefebvre said in his plea bargain that the company was originally created to provide a solution for people looking pay for online services, however with the increase in the popularity of online gambling after 1999, it soon changed its focus to serve the internet gaming industry.

Daily Mail Bingo Site Comes Under Fire

With the new U.K. Gambling Act coming into effect after the summer, many online sites are already being scrutinized for signs that they meet the appropriate industry standards and gambler protection policies. This week, one of England’s largest newspapers, the Daily Mail, came under fire because it was shown that its online bingo site was not meeting the guidelines outlined by gambling advisory groups in the country. Church groups and other interested parties showed that did not offer sufficient advice to problem gamblers on how to deal with their addiction and it also used youngsters to promote their site – a policy that has been given the thumbs down by the UK Gaming Commission. To its credit, the casino’s operating company promised to look into the matter and take the necessary steps to follow the advisory group, CamCare’s guidelines.

Barney Frank Calls for More Public Intervention on HR 2046 Bill

“Call your Representative and your Senators and tell them to get out of your life!” This was the cry from Congressman Barney Frank, the U.S. politician who is hoping to get the archaic Unlawful Internet Gambling Enforcement Act repealed with his own law known as HR 2046. Frank was speaking to the people of American during an interview campaign given after official hearings of his law proposal. HR 2046, officially called Internet Gambling Regulatory and Enforcement Act, already has the backing of several prominent American politicians, including Howard L. Berman and Bob Filner (both Californian Democrats). If it is successfully passed in the Senate, the new bill will allow licensed gambling companies and poker rooms to operate in the U.S. industry. 218 votes are needed by Frank to get the new bill approved by the Senate.

New UK PM May Bow to Pressure over Online Gambling Ads

A local U.K. newspaper, the Times, has reported that the country’s new Prime Minister, Gordon Brown may be having second thoughts about allowing online gaming companies to advertise their sites and products through national media. A new law is meant to go into effect in September this year, allowing gaming firms to broadcast their advertisements on the radio and television. However, the new culture secretary James Purnell reportedly has the permission of Prime Minister Brown to overturn the policy if he finds justification to do so. Purnell has said that due to pressure by church groups who felt that the new broadcasting would increase problem gambling, he would be “going through methodically to see if the concerns are legitimate.” It waits to be seen whether the Brown government will have the strength to see all the new regulations through in September and how their hesitance may affect future planned projects such as the building of new mega-casino in the country.