ePassporte exits America, what now?

[Qbins Missile Crisis]

Anybody on the fence about whether or not the online gambling community needs legalization and regulation should look no further than what is happening right now to online poker players.

If you haven't heard, ePassporte, probably the last (definitely the largest) ewallet payment processor still serving US customers has officially stopped serving those customers - and in a rather sudden fashion too.

This story erupted on Friday, but I basically ignored it because it wasn't in my sweet spot (ie. sports and legal) and because I had no idea of the impact. Now that the full impact is becoming evident, I figured it was a story worth covering.

The way it all shook down speaks volumes about both the general need for customer protections and ePassporte's need for better internal and external communications. Poker site, poker-king.com has a play-by-play description of the events that took place.

It all happened last Friday, April 11. Out of the blue, ePassporte deposits stopped working. Rumors immediately started flying, and the situation wasn't helped by the fact that ePassporte's customer service reps were telling people that it was just a temporary technical problem.

As the day continued, it gradually became known that the problem wasn't technical, but rather it was a decision by ePassporte to no longer do business with Americans.

Finally, word came out that ePassporte had officially notified poker sites - earlier that same day, no less - of the fact that they would not be processing American deposits anymore. You can see a scan of that notification here.

So the official reason given is "the United States Attorney's Office for the Southern District of New York is conducting a widespread investigation of Internet gambling, including poker."

Now, I'm not going to criticize ePassporte for its decision to exit the market. After all, they are just the latest of a long list of companies that have already done so. But they way it happened absolutely reeks of... something.

For one thing, why couldn't they give more notice than the same day?

The fact they waited till the last minute could indicate any of a number of things, such as:

a) They only very recently became aware of the investigation, and they have company assets (ie. investors) who are located in America and they are hoping to stave off the investigation before the axe falls. If this is the case, then they really are the stupidest company around.

Neteller's founders got arrested at a time when they were no longer even affiliated with the company. ePassporte has been handling the bulk of Neteller's ex-customers for the last two years. To claim that they only recently became aware of an active investigation is one thing, but it also implies that they were not suspecting any investigations during recent months.

Well, to assume that you are not being investigated when you are the largest ewallet service serving Americans is not only stupid, but it strains credibility in a huge way. Maybe they were not aware of any specific investigation, but they had to assume that somewhere in the Department of Justice somebody was looking into the ePassporte situation. It only makes sense.

So - no - I'm not buying the "we only just became aware of the investigation" argument. It just doesn't hold water.

b) They wanted to milk every last drop of American revenue before they exited the market, and/or their processing network was operating beyond the American law.

This is the most likely scenario and, assuming that all depositors get their funds back, I'm not really going to hammer them if this is the case.

If they were able to effectively process American accounts with zero issues, they easily could have been tied into one of those grey-area-technically-money-laundering processing companies that was working fine until the moment eveything went wrong.

If that was the case, then they really had no option once they lost their processor. And since the system was working fine and dandy for months or years, they felt no need to warn customers. And besides, what kind of warning are they going to give... "By the way, to process American accounts, we use a third-party network in a fashion that is technically considered money laundering." Yeah, that's great marketing copy.

So if this is the case, and as long as users get their funds back, don't be too harsh on ePassporte. After all, they served you well and for a long time when nobody else would.

That being said, I still don't like the fact that there is still no mention of this situation on the ePassport website. Not even a press release. That's kind of self-serving.

Fallout and Blame

For me, the bigger issue is... what now?

For a lot of American poker players, ePassporte was the last best option for them to fund their hobby. Already, there are reports that some poker networks have seen their traffic drop as much as a third in the few days since ePassporte's exit. If that is the case, then not only was ePassporte a much bigger operation than I suspected, but it is also much worse news for poker sites than I originally thought.

True, there are other options for funding accounts, but that is a process that requires re-educating users, which can sometimes be pretty time-consuming.

But the most sickening fact is that this entire problem has been created and cultivated by the American government.

If online gambling were legal and regulated - hell, even if it was just ignored - by the government, issues like this would never come up. American banks should be processing these American accounts, not fly-by-night payment processors based out of Curacao!

Somebody please explain to me how the American public was served by this investigation started in the Southern District of New York? As far as I can tell, all it has achieved so far is drastically inconveniencing thousands of honest hard-working Americans while putting their money in jeopardy.

The job of government is to protect its citizens from the very situation the government created here. If there ever was a case for government regulation, or even government non-regulation, this is it.

Hopefully, the new bill announced last week, H.R. 5767, will turn the tide somewhat and at least get us back to a world where the American government minds its own business.

April 15th, 2008
Covers.com

I tried epassport when it was around, but I find that the easiest way to deposit funds was with a pre-paid credit card. Western Union is good too, if you like leaving the house

E-check is great too. It's like writing a check and the money comes right from your bank account.