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Offshore Money Transfer: Alternatives to Neteller...By Jay Graziani

On the heels of the announcement last week that Pinnacle Sports would immediately be closed to U.S. customers, another hammer was dropped on the e-gaming community this Monday with the arrest of two founders of Neteller, the money transfer company that has focused its business primarily on serving the online gaming industry. Once again, already-shaken offshore operators and players were thrown into a panic.

Yesterday, Citadel Commerce announced they would no longer provide "e-wallet" solutions to U.S. customers. Neteller shortly followed suit, announcing that it was blocking all transfers for U.S. account holders to and from offshore gaming sites. Later in the day, upstart operator SolidPay also closed business to U.S. customers. All of this was foreshadowed by the withdrawal of Moneybookers from the U.S. market back in October. Offshore bettors were left wondering what options might be left for transferring funds to and from gambling sites. On top of all the above, rumors are circulating about other sportsbooks pulling out of the U.S. market.

When the UIEGA passed, many (this author included) suggested moving money offshore instead of bringing it back to the states. The reasoning was that it would be harder to get money offshore to gaming sites than it would be to recover those funds from reputable operators, who could always resort to slow options like a check. With Neteller now blocking U.S.-based gaming transactions, many of those bettors are now separated from their money in their offshore accounts.

While the recent events will certainly complicate things for most offshore players, the fact is that the sky is not falling and the industry is not finished. The panic evident among the offshore bulletin boards is unjustified. First and foremost, the gaming sites will do all in their power to ensure smooth money transfers. There is too much money at stake for all of them to just fade quietly into the night. Many thought the online gambling industry would be in trouble when most major credit cards were blocked or when Paypal was sued, causing them to exit the online gaming arena. The industry evolved to face those challenges, and they will evolve to compete in the current atmosphere as well. We can expect new solutions to be implemented by the time football season rolls back around. But more importantly, there are other options out there now for resourceful bettors:

Sportsbook debit cards - Offshore operators have tinkered with debit cards on and off through the years. Perhaps the most infamous is the BetPanAm Flexcard. Others have tried it as well, but most of the existing cards have been taken out of operation by the issuing banks. However, BetJamaica announced yesterday that they will be issuing a new card. While details are still sparse, they claim their Transfer Card will allow deposits and withdrawals within 30 minutes, with a low $0.50 fee per transaction. BetRoyal has announced that they will also be unveiling a "RoyalCard" in the next month. Account-linked debit cards may prove to be one of the better post-Neteller funding methods, unless problems with issuing banks arise.

Player-to-player transfers - Neteller is still allowing "peer-to-peer" transactions, so this may represent a possible way around the gaming ban for U.S. citizens. There have been cases where sportsbooks, prior to being approved for Neteller "merchant" account, would have Neteller funds routed to employees' personal Neteller accounts. This would be similar to the current practice of sending Western Union deposits to individual "runners" who are employed by the sportsbook. Furthermore, since Neteller's ban on gaming transfer is not global, U.S. citizens could employ a friend or agent from outside the U.S. to accept a peer-to-peer transfer on their behalf and deposit it into their sportsbook via account-to-account transfer.

Western Union/Moneygram - Let's not forget the original method of choice for transferring money offshore - Western Union and Moneygram have been servicing the offshore gambler's needs for decades. Both are also available online for U.S. customers, adding to the ease of use. Fees are generally picked up by the sportsbook for deposits of more than a few hundred dollars. One downside is the need to provide identification at the counter prior to sending/receiving money. Another issue is relatively high fees if the sportsbook is not covering them. Of course, both have policies against gambling-related transactions, although most transfers slip through the system regardless. But with added pressure from Uncle Sam, we might expect new policies that crack down on sending money to gaming jurisdictions, making the use of these services more challenging in the near future.

Cashier Check/Money Order - Another old-fashioned deposit method is to just mail in a check. This can be effective, but slow, especially compared to other methods in the internet age. Checks also leave a "paper trail", while money orders are limited to smaller amounts, making them less than ideal for high-limit players.

Credit cards - Many books still claim high acceptance rates for credit cards. Depending on your issuing bank, you may be able to sneak a transaction through, or the receiver may be able to do some manipulation on his end to ensure the transaction is not flagged as "gambling related" (i.e. processing the charge through a non-gaming merchant account). Of course, this also leaves a paper trail and doesn't allow you to withdrawal winnings, so even if your charge is accepted, this is not the most efficient transfer method.

E-checks, EFTs, bank wires, and debit cards - Many sportsbooks allow E-check or electronic funds transfer, either through a 3rd party provider like Click2Pay and InstaDebit, or through their own software. However, this requires providing your banking information to the sportsbook in question. It also may violate the terms of service of your bank, causing your account to be closed. While most credit cards are blocked for gaming transactions, some VISA debit cards are still functional, particularly those from smaller "community" banks who have less stringent policies. If utilizing these methods, you may want to open a separate checking account which is only used for gaming-related transaction to provide an added level of security,

E-gold - While not widely available yet, e-gold transactions may see an increase as other services disappear from the market. E-gold provides heightened privacy and low transfer fees (around 1% or less depending on amount transferred). Unfortunately, the privacy features also mean that fraud can be a problem. There are no chargebacks or waiting periods, so if an account is hacked, it can be emptied immediately with no recourse for the victim. It also has been the subject of investigation by U.S. Secret Service agents, so in the current environment that may be a sign of impending trouble. E-gold is not currently accepted by a large number of books - BetRoyal and 5Dimes are two of the few that will take it. However, e-gold may become a viable option if more sportsbooks decide to utilize it.

Offshore banks - For the truly dedicated, opening an offshore bank account may relieve a lot of money transfer problems. This is a more complicated solution whose details are beyond the scope of this article. However, many Caribbean nations have offshore banking solutions that would nicely fit the needs of the U.S.-based gambler.

Clearly, transferring money will not be as simple as it was even just days ago for U.S. players. The days of moving money in and out of books daily at low or no cost are probably gone. The sportsbooks, however, will adapt. This is a competitive industry, and while some may sink, others will figure out how to swim - there is too much profit in online gaming for it to just disappear. Some will begin offering free withdrawals by other methods; others will come up with innovative solutions like account-linked debit cards. Competition will drive offshore operators to come up with innovative and efficient solutions for deposits and withdrawals. The bottom line is: while this may be a temporary setback to the online gaming industry, sportsbooks, poker sites, and casinos will continue to thrive in cyberspace.

Jay Graziani

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