WAS NETELLER'S BAN ON U.S. PLAYERS PREMEDITATED?

by InfoPowa

If the ban on US players has been planned since November, why was more warning not given?

For the players, it was an unexpected shock when notices suddenly went up on the Neteller site abruptly advising that "with immediate effect" all US player transactions with online gambling sites would be banned. But Reuters reported today that the Isle of Man-based e-wallet had been planning such a move since November.

 

The revelation immediately begs the question: "If this move has been in process for so long, why weren't players notified in advance and given a window of opportunity to clear their accounts instead of the current scramble?" Investors may be asking the same question as they face a share that has already endured a 60 percent nosedive since last October and is now suspended at the request of the company.

 

Fellow payments processor Citadel has also announced its official and equally abrupt exit from the US market.

 

The (for some sudden and surprising) move by Neteller came two days after founders and former directors Stephen Lawrence and John Lefebvre were detained by US authorities and charged with money laundering related to online gambling.

 

Reuters quoted a Neteller statement as commenting: "Today’s withdrawal from the US market by Neteller is the culmination of months of careful planning.

 

"Along with this action, the group is actively assessing what further steps it may take in light of the two arrests made earlier this week to clarify the company’s position in this matter.

 

"These decisions will allow the group to focus on opportunities available in the growing markets of Europe, Asia and the Americas outside of the United States."

 

The company added that all US customer funds were held in segregated accounts and were fully secure and are “available for withdrawal by customers on demand”.

 

In its statement today, Neteller said the group had experienced slowing fourth quarter growth in terms of receipts and new customer sign-ups. It said it would continue with its focus on geographic diversification through further product launches in Europe and Asia.

 

The statement added that US customers made up 76 percent of its active customers in the fourth quarter. Of new sign-ups over the period, 74 percent were from North America.

 

Average daily receipts for the fourth quarter stood at US$5.75 million. Average daily new customer sign-ups were 3 493. Revenue for the full year was expected to fall between US$255 million and US$260 million. The loss of the US market could mean an overall dip in revenues of 65 percent or more.

 

Neteller spokesmen revealed that the company has already taken steps to develop country blocking software.

 

The Citadel news came in a statement by parent Canadian company ESI Entertainment, which said the move came “...in light of recent US Department of Justice enforcement actions against financial processor executives”.

 

US customers contacting Neteller support for withdrawal information were advised to take out a Neteller card for use in ATMs - not a popular option due to the heavy charges the processor levies. Alternatives are the EFT and check withdrawal options. However, due to the anticipated backlog there will be a 2 week delay for EFTs and 6 week delay for checks, players were told.

 

The delays in activating these options caused several players to remark that for a crisis which had been foreseen this did not indicate very good organisation and planning.

 

U.S. prosecutors, using mainly the company's own transparent information as a public company, claimed that Neteller processed more than $7.3 billion in transactions in 2005 and more than 95 percent of its revenue from transfers involved Internet gambling.

 

From the point of view of vulnerability to arrest by US officials, most online gaming executives and founders have shunned traveling to or through the United States since the arrest of Bet on Sports' David Carruthers and the later detention of Sportingbet's chairman Peter Dicks last year.

 

However Neteller's Lawrence and Lefebvre, who together founded the company in 1999, apparently did not heed the warnings of other executives.

WERE THE ANKLE CHAINS REALLY NECESSARY?

by InfoPowa

ex-Neteller exec makes humiliating entry
to US Virgin Island court

One of the more distressing images generated by the vast media coverage on the arrest of two Neteller ex-directors on money laundering charges this week concerned the arrival in a US Virgin Islands court of Canadian citizen Stephen Lawrence, who had earlier been arrested by FBI agents on the island of St. John.

 

Reports painted a picture of the wealthy Canadian businessman being led into court in ankle chains, and prompted questions as to whether this sort of humiliation was really necessary for someone who has thus far not been accused of violent crime or tendencies to escape.

 

The 46 year old retired Neteller founder was arrested on the island of St. John on Monday on a warrant from the U.S. Attorney's office in New York, said FBI agent Donald A. Neily.
 
District Court Judge Geoffrey Barnard said he intended to set bail at $5 million at a hearing Thursday, and it is anticipated that this will be accompanied by restrictions on travel outside the US as was the case with his co-accused John Lefebvre in a New York hearing earlier this week, where he was released on similarly hefty bail.