Running a site legally (OR how to do it and not get a boyfriend?)

[ErebusBat]

So I have some ideas that I think could make some BTC; however I am hesitant because of the US Government's hostile attitude toward online gambling combined with bitcoin.

I see that our favorite SatoshiDICE is registered in AU (although it is a .com so the US govt could seize it) and they use cloud flare as a buffer that is all good and what not; however isn't CloudFLARE a US company?  Couldn't they be compelled to release what IP (and therefore the location of) the actual server?

Even sites that are 100% outside the US they don't like.  Look at http://en.wikipedia.org/wiki/Online_gambling#United_States, the BetOnSports paragraph.  The guy wasn't even planning on going into the US and they still got him.  Who knows, the plane might have actually be diverted on purpose when it was found out that David Carruthers was on the passenger manifest.

How can one legally put their gaming ideas to work?

Someone in AU want to partner?

[1714831541]

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[1714831541]

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[ErebusBat]

So if the US from cloud flare did get the IP and the location of the actual server, as long as it isn't on US soil they can't touch it.

True, but alot of times they will still ask the provider and if they divulge that a person in the US is connected to it......

Anyway why not just make it a tor hidden service. That is a little more protection.

I would actually, except that I think that raises the bar alot.  If you want to make bank on a gaming site then you need to make it as easy as possible to throw their money at you.

[DeathAndTaxes]

If you are small enough nobody is going to care.  If you get big enough being on foreign soil isn't going to help you the tiniest bit.

http://www.fulltiltpoker.com/
the largest online poker site in the world (at the time the DOD shut them down, issued arrest warrants, revoked passports, and frozen nine figures in bank accounts around the world (w/ the aid of local govts).  BTW "in reim" is a nice way of saying the US govt is asserting that any and all properties (cash, stock, bonds, server, software, patents, shareholder compensation, etc) is all the property of the US govt as proceeds of a criminal enterprise. The fumiest part is the DOJ wants $1 B in damages on top of seizing everything the company owns.

[AnonymousBat]

I would keep everything in Bitcoins when running the site.

Remember, Bitcoins isn't real money, it's not even backed by any government!

By keeping everything in Bitcoins, there is technically no money for them to seize. Let the players figure out how to convert it.

You can store them in such a way where if you do get busted you can still have a third party honor all of your players withdrawals.

The only way you will get busted is if you get pretty big and actually start making out pretty good, once that becomes the case you will also be in a better position to defend yourself, especially if your resources can’t be illegally confiscated.

Not only that, but the US government is basically going to have to make the argument that gambling with fake money is somehow illegal, and if that's the case, well, they better go after all of those online MMORPG's that have ways players can gamble fake money.

“The question isn't who is going to let me, it's who is going to stop me."
-Ayn Rand.

[ErebusBat]

Not only that, but the US government is basically going to have to make the argument that gambling with fake money is somehow illegal, and if that's the case, well, they better go after all of those online MMORPG's that have ways players can gamble fake money.

This is a very good point; however I don't really want to be the one to test that in the courts

My guess is that they would start looking at the income (my income) and having me justify it or seize that, saying that it was part of a criminal enterprise.

[Stephen Gornick]

I would keep everything in Bitcoins when running the site.

Remember, Bitcoins isn't real money, it's not even backed by any government!

By keeping everything in Bitcoins, there is technically no money for them to seize. Let the players figure out how to convert it.

You can store them in such a way where if you do get busted you can still have a third party honor all of your players withdrawals.

The only way you will get busted is if you get pretty big and actually start making out pretty good, once that becomes the case you will also be in a better position to defend yourself, especially if your resources can’t be illegally confiscated.

Not only that, but the US government is basically going to have to make the argument that gambling with fake money is somehow illegal, and if that's the case, well, they better go after all of those online MMORPG's that have ways players can gamble fake money.

You might want to add a disclaimer that these are your opinions.  I will add the disclaimer that this probably isn't very good advice.  I will also add that SatoshiDICE does not use the web for its gambling platform.  I can play SatoshiDICE without ever touching their web site or connecting to their servers.  Because of Bitcoin's architecture, it is not technically possible for SatoshiDICE to detect where I am wagering from.

[AnonymousBat]

Not only that, but the US government is basically going to have to make the argument that gambling with fake money is somehow illegal, and if that's the case, well, they better go after all of those online MMORPG's that have ways players can gamble fake money.

This is a very good point; however I don't really want to be the one to test that in the courts

The courts are not about justice, you already break enough laws every day to be put in jail for years.

Not only that, but the US government is basically going to have to make the argument that gambling with fake money is somehow illegal, and if that's the case, well, they better go after all of those online MMORPG's that have ways players can gamble fake money.

My guess is that they would start looking at the income (my income) and having me justify it or seize that, saying that it was part of a criminal enterprise.

It would be foolish to convert too much of the Bitcoins to USD, I would keep them out of the US, and build things outside of their jurisdiction. Cash out enough to live off of and pay all applicable taxes on that.

But for everything else? Build out in a more sane country with the remaining resources.

You might want to add a disclaimer that these are your opinions.

I am quite certain that everyone already understands that posts on an internet board are mostly all, opinion. It would be redundant to have such a disclaimer.

I will add the disclaimer that this probably isn't very good advice.

You might want to add a disclaimer that these are your opinions.

I will also add that SatoshiDICE does not use the web for its gambling platform.  I can play SatoshiDICE without ever touching their web site or connecting to their servers.  Because of Bitcoin's architecture, it is not technically possible for SatoshiDICE to detect where I am wagering from.

Not if you're using a VPN, or logging into a dedicated server located in a remote country and wagering from there.

By the way, federal anti-gambling laws in the United States are unconstitutional, especially since it’s legal for some people, while illegal for others. Think of it this way, say lobbyists from Las Vegas lobbied the federal government to make certain kinds of gambling illegal, unless the states had laws legalizing it prior to the federal law.

Sounds like a protection racket to me, and you guessed it, unconstitutional. The federal government can't pass a law that bans states other than Florida from growing oranges.

http://newjersey.tenthamendmentcenter.com/2011/11/nullification-its-a-gamble/

[ErebusBat]

By the way, federal anti-gambling laws in the United States are unconstitutional, especially since it’s legal for some people, while illegal for others. Think of it this way, say lobbyists from Las Vegas lobbied the federal government to make certain kinds of gambling illegal, unless the states had laws legalizing it prior to the federal law.

See the first paragraph in the link I posted:

The United States Court of Appeals for the Fifth Circuit ruled in November 2002 that the Federal Wire Act prohibits electronic transmission of information for sports betting across telecommunications lines but affirmed a lower court ruling that the Wire Act "'in plain language' does not prohibit Internet gambling on a game of chance." But the federal Department of Justice continues, publicly, to take the position that the Wire Act covers all forms of gambling.

In other words: they will still arrest your ass.  I don't want to be arrested.  I see you are operating out of LA AnonymousBat, what is your legal strategy, if I can ask.

[AnonymousBat]

The United States Court of Appeals for the Fifth Circuit ruled in November 2002 that the Federal Wire Act prohibits electronic transmission of information for sports betting across telecommunications lines but affirmed a lower court ruling that the Wire Act "'in plain language' does not prohibit Internet gambling on a game of chance." But the federal Department of Justice continues, publicly, to take the position that the Wire Act covers all forms of gambling.

In other words: they will still arrest your ass.  I don't want to be arrested.  I see you are operating out of LA AnonymousBat, what is your legal strategy, if I can ask.

The federal government has a knack for twisting things, it doesn't matter if it's the law. It's like when they use the interstate commerce clause to tell farmers that they can't grow food on their own property.

In other words, even if you find a way to do it legally, they'll find a way to get you. Even if they *think* it's illegal when it's not, you're hosed.

What I'm doing is really legally no different than everything else I'm doing. I don't engage in fraud, theft, or hurt people so I know that I'm on a high moral ground.

I choose dangerous liberty over peaceful slavery. Better to die free than to be a slave.

In my case, I have nothing to lose. If my site fails the chances of me being prosecuted for it are slim, if it succeeds to the point where they come after me, chances I'll have the resources to defend myself against their unconstitutional acts.

An unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative as though it had never been passed.
 -Norton v. Shelby County, 118 U.S. 425 (1886)

It's too bad it's not gold, because say I actually did gold instead of bitcoin and then they tried to claim I was running an illegal gambling ring, I could just argue that gold is not money and bring my star witness, the chairman of the federal reserve.

Gold isn't money!

:p

[ssaCEO]

A couple good things to note about the BetOnSports case.
1. BetOnSports was offshore, in the UK, but it's a incorrect to say they were completely outside the US. Actually the majority of their business was to and from the United States. "Completely outside" would mean the business was both located outside and marketing only outside the States...that it stayed completely away from the country. Which it didn't.
2. Carruthers was on US soil when he was arrested.
3. Sports betting is a violation of the Wire Act - no other form of online betting is so regulated. This makes for an extremely clear-cut, made to order case. In essence the case against him was no different from the case against any bookie who takes bets on the telephone over interstate phone lines.
4. The way UIGEA regulates poker, is by payment transfer for the purpose of gaming; not the gaming itself. The Wire Act makes no such distinction and goes directly after the bookie. So the methods of payment transfer BetOnSports was using didn't matter, and booking all their bets in Bitcoin wouldn't have changed anything.
5. No one knows whether US federal anti-gambling money transfer legislation (specifically UIGEA) applies to Bitcoin or not; no lawyer has yet written a legal opinion about it, much less tested it in court.

and 6... buy the next issue of Bitcoin Magazine where I've been told we might find out some interesting info on that very subject (and for all you non-US folks, we'll be putting a bonus code in our ad there, too).

*Edit: about #6, I haven't read the article and I don't know what's actually going to happen or not with it, just that it's a topic of interest.

[Raoul Duke]

Worse than that: Cloudflare is a NSA honeypot, built with NSA's funding

[Raoul Duke]

Worse than that: Cloudflare is a NSA honeypot, built with NSA's funding

Do you have any links that talks about the NSA and cloudfare, I am guessing not much detail, kinda sad cause cloudfare is a great service.

Yes, they are a great service. Interestingly enough I can't find the article where it talked about the Cloudflare CEO(also the CEO of Project Honeypot) reaching out to NSA to seek funding for Cloudflare.
Wonder why I can't find it anymore...

EDIT: Found it. It wasn't NSA but the Department of Homeland Security

http://exiledonline.com/isucker-big-brother-internet-culture/
http://techcrunch.com/2011/06/27/cloudflare-ceo-our-marketing-strategy-is-sign-up-all-of-the-worlds-international-criminals-tctv/

Cloudflare was started at the request of the DHS. Think what you wish of it lol

[ErebusBat]

Very interesting...   AnonOps used CloudFlare for a bit too.

[ErebusBat]

You sill control your DNS gweedo so it would only be temporary censorship.

[Bitcoin Oz]

The Aus government will hand you over to the US at a moments notice if they get a warrant.

[ErebusBat]

A couple good things to note about the BetOnSports case.
1. BetOnSports was offshore, in the UK, but it's a incorrect to say they were completely outside the US. Actually the majority of their business was to and from the United States. "Completely outside" would mean the business was both located outside and marketing only outside the States...that it stayed completely away from the country. Which it didn't.
2. Carruthers was on US soil when he was arrested.

I am on US soil, hence my worry.

5. No one knows whether US federal anti-gambling money transfer legislation (specifically UIGEA) applies to Bitcoin or not; no lawyer has yet written a legal opinion about it, much less tested it in court.

My worry is that there is a judicial ruling stating that the UIGEA only applies to sports betting; however the US Justice department (the one responsible for the actual prosecution) has publicly stated they disagree and will go after ALL gambling sites.

I also notice that Strike Saphire is blocked in the US... so obviously you have some concern as well.  May I ask where you operate out of?

[TangibleCryptography]

My worry is that there is a judicial ruling stating that the UIGEA only applies to sports betting; however the US Justice department (the one responsible for the actual prosecution) has publicly stated they disagree and will go after ALL gambling sites.

There is no such ruling.   The WIRE ACT applies only to Sports betting which is why the UIGEA was passed.  The UIGEA clearly applies to any form of gambling.  A coin flip site would fall under the domain of the UIGEA.  The question that remains undecided is does the UIGEA apply to tx involving Bitcoins?  

[ErebusBat]

My worry is that there is a judicial ruling stating that the UIGEA only applies to sports betting; however the US Justice department (the one responsible for the actual prosecution) has publicly stated they disagree and will go after ALL gambling sites.

There is no such ruling.   The WIRE ACT applies only to Sports betting which is why the UIGEA was passed.  The UIGEA clearly applies to any form of gambling.  A coin flip side would fall under the domain of the UIGEA.  The question that remains undecided is does the UIGEA apply to tx involving Bitcoins? 

You are correct, I mis-typed.  Thank you for clarifying TangibleCryptography.

[IveBeenBit]

A couple good things to note about the BetOnSports case.
1. BetOnSports was offshore, in the UK, but it's a incorrect to say they were completely outside the US. Actually the majority of their business was to and from the United States. "Completely outside" would mean the business was both located outside and marketing only outside the States...that it stayed completely away from the country. Which it didn't.
2. Carruthers was on US soil when he was arrested.
3. Sports betting is a violation of the Wire Act - no other form of online betting is so regulated. This makes for an extremely clear-cut, made to order case. In essence the case against him was no different from the case against any bookie who takes bets on the telephone over interstate phone lines.
4. The way UIGEA regulates poker, is by payment transfer for the purpose of gaming; not the gaming itself. The Wire Act makes no such distinction and goes directly after the bookie. So the methods of payment transfer BetOnSports was using didn't matter, and booking all their bets in Bitcoin wouldn't have changed anything.
5. No one knows whether US federal anti-gambling money transfer legislation (specifically UIGEA) applies to Bitcoin or not; no lawyer has yet written a legal opinion about it, much less tested it in court.

and 6... buy the next issue of Bitcoin Magazine where I've been told we might find out some interesting info on that very subject (and for all you non-US folks, we'll be putting a bonus code in our ad there, too).

*Edit: about #6, I haven't read the article and I don't know what's actually going to happen or not with it, just that it's a topic of interest.

ssaCEA, can you explain why you don't accept bets from US residents? My understanding of the gaming laws are similar to yours - that the Feds went after the poker sites because of the games they were playing with payment processors to get around UIGEA. Doing business in BTC seems like an easy and obvious way to not violate UIGEA.

[ErebusBat]

ssaCEA, can you explain why you don't accept bets from US residents? My understanding of the gaming laws are similar to yours - that the Feds went after the poker sites because of the games they were playing with payment processors to get around UIGEA. Doing business in BTC seems like an easy and obvious way to not violate UIGEA.

Or to piss them off enough to come after you.  Anyone in the US that really wants to play at strike sapphire can, they just have to put a little work into it and it isn't the sites fault the user purposefully circumvented their checks.