Internet gambling site setup

What is the name of your state? WV

I have been considering starting my own internet gambling site where I allow users to gamble against one another, and possibly in some cases against me, "The House".

This raises several questions, some of which fit here, while others fit elsewhere. I'll just throw them out there and see if anyone from this forum can answer rather than cross-posting (or I'll seperate my questions if I receive no answers here).

Question 1:
In setting up this sole proprietership, do I need licenses, etc? Or can I simply take the site live and start taking paypal cash?

Question 2:
Does server location matter? Do I need a server located in a place where gambling is legal, or does the internet count as a gambling-legal place (like a riverboat, etc).

Question 3:
Is it possible or necessary to write a disclaimer, informing all visitors that in the event that they should bet all their money and lose it all that I am not responsible for said losses, or is that assumed by the nature of the site?

Question 4:
What kind of accounting will I be responsible for come tax time? Will I just be able to fill out a form whatever whatever C and report my earnings from the site and be done with it, or is more documentation required?

Question 5:
Is there a mandatory fairness inspection process for gambling websites? It would be easy to make a craps table that always crapped out when a certain amount of money was on the table. I assume this would be highly illegal, but, there's always the accidental chance that in coding a card-game that one makes it impossible to draw a given card (messing up an array, etc)... this offset could be seen as unfair, but, should this accident be made, would I be held responsible/sued? Could I disclaimer this, as well, with a "To the best of our knowledge all games are as fair as their real life equivalents"?

Question 6:
Is there a legal way to set up the site so that a disputed roll/draw/loss could be ignored as not to get bogged down in legal issues? I ask this for the situation where someone presses "roll dice" and the server gets the request, but the page does not refresh because their internet service went out. In such an event, the server decides the outcome, tries to display it, and since the person lost, takes their money (or gives them their credit).

To what extent am I liable to ensure error-free gameplay when money is involved? Can I also disclaimer that?

Anyway, thanks for any informed replies you can muster!

-JX

JudgeX said:

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Question 1:
In setting up this sole proprietership, do I need licenses, etc? Or can I simply take the site live and start taking paypal cash?

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Any gambling site must be offshore (in a country in which it is legal) owned by an offshore company with servers located there. As the owner, I think its also best to live in the country too because if the federal government takes notice you could be arrested.

Also, paypal will not transfer payments for gambling. Neither will many major credit cards.

The simple answer when in comes to internet gambling and the United States: Fuhgettaboutit.

But partypoker.com can have commercials on TV here in the United States? Promoting illegal activity on the part of the americans to which they are broadcasting?

Something doesn't add up there.

partypoker.com is not located in the US. They face huge risks from the federal government cracking down on them. Their TV ads do not mention gambling and the advertising of these sites is a bit of a grey area. As with other online gambling sites, the execs of those companies are constantly worried about entering the US because the Feds might decide to arrest them.

Partypoker is hosted in Europort, Gibralter Island. Good luck finding anymore info about the site, there is very little.

Well, my point is... PartyPoker itself isn't operating like a standard Casino.

You don't play against the house. You play against others. it's essentially a forum in which you can play against other players, and the house takes a cut of each pot for the use of their tables.

This is the same model I'd be following, and, as long as I host it in a place where gambling is legal, doesn't that make it okay?

As an American citizen, could I not legally build a building in Las Vegas and make it into a casino?

Why can't we do the same online? Except that I want my casino to be located on a server in China, Norway, or some other country where gambling is legal. I pay for the real-estate there, I don't see why I can't do it... people from Las Vegas, River Boats around the US, and other places where gambling is legal should be welcomed to my casino, while I myself cannot gamble there because I live in West Virginia.

That seems to add up to me, but, I don't know if I've forgotten a law somewhere. I know that I cannot legally gamble here in WV and that prevents me from using partypoker.com if I want to be legal (even though they really couldn't ever catch you since you gamble for money that's locked up in Firepay or other online cash systems).

Essentially, gamblers on my site would just be purchasing virtual gambling chips, spending them against other player's virtual gambling chips, and I keep a certain number of those chips based on the fact that I provided the forum for them to do so. They accept all responsibility for following the rules where they live, and agree that we're not responsible for losses incurred by regulations in their territory, etc...

http://www.ectnews.com/story/42696.html
This link claims that the DOJ considers online gambling illegal in the United States, since it would possibly violate an act from 1965, but also says that it is very rarely enforced and hard to do anything with because of some sort of quibble with the WTO and Antigua.

I also am having lots of trouble finding any actual news articles or anything where a gambling site has been taken down. I found one where an Indian Reserve shut down the online operations of one of its own casinos, but, I've not found any where the DOJ has stepped in.

Party Poker is owned by a company called Party Gaming. Partygaming.com. They just went public in the UK. All the owners/execs are real shadowy about where they live and who they are. Do some searches on the company and you can find out more.

Basically the US Government is hostile to Online Gaming. If you were to start such a business, your company, your server, and potentially you would have to be off shore. Could you set it all up off shore and remain in the US? Potentially, but the risk you would be taking would be high. If the Feds come knocking they wont just want to shut down your site they will want to arrest you and charge you with a crime. So your worst case scenario is that you might end up in jail. Not worth the risk if you ask me.

I work in the online advertising world and know about these businesses and all the sucessful Americans in online gaming live off shore and are reluctant to come home. If they do come home they are very secretive about it.

Well, I would understand all the illegality involved therein if I were gambling against my clients, but, I was just wanting to set something up where I allow people who can already legally gamble online where they are... to come and gamble, and act as an eskrow service, and take a small cut for each game played.

I know I'm not allowed to gamble online... and using my own site would be illegal for me... but if I guy from bulgaria and a fellow from china want to get on my site located in china and have a friendly dice game for $75, and I want to take $4.25 out of the pot for hosting it... I don't really see how I've broken any American law.

JudgeX said:

I don't really see how I've broken any American law.

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The laws state unless you are a licensed casino registered in your state to do business, you cannot make a penny off gambling by hosting the gambling. It is also illegal to profit from overseas gambling whether by phone, mail, or the internet. If all this online gaming was legal, the brick and mortar casinos would all be fighting for online suckers...er, customers. My question to you, why do you think there are no gaming sites on the internet hosted or run by American citizens living in the U.S.?

That's a good question, but, honestly, I think there are a lot of americans that run sites like this...

They just don't advertise or make easily available who they are. I mean, think about the process... you find a website, registered to someone who lives in the united states.

It's a gambling site, but in order to prove that the guy is making money, you'd have to pull his information from his NETELLER account or some other pay-online setup (since he can just have them cut him a check whenever he wants to withdraw some of his earnings). Now, if he opts to cash that check at his local bank, you might have a simple trail of paper to follow, but, he'd probably be smarter than that, and deposit it into an offshore account (which are usually rather easy to come by and rather secure).

So, the process of proving that some random dude who has a gambling URL registered to his name becomes a full investigation process, and I think the only thing you'd be able to charge him with would be Aiding and Abetting anyway.

At a certain point, doesn't it become a waste of resources to research and do the work for a small charge?