Haley's Poker Blog

No bad beats, but still a poker blog... hence the anguish.

Thursday, January 18, 2007

Thoughts on NETeller

Needless to say, this one was long expected but still hurts. I'm one of the unfortunates who, through sheer rotten timing, just happens to have a small chunk o' chump change tied up there right now.

We'll see what happens. Reports indicate that ACH/EFT tansactions will now take between two and four weeks to process, purportedly because NETeller's current ACH processor terminated their business agreement. This may well be true, and it may have been something as straightforward as the unknown ACH processor also coming in for heat from the feds under similar money-laundering and racketeering threats, but it's not the only possible explanation.

There is also the chance, albeit it lesser or complementary, that NETeller doesn't have near enough "cash" on hand to cover the crush precipitated by recent events. It's not that the assets aren't there, it's that the assets are reinvested in short-term market tools designed to make those dollars work a little harder, and it may well take days or weeks for enough of them to be reconverted to more liquid form. I would be both unsurprised and unconcerned by this part of it, at least, were this to turn out to be the case. NETeller could process everything at once, but could also incur market penalties by liquidating certain financial tools before they come due. Having an ACH problem, even a manufactured one, might save them a few million dollars... no drop in the bucket when perhaps two-thirds of their business is simply going to go away.

NETeller was as taken by surprise as any of us, by all indications. Their knee-jerk withdrawal from the U.S.-to-gaming market is a $7 billion example of way too little, way too late. If they believe that what they were doing is okay, then they should have no problem in continuing to do so and fighting the charges against their founders. But if they knew they were doing something wrong and continued to do it, then backing out now would hardly matter. History can't be unwritten. All NETeller's reaction looks like from the feds' viewpoint is a corporate admission of guilt.

Do I think that Lawrence and Lefebvre allowed their vast financial windfall to delude them into naivety? Oh, yeah, no doubt on that one. And now hundreds of thousands of poker players are left scrambling as a result.

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