In its heyday (and at the bring of its US gambling exit), Neteller was making $239 million in revenue which eventually dropped as low as $44 million (2010) — leaving the US online gambling market behind was therefore a significant blow to Neteller as it was to players. Neteller used to deliver $7 billion annually out of which 70% was from the USA, out of which vast majority was online gambling transactions.
Why Neteller Left the US Gambling Market:
On January 15th, 2007, two Neteller founders – namely Stephen Lawrence and John Lefebrive – were arrested in connection with “creation and operation of an internet payment services company that facilitated the transfer of billions of dollars of illegal gambling proceeds from US citizens to the owners of various internet gambling companies located overseas.” Neither were in an active role in the company but both owned significant shares.
The founders were eventually charged with money-laundering as per the Wire Act of 1961. The investigation revealed that Neteller allegedly used shell companies to process gambling transactions to and from its US customers — for example, in order to move money out of the US, a shell company would receive US customer deposits on Neteller’s behalf and the money would then be redirected to Neteller’s accounts in Canada. (Neteller itself is based in Isle of Man.)
Two days after the arrests, Neteller announced that online gambling transactions to or from its US customers are prohibited. For US players, the outcome was worse than losing a good payment processor: it took Neteller about six months to allow US customers to cashout the money from their Neteller accounts, and the money was paid without interest. (Fortunately it was paid at all.)
Why Neteller Has Returned to the US Gambling Market:
As mentioned, Neteller made loads of money before the UIGEA. Poker has become an even more mainstream game and just like before, there’s a lot of money to be made in the US. This time, though, there are no legal doubts — they’re operating in regulated states and, of course, positioning yourself well in those jurisdictions means that they’ll be ready when other states legalize online poker too, which is bound to happen eventually.
Neteller has years and years of experience of being a payment processor to gambling sites and they’re still the most recognizable gambling payment processor for US players (Paypal stopped processing online gambling transactions in 2003 and has shown no signs of returning). It only makes sense for Neteller to re-enter the US market since they have 100% certainty that they’re operating legally, years of experience over others and the advantage of getting in early.