[gregm]

I am sure a great deal of people have seen these, but there may be some who have not seen it. This first one is one of the more interesting basic articles I have read on the poker/DOJ debacle.


Poker road had a great pod cast on this friday as well.


http://www.pokerroad.com/radio/prr/358



Gary Wise

http://sports.espn.go.com/espn/poker...ary&id=6372121



"There is no entity in the poker industry whose fate did not take a sharp turn Friday.


As we learned Friday, the Department of Justice arraigned 11 prominent members of the poker industry for fraud and money laundering to the tune of billions, among other charges, seized five URLs, froze more than 75 bank accounts and effectively jettisoned PokerStars, Full Tilt Poker and Absolute Poker from American culture.


Now, as the dust begins to settle, we take stock of events as they've unfolded, try to answer some of the questions raised and do some educated guesswork on what tomorrow's poker industry may look like.


Since the announcement:

• DOJ spokesperson Caroline Sullivan confirmed to ESPN.com that Chad Elie and John Campos were taken into custody early on Friday and Bradley Franzen was arrested after the DOJ statement was released. Franzen will be arraigned on Monday in the Southern district of New York.


• Some two weeks after announcing partnerships with PokerStars and FullTiltPoker, respectively, Wynn Resorts and Station Casinos each announced they had terminated their alliances.



• Full Tilt Poker issued a statement assuring players' funds were safe and withdrawal requests would be honored.



• PokerStars made a similar announcement to their clients, adding "outside the US it is business as usual." They also moved their online base of operations to www.pokerstars.eu. Similarly, FTP moved to www.fulltiltpoker.co.uk.


• FTP issued a news release in conjunction with CEO Ray Bitar (who was also charged) in which Bitar voiced his disappointment with the DOJ's decision to bring charges. FTP voiced support for Bitar and the company announced it was suspending "real money" play in the United States, but was continuing to provide peer-to-peer play elsewhere.


At present, there have been no statements from UB.com. PS and FTP have left the U.S. market along with some 25 to 40 percent of their respective customer bases. What now?



For the market:

While the events of the past month (namely, the partnerships between land-based and online casinos and the recent experiments in limited legalization in the District of Columbia) suggested forward momentum for the online poker industry as it was constituted then, now that momentum shifts back to land-based casinos and online operators that have stayed out of the U.S. market or have limited U.S. play to non-real-money play.


Both bwin.party digital entertainment and Zynga appear to be in good shape to capitalize on Friday's developments, with the former's reported search for partnership with a land-based giant seemingly intact.
The departure of Poker Stars and Full Tilt Poker leaves a large gap in the U.S. poker market which other operators may seek to exploit. While the threat of additional arraignments looms large, we may see reflections of late 2006, when Party Poker's departure from the U.S. market in the wake of the Unlawful Internet Gambling Enforcement Act's (UIGEA) passing was seized as an opportunity by PS and FTP, among others.



It's been almost five years since PS and FTP made the decision to continue their operations in the U.S., and it took that long for the DOJ to build its cases against them. 2011's renditions may see that as plenty of time to build their coffers.



For legalization efforts:

While some are seeing Friday's events as a step backward as legalization/regulation goes, not everyone is taking that point of view.



"If the legal goal was to get a legalized federal landscape, it still is," said Alexander Ripps, legal analyst for GamblingCompliance.com, a group that focuses on the independent analysis of gambling operations. "This just provides more incentive to get things done. This could long-term be a good thing for those efforts. It could press action and ultimately in the long term, that's in [the poker industry's] interests."



Ripps' assessment suggests Friday's events could act as a call to action. This marks the first time that American players have been left without what many consider to be secure options as online play goes. A resulting outcry could serve to inspire politicians to action.



The removal of PS and FTP from the equation also gets legislation over a tricky hump, trying to create the infrastructure of a new industry where one was already in place. Where past legislation has often tried to incorporate the industry as it was, the guess is that will no longer be the case.



For organized poker:

Less than 24 hours after the DOJ's announcement, PokerStars was cutting guaranteed tournament purses in half to account for the lack of U.S. player involvement. The educated guess is that online tournament play, while continuing on outside the U.S., will see player and prize pools shrink.



Studies have shown the affect of online poker on live poker room numbers is minimal, but for centers like Las Vegas, which have seen a recent dip in travel and tourism dollars, this could provide a small boom. Not all live poker will benefit, though.



From 2009 to 2010, the World Series of Poker main event saw attendance increase by more than 800 players, but a portion of their entries came from online satellite tournaments that allowed winners to qualify for a fraction of the price.



With the U.S.-based WSOP now forced to be vigilant against such qualifications and so many of their customers faced with suddenly unavailable poker bankrolls, many are preparing for reduced attendance. Professional poker player Tom Dwan put his guess for attendance at 5,144 on Twitter and many have suggested even fewer.



Where the WSOP leads, others will follow. The end of the satellite system for U.S.-based tournament circuits like the World Poker Tour and North American Poker Tour will likely lead to reduced attendance. FTP said its recently announced ONYX Cup has been canceled and other similar PS/FTP related entities seem likely to follow suit.



For the sub-industries:

A loss or decrease in advertising revenue from PS and FTP will send shockwaves through the sub-industries built around online poker. Many poker television shows, deprived of sponsorship and advertising money, will be forced to make do with greatly reduced budgets or fold up shop.



Similarly, most poker media have been financially supported by the sites in banner ads and advertising pages. As such, revenue -- and therefore jobs -- will be lost.



In addition to media, other businesses like poker training sites could see business suffer. "It definitely can't be good," admitted Phil Galfond, one owner of poker coaching site BlueFirePoker.com. "I have to think we'll be hurt. We have a lot of U.S. customers who won't be able to use what we teach them now."



For the poker star system:

It became evident when PokerStars ended its agreement with 2004 WSOP champion Greg Raymer the company was tightening its belt as far as player sponsorships went. Now, the real tightening will likely begin. PS and FTP both have a number of American pros under contract whose sphere of influence is no longer a viable market.



Many American pros, especially those who wear the FTP patch, had deals that paid them based on the number of hands they played on the site. As they can no longer do so while staying on U.S. soil, if those players are allowed to continue with their agreements, they'll need to move out of the U.S. in order to continue collecting.



For the biggest stars, there could be bigger issues based on the close relationships they have with the sites. This is a part of the story many industry insiders will watch intently.



For the players:

Friday's events have left players with more questions than answers, most of them concerning the status of the money they have online. While both PS and FTP have issued public statements assuring that payments will be processed, a number of players found themselves unable to withdraw funds Friday. This may be due to the number of requests that needed to be processed.



For professional players, the choices are limited. Some, such as 25-year-old Aze Gallo of Florida, are considering moving out of the country. "Honestly, I'm mostly thinking about it because of being disgusted about living in a country that would ban online poker," Gallo said when contacted by ESPN.com. "I'd rather play poker abroad than do something else in this country at this point. I feel like my country is trying to make money in the guise of holding my hand."


Galfond, who plays cash games at the Internet's biggest tables, said it will likely be some time before the high-stakes games are up and running. "As of now, I don't feel comfortable having a large amount on any site other than Stars or Tilt, so I don't know if the games will move over somewhere. I assume things will take a while to work themselves out. I think there's just a ton of uncertainty."



There may be grounds for the belief money will be returned in the way the DOJ's 2007 case against Neteller played out. In that case, funds at Neteller, an e-wallet where users at that time were able to deposit money into online gambling accounts, were frozen after the U.S. Attorney's office filed charges and arrested the company's founders on money laundering charges.


The DOJ and Neteller negotiated a deferred prosecution agreement that allowed Neteller to reimburse customers. Paul Hugel, a defense attorney with Clayman and Rosenberg in New York, represents several online gaming companies. He weighed in on the Neteller comparison:





"From the players perspective, my sense from the Neteller prosecutions is the government had a lot of leverage because they had people in custody," he said. "I don't know that's the case here. Eight of 11 defendants are outside the US, still at large. I don't know if the jurisdictions in which they're presently located will be cooperative in their extraditions and you can't tell from what the government made public how much money they actually seized. It looks like the only money seized was that in the U.S. It may be the companies are still in control of the players' funds or the government may control some of them. That would make a big difference from the players' perspective."





"The DOJ could in theory take the position that all this money is subject to forfeiture," he continued. "Even though the players committed no crime, the government's position could be that once the money is sent to the online companies, that money becomes proceeds of unlawful activity and subject to forfeiture. That said, I'm not sure the government would try to seize money that is clearly in player accounts, it's just that they could try to do that. I think at the end of the day, it's more of a political decision than a legal decision."





There are more bases to cover in the days that lie ahead for an industry shaken to its foundation. We'll continue to bring you coverage as the poker industry's new face emerges. "



Gary Wise is ESPN.com's poker columnist.

[gregm]

Good article on players reactions


Bluff magazine
Jessica Welman


http://news.bluffmagazine.com/the-mo...hutdown-20172/





It’s only been 24 hours since the news broke that online poker as we know it in the United States is over, but the impact the news has made on the poker community is already far-reaching. Players instantly took to Twitter to joke about being unemployed, numerous poker fans contacted their local Senators urging them to regulate the game, and many full time grinders were left wondering: What does this all mean for my bottom line?


Not all that much has changed for poker pro Jon Aguiar. An online pro since 2004, Aguiar currently divides his time between online poker and the high stakes tournament circuit. Now that online is not an option, he says he is just going to focus on playing live tournaments and cash games.


“I got a few secret places [to play live]. There will be home games popping up everywhere. There will be places to make money playing poker,” Aguiar told BLUFF. “I’m not going to make any drastic moves to other countries.”


WPT title holder McLean Karr is considering such a drastic option. Like most other US players, Karr is waiting to see how things play out before uprooting from his current home in Manhattan, but spending a couple of years elsewhere is an option on the table. Karr told BLUFF Canada, Europe, and Costa Rica are all options, but he doesn’t want to leave the States for more than a year or two. Online poker pro Nick Rainey also expects he will leave the country in order to continue grinding online. He is one of a number of players considering Vancouver as their new home.


High stakes pros and young 21 year-old grinders may have a multitude of options before them, but others don’t really have any options at all. Devin Porter is a 27 year-old poker pro from Utah who actually converted from being a live pro to an online grinder so he could stay home and spend more time with his wife and two-year old son. For six years, he has paid his bills, supported his family, and played full time. Now, he doesn’t see much of a way he can continue living the life he’s made for himself.


“I’m kind of just waiting for things to settle down and for things to come to light since it’s just chaos right now. I texted some real world friends and kind of asked tongue-in-cheek if their jobs were hiring,” Porter explains. “It affects me pretty big. I don’t really have options. I live in Utah and it’s not that far of a drive to Vegas, but I’m not going to drive there every weekend and I am not going to move my family. I’m kind of up in the air. If this is pretty long-term, I’m kind of out of the game for a while. It’s pretty depressing.”


With poker outside of the WSOP ruled out as an option, Porter is already seriously considering getting a “real world” job, but even that might prove difficult. With no college education and no work experience, Porter realizes he is at a big disadvantage in today’s tough job market.


“It’s obviously a good thing that I’ve been able to work for myself for six years, but I can’t really go into an interview and use my ability to four-bet bluff to get a job,” Porter jokes. “I’ve got no choice but to choose between a real job and live poker. I don’t really have any job experience. I did have a job before poker for four or five years, but it’s not something I want to go back to. I’ve got pretty much no college education. I’ve got no degree, no job skills, and a six-year gap on my resume because I’ve been playing professionally since 2005. It’s hard enough to get a job right now when you’ve got experience and a good resume and I’ve got pretty much nothing. I don’t mean to pity party and it is my own fault for not having a back-up plan.”


Porter also has his doubts that any poker sites that emerge in the wake of the seizures will even be worth his time. “The people who are good at poker are going to find a way to play online whether it is masking their IP or moving to another country, but the fish are going to be gone. The only people they are going to find there are the regulars coin-flipping for variance and it is not going to be profitable.”
Rainey disagrees and thinks that many of the grinders, especially those who made their living off of rakeback, will likely just walk away from the game following the shutdown. “The games should get a lot softer because a lot of the guys who are decent won’t make the effort to keep playing,” Rainey suggests.


Aguiar, Porter and others willingly admitted that they probably should have seen this coming and planned accordingly, but Aguiar seems to already be at peace with the fact that, for now at least, there isn’t much he can do.


“We already went through this once in October of 2006. That was more shocking than this for some reason, because this is what we thought was going to happen with that, it’s just been delayed. It’s been a good run,” says Aguiar. When asked if he’ll look back on this day five years from now and see it as the beginning of the end, he was quick to respond.
“No, five years from now I’ll be playing on HarrahsPoker.com. “


No one is sure whether brick and mortar casinos will step in and launch poker rooms in the Big Three’s absence, but that is one of the prevailing rumors keeping players going along with the suggestion that regulated online poker is on the horizon.


Players may already be looking ahead to the days when they can make money playing online again, but the problem of how they are going to get by still remains. One thing that may keep them from paying bills is the inability to cashout. Several players reported via the forums and Twitter that their cashouts were approved and cash was deposited into their bank accounts, but many others report their requests were denied. It is believed that some of the bigger players and backers online have six and seven-figure sums stuck in their poker accounts with no idea of when or if they will ever get that money back.


Aguiar is one of a number of players who isn’t overly concerned about cashouts, believing the current situation will play out much like the seizure of Neteller did back in 2007. If that is the case, money will be inaccessible for a while, but eventually, all of the players with money on Neteller did get their money back.


When Full Tilt Poker released its statement that it was withdrawing from the US market, it did tell players it was still accepting cashout requests, however as of 2PM ET today, the site says it is temporarily restricting US customers from cashing out.


Players stand to lose more than just money thanks to poker’s Black Friday. Players like Rainey and other high volume grinders earn bonuses and cash thanks to the site’s VIP programs, but with US players shut out, it seems like player points might be one of the casualties of the seizure.


“Those points are the same as money,” Rainey explains. “That guy, WizardofAhhs, who recently became a Team Online Pro had 9 million FPPs in his account. [You can buy] three Porsches [from PokerStars’ online store], so they’re worth almost $200,000.”


Rainey was on track to make PokerStars’ highest VIP ranking this year, SuperNova Elite, but now he has cleaned out his account just in case his funds won’t be accessible later. His points remain online though and he genuinely doesn’t know what will come of them. According to Rainey, FPPs have an exchange rate of around .016 cents per point


“It’s one of the questions i have been wondering and no one is discussing yet. I have confidence that Stars will do their best to take care of players. They don’t always do everything the way I like, but they do a great job overall.”


For now, it seems like most regular players on the sites remain confident that the rooms will do everything in their power to do right by their customers. What they are much less confident about is the future of online poker in the United States and what they are going to do to pass the time come Sunday.

[gregm]

Great article from Las Vegas Sun

http://www.lasvegassun.com/news/2011...ud-legislativ/

Poker company indictments further cloud legislative debate

By Jon Ralston (contact)


Sunday, April 17, 2011 | 2:01 a.m.


On March 10, two apparently unrelated events occurred thousands of miles apart.


In the Southern District of New York, a federal grand jury indicted three leading Web poker companies for laundering billions of dollars through sham companies meant to conceal their true purpose: to circumvent the Unlawful Internet Gambling Enforcement Act. The indictment against PokerStars, Full Tilt and Absolute was sealed.


That same day, in the Northern District of Nevada, Assembly Judiciary Chairman William Horne introduced a bill on behalf of PokerStars designed to circumvent the act by legalizing Web poker in the state. Horne carried the company’s agenda a few months after being hosted by PokerStars in London for two days.


Even in a capital where the sleaze so obviously oozes, where lobbyists and legislators look alike in that “Animal Farm” way, even Orwell would have had trouble conceiving of a story this slippery.


And now, with that indictment unsealed Friday and two major Nevada gaming companies having announced deals with the tarnished Web poker giants, this story has the potential to embarrass many people and darken the cloud over Nevada’s legislative process.


Perhaps the March 10 bill introduction was a coincidence, especially because the PokerStars folks, led by lobbyist and former Assembly Speaker Richard Perkins, were so dismissive of any federal problems, legal or legislative. Indeed, on March 24, in response to a question from freshman Assemblyman Ira Hansen, Perkins assured the committee that PokerStars boss Isai Scheinberg, who had been indicted two weeks earlier, was not wanted by authorities.



Perkins told the panel he wanted to remove that “sort of potentially very damaging statement hanging out there,” and Horne closed the hearing by saying despite assertions Internet poker is illegal, nobody has been arrested by the Justice Department.
That statement, as they say, is no longer operative.


This is inescapable: Horne and his pal, Commerce Chairman Kelvin Atkinson, as well as state Senate Majority Leader Steven Horsford, went on trips sponsored by a company that was under federal investigation and has been and is again accused of operating illegally. Not to put too fine a point on it, but the government says the money used to buy plane tickets, meals and who knows what else for those lawmakers was the fruits of a massive, illegal conspiracy.


It would be easy to ridicule Horne and Perkins for saying Friday that the indictments don’t affect their legislation. But in this sense they are correct: The Nevada Resort Association so gutted their original bill that what could pass, unless the cloud of suspicion kills it, essentially does nothing.


How prescient Gov. Brian Sandoval looks now after releasing a letter essentially opposing Horne’s bill: “While there may be some disagreement about the scope of the ban, it is important that we not unintentionally expose the citizens of our state to civil and criminal liability.”


In a sense, Horne is fortunate the Resort Association eviscerated his bill for him because if it had passed in the form PokerStars wanted it, this would look even worse. Imagine that.


It also doesn’t look so hot for Wynn Resorts, coincidentally represented by Perkins, too, which signed a deal March 25 with the online poker behemoth. Or for Station Casinos, which partnered with Full Tilt less than a week later. Both, shockingly, ended those deals Friday.
Both deals were predicated on the federal government legalizing Web poker, which Senate Majority Leader Harry Reid has said should occur first. But the usual industry gymnastics — we hate other kinds of gaming until we think we can profit from them — ensnared both Nevada casino companies as they announced deals, surely unbeknown to them, after the indictments had occurred.


Remember, too, how much worse this looks because of those PokerStars junkets for the lawmakers Perkins arranged — trips Horne and Atkinson went out of their way not to disclose, claiming they had permission from legislative lawyers. How they could believe the public is not entitled to know companies paid for such trips is astonishing. But now that the companies are under indictment, imagine if we did not know what they had done.


Before you conclude I am one of those anti-Web poker zealots, the reverse is true: I used to play online before President George W. Bush signed the Internet Gambling Act, and I wish it were legal.


But this story has little to do with the merits of Internet poker. It is a story of good old-fashioned power politics undone first by greater power politics (the Resort Association, Reid and Sandoval) and now by a scathing indictment with a timeline that should embarrass legislators and gamers alike.


The neutered Horne/Perkins bill may yet pass the Legislature. But from the hosted trips to the bill introduction to the indictment, this does not pass the smell test.

[Degenerate]

Thanks for the info.

[Art Vandeleigh]

Seconded, thanks for putting everything together in one place.

[McBa1n]

Real nice articles and reads, thanks gregm. A lot of what was printed so far confirms my suspicion. B+M or move out of the country:/.

[frankzig]

thanks for the info have to see how it plays out

[Czu81]

Thanks mate the infos. good job!

[gregm]

Thanks guys, glad you liked them. I have been consuming more poker media, tv, looking for articles than I have any sort of tv and media about stocks. Poker media must be booming with traffic this weekend.

I read a great article this morning from e-gaming news how euro poker sites booming since friday. I just wonder how good the players are on these sites.

egaming news

http://www.egrmagazine.com/news/1659...k-friday.thtml



Euro sites capitalise on "Black Friday" 18/04/2011

Tom Victor


In the 72 hours following the indictment of 11 senior executives and owners of three of the biggest US-facing poker sites, their European rivals have launched respective marketing drives in an attempt to capitalise on the availability of new players.



Since the US Attorney’s Office issued a notice on Friday bringing charges against Pokerstars founder Isai Scheinberg, Full Tilt’s Ray Bitar, and nine others for alleged fraud, money laundering and illegal gambling, traffic on a number of rivals' sites has risen dramatically.



According to Pokerscout’s weekly traffic report, all three affected sites have seen their traffic drop significantly, with Full Tilt’s 48% week-on-week decline the most striking. PKR, however has seen a 21% rise (the highest from a non-US site) while PartyPoker (9%), 888Poker (5%) and the iPoker network (4%) are also on the up.



Several networks and sites not taking US customers have hastily launched promotions to target those players looking to deposit on sites other than Full Tilt, Pokerstars and the Cereus, the two-site network that contains Absolute Poker and Ultimate Bet, both of which are included in Friday’s indictment.



Last night, Unibet announced it would be holding its first ever €500,000 guarantee tournament, while ChiliPoker – on the iPoker network – countered what has come to be known as online poker’s “Black Friday” with its own “Purple Day” promotion, featuring 200% sign-up bonuses.



One European-based affiliate, who asked not to be named, told eGaming Review: “My inbox is getting constant messages such as 888 doubling their prize-pools, and Titan Poker offering 60% revenue shares and saying if you are a Pokerstars player you can send them a screenshot of your VIP status then you get the same level of loyalty there.



“I was surprised by the email [from Titan] because it was so obvious, but I think Pokerstars and Full Tilt have really played outside the rules of the game and now this is a very positive development for the whole affiliate system.”



He went on to suggest that, from a player’s point of view, a more carefree attitude towards funds locked up on the bigger US-facing sites could begin to reap rewards. “Many people think that playing on Pokerstars and Full Tilt is like playing Zynga poker because no one knows what the value of the chips really is,” he said.



Dominik Kofert, CEO of power affiliate PokerStrategy.com, is cautiously optimistic about the impact Friday’s news will have on the online poker market outside the US.



“The curious thing is that some of these same people used to say that – compared to some banks and payment providers – the safest place to keep money was on Stars and Tilt.”



His site refuses to take American players and runs IP blocks. Providing Pokerstars and Full Tilt can continue to run their non-US-facing sites, as is currently the case, he expects a “mini-boom” outside the US.



“The European-facing sites have launched their various promotions and I think Pokerstars will follow suit in the next few days,” he said.
“With more traffic going to those sites not taking players from the US, I expect Pokerstars and Full Tilt to divert more of their marketing spend to these markets in response.”



He added the priority for many of his players was to ensure their funds are secure, with many of them currently unable to withdraw from Pokerstars and Full Tilt.
“It is an issue of trust, and it is important that this element gets sorted out as quickly as possible,” he said.



But while European sites are seemingly showing a near-unanimous drive to capitalise on those players deserting the ‘big three’ in America, a mixed message is coming from stateside competitors.



Bodog made a mysterious return to Pokerscout's rankings with a 26% seven day rise in player numbers in the wake of Friday’s indictments, having blocked the tracking site earlier this year, while the Merge and Cake networks continue to take American players at the time of writing.



However, Victory Poker – one of the larger skins on Cake – is immediately abandoning its US focus. CEO Dan Fleyshman tweeted yesterday: “Asked the Cake Network to BLOCK US players from the Victory Poker site. They are supportive of my decision. Hope it gets regulated 1 day!”

[ouman101]

Thanks, I'll look into these

[SBRPicks]

Great thread guys. Here is the blog entry that I. Nelson Rose wrote on this. Professor Rose, as you may have seen, did an interview with SBRtv recently, and he has agreed to do one on this matter as well, if and when he has the time. So, if you have any questions about this that you'd like him to address, let us know, posting it in this thread is fine. And in the meantime, here is his blog entry from http://www.gamblingandthelaw.com/blog.html

BLOG:
April 17, 2011:

Gambling and the Law®
Federal Poker Indictments: Revisiting Prohibition

The timing is suspicious.
March saw Nevada regulators approving a partnership between Caesars and 888, and Wynn announcing a joint venture with PokerStars. Now comes the indictments, three-billion-dollar civil suit and seizures of domain names by the feds. Wynn immediately cancelled his plans. Players were panicked.
Which was, of course, the goal.
If the allegations are true, the operators brought this on themselves, by lying and bribing bank officials. Of course, the prosecutors have the problem of convincing a jury that there is bank fraud when the "victims" are tricked into making millions of dollars.
And will this be the end of Internet poker? Did Prohibition end drinking?
Prohibition created modern organized crime, by outlawing alcoholic beverages. When people want something and it is illegal, organizations will arise to fill the demand. How much more so when the activity, online poker, is not even clearly illegal?
Every action by the U.S. federal government makes it more difficult for it to go after the next operator. The UIGEA, rammed through by the failed politician Bill Frist (R.-TN), can be seen as an anti-consumer-protection law, because it scared all of the publicly traded gaming companies out of the U.S. market. Then prosecutors went after payment processors, making it more difficult for players to find legitimate ways to send their money to betting sites.
Now the feds have seized .com domain names and charged operators with bank fraud. So, gaming sites are switching to .eu and .uk, and cutting off all physical contact with the U.S. Even the present American operators can’t be extradited, so what hope is there for the DoJ to bring future foreign operators here to stand trial?
The Grand Jury has been meeting for at least a year. The criminal indictment against PokerStars, Full Tilt, Absolute and their founders, was unsealed by the U.S. Attorney for New York on April 15, but bore a date-stamp of March 10. So why now?
Besides the Caesars-888 and Wynn-PokerStars agreements, the Nevada Assembly Judiciary Committee recently approved a bill to regulate online poker. And the District of Columbia actually made it legal.
The DoJ has been waging a war of intimidation against Internet gambling for years, successfully scaring players, operators, payment processors and affiliates into abandoning the American market. Lacking the two essentials to any prosecution – a statute that clearly makes the activity illegal and a defendant physically present in the U.S. – the feds have announced showy legal action against easy targets about every other year.
Online poker is not an easy target, since a federal Court of Appeal ruled the Wire Act is limited to bets on sports events. And tricking financial institutions into processing poker payments seems a technicality, especially since the banks made millions without paying a penny in fines.
But getting a bank to agree to process gambling transactions in return for a $10 million investment is an easier case, if true. I can understand approaching a small bank – so small that the officer and part-owner who allegedly arranged the deal, asked for, and received, only $20,000 for his “bonus.” But why would you do this in Utah, of all states?
There are lots of interesting nuggets in the legal papers. The DoJ claims that one-third of the billions of dollars players deposited went to the operators through the rake. That number seems high, but if true, it explains why everyone wants to operate an online poker room, with few expenses and no chance of losing to a lucky gambler.
All of the activities cited occurred after the passage of the UIGEA. This is a subtle acknowledgment that operators who left the U.S. in 2006 have nothing to fear.
Even if there was a bribe, the feds are still going to have to prove that the poker was illegal. Since the Wire Act won’t work, prosecutors used 18 U.S.C. 1955, which makes it a federal felony if five or more people do more than $2,000 in business a day in violation of state gambling laws. There is a “thank you” to the Washington State Gambling Commission, indicating that the DoJ is probably going to piggyback on that state’s 2006 law outlawing all Internet gambling.
The Washington statute was upheld by the State Supreme Court. Still, there are problems. State laws are presumed not to reach beyond their borders. And even if Internet poker is illegal in that state, it is quite a leap to seize domain names for the entire country and threaten bank accounts in places like Panama.
The only state with a law better than Washington’s is Nevada. But basing this attack on Internet poker on Nevada law would look like it was motivated by the landbased casinos. After all, who are the big winners here?
We will probably see the first attacks on the indictments from the two defendants who were arrested, the Utah banker and the Nevada payment processor who allegedly bribed him, when they fight extradition to New York. And the poker operators will undoubtedly fight to get their .com names back for the rest of the world.
The operators will never stand trial. The only U.S. extradition treaty I have found that covers illegal gambling is with Hong Kong. Calling it bank fraud won’t work, since the defendants can show their local courts that it is based on gambling. And it is fundamental to all extraditions that the activity be illegal in both countries. No nation will extradite an individual to be tried for the very activity that that nation licenses.
There may not even be a settlement. The DoJ accepted $405 million from PartyGaming and one of its founders and $100 million from Neteller and its founders. But those companies had already left the U.S. gaming markets. The DoJ will insist on a guilty plea to something, which might kill the operators’ chances of getting licensed when American laws change. And no amount of money will buy them the right to open up again without a change in the law. So what would these operators get from a settlement, other than not having to be worried about getting arrested changing planes?
It will be interesting to watch the fallout. There are a lot of famous American poker players and others who are associated with the indicted operators. They should be getting their affairs in order.
Meanwhile, like a raid by Elliot Ness on breweries and speakeasies during Prohibition, there are now wonderful opportunities for new operators to fill the vacuum. Unless, of course, Americans are actually going to stop playing poker on the Internet.

© Copyright 2011, I. Nelson Rose, Encino, California. All rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose,

[brico]

I'll take a glance. Thank you

[BeerDog99]

Here is Wicked Chops Poker's blog on the subject:

http://wickedchopspoker.com/the-new-poker-world-order/