Category: Poker Law

Online Poker the Day After

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Yesterday was quite the day for the online poker world with the US Department of Justice seizing the domains of the world’s largest online poker sites. There’s been many reactions and speculation as to what’s happening and what’s going to happen in the coming days. Many are angry that the US continues to go after online poker. This is not the case here; this isn’t about whether online poker is legal or whether or not it’s a game of skill or a game of luck. This is about money laundering and tax evasion that took place through the websites.

After reading the Civil Complaint it became apparent that the US Government had every right to do what they did. Here’s an excerpt that helps to better explain the crime:

“For example, defendants ISAI SCHEINBERG and PAUL TATE of PokerStars, RAYMOND BITAR and NELSON BURTNICK of Full Tilt Poker, and SCOTT TOM and BRENT BECKLEY of Absolute Poker, arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls.”

“By late 2009, after U.S. banks and financial institutions detected and shut down multiple fraudulent bank accounts used by the Poker Companies, CHEINBERG and BITAR developed a new processing strategy that would not involve lying to banks. PokerStars, Full Tilt Poker, and their payment processors persuaded the principals of a few small, local banks facing financial difficulties to engage in such processing in return for multi-million dollar investments in the banks. For example, in September 2009, ELIE and others approached defendant JOHN CAMPOS, the Vice Chairman of the Board and part owner of SunFirst Bank, a small, private bank based in Saint George, Utah, about processing Internet poker transactions. While expressing “trepidations,” CAMPOS allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by ELIE and an associate, which would give them a more than 30% ownership stake in the bank. CAMPOS also requested and received a $20,000 “bonus” for his assistance. In an e-mail, one of ELIE’s associates boasted that they had “purchased” SunFirst and that they “were looking to purchase” “a grand total of 3 or 4 banks” to process payments.”

They knowingly bought banks or bribed banks in order to circumvent UIGEA. We agree that UIGEA is ambiguous but it is still a law.

Andrew Feldman of ESPN has reported that the US DOJ is trying to shut down the sites globally. We don’t know how this can be done. Full Tilt Poker and Pokerstars operate in a jurisdiction where online poker is legal. They are both licensed in countries like the France and the UK. We suspect the only way this could happen is if the US DOJ has proof of money laundering or tax evasion in those countries and is sharing this information with countries world wide.

At Holdem Poker Chat we’re being optimistic about the whole situation. This is in fact exactly what the Las Vegas casinos wanted. They are now on a level playing field with online poker and can now make a strong case for legalizing and regulating online poker in the USA. In fact we expect this to happen rather quickly now that their competition is out of the way.

Black Friday Recap

Pokerstars, Full Tilt Poker, Absolute Poker and UB we’re named in an indictment by the U.S. Department of Justice and their domains were seized and replaced with a warning page.

PokerStars has suspended real money play for US players. Players can log in but can’t play at the real money tables. The PokerStars website can be accessed by going to pokerstars.eu and player support is available at support@pokerstars.eu.
Steve Wynn has cancelled his partnership with Pokerstars for PokerstarsWynn.com
Pokerstars has already lost 25% of its traffic.
PokerStars dropped some of their guarantees, including Sunday Storm (from 300K to 200K) and Sunday Million (from 1.5M to 1M)

Full Tilt Poker has left the US market until further notice, and is ensuring that the money is safe with them. Players may send inquiries to support@fulltiltpoker.co.uk.
Fertitta (Stations Casinos) has ended their partnership with Full Tilt Poker
Full Tilt Poker will lose 40+% of its traffic.
Full Tilt Poker has Cancelled the Onyx Cup

Sources have told poker news organizations that UB and Absolute Poker will likely stay in the US.
As of this morning April 16, 2011 players could still play real money games on both sites.

We do not at this time think that this will trickle down to other online poker sites that accept US players like those on the Merge and Cake networks. There are many rumors flying around that other sites including sportsbooks will be next but those are just rumors. Again, this is about money laundering and tax evasion. Not about whether poker is legal or not. We’re slowly updating our review pages to reflect the changes. If you’re looking for a new place to play, we suggest you try Lock Poker where we’ve secured a very nice bonus for all new players.

Stay tuned to Holdem Poker Chat for all the latest Online Poker News.

Full Tilt Poker has Suspended Real Money Play in the US

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Full Tilt Poker just released a statement regarding Friday’s indictment by the U.S. Department of Justice announcing that it is suspending real money play for USA players until the situation is resolved.

Click here for Poker Sites Accepting Players from the US

Full Tilt Poker™ Supports Poker Players And Its Chief Executive

Dublin Ireland (April 15, 2011)- Full Tilt Poker is saddened by today’s charges against its CEO Raymond Bitar and offers its full support to Mr. Bitar and Nelson Burtnick.

Online poker is a game of skill enjoyed by tens of millions of people in the United States and across the world. And, Full Tilt Poker remains as committed as ever to preserving the rights of those players to play the game they love online.

Mr. Bitar and Full Tilt Poker believe online poker is legal – a position also taken by some of the best legal minds in the United States. Full Tilt Poker is, and has always been committed to preserving the integrity of the game and abiding by the law.

“I am surprised and disappointed by the government’s decision to bring these charges. I look forward to Mr. Burtnick’s and my exoneration,” said Mr. Bitar.

Unfortunately, as a result of this action, Full Tilt Poker has decided that it must suspend “real money” play in the United States until this case is resolved. However, Full Tilt Poker will continue to provide peer-to-peer online poker services outside of the United States.

Feds seize Poker Domain Names

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The Feds are once again going after poker sites without defining what “illegal gambling” is. Without a real law, or a working definition, this amounts to just a strong arm shakedown. “We are big tough guys so we will tell you what to do, even though we have no lawful basis to do so”

Excerpt from a press release I am sure that they are very proud of:
MANHATTAN U.S. ATTORNEY CHARGES PRINCIPALS OF THREE LARGEST INTERNET POKER COMPANIES WITH BANK FRAUD, ILLEGAL GAMBLING OFFENSES AND LAUNDERING BILLIONS IN ILLEGAL GAMBLING PROCEEDS

 

 

Multi-Billion Dollar Civil Money Laundering And Forfeiture Action Also Filed

Internet Domain Names Used By The Poker Companies Seized

PREET BHARARA, the United States Attorney for the Southern District of New York, and JANICE FEDARCYK, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced the unsealing of an indictment today charging 11 defendants, including the founders of the three largest Internet poker companies doing business in the United States—PokerStars, Full Tilt Poker, and Absolute Poker (the “Poker Companies”)—with bank fraud, money laundering, and illegal gambling offenses. The United States also filed a civil money laundering and in rem forfeiture complaint (the “Civil Complaint”) against the Poker Companies, their assets, and the assets of several payment processors for the Poker Companies. In addition, restraining orders were issued against more than 75 bank accounts utilized by the Poker Companies and their payment processors, and five Internet domain names used by the Poker Companies to host their illegal poker games were seized.

Manhattan U.S. Attorney PREET BHARARA said: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”

FBI Assistant Director in Charge JANICE K. FEDARCYK said: “These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”

The whole press release can be found here:

http://www.justice.gov/usao/nys/pressreleases/April11/scheinbergetalindictmentpr.pdf

Online Gambling Regulations Bill Approved

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The House Financial Services Committee approved a bill Wednesday that would license and regulate online gambling in the United States, in a 41-22-1 vote.

The Security and Accountability For Every Port Act of 2006 (SAFE Port Act) was an Act of Congress covering port security online gambling measure that was added at the last moment. The House and Senate passed the conference report on September 30, 2006, and President Bush signed the Act into law on October 13, 2006.

Since 2008, Committee Chairman, Barney Frank (D-Mass) has been fighting and lobbying to halt the Unlawful Internet Gambling Enforcement Act. Frank’s first attempt failed to get out of Committee on a 32-32 vote. A second bill passed Committee on a 30-19 to vote, but was never voted on by the full House of Representatives.

This year, Rep. Frank introduced the Internet Gambling Regulation, Consumer Protection, and Enforcement Act (HR 2267). This bill drew a large amount of support by the Democrats and almost half of the votes by the Republicans. Thirty-four Democrats voted for the bill and four voted against it, while seven Republicans voted for the bill and 18 voting against it. Several members of the committee failed to even vote.

Along with Frank, two California Representatives, Republican John Campbell and Democrat Brad Sherman, took part in amending the bill Wednesday and ensuring its passage.

Campbell created a substantial amendment which called for changes on both the administrative and consumer protection sides of the proposed legislation. Campbell’s amendment gives “states and tribal authorities parallel authority to administer licenses and enforce these regulations.” Campbell’s amendment also requires licensees to maintain all online gambling facilities targeting U.S. residents within in the United States.

Campbell added additional protections for consumer by requiring the odds of winning be posted for each game. His amendment also requires loss limits for players in addition to age and location verification.

Sherman’s amendments added language that prevents bad “actors” from obtaining licenses, gives states a full legislative session to opt out of the federal plan and specified that that in order to get a license, the majority of that company’s job had to be in the U.S.

Other amendments that passed include bans on inappropriate advertising, bans on ads targeting minors and the frequent testing of minor protection systems.

“The fact is, online poker is not going away,” said former Sen. Alfonse D’Amato, chairman of the Poker Players Alliance, in a statement. “Congress has a choice – it can license and regulate it to provide government oversight and consumer protections, or our lawmakers can stick their heads in the sand, ignore it, and leave consumers to play on non-U.S. regulated websites in all 50 states. I’m glad the Financial Services Committee today overwhelmingly chose to act and protect Americans as well as preserve the fundamental freedoms of adults and the Internet.”

There are still several hurdles that need to cleared before it can become law. First, the full House needs to vote on it. Since the house breaks on August 9th, it is unlikely the vote is going to happen. It is also unlikely the voting will occur during the lame-duck session of Congress after the November elections. The bottom line is that this means it has to pass a full floor vote between Sept. 7 and Oct. 8. In order for a full vote to happen, the Democratic leadership in the House, led by Speaker Nancy Pelosi (D-Calif.), needs to schedule it.

If the House passes the bill, then it needs to be taken up by the Senate. If it is passed by both the House and the Senate, then it will need to be signed by President Obama.

It is important for all of this to happen this year, before the end of the legislative session. If it doesn’t, the process will have to start all over again next year. Then it will have to be presented when the makeup of both the House and the Senate will be different.

A bitter sweet victory for online gamblers, but a continuous uphill struggle and fight for those Representatives fighting for our rights.