The 43rd annual World Series of Poke isn’t even over yet and already the poster boy of poker, Phil Ivey, is making if not a bigger splash than ever, then at least as big a one, with three final tables, including a second place finish. And if that’s any indication, he’s only just warming up.
We haven’t seen or heard much from Phil Ivey ever since the devastating end of Full Tilt Poker and the ensuing the fallout with U.S. players not being returned their funds. At one point, Ivey showed a $4 million negative balance on Full Tilt Poker’s ledgers and had even started pursuing legal action against his former sponsors.
But at this year’s WSOP, it was all back to business for Phil Ivey…or rather, not the business of poker but the game of it. He finished in second place in the $10,000 Pot Limit Hold’em event, final tabled in two other events and cashed in a total of four. And the games are still going.
Ivey has already won eight WSOP bracelets in his career, so this year’s showing comes as no surprise. It’s just a refreshing non-surprise to Phil Ivey back in the game he loves and that gave him the fame he achieved and deserves, and not the notoriety and black cloud that had been hanging over him since the FullTilt fiasco. Hopefully this puts an end to that dark chapter and revives the young poker legend in the making that Phil Ivey has always represented.
It looks like the voters of New Jersey will approve adding sports betting to the state’s menu of legal gambling. But don’t expect it to be served up right away.
The election tomorrow is not a sure thing. As was shown in the 2010 voting, off-year elections are not like general ones, when millions more come out to decide who will be President. Instead, older voters predominate, and they are more conservative, more religious, more Republican and, in general, more anti-gambling.
Still, the polls are favorable, with those in favor of Public Question 1 leading those opposed by more than 20%. Even Gov. Chris Christie (R.-NJ) has said he will vote for it. Now that he has decided that he won’t run for President until 2016 at the earliest, he can work on raising revenue for the state without raising taxes. And five years from now, nobody will remember or care about his stand on sports betting.
But, even if New Jersey voters approve, it will still be some time before sports betting is allowed in the state. The problem is the federal Professional and Amateur Sports Protection Act (“PASPA”). First, New Jersey State Sen. Raymond Lesniak (D.-Union), has to revive, and then win, his federal lawsuit and get PASPA declared unconstitutional.
On March 7, 2011, U.S. District Court Judge Garret Brown dismissed Lesniak’s first complaint against PASPA. Judge Brown was probably correct in ruling that the federal courts could not hear the case, since New Jersey did not have a sports betting law in place. It may seem like a technicality, especially because most state courts would have made a ruling. But it is a fundamental restriction on federal courts that they cannot give advisory opinions.
So Lesniak got Public Question 1 on the ballot. Once the voters approve sports betting, the federal court will have a real “case or controversy” under the U.S. Constitution. Congress, through PASPA, forbids any state from legalizing sports betting.
Just stating that shows why the courts will probably find PASPA unconstitutional. I cannot think of any other act of Congress that prevented a state from changing its public policy on gambling.
The situation is even more bizarre, since there are plenty of states with legal sports betting. Besides Nevada, the state lotteries of Oregon and Delaware are allowed to take parlay bets on NFL and other games. Alaska allows Calcutta pools on amateur and professional sports; Montana and North Dakota have all sorts of sports pools; Wyoming permits Calcuttas on amateur events; Washington state has low-limit sports pools; and New Mexico even has “Keirin,” parimutuel wagering on bicycle races. And that’s not counting all the betting on jai alai.
All of those states were grandfathered-in in 1992 when PASPA was enacted. It is going to be difficult to find a constitutional reason why nine of the 50 states can have sports betting, but New Jersey cannot.
In fact, it is difficult to know where in the U.S. Constitution Congress got this power to begin with. Gambling has always been an issue for the states to decide on their own. When the National Football League and other sports organizations were lobbying for PASPA, the lawmakers, at first, looked to Congress’s power to protect trademarks. This even worked in a lawsuit against the Delaware Lottery, where the NFL convinced the court that use of team names might look like they were endorsing Delaware’s games. But, since sports books in Nevada take bets using the teams’ names, it is silly to say that PASPA protects the teams’ intellectual property in some states but not others.
Now, it appears that it is Congress’s power to regulate interstate commerce which will be used to justify PASPA. Of course, those nine state exceptions, plus the dozens of other states that have betting on jai alai, and horse and dog racing, means PASPA is, legally, irrational.
Court cases take time. Even though there will be no facts in dispute, it will still be months before Sen. Lesniak’s case against PASPA can reach the stage where the trial judge can issue a ruling. Then, assuming New Jersey wins, the important question will be whether the state will be allowed to start accepting bets on sports events immediately. The losers, aided by the NFL, will file an appeal. In Delaware, the state could not get the courts to let it begin while its sports betting case (on the issue of whether it was restricted to parlay bets) was up on appeal. The sticking point was what would happen to all the bets, especially the losing wagers, if the appellate court reversed and decided the state did not have the right to accept those bets. Does everyone get their money back?
There are ways to protect the bettors and state against the slim possibility the appellate court reverses the trial court. But, if the courts don’t allow the state to start until after the federal Court of Appeal decides, it could be two or three years before sports betting comes to New Jersey.
And then what? The other states will not sit and let this opportunity go untapped. Delaware will ask that the court reconsider the ruling that limited it to parlay bets. Operators in other states, especially those with casinos, like Michigan and Louisiana, will immediately start pressuring legislatures to legalize sports betting, or at least put it on the ballot.
One of the more interesting states is Mississippi, which actually had a statute expressly allowing sports pools. Code 1972, §§ 75-76-55, 75-76-89, 75-76-5(gg). The State Supreme Court ruled that the statute does not mean what it says. That fight will be revived, or rather, the Mississippi Legislature will probably legalize regular sports books for the state’s casinos.
The NFL and other sport leagues will try to get Congress to do something about this. I don’t know if there is anything that could be done, short of an amendment to the U.S. Constitution. But it does not matter. Congress has not passed any substantive law of any kind in 2011, and it does not look like it will in 2012, an election year.
Besides, even a Republican Governor like Chris Christie is in favor of allowing sports betting. Legal gambling is seen as a painless way for the states to raise revenue and create jobs.
What are the odds that the only law Congress passes this year or next is one that hurts jobs, prevents states from raising revenue without raising taxes, and directly interferes with states’ rights?-
BREAKING NEWS: The Alderney Gambling Control Commission (AGCC) has suspended the licences for Full Tilt Poker. Full Tilt is required to suspend all operations from within the jurisdiction immediately.
The AGCC said in a statement this morning: “The decision to suspend these licenses follows a special investigation prompted by the indictments unsealed by US Attorney General’s Office in the Southern District of New York on 15th April 2011, during which grounds were found to indicate that these licensees and their business associates were operating contrary to Alderney legislation.”
From what we are being told the Full Tilt Poker software does not open and for now at least they are closed. There has been no official announcement by Full Tilt Poker.
We’ll have more on this developing situation when we get more details.
Update:
AGCC’s official announcement:
In the matters of:-
VANTAGE LIMITED
OXALIC LIMITED
FILCO LIMITED
And
ORINIC LIMITED
Alderney Gambling Control Commission (AGCC) has today issued Hearing Notices under Regulation 46 of the Alderney eGambling Regulations, 2009 to the above named companies who collectively trade as FULL TILT POKER.
In addition, AGCC has issued Suspension Notices under Regulation 47 of the Alderney eGambling Regulations, 2009 to the above named companies requiring them to immediately suspend operations.
The above named companies must, until the Suspension Notices are cancelled or the Commissioners of AGCC have reached a determination at the conclusion of the hearing convened in accordance with Regulation 46 of the Alderney eGambling Regulations, 2009 cease to exercise their eGambling licenses, which means that these licensees must from today cease to:-
Register new customers;
Accept deposits from existing customers;
Allow existing customers to withdraw funds that are held in their accounts; and
Permit customers to participate in any form of poker game play or gambling
transaction.
The Alderney Gambling Control Commission will hear the matters contained in the Hearing Notices at a Regulatory Hearing which will commence at 10.00am on Tuesday 26th July, 2011 at the Victoria Park Plaza Hotel, 239 Vauxhall Bridge Road, London SW1V 1EQ. In the event that there is a change to these details this notice will be amended.
The Alderney Gambling Control Commission will hear the matters contained in the Hearing Notices at a Regulatory Hearing which will commence at 10.00am on Tuesday 26th July, 2011 at the Victoria Park Plaza Hotel, 239 Vauxhall Bridge Road, London SW1V 1EQ. In the event that there is a change to these details this notice will be amended.
André Wilsenach (Executive Director)
Alderney Gambling Control Commission
Alderney, Channel Islands
29th June, 2011
We are all familiar with the real estate saying “Location, Location, Location” with legislation the saying is “Timing, Timing, Timing”. Will this be the right timing for the legalization, licensing, taxing, and regulation for online gaming? We can all hope so.
It seems each week we hear of more politicians willing to put their vote behind bill HR 1174. To date it has 28 co-sponsors with representatives from both major political parties. We could see more bills attached to HR 1174: Internet Gambling Regulation, Consumer Protection, and Enforcement Act such as HR 2230 which specifically addresses the taxation of the gaming industry and has three sponsors. Future attachments could outline legalizing, licensing, and regulation. Republican Joe Barton of Texas is preparing a bill that would establish a new federal regulatory agency to oversee the websites. HR 2366: To establish a program for State licensing of Internet poker, and for other purposes. This bill has eleven cosponsors. But this bill would only apply to online poker. Our government officials seem to be motivated at this time with stimulating the U.S. economy and a H2 Gambling Capital study showed that online gaming could bring billions of tax dollars in the first five years and add 25,000 much needed jobs to the U.S. market.
California, Florida, New Jersey, District of Columbia, Pennsylvania, and Iowa are all looking at how to make online gaming profitable for their depleted state coffers. Allowing their residents to gamble through state lottery web sites or allowing residents to gamble online through tribal casinos, are only two ideas that are in discussion. A bill already signed by Nevada’s governor directs the Nevada Gaming Commission to prepare regulations and grant licenses to casinos so they can be ready when the federal government approves online gaming. Many states are anticipating that the federal government will pass legislation that legalizes and regulates online gaming and each state wants to ensure they will get their taxes from their residents.
We hope to see momentum pick up as more elected officials see that their constituents do indeed want to have the choice to gamble in their own homes. One way to get momentum started is by contacting your elected officials and to let them know where you stand on these pieces of legislation. You can call their office, send them an email or meet with them face to face. If you are a member of Poker Players Alliance they will usually contact you via email when important policies are being brought up.
The U.S. gaming community is in need of good news and though legalizing and regulating online gambling may take some time, what we are seeing now is a move in the right direction. We will continue to monitor news from all fronts and report the facts as we get them.
The US government is at it again. If you thought Black Friday on Friday, April 15, 2011 was the end of the Department of Justice’s indictments against online gambling sites operating illegally within the United States, you would be mistaken. Introducing the second and latest salvo in this brutal battle: Blue Monday, May 23, 2011, when the DOJ, with cooperation from the Department of Homeland Security and the IRS, charged three more people in connection with two online gambling companies covering a total of about 10 sites for violation of the 2006 UIGEA.
Just one day before the Poker Player’s Alliance descended on watching for the first National Poker Lobbying Day, the government gave them more to lobby about. Now in addition to Absolute Poker, Full Tilt Poker and Poker Stars, other online poker sites like Doyles Room Poker, online sportsbetting sites like Beted and online casinos like Golden Arch Casino will no longer be operating within US borders – that is, serving US customers. Instead, US customers browsing to those site will see what’s becoming increasingly familiar in the US online gambling scene: a message from the DOJ that the domain name for the site previously located there has heretofore has been seized.
The most recent indictments were all handed down in the District of Maryland where the two companies in question have the U.S. bases of operations. As part of this round of indictments are 11 bank accounts for which the government is currently seeking forfeiture. These are no doubt where US player funds from those sites are sitting, stuck, unable to be accessed by the rightful owners. Hopefully these monies will go the way of the Poker Stars player funds previously held up, which now are safely back in players’ hands.
In a previous blog, I wrote that the timing was suspicious. Why did the federal Department of Justice (“DoJ”) make its big show on Friday, April 15, 2011, when the grand jury had been meeting for more than a year?
We might not know the reasons for the timing. But we can understand why the prosecutors structured their cases as they did.
I often act as a consultant and expert witness for governments and industry. But I am also a professor of law, teaching not only Gaming Law, but also Criminal Law. So, here’s my view of why the DoJ’s indictment reads the way it does.
The 52-page document contained nine counts: violation of the Unlawful Internet Gambling Enforcement Act (“UIGEA”), conspiracy, illegal gambling business (“IGB”), bank and wire fraud, and money laundering. The criminal charges were carefully structured for maximum legal and public relations impacts.
The UIGEA was used because it covers money transfers, and to reinforce the false message that it made Internet gambling illegal. The UIGEA is actually only an enforcement act. It requires there be a violation of some other federal or state anti-gambling law.
The UIGEA was rushed through Congress by then-Majority Leader Bill Frist (R.-TN) and is a mess, with typos and other problems. For example, the UIGEA is expressly limited to payments going from players to operators for illegal online gambling, not the other way around. Do all the bank accounts that were seized only contain money being sent by players in New York to the poker sites? Was none of it money won by players?
Conspiracy is often called the prosecutor’s friend. All you need to prove is an agreement and an act in furtherance of the conspiracy. You don’t need to show any other crime was actually committed or even attempted. Conspiracy also makes trials easier for prosecutors. For example, testimony by a cooperating witness, “He told me he was going to take poker bets from the U.S.,” would normally not be allowed in as evidence under the hearsay rule. But, “He asked me if I wanted to help him set up a site to take poker bets from the U.S., and I agreed” comes in, to prove there was an agreement.
Almost all of the DoJ’s legal claims depend on the underlying activity, online poker, being illegal. The problem for prosecutors is that the main federal anti-gambling statue, the Wire Act, has been held in a published federal Court of Appeals decision to be limited to bets on sports events and races. Since the Wire Act won’t work, prosecutors used the IGB. That statute 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.
The only ones mentioned in the indictment are New York’s misdemeanor anti-gambling statutes. These clearly do not apply to players, which means the DoJ may not have had the right to seize players’ bank accounts. More importantly, the New York laws have never been tested, to see if they overcome the strong presumption that a state law does not reach beyond its borders. It also raises the issue of whether poker is a “contest of chance,” as required by Penal §225.00.
Note the repeated use of the word “fraud.” With Internet gambling, prosecutors have tried to find ways to include fraud whenever possible. For example, among the 22 counts in the criminal complaint filed against BetOnSports was a charge of mail fraud, for the weak claim of falsely advertising that sports betting was legal. (The website reached the whole world, including places where sports betting is, in fact, legal.) I believe, the DoJ’s emphasis on fraud is designed, in part, to create the impression among players that online sites cannot be trusted.
Most of the mail and bank fraud counts are actually weak. They involve defendants lying to banks to disguise the fact that online poker was involved. Phony companies were allegedly created and transactions labeled as sales of dog food and golf balls. There will be factual issues whether the banks actually knew what was going on – billions of dollars is a lot of dog food. And are we to believe no player ever mentioned online poker to his bank?
The bank fraud statute requires a scheme to either “defraud a financial institution” or to obtain any money owned or held by the bank. The second one won’t work. Lower courts have said the law was designed to protect the integrity of the banking system. But, the U.S. Supreme Court ruled that part of the statute means what it says: prosecutors have to show the victim lost money. Here, the banks were supposedly tricked into making millions of dollars. Talk about a victimless crime.
So, the DoJ is left with having to show that banks were “defrauded.” Again, there will be an issue of what exactly did the banks lose? Even after the UIGEA a bank cannot be charged with a crime for unknowingly facilitating online poker. As of June 1, 2010, there are regulations the banks have to follow. But, almost all the events took place prior to that; and, the final regulations do not provide for fines.
Bank fraud carries a maximum sentence of 30 years and a $1,000,000 fine. Money laundering also can lead to hefty penalties. It is another commonly used count in gambling prosecutions, because the prison sentence is based on the volume of money that was transferred, not on the gaming operations’ actual profit and loss. A defendant faced with 50 years in prison can be persuaded to plead guilty to illegal gambling charges that would otherwise be dismissed.
The indictment sets forth facts that would seem to call for a count of bribery, if true. Some of the defendants paid a small Utah bank $10 million to buy 30% of the bank, so the bank would transact online poker payments that the bank was reluctant to do. An officer and part-owner allegedly asked for, and received, $20,000. The indictment is careful to call this payoff a “bonus” rather than a bribe. The banker was charged with conspiracy and being part of the other activities constituting crimes. This avoids the question of who exactly was the victim, since it was the banker who solicited the payment. It also gets around the problem of whether a briber and bribee can also be charged with being coconspirators.
The DoJ has done what it could to make this indictment as frightening as possible. But we will probably never know just how strong the government’s case actually is. The payment processing defendants who are now in the U.S. will fight for a while, but will eventually have to agree to plea bargains.
The others, especially the big fish, also won’t stand trial. They would like to settle, even paying hundreds of millions of dollars and admitting they violated the law, but only if they won’t serve long prison sentences and risk losing their licenses in other countries. The operators have one major bargaining chip: If the DoJ won’t make a deal they can live with, they will simply stay away from countries where they might be extradited.
It looks like the voters of New Jersey will approve adding sports betting to the state’s menu of legal gambling. But don’t expect it to be served up right away.
We are all familiar with the real estate saying “Location, Location, Location” with legislation the saying is “Timing, Timing, Timing”. Will this be the right timing for the legalization, licensing, taxing, and regulation for online gaming? We can all hope so.
The US government is at it again. If you thought Black Friday on Friday, April 15, 2011 was the end of the Department of Justice’s indictments against online gambling sites operating illegally within the United States, you would be mistaken. Introducing the second and latest salvo in this brutal battle: Blue Monday, May 23, 2011, when the DOJ, with cooperation from the Department of Homeland Security and the IRS, charged three more people in connection with two online gambling companies covering a total of about 10 sites for violation of the 2006 UIGEA.
In a previous blog, I wrote that the timing was suspicious. Why did the federal Department of Justice (“DoJ”) make its big show on Friday, April 15, 2011, when the grand jury had been meeting for more than a year?