Poker Blog & Poker Forum

Black Friday has become the accepted term for the April 15 indictments against US poker sites Poker Stars, Full Tilt Poker and Absolute Poker. Law makers like Barney Frank and lobbyists like the Poker Players Alliance have condemned the indictments with righteous indignation. However, poker professionals have by and large been quiet on the issue and those who have spoken out have been quite circumspect.

The reason is that most of the well known poker professionals are brand ambassadors of one of the indicted US poker sites. The legal complications that could arise out of one wrong statement are too huge to fathom. Therefore they are all playing it by the ear. Daniel Negreanu, who represents Poker Stars, acknowledged this in his blog. “I’ve been advised to not discuss the matter at this point, which makes perfect sense to me…” He commiserated with those who have been financially hit by the closure of the three domains, especially the “professional poker-playing grinders who are supporting a family”. While the interim can be bad, Negreanu was hopeful about the future because poker is loved all over the world and cannot be made to disappear.

Annie Duke recently left Absolute Poker and she does not now represent any online poker site. But her brother Howard Lederer has a big stake in Full Tilt Poker. Like Negreanu, Annie expressed concern for those who had lost a means of livelihood and was also worried about her brother.

One can always trust Doyle Brunson to against the grain. Despite him running an online poker site, he could not resist making a dig at online players. Doyle Tweeted, “Now maybe we will see if these online “superstars” can play real poker. Ante up suckers!” This comment was not taken kindly to by the common online poker playing fraternity and much of the response he received contained explicit unprintable abuse. Doyle did retract saying that, “I guess when u have almost 400,000 followers, u had better be careful what u tweet. Does anyone in their right mind think I don’t feel bad?”

On the actual developments in the case, Poker Stars and Full Tilt Poker have entered into an agreement with the US Attorney for the Southern District of New York by which their domains are being released for the specific purpose of returning balances to players. Absolute Poker is discussing the terms of the agreement with the authorities and will take a call very soon.

The US online poker world was shocked last Friday when action initiated by the Department of Justice (DoJ) led to virtual shut down of the three biggest US poker sites. An indictment unsealed in the Southern District of New York charged the founders of Poker Stars, Full Tilt Poker and Absolute Poker with serious financial offences. Since most of these individuals are currently outside the United States, the authorities have enlisted assistance from international agencies for their arrest. The DoJ has also seized all the US domains of these online poker sites and American players are no longer able to access Poker Stars, Full Tilt Poker and Absolute Poker. The DoJ is also seeking a penalty of $3 billion from these three US poker sites.

The charges faced by the indicted persons go far beyond operating illegal online gambling sites. The legal opinion seems to be that the DoJ would not be able to make the illegal online gambling charges stick. However, according to the indictment the major charges are bank fraud and money laundering under the UIGEA. It has been alleged that the three US poker sites showed the funds received from US online poker players as payments made to fake online merchants for merchandise such as jewelry and golf balls. In fact three persons involved with the processing of payments have been arrested. Chad Elie and Bradley Franzen are payment processors and John Campos is from Sun First bank in Utah, which actually processed the payments.

As of now Poker Stars, Full Tilt Poker and Absolute Poker can be accessed by players from jurisdictions outside the United States. Poker Stars has even indicated that it is willing to pay the amounts in balance to those American players who can demonstrate a having a bona fide second address outside America. But for how long this will continue is anybody’s guess.

Reactions from the online poker industry have been trickling in. Black Friday is the common name being given to this fateful day. Online poker columnist Aaron Todd has given April 15, 2011 a more sentimental name – “the day that online poker died”.

Anurag Dikshit is one of the three founders of PartyGaming and the software architect of the online gambling operator. Prior to the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in late 2006, PartyGaming and its three founders were prosecuted by the United States federal authorities under the Wire Act, which forbids accepting online wagers. This forced PartyGaming to exit the American online gaming market and the three founders to leave the country. PartyGaming now operates from the United Kingdom and is quoted on the London Stock Exchange. PartyPoker is its online poker portal.

In 2008, Dikshit arrived at a settlement with the federal prosecutors. He filed a guilty plea and agreed to forfeit $300 million. However, at that time it was reported that Dikshit could face up to two years in jail when the case came up for hearing. The case was heard last week in a New York court and no prison sentence was awarded to Dikshit. The judge sentenced him only to one year’s probation. This was because the prosecutors did not seek any jail time for Dikshit. Dikshit has made a clean break from PartyGaming. In 2009 he sold two thirds of his 28% stake in the company for an estimated £188 million. Earlier this year he sold his remaining shares. It has been reported that currently Dikshit is engaged in charity work in South Asia. Dikshit had been criticized by none other than Doyle Brunson for folding up like an accordion and pleading guilty to breaking some kind of mystery law.

The other two founders of PartyGaming, Ruth Parasol DeLeon and Russell DeLeon, are living in Gibraltar and have refused to settle with the American authorities. Judge Jed Rakoff, who presided over the hearing, pulled up the prosecutors for not charging the DeLeons who are US citizens. Dikshit on the other hand has kept his Indian citizenship despite living in America for many years. The company PartyGaming has also settled with the American federal authorities for its activities in America before the UIGEA was enacted. In April 2009 PartyGaming agreed to pay $105 million to clean its slate. This was a prerequisite for its merger with Bwin and also essential if it wanted to return to the American market as and when online gambling was legalized there.

Copies of a 57 page draft bill have been circulating in Washington that seeks to amend the UIGEA to allow the licensing and regulation of only online poker. The other forms of online gambling are not covered. The requisite consumer protections for underage and responsible gambling have been provided for. The sponsor of the bill has not been named. However the Wall Street Journal is calling this draft bill “the Reid Bill”, stating that it has originated from the office of the Senate Majority Leader Harry Reid. The Wall Street Journal has also claimed that the bill is backed by the large land casinos. No confirmation of this has been received from Senator Reid.

There is every possibility that such a poker only bill would be attached to a must pass bill and moved through both the Senate and the House in the lame duck session, while the Democrats still enjoy majority in the House. This was exactly how the UIGEA was passed by the Republicans in 2006 and the UIGEA Rules in 2008. But now at the other end of the stick the Republicans are crying foul. Ranking Members of important committees in the Senate and the House, including Spencer Bachus, Dave Camp and Lamar Smith have written to Harry Reid and House Majority Leader Mitch McConnell drawing their attention to this attempt which they state is “secretive, closed-door, undemocratic process” being undertaken to regain access to the US market. This stand taken by the Republicans has been dubbed in online poker forums as pot calling the kettle black.

As of this moment no one is forthcoming with certain information, but if the Democrats pull this off it will be a wonderful Christmas and New Years Gift to the online poker community. Even the land casinos, once antagonistic to online gambling now support an only online poker situation. The regular anti-UIGEA bill, HR 2267 sponsored by Barney Frank, is stuck. It was passed in the House sub committee earlier this year, but has no chance of passing a full House vote now that the Republicans have a majority there.

The mid term elections in the United States are over. The official count is not yet out but it is clear that the map of the United States will be redder than before as the Democrats have taken a big bashing. They are expected to lose over 60 seats in the House of Representatives and yield control of the House to the Republicans. However, they will retain a thin majority in the Senate despite the losses there. What do these results hold for legalization of online poker? President Obama’s administration will definitely focus on getting things on track for the 2012 presidential elections and the online poker issue will be on the back burner. If the progress was slow in the last two years it will be slower now.

However, there are two individual victories for the Democrats that will keep the hopes alive at the online poker rooms like PokerStars and Full Tilt Poker. Barney Frank has been re-elected to the House from Massachusetts. Barney Frank is the sponsor of the bill HR 2267 that seeks to legalize online gambling, create a regulatory framework for it and derive tax revenue from it. Barney Frank is the outgoing chairman of the House Financial Services Committee. Sensing the mood against the Democrats he ensured that the bill was cleared by the committee a few months ago. This was a good thing because with the Republicans taking control of the House the chairmanship of the Financial Services Committee will go to a Republican. The name that has started doing the rounds is that of Spencer Bachus, who is online gambling’s enemy number one. He has lost no opportunity in speaking out against legalization of online gambling and has done everything in his power to stall the pro online gambling bills. Fortunately for online poker players Bachus does not enjoy total support from his own party.

The other important Democrat who is expected to win is Senate majority leader Harry Reid from Nevada. The problem is that he has maintained a blow hot blow cold stance towards online gambling because of the possible conflict with the land casinos of Nevada. Now Reid has to openly and unequivocally support the legalization of online gambling. One scenario that is being talked about is attaching the HR 2267 to a jobs bill and getting it cleared in the House in the lame duck session before the change of guard takes place and then hoping that Reid can manage the rest in the Senate.