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Monday, April 18, 2011

Poker Stars, Full Tilt and Absolute indicted

In case you are interested in poker and have been under a rock for the past several days be aware that last Friday the FBI threw a large clod in the churn of PokerStars, Full Tilt and Absolute Poker and a whole bunch of people associated with them and each other in various ways. Best I can tell they are indicted for money laundering, wire fraud and violation of:

TITLE VIII—UNLAWFUL INTERNET
GAMBLING ENFORCEMENT
SEC. 801. SHORT TITLE.
This title may be cited as the ‘‘Unlawful Internet Gambling
Enforcement Act of 2006’’.
SEC. 802. PROHIBITION ON ACCEPTANCE OF ANY PAYMENT
INSTRUMENT FOR UNLAWFUL INTERNET GAMBLING.
(a) IN GENERAL.—Chapter 53 of title 31, United States Code,
is amended by adding at the end the following:
‘‘SUBCHAPTER IV—PROHIBITION ON FUNDING OF
UNLAWFUL INTERNET GAMBLING

If you are interested you can read the law here see page 69 and the criminal indictment here. There are also civil charges suing for billions and all the assets.

Many had thought that the 2006 law didn't really apply to poker. Why? Well the law says:

BET OR WAGER.—
a sporting event, or a game subject to chance,

And since the government had not previously demanded that the Internet sites block US players it made sense. Many based this on the belief that CA, which outlawed stud-horse poker in 1885, because it was considered a game of chance and that holdem was a game of chance. Thus when Holdem became legal in the 1990 time frame it was considered not to be a game of chance, but a game of skill.

Everyone was wrong. According to this article the only game considered a game of skill in CA is Bridge. Holdem had merely been ruled that it was not stud-horse poker.

So much more for what "everyone knows." And, of course, CA law is not Federal law.

But it remains interesting that apparently the Feds didn't go to the Internet gambling sites and say "US players are forbidden from playing." I mean, I don't think the Internet sites would have ignored that.

But it is reported that US players now trying to enter a cash game receive this message:

We are sorry but, due to government regulations, playing real money ring games is not allowed in your area.

I got curious so I sent them an email asking who in the US government had said that. They replied:

We regret to inform you that in light of recent developments,PokerStars is no longer offering real money play to US residents.

We are currently assessing the situation, and will communicate with all of our players as soon as possible

That's a non-answer to the question of "Who." They are either lying or else they are belatedly covering all the bases.

But I want to return to this.

BET OR WAGER.—
a sporting event, or a game subject to chance,

It is just possible that the Feds didn't push the issue because they didn't want to have to prove that poker was a game of chance which would have probably been a question raised by a law suit had the Feds told the sites to block US players.

Instead the Feds decided that they would just block new players from funding (buying chips) their accounts and old players who busted out. That would eventually do the same thing. From the law:

‘‘§ 5363. Prohibition on acceptance of any financial
instrument for unlawful Internet gambling
‘‘No person engaged in the business of betting or wagering
may knowingly accept, in connection with the participation of
another person in unlawful Internet gambling—
‘‘(1) credit, or the proceeds of credit, extended to or on
behalf of such other person (including credit extended through
the use of a credit card);
‘‘(2) an electronic fund transfer, or funds transmitted by
or through a money transmitting business, or the proceeds
of an electronic fund transfer or money transmitting service,
from or on behalf of such other person;
‘‘(3) any check, draft, or similar instrument which is drawn
by or on behalf of such other person and is drawn on or
payable at or through any financial institution; or
‘‘(4) the proceeds of any other form of financial transaction,
as the Secretary and the Board of Governors of the Federal
Reserve System may jointly prescribe by regulation, which
involves a financial institution as a payor or financial intermediary
on behalf of or for the benefit of such other person.

In other words, their aint no way no how anybody can legally fund an account.

Apparently the people at the three sites who are indicted thought they could sneak through the back door.

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"Unlimited tolerance must lead to the disappearance of tolerance. If we extend unlimited tolerance even to those who are intolerant, if we are not prepared to defend a tolerant society against the onslaught of the intolerant, then the tolerant will be destroyed, and tolerance with them." - Karl Popper

“Necessity is the plea for every infringement of human freedom. It is the argument of tyrants. It is the creed of slaves.” - William Pitt

"Logic. There is little logic among the cultural elite, maybe because there is little omnipresent fear of job losses or the absence of money, and so arises a rather comfortable margin to indulge in nonsense." - Victor Davis Hanson