Yesterday’s events have left the online poker world in turmoil, with many people unsure of what is going to happen next. We take a look at exactly what has happened, why it is happening and we attempt to answer some of the questions brought about by online poker’s “Black Friday”.
What Exactly Has Happened?
Yesterday, the United States Department of Justice issued a statement naming 11 people – all founding members of Full Tilt Poker, PokerStars and Absolute Poker – as being charged with violation of the Unlawful Internet Gambling Enforcement Act (UIGEA), violation of the Illegal Gambling Business Act, as well as various counts of bank fraud and money laundering.
The 11 people charged are Isai Scheinberg, Raymond Bitar, Scott Tom, Brent Beckley, Nelson Burtnick, Paul Tate, Ryan Lang, Bradley Franzen, Ira Rubin, Chad Elie and John Campos.
These charges carry hefty jail terms and fines – conspiracy to commit wire fraud can carry a 30 year jail term and a fine of $1 million, not to mention the the 20 year term and $500,000 fine for money laundering.
With all of this in mind the authorities have seized five internet domain names, 76 bank accounts believed to contain proceeds of crime and as such, American poker players have now had the services of online poker sites such as Full Tilt Poker and PokerStars cut off.
Why Has This Action Been Taken?
In the Department of Justice press release, 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.”
In other words, these online poker companies are believed to have broken the law and as such, the authorities want them punished. It’s as simple as that. A minimum of $3 billion is being sought by way of penalty for these alleged offences.
The reason that the action may have come about, could well lie with the young Australian businessman Daniel Tzvetkoff, who this time last year found himself under arrest on the very same charges as the 11 men named yesterday – money laundering and bank fraud.
Tzvetkoff had worked alongside online poker companies like Absolute Poker, Full Tilt Poker and PokerStars, to set up payment processing schemes that allowed the poker companies to carry out their illegal transactions.
However, Tzvetkoff was alleged to have owed these companies in excess of $30 million and they turned him in to the authorities. By September though, he was out on bail and now it is Tzvetkoff’s former business colleagues who find themselves in trouble, not the man who just happens to know all if their operations like the back of his hand. Coincidence?
It is believed that Tzvetkoff, who is claimed by ‘Business Insider’ to be know how to “reverse-engineer transactions to determine its original source”, has handed over invaluable information about the processing of online poker payments to the law, in exchange for being treated with leniency.
What Happens Next?
It’s hard to say exactly what will happen from here. Full Tilt Poker and PokerStars have been forced to cut off their service to American based poker players and it now seems highly unlikely that they will attempt to re-enter that particular market until it is all fully legal and above board. That said, even if online poker does become totally legalised, the chances of the world’s leading poker sites actually getting a license appear to have been severely harmed by yesterday’s events.
The charges relating to the Unlawful Internet Gambling Enforcement Act could be contested by the poker companies, due to the grey area surrounding whether poker is actually illegal or not. The same applies to the charges regarding the operation of an illegal gambling business, with the money laundering aspect also hinging on proving that online poker businesses are actually illegal.
There would appear to be a strong chance that the charges won’t make it to trial and that some kind of settlement will be agreed upon.
The campaign to legalise internet poker has potentially been damaged by these events too. The poker world will almost certainly rally and unite after yesterday’s news, but ultimately, it is politicians who must get involved and it could be career suicide for any politician to support companies so recently accused of bank fraud, money laundering and other highly dubious activities.
In the meantime, Bodog Poker and UWinPoker are continuing to accept American players, though the wisdom of that decision is open to question as, clearly, they could be next in line.
Is my money safe?
The one question that most Average Joes are asking, is with regard to their funds stored in these online poker sites. It seems highly likely that any money in Full Tilt Poker and PokerStars is safe, though how long it will take to get hold of it is unknown at this stage.
PokerStars have already come out and assured their players that all of their funds will be returned in full. They issued a statement that included the line: “Please be assured player balances are safe. There is no cause for concern. For all customers outside the US it is business as usual.”
Full Tilt Poker didn’t make any concrete promises about player monies, stating: “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.”
Players with the likes of Absolute Poker will be concerned by the lack of any announcements.
Is There Anything We Can Do?
In short, no. These poker companies have allegedly broken the law and the authorities are seeking to punish them. Until online poker is fully legalised in the United States, there is very little anyone can do.
The Poker Players Alliance (PPA) is a group of poker players, both online and offline, who are campaigning for laws that provide poker players with a secure, safe and regulated place to play.
You can get involved with the Poker Players Alliance at http://theppa.org
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