GPWA Times Magazine - Issue 16 - May 2011

SPECIAL REPORT I. Nelson Rose on Black Friday: DOJ out of bounds By I. Nelson Rose Black Friday — a step too far Can a government be charged with war crimes, if the war is only one of intimidation? The U.S. federal Department of Justice isn’t blowing up buses. No one has died. But while Palestinian terrorists can only close down Israeli pizza parlors, the DOJ stopped online poker sites from doing business anywhere in the world – includ- ing where poker is 100 percent legal. On Friday, April 15, 2011, the DOJ seized the .comnames of five of the biggest poker sites. It is not even clear that online poker is illegal in every state and territory of the U.S. But players in countries like England, where it is indisputably legal, also found themselves unable to access their favorite sites. This is a door the U.S. should never have opened. The next to step through could be an Islamic country, which outlaws alco- hol, seizing the worldwide domain names of every retailer and restaurant that ad- vertises beer or wine. And theDOJ also effectively froze themon- ey deposited by hundreds of thousands of American players, who had done nothing wrong. There is no federal law against merely playing poker. Half the states do have mostly ancient laws on the books making it a crime, sometimes, to make a bet. But in the other half, it is not even a crime to bet with an illegal operation. This is true of New York, where the DOJ’s legalactionswerefiled.Thecriminalindict- ments charged the online operators under a statute, 18 U.S.C. §1955, which makes it a federal felony to be a large business in violation of state anti-gambling laws. The only state laws cited are New York’s Penal Law 225 and 225.05, which clearly do not apply to mere poker players. Black Friday saw widespread panic among players, and the threat of a world- wide bank run on online gaming opera- tors. By Wednesday, the DOJ appeared to realize it had considerably overstepped its power, and that it is losing the public- relations war. On April 20, Preet Bharara, the U.S. Attorney in Manhattan who had seized the domain names, announced that an agreement had been reached with PokerStars and Full Tilt Poker. Technically, the .com names remain seized. But the DOJ will now permit the companies to operate money games out- side the U.S., which they always had the legal right to do anyway. American play- ers can also go to the .com sites and get their deposits back. Bharara issued the following statement: “No individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player’s deposited funds.” Technically true, but misleading. Exactly how were players supposed to get their money, when they could not log on to the seized .com sites? Did Bharara tell the operators they could refund players’ deposits, and how they were supposed to do that? As of this writing (April 25) the DOJ has not worked out all the de- tails on what it will allow. ( Editor’s note: PokerStars has begun refunding money to American players. ) Notice that the announced agreement is only with PokerStars and Full Tilt. Those companies have licenses and approvals by foreign jurisdictions, including France, Italy and Alderney, which they want to pro- tect. They also would like someday to re- turn to the U.S., once the laws are changed. Absolute is licensed by the Kahnawake Gaming Commission, in the Mohawk Nation Territory of Kahnawake, just out- side Montreal, Canada, and has always tak- en the position that it does not have to be overly concerned with the laws of Canada, the U.S., or any other jurisdiction. So it is standing tough. In fact, it is still accepting money players from the U.S. Winners and losers Traffic on the seized sites seems to be down, but PokerStars and Full Tilt are still far and away the market leaders. According to some estimates, roughly 30 percent of PokerStars’ players were American, and half of Full Tilt’s players hailed from the U.S. Hit as hard have been media outlets which depend on poker ads. No reason to spend money on com- mercials if players can’t be converted onto That is probably the real reason for ESPN canceling so many poker TV shows. Traffic on rival sites that continue to take bets from the U.S. has increased, but not spectacularly. Players do have their favor- ites, and don’t necessarily trust the other sites. Plus, their money is still tied up. “ This is a door the U.S. should never have opened. The next to step through could be an Islamic coun- try, which outlaws alcohol, seizing the worldwide domain names of every re- tailer and restaurant that advertises beer or wine. ” Special Report