GPWA Times Magazine - Issue 22 - October 2012

By Joe Kelly and Frank Catania T he United States Attorney for the Southern District of New York has long been the most active prosecutor of online offshore poker companies, executives and payment processors. In numerous cases, including Black Friday, the Justice Department charged online poker operators and other defendants with conspiracy violations of various federal statutes, especially the Illegal Gambling Business Act (IGBA) and bank fraud. A typical indictment would charge defendants with violation of New York state gambling law which defined gambling as a game where the outcome “depends in a material degree upon an element of chance” and this would trigger federal jurisdiction if the illegal gambling business was a certain minimum size. The indictment might also include allegations of violation of the Unlawful Internet Gambling Enforcement Act (UIGEA) if there was online gambling, the Travel Act and other federal laws, but the IGBA allegation was the most important charge. In U.S. v. DiChristina , the defendant, who operated a Texas Hold’em poker club in a Staten Island warehouse, was convicted by a federal jury in the Eastern District of New York of violation of and conspiracy to violate the IGBA. The federal court, in an unusual move, granted his post-conviction motion to dismiss the indictment as a “matter of law” since poker is not federally prohibited because it is “predominately a game of skill rather than chance” ( Memorandum, Order, and Judgment, p 5). The Memorandum also opined there was “no merit” (p 6) to the argument that New York law did not prohibit poker, which, until this decision, would mean that there was federal liability under the IGBA. The Memorandum concluded that Texas Hold’em did not violate the IGBA because the poker game in question was a skill game, not a “gambling business” and not controlled by “the Mob” (p 8). The court also opined that since the IGBA statute was ambiguous on the question of poker, the defendant’s convictions should be dismissed. The court also concluded “the IGBA criminalizes illegal gambling businesses and not illegal gambling itself” (p 96). COVER STORY “ Hmm . . . maybe poker really IS a game of skill!” 31 “Hmm . . . maybe poker really IS a game of skill!”