Poker Arrested: Why the Feds Shut Down Poker

It’s being called Black Friday, the day the US Government shut down online poker for Americans and put the whole industry in jeopardy. On Friday April 15th, the DoJ seized the domain names of pokerstars, fulltiltpoker, UltimateBet and Absolute Poker, froze over 75 bank accounts and millions of dollars and issued arrest warrants for 11 individuals tied to the websites.

As you can imagine, millions of poker players across North America are outraged and upset that the US Government would go after a game they have so much passion for. They’re missing the point.

The US Governement and the DoJ have no issue with poker itself.  The issue they have which led to the crackdown was all the crime, fraud and money laundering taking place by these companies who on the surface display a polished image yet have operations that are mired in crime and corruption. In the future Black Friday will be known as the day the online poker world got cleaned up as corporate America stepped in.

“They lied to banks about the true nature of their business,” FBI official Janice Fedarcyk said in a statement. “Then, some of the defendants found banks willing to flout the law for a fee.”

Forums and websites are full of poker players venting that the US government just wants a piece of the pie and the ability to tax this billion dollar industry.  And that may be true to some extent. But the main issues are the staggering amount of money leaving the United States fraudulently, leaving banks to deal with fake businesses and accounts that were setup as fronts and in most cases don’t even exist.

So if you’re a poker player who sends these companies money and trusts them with thousands and in some cases millions of dollars, doesn’t this concern you? Doesn’t it concern you the risks they have chosen to take with your cash and their operations? Doesn’t it concern you that Absolute Poker has been lying to you all these years about its owner Scott Tom, who has been accused of stealing millions from his own players by cheating with super accounts?

You don’t become a legitimate company by upgrading your TV commercials and filling your website with famous poker pros. Why even spend all that money on lobbying the government to change its laws when you don’t respect and follow them in the first place? The only company that has shown true class is partypoker.com, who as a market leader back in 2006 decided to follow the law fully knowing it would cost them hundreds of millions of dollars and their number one position in the market. Yet they had the wisdom to see a day like this coming and understood that the only way they could participate in a legal, regulated market would be to comply with the Department of Justice and close the doors to US based players until it gets sorted out. Party Poker ended up settling and paying a $105 million fine and are now well positioned to be welcomed back when poker legislation and regulation take effect.

As was widely expected, European gaming stocks saw huge spikes as investors banked on the companies to fill the void left by Black Friday. Bwin (Pwin) closed up almost 30%, 888 Holdings was up over 19% and Playtech was up 11%. In the US, Las Vegas Sands gained 3.6%, Wynn gained 1.5%, while MGM dipped 1.6%.

Poker agent Brian Balsbaugh from Poker Royalty says:

“When Pokerstars, Full Tilt and Absolute Poker left the US market, 95 percent of the market share for US poker players absolutely disappeared and with that so did $200 million worth of marketing money and advertising money that these companies spent in order to acquire new customers. What that means is basically poker television shows like “The Big Game” on Fox and “Poker After Dark” on NBC are completely gone. So the poker landscape has changed dramatically in a very short period of time.”

The aftermath from legitimate companies with any ties to online poker was swift:

ESPN announced on Monday that they will be removing poker advertising from thier channel and website and will be restricting televised poker programming. According to an ESPN representative, the group was aware of the indictment only through what was announced publicly. “For the immediate future, we are making an effort to remove related advertising and programming pending further review.

Wynn Casino ended their relationship with pokerstars, which was a proposed joint venture to combine the largest online poker operator with Steve Wynn to create pokerstarswynn.com

“Wynn Resorts Limited announced today that it terminated its alliance with Poker Stars, the online poker company,” read a statement by the group. “The decision was reached as a result of the indictment unsealed by the US Attorney for the Southern District of New York.”

The list of individuals the DoJ has charged and issued arrest warrants for:

BRENT BECKLEY
NELSON BURTNICK
RYAN LANG
IRA RUBIN
Domain Names Seized and Shut Down:
pokerstars.com
fulltiltpoker.com
absolutepoker.com
ub.com
fulltilt.com
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