By Martin Owens
The Return of FullTilt
"Victory is won not in miles but in inches."
The Massacre That Wasn't
Does anybody remember this time last year? Black Friday had struck! FullTilt Poker, Poker Stars and Absolute Poker, all under Federal indictments. Big, fat, serious indictments. Bank fraud - people get 30 years for that one. Money laundering - 20 years out-of-the-box, even before they get nasty and add on RICO multipliers . And the UIGEA - five years for using American banking facilities for illegal Internet gambling. Oh, and wire fraud too. No indictment is complete without wire fraud.
Even worse, the Department of Justice instituted civil suit alongside the criminal complaints, alleging that FullTilt had not only broken gambling laws, but broken into customer accounts and robbed them. FullTilt's Alderney license was first suspended and then canceled. The website URLs were seized. Bank accounts were froze worldwide. Obviously something very serious was about to happen. Maybe even the end of Internet Poker!
Except it didn't. About three people were actually bought before a court on charges, and are in various stages of copping a plea and arranging a settlement. Absolute Poker and its Cereus network shut down, but they were under a cloud anyway, following a cheating scandal from 2007-2008. Poker Stars not only stayed afloat, but began to make a deal.
By July 2012, the whole thing had been settled. Neither Poker Stars Nor FullTilt admitted to any wrongdoing. All the blame rested, apparently on those few who were actually indicted. Poor souls, how could they survive 20, 30 year sentences? Um, well, they didn't get those, exactly. The last details have not been settled but right now it's looking like a couple of years apiece, maybe less, and some fines.
Speaking of fines, a large chunk of cash was of course handed over to Uncle Sam- about $731 million. (For all the terrible moral harm that online gambling sites allegedly do, I must say that the government has no qualms about accepting the money that these sites make from such supposedly unspeakable activities.) And the various US customers whose accounts had been frozen began to get their money back. Since their inability to get hold of their own money was arguably the result of the DOJ freezing their accounts in the first place, the civil suits have been dismissed "with prejudice" - legalese for fully and completely dead, no possibility of re-filing them later on. Thankfully, the government also stopped its solemn nonsense about "a Ponzi scheme", which none of this ever was.
In fact, Poker Stars seems to have emerged stronger than before. Poker Stars bought FullTilt with the government's (that is, the DOJ's permission. FullTilt, under new management, got its license back. For the present, neither site is accepting US clients in a play-for-money mode, though you can play for free all you like.
The Band Plays On
Well, even if the whole thing was sort of confused, it was worth it because illegal Internet poker has been put down. Right? Well, also, not really. FullTilt and Poker Stars are not taking US cash customers. But plenty more are. I won't list them here, about 30 seconds on Google will give you the top five or ten. But it's the same story. In 2006, when the unexpected last-minute passage of the UIGEA put the heat on Party Gaming, that was also supposed to be the end of the world for Internet poker. Instead, all it did was to open up the field precisely for Poker Stars, FullTilt, and so on. And now that the current champions have been eliminated, others are coming up to claim first place. Internet poker worldwide is worth something like $12-$15 billion, depending on who you ask. The United States market is worth roughly 50% of the world total.
What does that mean? It means there will always be somebody there to move that money. There always was, even before the economy went in the tank. And there always will be.
Perhaps these suits and indictments are not what they seem. Perhaps the Feds are not enforcing criminal law, gambling law at all, but are instead cultivating an exotic species of antitrust suit in disguise. One after the other, they knock off the leaders, only to leave the market open for others to move in and take their place. DOJ seems to be saying, "you had your turn, Party Gaming, FullTilt, now move over and let somebody else get the chance to be a billionaire."
Other, even more cynical observers interpreted the FullTilt indictments as an attempt to knock out the overseas version of online poker, just as states such as New Jersey and Nevada were finally getting ready to field their own licensed regimes. If so, the effort seems to have been wasted. For all that Nevada has approved a number of applicants for licensed Internet poker, and New Jersey is working on it, at the time of this writing there is no such thing as a licensed online poker game in the USA. Maybe next year, they say.
Meantime, the offshore fleet is reorganizing itself. If there's one thing that's certain, they'll be back. And they'll always come back, unless and until there is a regime of licensed, supervised, honest and trustworthy online gaming that state and/or Federal authorities can offer to the American gambling public.
And that doesn't look like happening anytime soon.
Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers, 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com
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