Online Poker Faces Assault From the Feds

Online Poker Faces Assault From the Feds

On family trips back to her grandparents' town in Chile, Paula Barros spent long nights battling it out with her relatives for penny stakes. She was calling bluffs before she turned 10.

Later, as a poor actress trying to land gigs in blustery wintertime Chicago, the recent Florida International University grad quickly realized she had the patience to wait out hands that her wealthier online opponents lacked.

Put the two together and she had a winning recipe for online poker. In 2009, within a month of signing up for PokerStars — then the largest online table — Barros was consistently winning almost every pot. The games paid out only around $20, but she spent winter nights hunched over her laptop, grinding out four or five wins before morning.

Maxwell Fritz made hundreds of thousands gambling online.
Will Rice for Eight One Seven Photography
Maxwell Fritz made hundreds of thousands gambling online.
Black Friday nearly finished Michael  Minkoff.
Bill Hughes
Black Friday nearly finished Michael Minkoff.

"If I didn't make an audition or get a part, online poker would give me the extra cash I needed for the week," Barros says.

By the time she came to Miami in late 2010, she had moved on to the higher stakes and bigger rooms at PokerStars. She kept refining her technique: betting only when she had the best position, far from the dealer; timing her games during the day, when most Americans were at work and easier-to-beat Europeans and Asians were stocking the rooms; looking hard for "donkeys" — obviously wealthy players throwing around chips and bets with little skill.

Between February and April, she cleared more than $1,000, scoring cash while her boyfriend played PlayStation games next to her on the couch in her Kendall apartment. "It was awesome," Barros says. "Poker supported my acting career. I could get to auditions instead of working some day job."

Then came April 15, 2011. The night before, Barros had won $200, cashed out $150, and left the rest in her PokerStars online account to play the next morning. But when she logged on, an ominous message appeared: Your account is unavailable because your government doesn't allow online poker. "I felt like I was living in a communist country," she says. "I couldn't believe 'my government' would put an end to this entire online gaming world just like that."

Yet that's exactly what happened on a day that the poker world now refers to as Black Friday. In one swoop, the U.S. Department of Justice seized the assets and shut down the three biggest companies serving the American market — PokerStars, Full Tilt Poker, and Absolute Poker — charging them with bank fraud, money laundering, and illegal gambling.

Tens of thousands of American players such as Barros woke up to find their accounts suspended, their millions of dollars frozen. For the the thousands of people who made a regular living with trump cards and flushes on the web, a whole way of life disappeared overnight.

The feds had shuttered a $2.5 billion American industry at the height of the recession, all because of an obscure provision sneaked into a spending bill by two conservative politicians working with Las Vegas lobbyists.

Today, players are still trying to adjust to life without online poker while the feds and states fight over whether online gaming has a place in the United States.

"They took away my way of life, and most people don't even realize it happened," Barros says. "Why can't I do what I want with my own money online? Why can't we play poker with the rest of the world?"


Hardly anyone noticed when the Unlawful Internet Gambling Enforcement Act passed in 2006. Moralists and casinos, which were trying to protect their turf, had been pushing it for years without luck. That's when Republican senators Bill Frist of Tennessee and Jon Kyl of Arizona got the bright idea to stuff it into a port security bill as a last-minute amendment.

In true Washington, D.C., fashion, most legislators never read the final bill. Many didn't even know an anti­gambling measure was in it. But in one secretive stroke, the two senators had declared war on poker.

It didn't actually outlaw online play. Kyl and Frist preferred their attack on the American pastime to remain surreptitious. Going after individual players would have meant a huge backlash. Instead, they targeted the financial institutions that handled the sites' money, making it illegal to deal in gambling proceeds.

Party Poker, the world's largest site, decided to cash in its chips. It agreed to pay a $105 million fine and leave the American market in exchange for not being prosecuted.

That left the world's most lucrative market up for grabs. PokerStars and Full Tilt, also-rans at the time, were quite willing to step into the breach despite the legal risks.

Why not? PokerStars, based on the Isle of Man, and Full Tilt, headquartered in the U.K.'s Channel Islands, figured they were outside the reach of U.S. prosecutors. It wasn't long before the two companies had cornered some 70 percent of the American market with revenues of nearly $2 billion a year.

But because the feds were squeezing banks and credit card companies, finding payment processors to handle the gambling sites' money grew increasingly difficult.

"By early 2007, suddenly the payment options are becoming much more tricky for PokerStars and Full Tilt," says Melinda Sarafa, a New York lawyer who has represented gamblers. "That's where they're starting to look into alternative providers."

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13 comments
Deman
Deman

Walter "Deadbeat Dad" Wright is a pussy!

online blackjack
online blackjack

Online Poker game has faces so many assault and that's why many people in trouble to join this great online gambling or not. This is the serious matter for the player.

7NT
7NT

Once the Wire Act was clarified ( and it seemed like the ruling was delayed?), maybe there was some culpability?

Dover Pro
Dover Pro

Online poker is a game of skill, as this article indicates, and it should be the right of anyone who chooses to play to do so. The PPA (http://theppa.org) is fighting to regulate and legalize US poker, check out their site for more information.

US Players have been continously victimized by shady operators, cheating scandals, poker action flops, faulty software, simple outright fraudulent sites, and payment processors being shut down.

It has been estimated that regulated legal online poker would produce up to 3 Billion Dollars in tax revenues VOLUNTARILY from players who would welcome protection. Legalized, trustworthy sites would automatically attract players from around the world creating a new American industry and thousands of USA jobs.

Sheryl J
Sheryl J

Thanks for this informative article about online poker and what the government did to it.  An entire industry was destroyed last year.  This is the first article that really illustrates the situation.  We need federal legislation that licenses and regulates online poker in the U.S. and brings back an industry.

Oh, and @rudedude, you're wrong.  Playing online poker is not, and has not been, explicitly illegal except in a couple of states.

Gary R. Reed
Gary R. Reed

Poker is a game of skill. For the Feds (or anyone else) who thinks it's just dumb luck like casino games or horse racing, sit down at a poker table with an accomplished player and play for a few hours. Let's see if you can get lucky. You won't. Oh you may win a hand or two. You might even come out ahead after an hour or two. Play long enough and skill will take all of your money. Bank it. That, if truth be known, is why the current administration hates the game. They want government to control you from the time you wake up until you go to sleep. To have something that they can't control, or even understand, is intolerable to them. 

FQS9000
FQS9000

Duh, the Fed are seizing assets.  They get to keep the cash.  That makes them look great to the other bureaucrats who promote them into better paying jobs.  The prosecutors are attacking because it is easy to get convictions, as these guys aren't hardened criminals.

Any time congress or ObammaBoy want to stop this they can, but it is in their narrow interests to continue.  So they will.

Term limits, guys.  Kick the pigs away from the trough.

rudedude
rudedude

Hello!  its ALWAYS been ILLEGAL! 

just because you got away with it for so long...

-not unlike internet taxes.  the day is coming... don't be shocked.

Gail S.
Gail S.

Thank you for this article!  Great background and good information on what has led up to our current situation here in the US and where we are now.  It's way past time for the US to move forward with regulating the online poker industry. 

Sheryl J
Sheryl J

Thanks for this informative article about online #poker.  I hope other media will do the same.  We need federal licensing and regulation, like H.R.2366.

Occultist1521
Occultist1521

It needs to be more massive than term limits like maybe just abandoning the current system in favor of another government with more democracy and less partisan bullsh*t. This current crap system shuttered everything not to keep the cash but to keep the cash out of your pocket. They collapsed the financial markets, and are now driving the dollar down by causing hyperinflation by printing money on top of money. No one you elect or reelect will change that. Wash. D.C. as the fed and state gov't. will NOT stop until everyone and I mean everyone (except themselves of course) has lost their home, job and is living on welfare. That way we become like Cuba dependant on Big Brothers hand outs so we can't and won't say anything against them for fear of losing our slice of bread.

JustMe
JustMe

No it hasn't. If you had read the article you'd see even the DOJ is no longer making that claim.

 
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