Longform

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.

"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.

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Chris Parker and Tim Elfrink