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Online Poker Faces Assault From the Feds

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Within a month of the federal crackdown, PokerStars returned $100 million to U.S. players and continued to operate abroad. Barros, like other PokerStars players, was given back the several hundred dollars that was frozen in her account on Black Friday.

Full Tilt players weren't so lucky. The company was cleared to offer returns but never did, because it doesn't have the money. Dozens of serious players in South Florida lost thousands in the Full Tilt crackdown, says Lou Stadler, president of the Miami Poker Society.

This past September, the feds accused owners Howard Lederer and Chris "Jesus" Ferguson of running a "global Ponzi scheme."

"Banks fail for not having sufficient revenue to cover customer deposits all the time," the company's lawyer, Jeff Ifrah, said at the time. "No one refers to such failures as Ponzi schemes. And there was no Ponzi scheme here." The court battle rages on.

This fall, a French company, Group Bernard Tapie, stepped in to buy Full Tilt for $80 million, promising to pay off the debts to international players. The feds are working to ensure that Full Tilt pays back American players. They've announced no timetable for repayment.

Absolute Poker — formed by four frat brothers at the University of Montana — wasn't liquid enough to continue either. None of its players has been reimbursed.

In December, Absolute Poker cofounder Brent Beckley pleaded guilty to lying to banks about the nature of his transactions. He's expected to receive 12 to 18 months in jail. His accomplice, Ira Rubin, ran a payment-processing company in Costa Rica that disguised gambling proceeds through fake merchants and suppliers. He pleaded guilty in January and is expected to receive up to two years in prison.

Rumors have been circulating that Absolute Poker will repay players soon, though payouts may be as little as 25 cents on the dollar.

"If you had a... state-regulated system, that wouldn't happen," says Rep. Joe Barton, a Republican from Texas. He's also pushing a law to legalize online poker. "This is one of those rare congressional bills that's not a Republican-Democrat issue. There are people for it and against it on both sides, but there are much more people for it. If it came up on the floor of the Senate on a majority-vote wins, it would pass. Whether it has 60 votes, I just can't tell you."

The general sentiment, from players to politicians, is that something will get done — eventually.

Sandy Becher, an attorney based in a penthouse along the Miami River, is among the nation's experts on online-gaming law. He had his own brush with federal crackdowns in 1998; back then, he was in-house counsel for SBD Global, an early online-poker firm based out of Panama. In a move similar to Black Friday, the feds shuttered the firm; Becher eventually negotiated a financial settlement. Today, Becher says he thinks the Obama administration will create a framework for online poker in the near future.

"I have a very strong sense it will be regulated and taxed in the next 12 months," Becher says. "That comes from talking to legislators and operators and other attorneys and seeing the trend from the Justice Department to the needs of states in this difficult financial time."

In the meantime, poker has gathered some powerful advocates. Casinos that once guarded their turf are hoping to get in on the online action. They're pushing Senate Majority Leader Harry Reid to get something done, but the prospect of new revenue sources is anathema to many Republicans. They squashed Reid's attempt to pass online-poker regulation in 2010.

It might come down to the states legalizing it within their borders (much like medical marijuana) and daring the feds to step in. Nevada has already begun issuing online-gambling licenses. Washington, D.C., passed a plan for running its own online-poker site. And in December, the Justice Department reversed its longstanding view that the 1961 Wire Act banned online gaming, a move many experts see as opening the door to state-regulated poker.


Eleven months after Black Friday, players are still adjusting to life without PokerStars and Full Tilt. Some, like Barros, have turned to live poker to fill the void. Just last month, she won the Miami Poker Society's tournament, earning a berth in the Las Vegas World Series of Poker. In February, she won a $700 pot in a game at Calder Casino.

"I've learned there are advantages in live games you don't have online. I can use my feminine wiles, for one," she says, laughing. "Online, I'm a dude as far as anyone is concerned."

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Chris Parker and Tim Elfrink

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