OC Legal Buzz

By Bill King

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Did Online Texas Hold ‘Em Just Get a Favorable Flop?

Several years ago, I had a love-hate relationship with Internet poker. I loved the ease of playing in the comfort of my own home and the way that I was pretty good at winning early rounds in tournaments or other low-buy-in games.  That said, I hated that there were cheaters using bots or different wi-fi cards so that they could conspire against us honest players. I also hated that my money was held offshore and my own bank wouldn’t honor my meager payout check because it was from some bank in the Bahamas. But while I have my own trust issues with who’s on the other side, I like the idea that people can play online. The old school form of playing has been modernized by faster play and more aggressive strategies as evidenced by the great Doyle Brunson’s failure to keep up anymore (sorry, Doyle).

Then came the Department of Justice (“DOJ”) to shake down several poker websites earlier this year on April 15th on a day known as poker’s “Black Friday.” In addition to bank fraud and illegal gambling, the DOJ accused these sites of “money laundering,”  in order to skirt the laws against interstate and inter-continental gambling. These companies are currently being prosecuted and accounts were frozen.  The worst part? Companies like Full Tilt Poker held onto money, refusing to pay many of its customers. It got so bad that several pro players sponsored by Full Tilt actually refused to play in headline tournaments as a form of protest for this practice. Meanwhile, other pro players are right in the middle of it all where $300 Million has gone missing (paid out to the owners/investors) that belongs to customers like you and me. High Stakes Report has done a great job providing a historical timeline through September here.

Chris "Jesus" Ferguson is one of the accused. Innocent pawn or diabolical schemer?

So what at first appeared to be the government’s attempts to shut down “illegal gambling” appears to be more geared at preventing money laundering, bank fraud and outright theft against consumers. And this has been supported by the DOJ’s Christmas present to the world of online poker….sort of.

In a letter two days before Christmas, the DOJ responded to inquiries by Illinois and New York to use the Internet for lottery ticket sales that are technically conducted across state lines. Since lotteries are huge revenue-gainers for states, the DOJ had an interest in supporting interstate Powerballs which provide payouts to people in any number of states (customers purchase in their own state, which apparently matters).

But for those of you non-lawyers and politicians, the DOJ also set a precedent that will help legalize online poker. The actual wording of the Wire Act prohibits “information assisting in the placing of bets or wagers on any sporting event or contest [referring mostly to horse racing and things like football].” Online poker involves betting in the game. Yes, that one preposition makes all the difference.

The other boring lawyer/legislator stuff is that our country has a system where states are permitted to pass their own laws on certain subjects where the federal government must acquiesce (you may be familiar with the perennial topic of abortion and whether or not it should be a states issue versus a federal one).  Anyway, both Nevada (of course) and Washington D.C. have legalized intra-state gaming where no federal law exists at this time to cause a conflict of laws.  So, in short, what’s good for the lotto is good for poker.

Consider that the Wire Act is really designed to prevent Bugsy and his gang of racketeers from engaging in illegal sports-booking and money laundering overseas. Trust me, Congress is moving toward legalizing online poker because there is so much money to be made and our states and fed need it. And, luckily, we even have a few leaders who actually care about the consumer and want better laws to protect them.  So, what the DOJ did was to draw a clear box around what is illegal so that states, businesses, and customers can act accordingly. Another great article for those of you who like how bills become laws is one by Professor I. Nelson –an internet law guru in our own backyard– found here. I’ll cut to the chase: it’s about whether or not the federal leadership can take credit for creating one-law-for-all or if it will be left to each state.

Sorry, Barney, but the states may take the wind out of your sails.

The good news is that internet gambling took a huge step in being legalized with laws designed to protect us from dishonest people using offshore accounts to steal from us. The bad news is that I still don’t trust that the system is cheater-proof sufficient that I’m willing to play with any real money.

Happy (Responsible) Gambling,


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