Poker Law Archives - Page 2 of 4

California’s Unnecessary Delay

September 1, 2011

On August 22, 2011, California State Senate President Pro Tem Darrell Steinberg sent a letter announcing that the bills to legalize intra-state Internet poker would not be voted on this year. The letter was also signed by Sen. Roderick D. Wright, Chair of the Governmental Organization Committee, and author of one of the bills.

Both legislators made it clear they are in favor of Internet gaming; just not now.

Anyone receiving the letter knew it was going to be bad news from the start. It opens with Dear Stakeholder; not exactly the warm salutation you would expect from sophisticated politicians.

Sen. Steinberg told the Sacramento Bee that, although he personally supports legalizing Internet gambling in California,he does not want any legislative action on the issue this year.

Why the delay? After admitting that the issue has been studied for the past three years, including numerous hearings and hours of testimony over the last several months, Senators Steinberg and Wright declare:

Despite these efforts, significant, unresolved issues remain, including tribal exclusivity and waiver of sovereign immunity, the types of games that would be authorized, who would be eligible to apply for gaming site licenses and potential federal constitutional questions.

The State Legislature goes into Interim Study Recess on Sept. 9. [W]e fully expect an objective proposal will be developed during the interim… The G.O. Committee will hold a hearing in January 2012.

Do lawmakers in Sacramento really need another half-year to study the issues?

For the record, the State Legislature spent only a few days deciding that California should have legal landbased casinos. A senior Assembly staff member told the Los Angeles Times how Prop. 1A and the model compact passed in 1999:

It was a stacked deck. It just sailed through both houses in three days without a single genuine public hearing, with hurry-up legislative hearings often held in out-of-the-way conference rooms, and after hours of closed-door negotiations between the governor, legislators and Indian representatives.

But, maybe the legal issues involving Internet gambling are more complicated than those surrounding Nevada-style tribal casinos. Unfortunately, none of the remaining “unresolved issues” seem all that difficult to resolve:

1) Tribal exclusivity. If that is an issue, there is nothing more to discuss. A few California tribes have taken the position that their compacts with the state, giving them the exclusive right to have slot machines in return for revenue sharing, mean no one else can operate Internet poker. Their reasoning is that a home personal computer becomes a slot machine if used for online betting. If that were true, the state would already be in breach for having authorized at-home wagering on horse races. Also, this is probably an argument most tribes would not want to win, because California would then have no reason not to authorize highly-taxed, privately-owned landbased casinos.

2) Waiver of sovereign immunity. The state has signed dozens of compacts with tribes for both casinos and off-track betting. There is no reason for waivers for online poker to be any different from those prior compacts.

3) The types of games. Sports betting is prohibited by the federal Professional and Amateur Sports Protection Act. Remote betting on horse racing is already legal in California. No one is seriously thinking about competing against the California State Lottery, one of the largest in the world. Bingo is limited to charities and tribes, and would require an amendment to the California Constitution to allow private operators. Casino gaming is also limited by the Constitution to federally recognized tribes. So the only game that could attract competitive bids from cardclubs and outside corporations is poker.

4) Who would be eligible to apply. This is obviously the big money question. Politically, at least one of the licenses has to go to a consortium of tribes, and one to a consortium of cardclubs. But politicians are looking at legalizing online poker not to protect local operators, but to raise money, because the state is desperate for revenue. So, at least one license has to go to an outside company with more money than any California operator, such as Caesars or Bwin/party. The only question is whether there will be a limited number of at least three licenses, or unlimited to any operator with enough money.

5) Potential federal constitutional questions. This is probably a reference to the position by the Department of Justice under Pres. George W. Bush that even intra-state Internet poker violates the Wire Act. Since then, courts have ruled that the Wire Act does not apply to poker. But, if intra-state poker violates federal law, there is nothing more to discuss.

So, why the delay? Maybe the senators really do have questions like these, which could be answered quickly by any competent gaming lawyer. Or maybe they are still trying to negotiate the political fight among various tribal factions, cardclubs, tracks and others over how many licenses will be issued, and to whom.

But, the Sacramento Bee may have been the first to publish what a lot of us have been thinking. An editorial on August 19, 2011, three days before the Dear Stakeholder letter, began:

Whether or not they are in support or opposition, lawmakers are unlikely to take decisive action until the last possible moment on two bills to legalize Internet poker and other forms of gambling in California.

Why?

These two bills are the ultimate juice bills of the session. Indian tribes and other groups on various sides of this issue are spending huge sums on lobbying, campaign contributions and consulting. The more this issue drags out and the more that lawmakers can gin up drama and stress over it the more money will flow through the Capitol.

The Bee and other newspapers have been reporting on the millions of dollars being spent on these bills. The lobbying has become so lucrative that it has even attracted such political heavyweights as former Assembly Speaker Willie Brown, hired by the Morongo tribe as a consultant.

A careful reading of the letter makes it clear that the politicians in Sacramento want additional input: Toward that end we strongly encourage you, as a Stakeholder, to be actively engaged during the interim in helping craft this objective proposal.

And Stakeholders should be prepared to write additional checks in 2012, 2013 and 2014.

Next year is the presidential election, and one-third of the California Senate and 100% of the State Assembly seats will be decided. So the few million dollars that are being spent on Internet poker will be unnoticed in the coming flood of political solicitations and donations.

If Internet gambling is not made legal in California next year, the bills have to be introduced, again, in 2013. The California Legislature meets in two-year sessions. Bills like this, even without the incentive of big money donations to drag things out, are only voted on in even years.

Republished with permission © Copyright 2011, I. Nelson Rose, Prof. Rose is recognized as one of the world’s leading experts on gambling law, and is a consultant and expert witness for governments and industry. His latest books, Internet Gaming Law (1^st and 2^nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.

Politics and Gaming

August 22, 2011

It is said that politics makes strange bedfellows.

That has always been true for opponents of expanded legal gambling.

In 1998, Don Siegelman was elected governor of Alabama, one of only two Democrats to beat incumbent Republican governors that year. The center piece of his campaign was a state lottery for education.

Yet, the voters of Alabama rejected the idea the next year, 54-46.

The campaign against creating a state lottery was one of the nastiest in memory. Where did the church groups get much of the million dollars they spent telling Alabama voters about the evils of legal gambling? From Mississippi casinos.

Existing gaming operators have always been willing to team up with opponents of all gambling to stomp out competitors.

But there seems to be a new trend: Now it is proponents of expansion who are finding the most unexpected allies.

It is not hard to see why Barney Frank (D.-MA) could work with Ron Paul (R.-TX) to try to legalize Internet poker in 2008. Frank is often as much a libertarian as a liberal. He believes government should stay out of people’s homes.

And Paul is not really a conservative, like every other member of the GOP in the House of Representatives. He, also, is a libertarian. At a presidential candidate debate, he came out in favor of legalizing heroin and prostitution. So allowing people to gamble is, for him, actually rather tame.

The few libertarians and pure fiscal conservatives left in the GOP, like darkhorse presidential candidate, former New Mexico Governor Gary Johnson, naturally believe adults should be able to decide for themselves whether they want to gamble. And former Republican office holders, like the Poker Players Alliance’s Alfonse D’Amato and FairPlayUSA’s Tom Ridge, who created the silly terrorist threat levels color codes, are always available if the price is right.

But, how do we explain social conservatives supporting legal gambling? The tea party and other Big Brother types want government in the wedding chapel, bedroom and doctor’s office, particularly if you are female. Yet, Joe Barton (R.-TX) introduced a bill this year to legalize internet poker. Barton is so far right that he actually publicly apologized to BP for President Barack Obama daring to investigate BP’s disastrous Gulf oil spill.

Barney Frank signed on as a co-sponsor; probably the only time he will be working with Barton this year, or any year.

Frank also reintroduced his own Internet gambling legalization bill. Since the GOP now controls the House, he needed a Republican co-author. He found one in John Campbell (R.-CA).

Meanwhile, the leaders of both parties in the Senate sent the U.S. Attorney General a letter that many see as an indication that they also might be considering legalization. The fact that the authors could agree on even a letter is itself amazing.

Harry Reid is the Majority Leader and a moderate Democrat. He represents Nevada, which makes him pro-gambling. Jon Kyl (R.-AZ) is a conservative Republican, a redundancy since all but two Republicans (from Maine) in the Senate are conservative. He is the GOP Whip, the second most powerful Republican. More significantly, he is so opposed to Internet gambling that his name has become synonymous with efforts to outlaw it, as in “the Kyl bill.”

But reading between the lines, the only thing Reid and Kyl agree on is that Internet poker should be operated only by their constituents: Landbased casino companies (Reid) or Indian casino tribes (Kyl).

Are conservative Republicans really becoming pro-gambling? There are a few Tea-Party-types who actually believed their own rhetoric, that everything is a state issue. Rick Perry (R.-TX) said it was OK with him if New York legalized gay marriage – at least, that was his position before he entered the race for president.

Maybe it is wrong to view legal gaming as a partisan issue. After all, the liberal Democrat Kathleen Kennedy Townsend — and you can’t get more Democratic than a Kennedy — ran and lost the governor’s race in 2002 in Maryland in part by opposing slot machines at racetracks.Ironically, the Republican candidate, Robert Ehrlich, who strongly backed racinos to solve the state’s budget crisis, never succeeded. For eight years, the Maryland State Legislature kept killing the proposal. But it wasn’t due to any anti-gambling ideology. The fights were always about who was going to get the money.

Money is, of course, what is driving the latest pushes for legalization. Gambling is seen as a voluntary tax. Every time there is an economic crisis, lawmakers and governors turn to authorizing more gambling as an easy way to raise revenue.

There is so much legal gambling that proposals that would have been considered outrageous just a few years ago don’t even raise eyebrows. Remember when there was no legal gambling in any major American city, other than Las Vegas? Then came the temporary casino in New Orleans in 1995 and the passage of Proposition E in 1996, allowing three casinos in Detroit.

The Michigan election was historic. Never before had the voters approved high-stakes casinos in the face of active opposition.

Now there are casinos in Philadelphia and Pittsburgh, put there by the state legislature. Most significantly, casinos are being built in the four largest cities in Ohio, approved by votes of the people.

There is so much legal gambling in the U.S. that it is easy for politicians to say, “We’ve already got casinos, racetracks and a state lottery. What’s the big deal about Internet poker?” Of course, there is so much legal gambling in the U.S. that those casino and racetrack owners, and even the state lottery, respond, “Internet poker is fine, as long as we get to run it.”

Today, the major opposition to expanding legal gambling comes from existing operators, and they don’t particularly care which political party is in power. That is not to say that ideology plays no role.

One-third of the electorate will always be against legal gambling. They are mostly from the religious right, and they always vote. So, special and off-year elections spell doom for proposals for new gaming.

As Kathleen Kennedy Townsend and Ralph Nader demonstrate, the far left also has a few gambling opponents. They are mostly paternalistic, believing poor people should not be gambling or drinking beer or buying hamburgers.

Although the country is growing ever more polarized, the good news for proponents is that gambling is becoming a non-issue. Those of us who are involved in it every day can lose sight of the fact that most politicians don’t know or care about the issue. And, apparently, even the religious right is losing interest.

On November 2, 2010, the voters in Iowa removed three sitting justices of the State Supreme Court, because they had ruled in favor of same sex marriage. How did this religious conservative landslide affect legal gaming? Votes in favor of casinos went up in all 14 counties in Iowa, from an average of 74% in 2002 to 78.8% in 2010.

Joe Barton has not been condemned for coming out in favor of Internet poker. Conservative groups like Focus on the Family used to instantly orchestrate mass letter-writing campaigns against any proposal for expansion of gambling. It was unthinkable that a conservative Republican would actually author such a bill.

Today, the states are desperate for money. And gambling is increasingly being seen as just another way to raise revenue, without raising taxes.

From Land Based to Online Poker

July 27, 2011

The question is not if, but when: What will happen when the biggest land-based gaming companies start competing for real on the Internet?

We already know the answer, from looking at what has happened in every other industry. There is a natural progression, starting with any new invention. It does not matter if it is automobiles at the dawn of the 20^th century; radio, movies and television from the 1920s to the 1960s; or computers, more recently. And it makes no difference if the invention is a “true” patented contraption, like the camera or the photocopier, or merely an idea whose time has come, like casinos on land or poker on the Internet.

Inventors and entrepreneurs are the first to grab onto any breakthrough. The first efforts of these garage inventors are not always the most graceful. For example, the first computerized bingo machines were raw cathode-ray tubes with wires. I was sure I would get electrocuted if I touched it.

Once the invention is shown to not actually kill people, partnerships and small companies, commonly called mom-and-pop operators, hop onboard. These small start-ups grab a large share of the market, because the big boys have not yet caught on.

If the idea is a good one, and the execution is competent, these small companies start making money and growing. But, soon, corporations, with greater access to capital for expansion and marketing, begin to dominate the business. Sole proprietorships and partnerships are consigned to niche markets.

At some point the business finally attract the attention of large international companies. They have the means to buy up their competitors. It’s called consolidation, but what it really means is, if the law allows, conglomerates will take over just about everything, leaving only crumbs for smaller, local operators.

Land-based gaming has already gone through its waves of consolidation. There are 30 major casinos on the Las Vegas Strip. Most are owned by only two companies: MGM Resorts International (more than a dozen casinos) and Caesars Entertainment (nearly as many). It’s a long way to the next level of ownership. The Las Vegas Sands (“LVS”) and Wynn Resorts each own two casinos on the Strip. Only a few are independent, if you can call it that, when, for example, it is a bank that got stuck with a casino: Deutsche Bank, which ended up with the Cosmopolitan.

Internet gambling is following the pattern. Mergers and acquisitions (M&As) first gave Party Gaming the World Poker Tour and then created the giant, awkwardly named bwin.party digital entertainment. Eventually, there will be only a few dominant online gaming companies in the world.

Who the survivors will be is not only unknown, but unknowable, due to the uncertainties created by shifting laws and even faster changing technology.

Caesars Entertainment, formerly Harrah’s, would be the largest Internet gambling company in the world, if only it did not have to worry about keeping its Nevada license. The company bought Binion’s Horseshoe in 2004 just to get the World Series of Poker brandname; it also kept the Horseshoe brand, but sold the actual hotel and casino. Caesars created a subsidiary, Caesars Interactive Entertainment, headquartered in Montreal, combining both its poker and online activities. It chose as its first CEO Mitch Garber, former CEO of Party Gaming. But it can’t take interstate bets from Americans, and it can’t buy up existing operators who do.

Predictions are also difficult, since some of the biggest potential players either did not exit ten years ago, or don’t exist today. Technology creates stock bubbles, which can lead to strange combinations, like AOL and Warner Bros. I would not be surprised to see M&As involving Facebook and Google, perhaps buying bwin.party or Caesars.

Powerful individuals throw in another variable, when they control giant companies. It will be entirely up to Sheldon Adelson and Steve Wynn to decide whether their multinational landbased casino companies, LVS and Wynn, are going to get into the field of online gaming, or not.

Of course, having one person in absolute control can cause problems beyond missing opportunities. LVS was hit with civil suits and criminal investigations, all involving allegations of wrongdoing by Adelson. Meanwhile, Steve Wynn’s announcement of his company’s earnings was lost in the uproar caused by his knocking Obama as a socialist, while praising the government of China – that’s the Communist government of the People’s Republic of China.

The land-based operators are gearing up for when they can take Internet bets from Americans. The easiest way to instantly gain expertise is to buy it. International Game Technology, one of the largest manufacturers of slot machines, paid about $115 million for Entraction Holding AB of Stockholm, Sweden. The M&A was textbook: Entraction has one of the world’s largest online poker networks and is one of the leading suppliers to the industry. Most importantly, it had never taken bets from the U.S., and will thus not cause IGT any problems with its dozens of regulators.

Caesars is more aggressive. It entered into a partnership with subsidiaries of 888 Holdings. In March, both the Nevada Gambling Control Board and the Nevada Gaming Commission declared 888 suitable. This was a significant departure from Nevada regulators’ former position, that any company that had taken bets from the U.S. was violating the law. Now 888 is considering applying for a Nevada license and planning a strategic partnership with Caesars to operate online poker, once the law allows.

Wynn took this trend to the limit, by announcing he was going to work with PokerStars to set up PokerStarsWynn.com. It was a gutsy move, since, unlike 888, PokerStars was still taking bets from the U.S. How gutsy was seen a few days later, when the federal DoJ indicted PokerStars’ principals. Naturally, Wynn cancelled his plans.

The large land-based operators understand how important it will be, to be the first online with 100% legal poker targeted at Americans. This means not only getting all regulatory approvals. The operation has to have no glitches, since players can move to a new poker room with the click of a mouse.

If laws are changed to clearly allow U.S. betting, the eventual winners will be the land-based gaming companies, or whatever conglomerate owns them at the time. The reason is simple: Success on the Internet is almost entirely due to marketing. There is nothing magical about the words Party Poker that would guarantee that it would end up with 40% of the world market, before it pulled out of the U.S. Why did Party Poker succeed, while so many other online poker companies went under? It was among the first, it had technology that worked, and it bought the rights to have its name in the middle of every table on the televised World Series of Poker.

Could even a pre-Black Friday PokerStars have competed with the brandnames and loyalty of a Caesars Palace or Harrah’s? The land-based gaming companies have player data bases with millions of names. They can offer players a lot more than free T-shirts. And, if they can’t win, they can raise corporate money to simply buy off their competitors.

But land-based operators, particularly casinos, have one enormous disadvantage: They have all the expenses connected with massive real estate holdings and tens of thousands of employees. Online casinos are cheaper to set up and cost less to maintain, even including the costs of acquiring and keeping patrons.

The big money understands that Internet gambling is simply a better investment, if it is legal. If the land-based operators can’t beat their online rivals, they can buy them.

So, welcome to the future world of mgm.bwin.party and Zynga-Caesars-888.

Senators Reid and Kyl Send Letter to the US DoJ

July 18, 2011

Leaders of the Democratic and Republican Parties in the Senate have sent the U.S. Attorney General a letter demanding that the Justice Department do something about Internet gambling. What, exactly, is up to the reader. This Rorschach inkblot test of a letter allows proponents and opponents to project their hopes and wishes on whether the federal government will ever do anything, other than make a few showy arrests, about online gaming.

The fact that the authors could agree on even a letter is itself amazing. Harry Reid is the Majority Leader and a moderate Democrat. He represents Nevada, which makes him pro-gambling. Jon Kyl (R.-AZ) is a conservative Republican, a redundancy since all but two Republicans (the senators from Maine) are conservative. He is the GOP Whip, the third most powerful Republican, and responsible for rounding up the votes of his party in the Senate. More significantly, he is so opposed to Internet gambling that his name has become synonymous with efforts to outlaw it, as in “the Kyl bill.”

So how did sworn enemies come together on this issue? And what exactly did they agree to?

Optimists see the letter as a breakthrough, that Kyl is getting ready to allow, at least, intra-state Internet poker. As additional evidence, they point to this language from Kyl’s website:

“Efforts to carve out an exception for games like poker, which many believe is a game of skill, may be considered later this year. Until I have the chance to review them, I cannot make a judgment about their merits; but I will consider them carefully as long as they leave in place the broader proscriptions against online betting.”

But, if anyone thinks Kyl has suddenly become reasonable, here is the preceding paragraph:

“I have opposed efforts to legalize Internet gambling in the past because evidence suggests that it fosters problems unlike any other forms of gambling. Online players can gamble 24 hours a day from home; children can play without sufficient age verification; and betting with a credit card can undercut a player’s perception of the value of cash — leading to possible addiction and, in turn, bankruptcy, crime, and even suicide.”

So, what is really going on? It is not cynical to remember we are dealing here with professional politicians. Notice, for example, Kyl’s careful language about Internet gambling being “unlike any other forms of gambling.” Kyl is a social conservative, one of those Big Brother types who want government in the wedding chapel, bedroom and doctor’s office, particularly if you are female. He is against gambling. But Arizona’s casino tribes are politically powerful and able to give, or withhold, millions of dollars in campaign donations.

Reid says he is personally opposed to Internet gambling. But he represents Nevada casinos. So, his position switched when the American Gaming Association’s switched. Reid went so far as to introduce his own online gaming bill, which would have benefited Harrah’s (now renamed Caesars).

Deconstructing the letter — a copy is attached — it is clear the real enemies are the state lotteries. The one thing Reid and Kyl can agree on is that Internet poker should be run by their constituents: Indian casinos for Kyl and commercial casinos for Reid. So, it is possible that Congress might legalize intra-state and ever interstate online poker, if they can figure out a way to prevent state lotteries from being the operators.

Of course, this requires Congress to actually do something. Reid has proven himself to be such a weak leader that Democrats could not accomplish their full agenda, even when they had the Presidency, control of the House, and a filibuster-proof 60 votes in the Senate. And the Republicans were rewarded in the 2010 election for being the “Party of No.” They are anti-government to begin with — except for trying to impose their religious views on everyone else — and believe they can win in 2012 if Obama accomplishes nothing more.

Some conservatives, like Rep. Joe Barton (R.-TX), best known for apologizing to BP for the White House daring to investigate its Gulf oil spill, have come out in favor of Internet poker. But all it will take is one letter from an anti-gambling religious group, like Focus on the Family, to get the right-wing riled up. The tea-party controls the GOP, and while Democrats still have the presidency and a majority in the Senate, the Republicans have veto power over everything.

US Online Gambling Laws Show Progress

June 28, 2011

We are all familiar with the real estate saying “Location, Location, Location” with legislation the saying is “Timing, Timing, Timing”. Will this be the right timing for the legalization, licensing, taxing, and regulation for online gaming? We can all hope so.

It seems each week we hear of more politicians willing to put their vote behind bill HR 1174. To date it has 28 co-sponsors with representatives from both major political parties. We could see more bills attached to HR 1174: Internet Gambling Regulation, Consumer Protection, and Enforcement Act such as HR 2230 which specifically addresses the taxation of the gaming industry and has three sponsors. Future attachments could outline legalizing, licensing, and regulation. Republican Joe Barton of Texas is preparing a bill that would establish a new federal regulatory agency to oversee the websites. HR 2366: To establish a program for State licensing of Internet poker, and for other purposes. This bill has eleven cosponsors. But this bill would only apply to online poker. Our government officials seem to be motivated at this time with stimulating the U.S. economy and a H2 Gambling Capital study showed that online gaming could bring billions of tax dollars in the first five years and add 25,000 much needed jobs to the U.S. market.

California, Florida, New Jersey, District of Columbia, Pennsylvania, and Iowa are all looking at how to make online gaming profitable for their depleted state coffers. Allowing their residents to gamble through state lottery web sites or allowing residents to gamble online through tribal casinos, are only two ideas that are in discussion. A bill already signed by Nevada’s governor directs the Nevada Gaming Commission to prepare regulations and grant licenses to casinos so they can be ready when the federal government approves online gaming. Many states are anticipating that the federal government will pass legislation that legalizes and regulates online gaming and each state wants to ensure they will get their taxes from their residents.

We hope to see momentum pick up as more elected officials see that their constituents do indeed want to have the choice to gamble in their own homes. One way to get momentum started is by contacting your elected officials and to let them know where you stand on these pieces of legislation. You can call their office, send them an email or meet with them face to face. If you are a member of Poker Players Alliance they will usually contact you via email when important policies are being brought up.

The U.S. gaming community is in need of good news and though legalizing and regulating online gambling may take some time, what we are seeing now is a move in the right direction. We will continue to monitor news from all fronts and report the facts as we get them.

Maryland Police Department Celebrating Online Poker Seizure

June 14, 2011

A local police department in Maryland is celebrating after participating in a federal sting operation which shut down major internet gambling operations. The Anne Arundel Police Department received a check for $470,000 after helping the feds seize online gaming companies that processed over $33 million dollars’ worth of transactions through the undercover processor. The money comes from a case handled by federal investigators in Baltimore and the operation was suitably named “Operation Texas Hold’em.”

William Winter, the agent in charge of the Department of Homeland Security in Baltimore, made a statement earlier regarding the seizure and explained how the feds set up a phony processing company and allowed the undercover agents contact with the online gaming operators. It’s illegal in the United States of America for companies to accept and/or process gaming transactions; which gave the feds ample reason to go undercover.

Through the sting operation the federal agents negotiated contracts with online gaming operators and began processing funds for the companies. The agents could easily track the payments to numerous operations and bank accounts in the United States and abroad. The accounts were seized in the recent bust and the monies were shared among the agencies that participated in the sting. The amount given to the Anne Arundel Police Department was based on the number of agents from the force that helped take down the online gaming operators.

The Anne Arundel County Executive John Leopold made it clear that this was the biggest asset distribution in the history of the county, and the police department will use their share of the funds to buy equipment needed for the force. The police chief, James Teare, also made a statement regarding their share of the funds by saying:

“This is huge, especially in these economic times; we just went through a very tough budget where we’re getting vehicles taken away. This infuses money to be able [to buy] vehicles, weapons that are less lethal and to do training that is much needed for these officers to do their job.”

Some industry insiders believe this is just the beginning. It’s obvious that the government in the USA is serious about taking down online poker and this is proof. Time will tell how many operators will shift and take their business out of the USA, and as of now the bigger names in online poker have already done so. Poker players in the United States can still play online at selected sites, but with operations like these going on who knows what is in store for online poker sites in the near future.

For those of you who had your Quicktender – UseMyWallet Funds seized. This is the case that led to those funds being seized.

How Did Black Friday Happen Anyway? Daniel Tzvetkoff: FBI Rat.

May 31, 2011

If you’re sitting there scratching your head like we were about how the FBI could have built its case strongly enough to get the DOJ to issue those warrants that forced the shutdown of three of the biggest poker sites on the Internet, here’s how: an insider ratted them out. That is, an individual engaging in illegal online gambling entrepreneurial activity himself cut a deal with US authorities to save his own rear from the frying pan by helping to bring down bigger fish than he.

The “he” in question is one Daniel Tzvetkoff, and the more you find out about this guy, the less you like him. He and a partner created Instabill which, as you might now, is one of the payment processors that helps arrange financial transactions between the online gambling sites and its players, including U.S. players – a big no-no according to Uncle Sam.

Apparently (or “allegedly” as we’re supposed to say) Tzvetkoff laundered some $540 million through Instabill: money that was supposed to go to Full Tilt Poker, Poker Stars and Absolute Poker but ended up going into his pocket. Living high on the hog on his clients’ money, it only makes sense they went ahead and sued him.

Arrested in New York in 2008 while attending a conference, Tzvetkoff began worming his way out of his legal hole then by, it seems, turning the tables on those very sites, in essence biting the hand that had stopped feeding him once they realized he’d already bitten a chunk out of them before.

The upshot (call it payback, call it irony) is that Tzvetkoff still faces charges with a penalty of up to 75 years in prison in his own native Australia if they can just get our hands off him and theirs on him.

Ten More Online Gambling Sites Shut Down

June 14, 2011

The US government is at it again. If you thought Black Friday on Friday, April 15, 2011 was the end of the Department of Justice’s indictments against online gambling sites operating illegally within the United States, you would be mistaken. Introducing the second and latest salvo in this brutal battle: Blue Monday, May 23, 2011, when the DOJ, with cooperation from the Department of Homeland Security and the IRS, charged three more people in connection with two online gambling companies covering a total of about 10 sites for violation of the 2006 UIGEA.

Just one day before the Poker Player’s Alliance descended on watching for the first National Poker Lobbying Day, the government gave them more to lobby about. Now in addition to Absolute Poker, Full Tilt Poker and Poker Stars, other online poker sites like Doyles Room Poker, online sportsbetting sites like Beted and online casinos like Golden Arch Casino will no longer be operating within US borders – that is, serving US customers. Instead, US customers browsing to those site will see what’s becoming increasingly familiar in the US online gambling scene: a message from the DOJ that the domain name for the site previously located there has heretofore has been seized.

The most recent indictments were all handed down in the District of Maryland where the two companies in question have the U.S. bases of operations. As part of this round of indictments are 11 bank accounts for which the government is currently seeking forfeiture. These are no doubt where US player funds from those sites are sitting, stuck, unable to be accessed by the rightful owners. Hopefully these monies will go the way of the Poker Stars player funds previously held up, which now are safely back in players’ hands.

DoylesRoom and 9 Other Domains Seized

May 23, 2011

Earlier today it was announced that a federal grand jury returned indictments charging two gambling businesses and three defendants with conducting an illegal gambling business and money laundering. The two indictments were returned on April 26, 2011 and unsealed today. As part of the investigation, 11 bank accounts located in Charlotte, North Carolina; Guam; Panama; Malta; Portugal; and the Netherlands; and domain names associated with 10 internet gambling sites were also seized today.

The following internet domain names were seized pursuant to court order:

Doylesroom.com
Bookmaker.com
2Betsdi.com
Funtimebingo.com
Goldenarchcasino.com
Truepoker.com
Betmaker.com
Betgrandesports.com
Betehorse.com
Beted.com.

Anyone who tries to access those web sites will be directed instead to a banner that provides notice that the domain name has been seized by order of the court. The banners are expected to be posted later today.

ThrillX Systems, Ltd., d/b/a BetEd; Darren Wright; and David Parchomchuk, both of British Columbia, Canada are charged in one indictment. K23 Group Financial Services, d/b/a BMX Entertainment; and Ann Marie Puig, age 35, of San Jose, Costa Rica are charged in a second indictment.

The indictments and seizures were announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement, Homeland Security Investigations; Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service – Criminal Investigation, Washington, D.C. Field Office; Anne Arundel County Police Chief James Teare, Sr.; and Colonel Terrence Sheridan, Superintendent of the Maryland State Police.

“It is illegal for internet gambling enterprises to do business in Maryland, regardless of where the website operator is located,” said U.S. Attorney Rod J. Rosenstein. “We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country.”

“These indictments are the direct result of impressive undercover investigative work by our agents, along with the close collaboration of our law enforcement partners here in Maryland,” said William Winter, Special Agent in Charge of ICE’s Homeland Security Investigations (HSI) in Baltimore. “The proceeds from illegal Internet gambling are often used to fuel organized crime and support criminal activity. ICE HSI will work diligently to uncover illicit transactions involving these types of financial crimes. Together, with our law enforcement partners, we will disrupt and dismantle organizations that commit these crimes, regardless of their location, whether here in the United States or abroad.”

“Internet gambling, along with other types of illegal e-commerce, is an area of great interest to IRS Criminal Investigation,” said IRS Special Agent in Charge Rebecca A. Sparkman. “Laundering money from illegal activity such as illegal internet gambling is a crime. Regardless of how the money changes hands – via cash, check, wire transfers or credit cards – and regardless of where the money is stored – in a United States financial institution or an offshore bank – we will trace the funds. IRS Criminal Investigation will vigorously investigate and recommend prosecution against the owners and operators of these illegal enterprises to the fullest extent possible.”

According to the two count indictments and the affidavit filed in support of the seizure warrants, ThrillX, a registered company in British Columbia, Canada, with offices in Vancouver, Canada and San Jose, Costa Rica, is a software solutions provider producing online sports book and casino software. BMX Entertainment, based in Limassol, Cyprus, operates six websites that offer online sports betting services.

The indictments allege that the defendants own and manage illegal gambling businesses involving online sports betting. The affidavit alleges that online gambling sites are run by companies located outside of the U.S., while the majority of customers are in the U.S. Internet gambling operators rely upon the U.S. banking system, and more specifically, money-processing business generally called “payment processors,” to facilitate the movement of funds to and from their customers, the gamblers. Typically, an internet gambling operator directs the payment processor to collect funds from individual gamblers which are used to wager with the gambling organization. Those gambling proceeds are transferred to an offshore foreign bank. The internet gambling operator then sends a check or wire transfer from an offshore bank to the payment processor, directing the payment processor to distribute the money to gamblers for their winnings.

The affidavit filed in support of the seizure warrants alleges that Homeland Security Investigations in Baltimore, Maryland opened an undercover payment processor business, called Linwood Payment Solutions. Linwood allowed undercover agents to gain person-to-person contact with top managers of gambling organizations to discuss the Internet gambling business, to negotiate contracts and terms of the processing, and to handle the intricate movement and processing of collection and payment data from the gambling organizations to the banks.

The affidavit alleges that on November 12, 2009, a Maryland-based online gambler and cooperating informant confirmed that he/she frequented gambling sites, opened accounts and gambled in Maryland. The gambler agreed to set up online gambling accounts and was provided $500 to place bets on gambling websites. The gambler created an account on a BetEd website and placed several bets. On March 30, 2010, BetEd used Linwood to wire transfer $100 in winnings to the gambler’s bank account.

Linwood allegedly processed gambling transactions since 2009 for BetEd, K23 and other gambling organizations using banks located in Guam and Charlotte, North Carolina. According to the affidavit, between December 2009 and January 2011, Linwood processed over 300,000 transactions worth more than $33 million, including transactions for individuals in Maryland. Between February 2010 and March 2011 alone, BetEd directed Linwood to wire transfer over $2.5 million of collected gambling proceeds to bank accounts in Panama; and between February 2011 and April 2011, K23 directed Linwood to wire transfer over $91,000 of gambling proceeds to bank accounts in Portugal and Malta.

The indictments and affidavit seek the forfeiture of the bank accounts used to process the gambling transactions, as well as domain names of websites used by the defendants to further the online gambling transactions.

The defendants face a maximum sentence of five years in prison for operating an illegal gambling business and a maximum of 20 years in prison for money laundering. No court appearance has been scheduled.

UPDATE: We have it on good authority that DoylesRoom will continue to cater to US players and may even get their domain name back. We’ll keep you posted.
Bookmaker is already back up and running under a new domains and sent this email out to all players;

As you may already know, Bookmaker has temporarily lost the rights to the Bookmaker.com domain. We are confident that in time, it will be returned to us, until then, we have launched a new, temporary site: bmaker.ag.

Despite having lost the domain, none of the business operations have otherwise been affected. Player account balances and information are safe and secure. Effective immediately, players can log on to bmaker.ag. and it’s business as usual.

You likely won’t notice any other changes at all and will experience all the same features and benefits as our original site; just on a new address.

We sincerely apologize if you were affected by our interruption. As always, if you have any questions or concerns please call our customer service department at 1-866-9Bookmaker.

Black Friday Indicted Pleads Guilty

May 23, 2011

Bradley Franzen, one of the 11 people charged last month in the case that shut down U.S. operations for Pokerstars, Full Tilt Poker and Absolute Poker, pleaded guilty Monday in Manhattan federal court, admitting he illegally helped link gambling companies with banks to process millions of dollars.

The charges that he pleaded guilty to were: conspiracy to commit bank fraud; accepting funds in connection with illegal gambling; and conspiracy to commit money laundering.

Franzen said he was contacted in 2009 at his Costa Rica home by an Internet poker company owner who wanted to process checks online. He said he agreed to link online poker companies with banks even though he knew it was illegal.