Poker Prohibition Is Not Regulation

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When people want something, businesses arise to fill the demand.  How much more so when the activity, online poker, is not even clearly illegal?

If the commercial goods or services are not legal, then by definition, the organizations will be criminal.  Prohibition created modern organized crime, by outlawing alcoholic beverages.

When Prohibition was repealed, organized crime turned to things people wanted but could not get legally: prostitution, drugs and gambling.

When legal gambling began to spread, with insufficient safeguards to keep out the bad guys, organized crime used its experience to infiltrate.

Over the years and around the world, governments realized they had few options.  The only way to completely outlaw gambling would be to crack down on players almost as hard as operators.  This is not politically possible in a democracy.

Since prohibition does not work, the next best choice is to legalize gambling and put in strict regulations.

The federal government of the United States has decided to ignore these lessons of history and take the worst aspects of the choices available.

Every action by the federal government makes it more difficult for it to go after the next operator.  The UIGEA, rammed through by the failed politician Bill Frist (R.-TN), scared all of the publicly traded gaming companies out of the U.S. market.  Then prosecutors went after payment processors, making it more difficult for players to find legitimate ways to send their money to betting sites.

Now the feds have seized .com domain names and charged operators with bank fraud.  So, gaming sites are switching to .eu and .uk, and cutting off all physical contact with the U.S.  Even the present American operators can’t be extradited, so what hope is there for the DoJ to bring future foreign operators here to stand trial?

The criminal indictment against PokerStars, Full Tilt, Absolute and their founders, was unsealed by the U.S. Attorney for New York on April 15.  Why now?

Maybe this just happened to be when the cases came together, when investigators had verified all the information about bank accounts they got almost exactly a year before.  Daniel Tzvetkoff was arrested in April 2010, apparently turned in by these very same websites for embezzling tens of millions of dollars while doing payment processing.

So, maybe it was merely a coincidence that recent developments had given Internet poker an air of respectability, a feeling that legalization was inevitable.  Nevada regulators approved Caesars Entertainment’s partnership with 888, a company that used to take bets from the U.S.  Steve Wynn upped the stakes by announcing a joint venture with PokerStars, which was still accepting American poker players.  The Nevada Assembly Judiciary Committee approved a bill to regulate online poker.  And the District of Columbia actually made it legal.

The DoJ has been waging a war of intimidation against Internet gambling for years, successfully scaring players, operators, payment processors and affiliates into abandoning the American market.  Lacking the two essentials to any prosecution – a statute that clearly makes the activity illegal and a defendant physically present in the U.S. – the feds have announced showy legal action against easy targets about every other year.

Online poker is not an easy target, since a federal Court of Appeal ruled the Wire Act is limited to bets on sports events.  And tricking financial institutions into processing poker payments seems a technicality, especially since the banks made millions without ever facing any criminal charges or even paying a penny in fines.  Talk about a victimless crime!

But getting a Utah bank to agree to process gambling transactions in return for a $10 million investment is an easier case, if true.  The bank was so small that the officer and part-owner who allegedly arranged the deal, asked for, and received, only $20,000 for his “bonus.”

Even if there was a bribe, the feds are still going to have to prove that the poker was illegal.  Since the Wire Act won’t work, prosecutors used 18 U.S.C. 1955, which makes it a federal felony if five or more people do more than $2,000 in business a day in violation of state gambling laws.  The indictment relies on “New York Penal Law 225 and 225.05 and the laws of other states.”  There is an obvious problem with using a state misdemeanor to charge federal felonies against foreign corporations licensed by foreign countries.

The DoJ also included a “thank you” to the Washington State Gambling Commission, indicating that the DoJ is probably going to piggyback on that state’s 2006 law outlawing all Internet gambling, as well.  At least Washington state makes Internet gambling a felony.

Still, there are problems.  State laws are presumed not to reach beyond their borders.  And even if Internet poker is illegal in that state, it is quite a leap to seize domain names for the entire country and threaten bank accounts in places like Panama.

The only state with a law better than Washington’s is Nevada, because it expressly says it reaches beyond the borders of the state.  But basing this attack on Internet poker on Nevada law would look like it was motivated by the landbased casinos.  After all, who are the big winners here?

The operators will never stand trial, unless they voluntarily return to the U.S. or make some other mistake.  The only U.S. extradition treaty I have found that covers illegal gambling is with Hong Kong.  Calling it bank fraud won’t work, since the defendants can show their local courts that it is based on gambling.  And the activity must be illegal in both countries.  No nation will extradite an individual to be tried for the very activity that that nation licenses.

But what is the federal government accomplishing with going after foreign licensed poker operators?

The DoJ is raking in lots of dough for itself.  For example, it received $405 million from PartyGaming and one of its founders, without even filing any criminal charges.  And Party Poker had pulled out of the U.S. years earlier.

Certainly the prosecutors are scaring a lot of people and making it difficult for average citizens to even get their money to a foreign site, let alone place and collect a bet.  But when the public relations campaign turned against it, the DoJ quickly backed down.

The DoJ’s seizure of .com names around the world, even in countries where online poker is 100% legal, led to international outrage.  It also creates a dangerous precedent.  Can an Islamic country, which outlaws alcohol, seize the worldwide domain names of every retailer that advertises beer or wine?

And the DoJ made it nearly impossible for players to get their deposits back.  Even in the U.S., there is no federal law against merely playing poker on the Internet.

Five days after Black Friday, the DoJ announced that an agreement had been reached with PokerStars and Full Tilt Poker.  The companies will be permitted to operate money games outside of the U.S., which they always had the legal right to do anyway.  American players will be able to go to the .com sites and get their deposits back.

The problem for the DoJ is that prohibition is not regulation.  Getting rid of publicly traded operators created a vacuum that was quickly filled by companies whose owners were difficult to trace.  Scaring away well-known poker names means that newcomers, some of whom will undoubtedly be sleazy, will take their places.  If the multi-billion-dollar U.S. online poker market becomes too hot for licensed companies, operators without any licenses, who won’t even reveal what country they are in, will be glad to run the games.

Meanwhile, like a raid by Elliot Ness on bootleggers and speakeasies during Prohibition, there are now wonderful opportunities for individuals you would not want to meet in a dark alley.

Unless, of course, Americans are actually going to stop playing poker on the Internet.

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 (1st and 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website,

Become a Poker Activist

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Since Black Friday, the online poker forums like ours have been breaking all-time traffic records. It seems that anyone with accounts on any of the Big 3 have wanted to come and share their story. While it is great to see that so many people are motivated, there are, in fact, better ways to spend the energy.

It is nice to hear stories and know each of us are not alone in our struggle to figure out where to go in this New World Order, but that does not bring about change. Many of the things that the Big 3 were doing were wrong and illegal, by the letter of the law. They knew of these laws, and knew the whole time that they were breaking them. In order for things to recover, governmental regulation will be necessary to pick up the pieces.

But, how do our legislators know that we, as a public, want this to happen? How do they know that our outcry is so large, that so many people are affected? I doubt too many spend their days idly browsing the numerous poker forums on the net.

Click Here for Online Poker Sites Accepting Players from the US

Since the indictments, it has been reported that over 70,000 letters have been sent to various governmental officials related to the changes in the poker world. While it is easy to fall into the trap of believing that your voice does not count, those who wrote those letters did not. What did their actions accomplish? Simply visit any of the Big 3 and you will see that have all reclaimed their domain names, that the DoJ has promised to help facilitate cash-outs. This shows just how much power a vocal group can have.

If you want to see changes, if you want your Congressman to know what you think on the issue, write to them! That is the only way that Congress can know what you want, can ever hear your voice. Take a few minutes and take what you were about to write here at Holdem Poker Chat and make it so your voice will be heard by those who can make a difference.

Exit Bobby’s Room Enter Ivey’s Room

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A few days back Daniel Negreanu made an interesting tweet on his twitter account @kidpoker. ‘Pretty amazing that Bellagio lost ALL of its hi limit action. Players banded together and moved the game to Aria due to poor treatment.’ This caused quite a stir in the poker community since Bobby’s Room in the Bellagio  used to be the home of the high stakes action in Las Vegas since it opened. What’s wrong with the Bellagio and what is the Aria anyway?

The Aria is a new hotel casino which opened his doors last year and is located right next to the Bellagio. Unlike other Vegas casino’s the Aria doesn’t have a theme. Instead it is a high tech hotel which incorporated a lot of technology in its design and even won a Leadership in Energy and Environmental Design (LEED) gold certification, the biggest hotel ever to do so. Pretty impressive for a hotel/casino built in the Nevada desert where environmentalism seems to be the last thing on people’s mind.

After Daniels tweet more people raised their voices and it became clear why the Bellagio lost their players and the Big Game. According to the players, the low comps, low level of service and rude floor people of the Bellagio have been an annoyance to the players for a long time. When the Aria opened their own high stakes room called Ivey’s room, named after Poker pro Phil Ivey, it was an easy switch. The Aria provides their high rollers with food, rooms, calls players when their seat is open and the setup of the room is much nicer. The Aria also allows the highest game running the be seated in Ivey’s room where as the Bellagio always refused to let any game below  $400/$800 in Bobby’s Room.

The WSOP always brings a lot of poker players into town for the summer and fills Las Vegas poker rooms with action at all stakes. This year however might very well be different because of the recent events on Black Friday. The Big Three online poker sites, Pokerstars, Full Tilt Poker and Cereus traditionally provide a lot of the online qualifiers for the WSOP. With no US qualifiers this number will be significantly lower this year and with that the amount of poker players in town. This will force the poker rooms to compete more then ever for their players.  A full poker room cannot be take for granted anymore. Maybe the Bellagio will see this as well and clean up their act in time to regain the high stakes action this summer.

Black Friday: A Step Too Far?

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Can a government be charged with war crimes, if the war is only one of intimidation?

The U.S. federal Department of Justice isn’t blowing up buses.  No one has died.  But while Palestinian terrorists can only close down Israeli pizza parlors; the DoJ stopped online poker sites from doing business anywhere in the world – including where poker is 100% legal.

On Friday, April 15, 2011, the DoJ seized the .com names of five of the biggest poker sites.  It is not even clear that online poker is illegal in every state and territory of the U.S.   But players in countries like England, where it is indisputably legal, also found themselves unable to access their favorite sites.

This is a door the U.S. should never have opened.  The next to step through could be an Islamic country, which outlaws alcohol, seizing the worldwide domain names of every retailer and restaurant that advertises beer or wine.

And the DoJ also effectively froze the money deposited by hundreds of thousands of American players, who had done nothing wrong.  There is no federal law against merely playing poker.  Half the states do have mostly ancient laws on the books making it a crime, sometimes, to make a bet.  But in the other half, it is not a crime to even bet with an illegal operation.

This is true of New York, where the DoJ’s legal actions were filed.  The criminal indictments charged the online operators under a statute, 18 U.S.C. §1955, which makes it a federal felony to be a large business in violation of state anti-gambling laws.  The only state laws cited are New York’s Penal Law 225 and 225.05, which clearly do not apply to mere poker players.

Black Friday saw widespread panic among players, and the threat of a worldwide bank run on online gaming operators.  By Wednesday, the DoJ appeared to realize it had way overstepped its power, and that it is losing the public relations war.

On April 20, Preet Bharara, the U.S. Attorney in Manhattan who had seized the domain names, announced that an agreement had been reached with PokerStars and Full Tilt Poker.  Technically, the .com names remain seized.  But the DoJ will now permit the companies to operate money games outside of the U.S., which they always had the legal right to do anyway.  American players can also go to the .com sites and get their deposits back.

Bharara issued the following statement:  “No individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player’s deposited funds.”

Technically true, but misleading.  Exactly how were players supposed to get their money, when they could not log on to the seized .com sites?   Did Bharara tell the operators they could refund players’ deposits, and how they were suppose to do that?  Even today the DoJ has not worked out all the details on what it will allow.

Notice that the announced agreement is only with PokerStars and Full-Tilt.  Those companies have licenses and approvals by foreign jurisdictions, including France, Italy and Alderney, which they want to protect.  They also would like to someday return to the U.S., once the laws are changed.  Absolute is licensed by the Kahnawake tribe in Canada and has always taken the position that it does not have to be overly concerned with the laws of Canada, the U.S., or any other jurisdiction.  So it is standing tough.  In fact, it is still accepting money players from the U.S.

Winners and losers:

Traffic on the seized sites seems to be down, but not precipitously.  Americans must have quickly discovered that they can sign up to the same operators through .eu and .uk sites.

Hit as hard have been media outlets which depend on poker ads.  No reason to spend money on commercials if players can’t be converted onto  That is probably the real reason for ESPN cancelling so many poker TV shows.

Traffic on rival sites that continue to take bets from the U.S. have increased, but not spectacularly.  Players do have their favorites, and don’t necessarily trust the other sites.  Plus, their money is still tied up.

Purely European companies, like Playtech, and the not-quite Internet poker sites are also doing well., a subscription poker site with free alternative means of entry, based in San Francisco, received $2.8 million in new funding after Black Friday.  And Atlantis Internet Group Corporation, which is setting up legal closed-circuit computer linked poker on Indian land, saw its stock rise 400% in the last few days.

Brick and mortar card clubs and casino cardrooms have seen modest increases in the number of poker players.  The first weekend after the online players’ funds are freed up will show whether the crackdown on Internet competition can help save Atlantic City.

In the long run it will probably be the largest landbased operators, like Caesars, and online sites which had already pulled out of the U.S., led by Bwin-Party and 888, that will be the biggest winners.  The indictments reinforce proponents’ arguments that the states should legalize intra-state poker, so that the operators and their computers and payments processors will be physically here to be taxed and regulated.

The major obstacle is political.  The same political and economic forces that allow us to even talk about legalizing Internet poker also stand in its way.  There is so much legal gambling in the U.S. that allowing one more form is no big deal.  But that also means there are well-established local operators who will fight to prevent outsiders from coming in to create new competition.

Each state will create its own formula for extracting as much money as possible without alienating existing local operators.  Atlantic City casinos companies have enough money that there is no reason to open New Jersey online gambling to foreign bidders.  In California there will be at least three licenses: one for a consortium of the state’s card clubs, the same for its gaming tribes, and at least one for an outside operator who can bring $200 million cash up front to the table.

Nevada casinos may want a federal law to prevent them having to compete against politically powerful local operators in 50 different states; 51 counting the District of Columbia.  But the recent indictments and stalemates in Congress prove that the states are where the action is, and is going to be, until well after the 2012 election.

Republished with permission © Copyright 2011, I. Nelson Rose, Encino, California. All rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I. Nelson Rose,

Licensing Jurisdictions Speak Out About Online Poker Indictments

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The Tuesday after online pokers “Black Friday” had some other big news in the online gaming industry. The Kahnawake Gaming Commission released a statement regarding their feelings on the sweeping indictments made towards four major online poker rooms. The United States Department of Justice seized online domains from Absolute Poker,, Full Tilt and PokerStars, not only did they seize domains, they arrested several people and charged them with felony crimes that could land the defendants in prison for 50 years.

Absolute Poker is licensed by the KGC, and the licensing jurisdiction wants players to know that they are concerned what will happen to players next, and they want to make sure that no player is affected by the decisions made by the USA DoJ. They also mentioned that they were in talks with Absolute Poker regarding player accounts and will release another statement in the near future.

Kahnawake Gaming Commission has been licensing online gaming operators for over a decade, and is located in the Mohawk Territory of Kahnawake, just outside of Montreal, Canada. They have recently been noted by huge player watchdog sites as becoming one of the leading licensing bodies available for online gaming.

Another licensing body is speaking out about the indictment as well. The Isle of Man Gambling Supervision Commission made their presence known and plans to handle things as professionally as possible with PokerStars to protect players, and the business model as a whole. PokerStars is still holding the license from the Isle of Man as of today, so their licensing status remains unchanged.  Finally, it was also noted that players from the USA with funds in their PokerStars accounts will hopefully be able to withdraw their funds in the near future. As of now PokerStars suspended all cash game play for USA players.

Chad Elie Marries a Playboy Bunny One Day After Online Poker Indictment

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One of the men facing criminal charges stemming from the “Black Friday” online poker indictment didn’t waste any time after he made bail that same day. Chad Elie is facing major criminal charges including fraud, which is being prosecuted by the Federal Trade Commission. He was one of the several arrests made on April 15th, following the online poker crackdown against Full Tilt, PokerStars and Absolute Poker/

Elie is said to be behind over $275 million dollars of illegal monies spent on online poker, but he didn’t let that get him down. Wasting no time, he quickly married his Playboy Playmate girlfriend in a small ceremony at Little Church of the West, in Las Vegas Nevada. Destiny Davis is the new blushing bride and has a business model of her own. While it has nothing to do with online poker, readers may know what her online career consists of since her background as a Playboy Bunny isn’t exactly privileged information.

This wedding may have come to a surprise to those following the case and charges against Elie and nearly a dozen of others as of April 15th. One thing is for sure; if a federal indictment with looming criminal charges, a possible 50 year prison term and multi-million dollar fines won’t stop the happy couple, it’s likely nothing else will.

Barney Frank Speaks Out Against Poker Indictments

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Barney Frank, the Democratic Congressman, let the Obama Administration know how he felt regarding Black Friday and the indictment that led to several arrests and the seizure of four well-known and big names in online poker on April 15th, 2011. He told them in so many words that this indictment and the criminal charges against the founders of these online powerhouses were a waste of the governments time and energy. The persons charged in this case are facing huge prison sentences and multi-million dollar fines.

Barney Frank has gone public with his feelings following the recent actions in online poker when Absolute Poker,, Full Tilt and PokerStars were shut down and taken out of the US market this last Friday. Frank is none too happy about the incident and has been interviewed by quite a few media outlets. Frank recently told that this was an “incredible waste of resources” by the American government and the time and energy spent on taken the poker rooms down could have been spent more wisely.

Barney Frank is a big name in congress and most notably for his own bill to legalize the game of online poker at the highest of levels. This bill and what it stands for, only mocks what the Feds are trying to do, which makes Frank even more passionate about his beliefs. He has stated more than once that the government is not helping the USA players by trying to come down on poker rooms; they are actually pushing players into the hands of an unregulated, unlicensed industry. Frank says the government shout try to find those responsible for the real estate market crash and other financial disasters the USA faces, rather than work so hard to make it a crime to play online poker.

He went on the record with the Hill asking the government to “Go after the people responsible for empty houses, not full houses.” While he is not giving the go ahead for USA players to break the law, but simply asking to place the online poker industry further down on the list of priorities for the federal government. Not all of those in the White House are against legalizing online poker, and Frank also mentioned that there were quite a few Conservative Republicans that are ready to back up his bill to regulate online poker, not only to legalize it for the players, but to license USA poker rooms online, giving the player some recourse during disputes. As it stands now, the player has little to no recourse should an issue arise while they are playing online.

Pokerstars to Partner with Wynn Resorts

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Pokerstars, world’s largest online poker site, has been very busy in Las Vegas over the last month. After announcing support for the passage of a new Nevada law that would bring online poker to the state and creating 500 new jobs if the law gets passed they have now formed a partnership with Wyn Resorts.

Wynn Resorts Ltd announced that they have entered into a partnership with online poker giant Pokerstars, and that the two companies would work together for the passage of a U.S. legislation that will define illegal internet gambling.

The companies plan to jointly operate a regulated, U.S. online poker site,, if they can get the legislation to pass, Wynn said.

“We are convinced that the lack of regulation of internet gaming within the U.S. must change,” Wynn’s Chief Executive Officer Stephen Wynn said in a statement.

Adam Sternberg Takes Down The Bay 101 Shooting Star Tournament

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The World Poker Tour hosts some excellent tournaments, including the Bay 101 Shooting Star.  The World Poker Tour is now in Season 9, and part II of the major tournament aired this past Sunday.  The tournament had 415 entrants and ran from March 14-18 with an incredible prize pool of $3,942,500.  The main reason that this tournament draws so much interest is because of the excellent $5,000 bounties on each “Shooting Star” that is competing in the field.  A Shooting Star is one of the many poker pros who compete in these events.  Part I of the Bay 101 Shooting Star event featured the host Mike Sexton competing in his first ever World Poker Tour final table.  Sexton made a very impressive run, and was definitely a fan favorite, but he was unfortunately eliminated in sixth place; but took home an solid $148,000.

Going into the final four of the Bay 101, the four players remaining were Steven Kelly (4,554,000 chips), Alan Sternberg (3,722,000 chips), Vivek Rajkumar (2,374,000), and Mike “The Mouth” Matusow (1,802,000 chips).  As play continued to press on, Mike Matusow made a few moves with a big bluff, which unfortunately didn’t work, but doubled up after that.  Vivek Rajkumar was knocked out in fourth place, making this his second appearance at a WPT final table in a row, with the last being the Los Angeles Poker Classic.  Matusow was then the next to go, as Alan Sternberg raised to 180,000 and Matusow shoved over the top for 1.2 million more, and Sternberg called.  Matusow turned over 9/2o against Sternberg’s K/Qs.  This then left us two with Steven Kelly taking on Alan Sternberg.

The hand which won the tournament for Alan Sternberg was when he got Steven Kelly all in with his 10/8o against Kelly’s A/Qo.  Kelly and Sternberg both hit a pair on the flop, with Sternberg flopping an 8, and Kelly’s queen putting him way ahead.  The turn was a 7 to pair the board and eliminate even more outs for Sternberg.  In a shocking river though, Sternberg spiked an 8 and took down the Bay 101 Shooting Star tournament, as well as $1,039,000.

NFL Great Emmitt Smith Signs With

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The three-time Super Bowl champion will represent at a selection of live events, starting with this week’s “National Heads-Up Poker Championship” at Caesars Palace, Las Vegas, from March 3rd to 6th.

During his glittering football career, Emmitt amassed 18,355 rushing yards and 175 total touchdowns. He became the first player ever to win the NFL’s Most Valuable Player (MVP) and the Super Bowl MVP awards in the same season, when his 132 rushing yards and two touchdowns helped the Cowboys beat the Buffalo Bills in Super Bowl XXVII.

The former Dallas Cowboys and Arizona Cardinals running back is also looking to add a coveted World Series of Poker* bracelet to his collection of silverware, by representing at this year’s World Series of Poker* (WSOP).

Emmitt got his first taste of WSOP* action in July 2010, one month before his induction into the “Pro Football Hall of Fame.” He earned his seat at poker’s biggest stage by winning a Celebrity Invitational Charity Tournament that he organized in support of the charity he set up with his wife: “Pat and Emmitt Smith Charities”. He won his WSOP* seat by beating out world renowned poker player and Team Full Tilt Poker Pro Phil Ivey.

Now, as part of poker’s most elite roster of celebrity and professional poker players at (including actor Don Cheadle, actor Mekhi Phifer, Tennis Player James Blake, Former UFC Champion Matt Hughes, UFC announcer Bruce Buffer and others) Emmitt is looking to transfer his skill on the gridiron to prowess at the felt. Look for Emmitt at the tables – exclusively at

*World Series of Poker and WSOP are trademarks of Harrah’s License Company, LLC (“Harrahs”). Harrah’s does not sponsor or endorse, and is not associated or affiliated with or its products, services, promotions or tournaments.