There have been recent developments in the United States regarding on-line gambling and its implications both for poker players and the US economy.
How TechWhiz blog sees the FBI clampdown on on-line gambling.
On April 15, the FBI announced the unsealing of an indictment against eleven defendants accused of racketeering and money laundering on a grand scale. The accused are not drug dealers, organised criminals or terrorists, but the operators of some of the world’s biggest gaming websites including Absolute Poker, Full Tilt Poker and PokerStars.
According to Manhattan U.S. Attorney Preet Bharara: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits...the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.”
Following this announcement, people visiting the websites of these companies were greeted not with the regular homepages but in each case a notice bearing the insignia of both the FBI and the Department of Justice which informed the visitor that the domains had been seized by Uncle Sam.
If this sounds surreal, these “domain seizures” are the culmination of an action going back years. The Unlawful Internet Gambling Enforcement Act which came into force on October 13, 2006, effectively outlawed on-line gaming in the United States. Or maybe not so effectively, because poker companies located off-shore continued to operate in the US with impunity.
It may be they thought the day of reckoning would never come, but they had obviously made contingency plans, because it was business as usual for non-US players. Shortly, players who attempted to log onto pokerstars.com were redirected to pokerstars.eu; the FullTilt domain remained unchanged but its contact address changed from support(at)fulltilt.com to support(at)fulltilt.co.uk. Other sites were similarly unaffected, and as of Easter Sunday, April 24, all the targeted sites were operating smoothly outside US jurisdiction.
That being said, the loss of the enormous American poker market has resulted, at least temporarily, in the downsizing of both cash games and tournaments on all the sites, including some tournaments with guaranteed prize pools. The nightly $24 + $2 Razz tournament on Full Tilt has had its guaranteed prize pool halved from $1500 to $750, while the $3 + 30c Pot Limit Omaha Hi Lo on PokerStars which runs daily at 10.35am has so far retained its $1500 guaranteed prize pool.
PokerStars is the world’s largest poker site, and Full Tilt is not far behind, so their futures look secure.
Although only a fraction of the size of the US market, the UK market is still huge, and the signs are that UK firms will not be affected detrimentally by the recent legal developments.
The William Hill company was founded in 1934 by bookmaker William Hill; incorporated 5 years later, it was bought in 1971 (after Hill’s death) by Sears Ltd. In 2002 it was floated on the stockmarket with a capitalisation of £1 billion. Although it operates a poker site and casino, the bulk of William Hill PLC’s £15 billion turnover does not come from poker, and according to its Director of Investor Relations, Lyndsay Wright: “There's nothing significant to report yet in terms of new trends since the US clamped down on Full Tilt and Pokers Stars. We don't take US customers and have blocked our site to US players for many years now, since before UIGEA was enacted.”
At the other end of the spectrum, Gutshot.Com is a dedicated poker site founded in the UK; much smaller than William Hill, it began life as a dedicated poker club by a small group of enthusiasts who used to play at the Gala Casino’s card room in Central London. After having its own problems with the law, the club was closed and moved on-line, where it had already established a presence. A spokesman for its support team said (quoted verbatim): “Gutshot Poker operate on the Ipoker/Playtech network and do not accept players based in the US so it is fair to say that we have not been effected by the recent events in the US.”
Finally, the British-based RakeTheRake, the world’s largest poker rakeback affiliate, issued a statement on April 18 which adds: “There were also restraining orders issued against over 75 bank accounts used by the online poker companies and their payment processors, as well as five Internet domain names.
These rooms have told us that play and payments are affected in the following ways listed below...”
From this, it looks as though only US players have been and will continue to be affected.
Although for the moment only gamblers appear to be out in the cold, the biggest loser in the long run is sure to be the American economy, including the Treasury. Poker, gaming generally, and everything associated with it – advertising, merchandising, software development, web hosting... – is a multi-billion dollar industry. It is well known that nature abhors a vacuum; as of 2008, PokerStars alone had a market value of $3 billion. If that money is chased out of the country by a latter day Eliot Ness, it may find a new, permanent home in the UK, Eastern Europe, or even China whose population of 1.3 billion are fanatical gamblers.
[The above article was published originally April 24, 2011].
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