The federal government decided to make April 15th a double-whammy for millions of American poker players by handing down indictments against the owners of Poker Stars, Full Tilt Poker, and Absolute Poker (parent company of Ultimate Bet). The government is pressing charges against eleven defendants charging them with bank fraud and illegal gambling.
The US Government is seeking 3 billion in money laundering and forfeiture penalties. Of course, this does not include all of the funds they may have the ability to confiscate from all of the American players on the sites. The potential windfall from this indictment for the federal government is staggering. After just recently battling over a small $38 billion dollars in spending cuts, they may have potentially added another 15% of income to that total by the time this is all said and done.
As the indictments were made public, players from across the United States watched in horror as they were blocked from playing cash games and tournaments and the company’s websites were seized. The scramble was on to try to retrieve their funds (including from yours truly) and many of us in the poker community realized that the federal had just given us our “good game” notice. But did they?
As with the Prohibition movement, millions of Americans now feel that their civil liberties have been trampled. To think that there will not be any fallout from this is ridiculous. While this seems like a dark day for all of us who enjoy hitting the virtual tables, the government may have done all of us a favor. There are quite a few unintended consequences that will come out of Friday’s “Pokergeddon” and benefit the poker community tremendously.
Creation of Federal and State Poker Sites
Rule #1 in politics is very simple. Follow the money. If you think that the UIEGA and Friday’s actions were about virtue and justice, you need to pull your head out of the sand. The bottom line was that the federal government saw a billion dollar industry they weren’t getting their piece of the pie from and stopped it.
As many states continue to legalize gambling and build casinos to generate revenue, the government shutdown of on-line poker leaves a huge windfall out there for the taking. Many states have considered measures to create in-state poker sites and Washington D.C. just approved it in their recently passed budget. So now the race begins.
Will the cash-strapped federal government now change roles from villain to hero and step in to take over the on-line poker industry? How quickly will states now act to either enact or create legislation to shut the federal government out of the on-line poker industry and reap the benefits themselves? I’m sure many legislators had no clue of the amount of revenue on-line poker generates but these indictments are bound to be an eye-opener. No one is going to just ignore the fiscal possibilities in these difficult economic times.
Full Regulation and Transparency
The ongoing questions about sites such as Poker Stars, Full Tilt and Absolute was how safe are they? Is their software set up to create action and eliminate players in tournaments to raise their rake? If any shenanigans are taking place, what legal outlet does a player have? We may never know the answers to these questions depending on how far-reaching the government’s investigation will be.
But when on-line poker returns, these questions will all be resolved. When on-line sites are based in the United States and subject to state and federal laws, playing poker on-line will be a far better experience. Want to whine and complain about “the rig”? Fine – file a lawsuit and prove it. Players who like to play on-line will now feel like they can make deposits without fear of having them taken away in the middle of the night. Examinations of software will be able to take place. This will be a win-win for everyone.
Don’t think that upsetting millions of people and causing them to lose millions of dollars will not come without a price. The current Department of Justice headed by Attorney General Eric Holder has made some incredibly questionable decisions as to which cases to pursue and ignore. Holder answers to President Obama. With so many informed Americans already up in arms with Holder’s supervising of the DOJ, many are going to question why would Holder and the Obama administration choose this issue to make a stand?
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The answer is going to be at the ballot box. As if there weren’t enough reasons to not vote for Obama in 2012, many poker players – especially younger ones who tend to be one-issue voters – could make up a huge block of voters that will turn against the President and in turn the Democratic party because of this move by the DOJ. While the Republican Party hasn’t exactly been supportive of poker legislation, it could turn out to be a lynch-pin issue for a large number of voters.
And there is a very clear opportunity for both parties to make this move and become heroes to the vast poker community. This could turn out to be an Election Day surprise. Approving such a measure close to Election Day would be very helpful to congressional Democrats who are looking like an endangered species at this point. Republicans who would push a regulatory measure – whether it passes or fails the Democratic Senate or falls victim to a presidential veto – could strike a chord with voters who already feel Democrats are taking away liberties and freedoms with some of the legislation the previous Congress passed. Expect someone to make a move on this with enough time to cause a reaction for the 2012 elections.
Legalization of Poker
The Pandora’s Box this indictment opens is the legality of poker. Once and for all, the decision could be made at a federal level if poker a game of chance or skill. One of the cries from the poker community is that state and federal governments condone certain types of games which are pure chance but not poker which contains huge amounts of skill as a factor toward winning or losing. Poker is legal in California because it was ruled a game of skill and not chance. Anyone who plays regularly knows that a player could sit a cash game table all day with the worst hand every time and still win based on strategy decisions and reads.
One of the arguments that the eleven men who have been indicted will be using is that poker is not gambling. Honestly, they won’t have a choice or they will lose that portion of the case. Early comments made about the situation indicate this will be one of their lines of defense. This should be a very welcome battle for all of the poker community who are tired of poker being lumped in unfairly with games of chance like craps and roulette. The defendants will be questioning how games of pure chance like bingo and a lottery are government sanctioned but not poker.
The possibility of this argument being made at the federal level should excite all American poker players. Should a successful case be made in federal court that poker is a game of skill, it then would exempt it from all gambling laws. No more persecution of home games and having to protect yourself from police intervention when playing a private $20 game. Quite possibly, this battle could create a nationwide situation like California where poker rooms could pop up all over the country and be done legally because of this potential legal precedent.
A ruling of whether poker is a game of skill or chance is an unintended consequence that the prosecutors in their zeal probably never considered. For the case against these people to succeed, they will be forced to prove poker is gambling. And while the poker community will probably not rally behind the defendants, they will rally around that aspect of the case. It is an opportunity that the poker community cannot and will not let pass by without a fight. A victory means a whole new world of poker far beyond the scope of what the prosecuted companies could have ever dreamed.
In conclusion, while we’re all devastated by what has taken place we must realize that the indictment will now bring all of these issues to the forefront. It can only benefit the poker community that this discussion can no longer be ignored or swept under the rug. It is time for the rest of the country to learn what poker is really all about and address all these topics head-on with no pretenses. Poker players will all suffer in the short term but in a time frame shorter than what some think, we will all benefit in the end.
Mark Hoke is the owner of Hoke’s House. Hoke’s House is a new poker TV show to be broadcast on WPMT Fox 43, MakePokerLegal.com and on his own site www.hokeshouse.com. For more information about getting on the show, please visit the site or email Mark at firstname.lastname@example.org
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