NEWS


US charges “will cut off the head of online Poker”


Some may have thought it would never happen, but Washington seems to be deadly serious about prosecuting online Poker firms


Fear, uncertainty and doubt were surging through the online Poker world as we went to press, following the US government’s sensational filing of bank fraud and illegal- gambling charges against personnel from three of the biggest operators. Eleven executives from Absolute Poker, Full Tilt Poker


and PokerStars – all of which are based overseas but, until this crackdown, allowed American residents to play on their sites – were charged in New York City and three of them arrested before being released on bail. The government also issued restraining orders against


more than 75 bank accounts in 14 separate countries used by the operators, and said it would seek $3bn in penalties and forfeited funds. “As charged, these defendants concocted an elaborate criminal fraud scheme,


tricking some US banks and


effectively bribing others to assure the continued flow of billions in illegal gambling profits,” said US Attorney Preet Bharara. “Moreover, in their zeal to circumvent the gambling law, the defendants also engaged in massive money laundering and bank fraud.” The prosecutions highlight the anomalous legal status


of Internet Poker in the US after the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA). Although there is not a clear-cut ban at the federal level on online gambling as such, UIGEA makes it effectively impossible for operators to legally bank their takings or conduct other financial transactions with players. Thus, prosecutors say, the three companies had to


abuse loopholes in the banking system, and it is this alleged chicanery rather than the actual operation of Poker games that has landed them in court. For example, according to the prosecutors, gaming


payments were disguised as transactions with online merchants, and the SunFirst bank was induced to illegally process gambling transactions with the promise of a $10m investment from Poker entrepreneurs as well as a $20,000 payment to the bank’s Vice Chairman. As we went to press, all three operators had closed


their doors to US gamblers, although they emphasised that money held by American residents in player accounts would be returned. Negotiations with the authorities over the practicalities were continuing, and it seemed likely that the three firms would continue to operate as normal for non-American players. All are based outside of the US – Full Tilt in Ireland, PokerStars in the Isle of Man, and Absolute Poker in Costa Rica.


6 MAY 2011 But there has already been negative fallout for the three


operators. Not only have they lost a vast market overnight, but it is now unlikely that the land-based casino industry will favour them as partners if, or when, online is finally legalised. Already Wynn Resorts has pulled out of a deal with PokerStars founder Isai Scheinberg to create PokerStarsWynn.com in anticipation of that day. There also remains a longer-term fear that the


government has effectively closed down the US online Poker sector, estimated to be worth up to $6bn a year in revenue. “It just cut the head off of everything,” Las Vegas pro player Robert Fellner was quoted as saying. The cases have, of course, yet to be heard, and it is


expected that the companies will defend themselves in part by arguing that Poker is a game of skill, not chance, and is therefore not covered by gambling laws. And there has been plenty of criticism of the


government, which had for so long apparently ignored the millions of Poker games being played on its citizens’ laptops that some thought it was quietly tolerant. One writer in the Los Angeles Times called the action an “asinine clampdown”, while a Buffalo State College professor said he was unconvinced that the indictment showed any breach of UIGEA or other laws. Perhaps, however, prosecutor Bharara would contend


that justice in this case is poetic. After UIGEA arrived, many Poker operators withdrew their services from American customers, not only diminishing their own revenues but also hugely strengthening the market position of those that remained – including the three current targets. The Act that built their businesses might now prove their undoing.


“The crackdown is illegal”


The US onslaught of prosecutions against online Poker operators breaks international trade law, according to the government of the tiny Caribbean nation of Antigua and Barbuda. The country of some 90,000 people has long fought a


battle in the World Trade Organization against Washington’s attempts to prevent American residents from playing on overseas Poker sites. It says the policy is protectionist, because the US


does not ban betting entirely and even allows online wagers on some horse racing. Antigua and Barbuda’s implication is that Washington is therefore favouring domestic land-based casino operators over foreign, online rivals, in defiance of international free-trade pacts. The World Trade Organization has supported the


island nation in the past, ruling that other US prosecutions of offshore Internet gambling operators violated international trade agreements. The US had argued that protection of public morality justified them.


INBRIEF


VEGAS GLOOM Nevada casino revenues slid almost 7% during February in their fourth sequential monthly decline, according to the state’s Gaming Control Board. On the Las Vegas Strip, revenues were down about 9.6%. Year-on-year, however, Strip revenue from table games was up 3.9%; from slots, 3.2%.


CONTENT DEAL GameAccount Network is to provide content from Aristocrat Leisure in European online gaming markets, focusing at first on the United Kingdom, Italy and Spain.


RITZ WINNERS Twenty-four players competed in a Poker tournament at London’s Ritz Club for a prize fund of £48,000 ($77,000). First prize went to Barminder Maker.


CLOSE TO HOME Intrepid Gaming is to reopen its Casino MonteLago property in Henderson, Nevada, targeting locals. It says average household income in the area is over $100,000, and residents are increasingly full-time rather than second-homers.


SPOTTING FAKES The European Central Bank has approved Innovative Technology’s NV9 and NV10 USB banknote validators as capable of recognising counterfeit euro notes.


LUCKY PLAYERS Revenue at Britain’s Rank Group grew 2% in the first 15 weeks of the year, although low win margins hampered the performance of its casino division. Customer visits to the casino properties, however, rose 12%. The firm says it is on track to achieve its target of converting at least 20 of its casinos to the G brand by the end of next year.


SPEAKING IN TONGUES Global Gaming Expo Asia, which takes place 7-9 June at the Venetian in Macao, will for the first time feature simultaneous translation in its conference sessions. Topics covered will include regulatory issues, casino operations, and technology.


WE’LL TAKE TWO FutureLogic’s Gen2 Universal and Eclipse devices are to be the printers of choice for Amaya Gaming Group.


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