Is the end of prohibition near?
The biggest news in online gambling so far this year — and probably this decade — is the U.S. government’s shutdown of the four biggest online poker rooms serving the United States: PokerStars, Full Tilt Poker, UB.com and Absolute Poker (the latter two sites are operated by the same company, CEREUS).
For affiliates, there are tons of angles to this story. Will these sites be allowed to return to the U.S. market? Should affiliates halt all marketing for offshore poker sites? And are there any legal risks to poker affiliate marketing?
All of these issues were addressed in last week’s Casino Affiliate Programs webinar with online gaming legal experts I. Nelson Rose and Lawrence Walters, who described the legal probabilities of the U.S. government’s recent crack-down on online poker.
But another question has emerged as the most talked about among all of Black Friday’s consequences, and the answer to that is still very much up in the air: Is this action by the U.S. government the beginning of a new era in the United States, where online gambling is allowed and regulated — but under an entirely new set of rules?
In other words: Is the end of online poker prohibition near, now that the U.S. government is finally taking action (albeit unwelcome action)?
Those who believe this is just the beginning, rather than the end, of U.S. online poker are quick to make the comparison to the United States’ 1920s prohibition on alcohol. “Business is being diverted from legitimate, respected companies that employ thousands of people to fly-by-night, underground (and in this case, foreign) operations,” writes Caesars CEO Gary Loveman at CNN.
“Just like Prohibition, consumers lose all of the protections that come with a government-regulated onshore business,” Loveman continues. “And millions of otherwise law-abiding adult Americans are hamstrung by a law they disrespect and consider to be a barrier to a perfectly appropriate activity.”
Those who make this argument realize that the government isn’t stupid and is eager to tax and regulate online gambling — but on its own terms. So, the government’s actions are seen to be an attempt to clear the U.S. online poker market of foreign competition ahead of new laws that would allow the activity, but heavily favor American companies like Caesars.
“Although it would appear that the chips are down for Internet gambling, the prosecutors’ crackdown may in fact turn out to be the last before Congress reverses itself and scraps prohibition,” notes no less an authority than The Economist.
“Legalization, if it happens, may not come soon enough for the three indicted websites, which are under pressure from customers demanding refunds of their fees,” the article continues. “But things are looking far better for those sites that had refused to accept American clients.”
And that’s a great point: U.S. authorities may be setting up a situation that would favor those companies that have “played ball” according to American laws — like PartyGaming, which paid its $105 million UIGEA fine years ago and is now working on legitimate ways to enter the American online gambling market.
… or maybe not.
And here’s the argument against: Many industry observers believe this is a case of U.S. authorities going after what they see as a serious crime, nothing more, nothing less.
And that crime isn’t Internet gambling — it’s the alleged bank fraud that went on as part of the companies’ attempts to sneak online gambling in the back door of the U.S. market.
According to the actual indictment served by the U.S. Department of Justice, the targeted companies “concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions,” per Betfair’s summary.
That “tricking” of U.S. banks is where the real serious charges lie, and it’s possible that U.S. authorities are choosing to prosecute that legal violation as means to:
• Leverage one piece of solid legal standing to send a message to all online gambling that the UIGEA isn’t to be ignored, and
• Fine the companies for large amounts of money, badly needed economically in the U.S.
If that’s really the case — and it’s not unlikely — then there isn’t any bigger motive to the FBI’s actions. PokerStars and Full Tilt aren’t being ushered out as some new, U.S. government approved online gambling site gets ready to launch. It’s just a matter of punishing those who are breaking the law (at least, according to the U.S. government’s perspective).
As Betfair blogger Matthew Pitt adroitly sums up, “All we can do is speculate about whether the sites in question are guilty of this but if these stories are true they are going to have a ton of explaining to do and nobody knows if they will be able to afford the reported $3bn fines that are being talked about. It should be a very interesting few months to say the least.”
The affiliate angle
So, opinions and gut suspicions aside, there’s no real way to predict where this is going. Meanwhile, what can poker affiliates do?
As last week’s Casino Affiliate Programs’ legal webinar explained, there may be some small cause for concern for affiliates. While risk is still minimal, affiliates shouldn’t ignore this call to more closely watch the activities of their operators and stay on top of everything they do.
Most likely, affiliates are in the clear legally from any ongoing prosecutions. But what affiliates should be more concerned about is where the poker affiliate marketplace is going now.
Will the affiliate partners you use now still be around, and serving the same markets, in five years? How about ten? Will new affiliate programs come to dominate the market with any new laws that arrive? That’s very likely, and to get in early on the earning possibilities, affiliates need to stay on top of the news and know what’s going on.
Of course, the best place to do just that is at the Casino Affiliate Programs Blog. So stay tuned for more updates on Black Friday and the online poker legal situation, and we’ll help guide you through the uncertain — but still highly promising — future of poker affiliate marketing in the United States.