Poker Money Freeze a “Wake Up Call”
June 10, 2009 (CAP Newswire) – Technically, using the Internet to gamble has never been legal in the United States. Even before the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, the Federal Wire Act of 1961 calls for the fining or imprisoning of individuals using communications channels for "betting or wagering". This was the basis for Minnesota's recent attempt to force Internet service providers (IPSs) to block consumer access to online gambling websites.
However, as with the UIGEA, the exact details of the Wire Act have always been rather vague, and the government has been haphazard in the application and enforcement of the law.
But that appears to be changing. “So many players assumed the Federal Government couldn’t do anything about internet gambling,” Rich Muny, the State Director for the PPA (Poker Players Alliance) in Kentucky, told PocketFives.com. "Congress passed a bill to target the financial services end of it and this should be a wake up call.”
Muny is referring to the recent actions by Arlo Devlin-Brown, the Assistant U.S. Attorney for the Southern District of New York, who has ordered the seizure of about $30 million in funds allegedly used for “money laundering transactions and illegal gambling offenses,” also according to an article at PocketFives.com.
This money is owed to 27,000 players at four poker sites based outside of the United States, adds the New York Times. (PocketFives puts the number at 24,000.) These sites include PokerStars.com and Full Tilt Poker, two of the Internet’s most popular gaming destinations. The article goes on to state that the freezing of these funds is being carried out through Citibank, Wells Fargo, and “two smaller banks”.
$30 million is relatively small change for the online poker industry, and the sites in question have vowed that their players will get paid eventually no matter what happens legally. But the larger issue is that the government is taking this action in the first place, and that it may scale up its efforts to include more sites and more money. After all, the government has, in the past, usually set its sights on betting and wagering, not poker playing.
The PPA is already fighting the action, claiming that this freezing was not legal due to the lack of a proper warrant, thus violating the U.S. constitution’s due process laws. “I see this ending in a strong fight,” Muny said. “The PPA has a solid record of winning state lawsuits. It's do or die on this one. If the sites lose, the settlement would be that they could no longer do business in the United States.”
As of today, the websites affected by this are still unable to properly pay out their winners, and are asking for patience while the matter gets resolved. But just how much patience will be needed, and how long will this situation take to fully play out? It’s hard to determine the government’s big picture strategy; whether this is the personal crusade of one U.S. district of part of a broader effort by the government to finally enforce its gambling laws.
Either way, it’s true that this is a “wake up call” to everyone in the online poker industry, from affiliate and players to the executives of the companies involved in this marketplace. No longer can we ignore the politics of the U.S. situation; there has never been any clearer evidence that Barney Frank's and Jim McDermott’s proposed laws to legalize and regulate online gambling must be passed — and soon.