Updates on FBI online poker shutdown
Last week, on what’s been labeled “Black Friday”, the U.S. Department of Justice surprised pretty much everyone by implementing a sudden, wide-ranging shutdown of online poker rooms to the United States market in combination with 11 arrests.
Days later, the consequences of that action are starting to be understood.
Here’s what happened: On Friday, April 15, 2011, the FBI cut off the flow of “billions of dollars” to PokerStars, Full Tilt Poker, and CEREUS poker rooms Absolute Poker and UB.com.
Eleven people were charged with bank fraud, money laundering, and Internet gambling: Seven of them the poker companies’ owners and executives, and four of them payment processors. Prosecutors are seeking $3 billion in money laundering penalties on top of criminal penalties.
“Raymond Bitar, 39, of Full Tilt Poker and Isai Scheinberg, 64, of PokerStars were charged with violating the Unlawful Internet Gambling Enforcement Act and other laws,” reports Reuters. “Absolute Poker owners Brent Beckley, 31, and Scott Tom, 31, faced similar charges.”
Bitar and Burtnick are outside of the U.S. and not yet arrested, the L.A. Times notes. “Restraining orders were issued against more than 75 bank accounts” used by the companies and their payment partners, MarketWatch adds.
The government’s actions are a move to strengthen enforcement of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which forbid payment processing of online wagering.
Previously, the government has places the burden of enforcement on banks and payment processors. Now, it’s going after the poker companies, claiming they used “fraudulent means to circumvent” the law and “’trick’ banks into processing the payments on their behalf,” per Bloomberg.
The payment processing angle adds to the likelihood of Australian entrepreneur Daniel Tzvetkoff having assisted U.S. authorities in the prosecutions.
Among the 11 arrests were “associates” of Tzvetkoff, who was involved in igaming payment processing, per the Australian. His release last week on $500 million money-laundering charges was surprising given the prior attitude of U.S. authorities of refusing bail.
Business deals, sponsorships, Steve Wynn
The arrests have focused much criticism on PokerStars’ new efforts to help usher in regulated online gambling in Nevada, and some Nevada lawmakers are hurriedly returning campaign “donations” from the company.
Steve Wynn was quick to cancel his recent deal with PokerStars; his company issued a news release with the announcement before Black Friday’s business day was over.
Meanwhile, ESPN has canceled all online poker sponsorships, UFC has canceled its Full Tilt Poker sponsorship, and Fox has reportedly canceled the PokerStars-funded and sponsored of Million Dollar Challenge and PokerStars Big Game.
Further cancellations are expected.
Tomorrow, we’ll look at the potential positive impact of Black Friday, for the blocked companies’ competitors and possibly for the entire Canadian online gambling market. Plus, we’ll take a crack at answering the burning question facing poker affiliates: Should we be worried?