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DoJ domain deal with online poker giants creates more confusion and controversy

Posted By Lenny S On 4/21/11 :

DoJ domain deal with online poker giants creates more confusion and controversy
 
Wednesday's US Department of Justice announcement that it is allowing Pokerstars and Full Tilt Poker to use their seized domains to organise the repatriation of US funds deposited with them has added yet more controversy and confusion to an already sensitive environment.
 
Industry observers, the media and players alike are currently debating issues such as the apparent paradox of online poker sites being asked to make financial transactions in an environment that claims such movements are illegal in terms of the UIGEA, and in which legitimate channels have largely been obliterated.
 
Another argument is that by collaborating with the DoJ through the temporary use of the seized domains, are the internet poker operators implicitly acknowledging the jurisdiction and authority of the US authorities and their actions in seizing the domains in the first place?
 
Given the fact that many millions of dollars are likely to be involved, yet another question is whether the DoJ is proposing the return of funds to players, or to the authorities.
 
The DoJ statement was followed by communications from Full Tilt Poker in which the company noted that  “the government has not agreed to permit any of the seized player funds to be returned to the players.”
 
The internet poker company observed that the agreement was a good first step, but that it won’t be able to give players refunds until the government gives up control of its funds.
 
That appears to conflict with a comment by U.S. Attorney Preet Bharara of the Southern District of New York, who said in his statement that “no individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player's deposited funds."
 
Full Tilt goes on to point out that “there remain significant practical and legal impediments to returning funds to players in the immediate future,” noting that thanks to the recent enforcement measures, there are now no [legal US] channels through which refunds can be made.
 
Pokerstars appeared to evade the argument building around the question of refunds, issuing a statement that simply reassured players that their account balances were safe, with resources available to pay, and all funds held in ring-fenced accounts separate from company assets as required by its Isle of Man licensing authority.
 
Meanwhile, the Alderney Gambling Control Commission, where Full Tilt Poker is licensed, joined the Kahnawake Gaming Commission and the Isle of Man licensing authorities in issuing a statement on the US debacle.
 
The Commission's statement comments:
 
"[The] AGCC notes that its licensee, trading as Full Tilt Poker, denies all of the allegations [contained in the US federal indictments unsealed last Friday].
 
"Upon the grant of its licence Full Tilt Poker identified that it had obtained specific legal advice relating to its proposed activities. AGCC further notes the current public statements made by Full Tilt Poker to its customers and its recent decision to suspend “real money” play in the USA.
 
"AGCC is concerned that appropriation of Full Tilt Poker’s dotcom site is hampering and potentially adversely affecting its lawful operation elsewhere in the world."
 
The Poker Players Alliance issued yet another statement Wednesday on the federal indictments, commenting on the domain use agreement with the poker sites:
 
“The poker players have spoken, and it seems the U.S. Government has heard their cries. But players are still in pain. While today’s action allows players on two of the three online poker sites to access their funds, this is just a small victory in the ongoing fight to protect Americans’ rights to play poker online.
 
"Even with today’s announcement, millions of Americans are being denied their hobby, avocation and in many cases their livelihood because they remain unable to play poker on the Internet.
 
“Over the past few days, PPA members sent more than 65,000 emails and letters, and made thousands of phone calls to the DoJ, the Administration and Congress demanding access to the money in their online accounts and condemning the DoJ’s declaration of war on poker.
 
“Online poker players have been the true victims of the DoJ’s action, and it is good to see the DoJ recognizing that fact and working with Full Tilt Poker and PokerStars to get players their money. Yet, the fight to protect American’s freedom to play poker online is not over.
 
“Now more than ever, poker players are uniting against the vague laws that continue to obstruct their right to play this game of skill in any format. Americans from all walks of life enjoy this great game, from stay at home moms to disabled veterans to the thousands of average Americans who earn or supplement their income through online poker winnings and they continue to tell their stories through online forums, the media, and calls and letters to Congress.
 
“The message they are sending is clear – at a time of such economic weakness in the U.S., citizens expect their government to be wholly focused on improving their way of life through job and revenue creation, not attacking their personal activities. Congress needs to recognize the benefit of licensing and regulating online poker to protect players’ rights while adding thousands of jobs and billions in revenue to the U.S. market.
 
“Online poker is not illegal and it’s time the government stops treating American poker players like criminals and protect the rights of their constituents.
 
"Congress has two choices. Either pass legislation to license and regulate online poker to provide much needed support to the U.S. economy, while offering a safe and stable environment for millions of Americans to play poker, or ignore millions of their constituents and pay the price at the polls in 2012.
"The answer is clear. Congress must listen to its citizens and take necessary action to license and regulate online poker – we know it, Congress knows it, and millions of Americans are demanding it.”
 
The US federal action against online poker continued to receive mainstream coverage, with lengthy articles from newswires widely carried, and editorials and assessments from publications as disparate as the Wall Street Journal and Time magazine.
 
The latter took a supportive view of the industry in a piece titled "Keeping Us Safe from Poker", noting that the federal action was "hypocrisy doubled down."
 
“Puritan Preet's raid on Internet poker sites in a country where gambling is legal in all 50 states, where governments are pushing their own lottery games every day, seems a bit contradictory to say the least-and I'm willing to bet that some of Bharara's staff have played poker,” Time’s article observed.
 
"The outlawing of Internet gaming has excluded a potentially large business from the U.S. that could be mined for tax revenues that could help pay off some of the debt S&P is so worried about," the Wall Street Journal noted.
 
The LA Times was also supportive, asking: "The bigger question is whether taking down the U.S. operations of three global websites will solve whatever problem Congress was trying to solve when it declared a prohibition on most forms of Internet gambling."
Sun Times characterised the federal action as a waste of government resources, commenting that the UIGEA has failed to define and clarify a fundamental element such as what is meant precisely by "unlawful illegal gambling." The publication also noted that in the alleged banking offences there were no victims - instead banks earned millions of dollars in fees.
 
Other articles pointed to the millions of Americans who play online poker; the devastating effect that the federal action could have on a wide range of American companies and livelihoods; the lost revenues to overseas companies and the billions that could be gained in taxes from a regulated industry.
 
The consensus was that a regulatory and licensing regime would generate jobs and tax revenues, whilst at the same time protecting the US player and creating a safer industry.



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