As you probably know by now PokerStars, Full Tilt Poker and Absolute Poker/UB were indicted today by the feds. Also today PokerStars banned U.S. players. This is a very sad day for online poker players everywhere, not just the U.S.
While I am not an attorney I think there is more to this than meets the eye. For example only the State of Washington has a law specifically against online poker. The feds have targeted some of the processing activity as it relates to Washington State residents and once their state courts ruled the law valid Full Tilt Poker and Poker Stars both left the state.
Even before the law was determined to be valid the feds, specifically the U.S. Attorney’s Office of the Southern District of New York, have targeted online poker. Even though many argue the UIGEA only applied to sports gambling and later on Washington State transactions the U.S. Attorney’s Office seems to have always had it out for online gambling.
Without any court ruling the feds automatically assumed the UIGEA applied to online poker even though there isn’t a court precedent. It almost seems like federal law enforcement has intentionally avoided a showdown with the likes of PokerStars and Full Tilt Poker simply because they knew there would be a fight and if the feds lost it could create a completely unregulated situation.
Instead of ever going after the U.S. facing online poker rooms for simply offering poker the feds waited to build cases in other ways. Since the feds assumed the UIGEA applied to online poker they told banks not to process online poker payment transactions. Since U.S. facing poker rooms could not get legitimate bank accounts to process payments they allegedly had to lie to banks to secure accounts within the U.S. That is where the feds got them.
Instead of having a court rule on whether online poker was legal or not the feds played a game of cat and mouse with U.S. facing rooms such as Full Tilt Poker and Poker Stars. Since the poker rooms had to make up stories and shell companies to gain access to the U.S. banking system the feds are charging them with different types of bank fraud and money laundering in addition to UIGEA violations.
It seems that an early court ruling after the UIGEA went into law would have shown companies what was legal and what was not. Many now think that entire situation was avoided to simply create a situation such as this so that these poker rooms that were operating in a gray area now have allegedly committed some serious crimes.
Some also think that this may be a sign of regulation. This is how the market will be cleansed of the renegades so that online poker can move to the regulated environment most of the world already has. I hope that is right but I am skeptical.
I also wonder if this is a cash grab like the one that the feds got Party Poker to sign off on. With regulated online poker so close to becoming I have to think companies that never entered the U.S. market or already settled have to wonder why PokerStars and Full Tilt Poker have been able to operate so openly for so long.
In the end I am hopeful that we at least get a ruling one way or another by the courts as to whether the UIGEA applies to online poker in states without specific laws banning it. I am also hopeful Scott Tom, one of the indicted, can be located so we can maybe get the bottom of the Absolute Poker cheating scandal. That is an entirely different story though.