U.S. Government and Their Online Poker Cash Grabs

I have been wanting to write this blog post for several weeks but Blue Monday really put me over the edge.  This post is going to be mostly opinion but it is certainly backed up by facts.  I am sick of our government’s cash grabs against online poker rooms that service U.S. players.

In my last blog post I created a timeline of how we got to this ridiculous point in time.  A bill that Bill Frist snuck through the back door in the last minutes of the 2006 Congress changed online poker forever.  It was a bill that failed to pass on its own so he attached it to the Safe Port Act, a must pass bill.  Nobody knew at the time how bad it would be for internet freedom nearly five years later.

Former Senator Bill Frist decided to abuse his position in Congress as Senate Majority Leader and now millions of online poker players in the U.S. are affected. While the UIGEA did not specifically allow online poker it did carve out such non skilled gambling such as weekly fantasy sports betting, horse handicapping and online state lottery ticket sales.  It is odd how such an anti gambling man like Frist would carve out such non skilled games.  I am sure the lobbies for such businesses could explain that for me.

Some of these players cannot pay their bills because of his actions.  While ordinary citizens are unable to pay their bills the DOJ profits hundreds of millions at their expense.  Others cannot fund their Las Vegas summer tournament season because they still have money locked up at Full Tilt Poker, Absolute Poker or Ultimate Bet.

The summer tournament season is what changes many player’s lives.  Las Vegas needs the tourism now more than ever but yet the feds decided to hurt the economy here even more.  It is already bad enough Obama has twice told Americans not to visit Las Vegas.

Five years have passed and Congress has failed to reverse the UIGEA, a bill that could not have passed on its own.  At the time of passage, according to public opinion polls, at least 85% of U.S. voters were opposed to the passing of the UIGEA.  Instead of correcting this mess the Department of Justice decided to enforce an incredibly unpopular law for their own profit.

One could argue that a law is a law and must be enforced.  There are plenty of laws that are completely absurd across the country that are not enforced.  Just browse this website to see what dumb, unenforceable laws your state has and whether the DOJ needs to go and enforce those laws.  Of course they will not enforce laws like those, there is no money in that.  That brings me to my next point.

The Department of Justice, without seemingly any laws on their side but using the UIGEA anyway, took it upon themselves to strangle processing for online poker rooms.  This all started in 2007 with the indictment of Neteller and has only gotten worse.  What motivation does the DOJ have for this policy?

The DOJ has made an obscene amount of money making their own rules as they went along.  In 2007 major search engines handed over $31.5 million to the DOJ to avoid prosecution.  The likes of MSN, Google and Yahoo stopped accepting online gambling ads years before the UIGEA passed but yet it seems it was easier to settle than it was to fight the DOJ.  Party Poker handed over $105 million.  One of Party Poker’s founders donated $300 million to the DOJ Christmas Party fund. In 2009 the DOJ seized $49 million from processors paying U.S. winners, something the UIGEA regulations seem to allow even if it was actually illegal to place the bet to begin with.  It is only 2009 and the DOJ has helped themselves to $485.5 million and I am sure I have missed something.

Apparently the DOJ was not happy with their nearly half a billion dollars.  They decided to open up Linwood Processing Services.  I would link to their main page but it has been removed with a message that it was a bogus, undercover processor.  At the time of this post the other pages are still live.  This bogus processor advertised all sorts of services including payroll services, tax services, investor relation services and even check printing services.  What it was really set up to do was to do business with online gambling sites in the hopes of bringing them down in the future.

It has been reported that Linwood Processing Services processed over 300,000 transactions totaling more than $33 million.   The typical processing rate in the online gambling industry is about 9%.  That means that the DOJ sting operation grossed another $3 million.  That is before any legit processing fees were earned.  I have to assume that they processed legit transactions as well to add to their bottom line.  If they rejected such transactions their cover may have been blown.

After it was time to close their profitable online processing business the DOJ seized 11 bank accounts associated with what appears to be the entire Beted deposit fund and others associated with the Bookmaker.com family.  There is no telling what that amount was but it is safe to assume that it is in the millions.  I will make the assumption it was $10 million.  That has to be a good estimate.  If anything it is low.

There is still a fortune tied up in seizures related to PokerStars, Full Tilt Poker, Absolute Poker and Ultimate Bet.  When the feds seized processors in 2009 they cash grabbed $49 million and the poker rooms did not miss a beat.  The amount seized on Black Friday was enough to cripple Cereus and make it so that Full Tilt Poker cannot pay U.S. players at this time.  Obviously it is more than $49 million to have that effect.  Considering PokerStars paid out over $100 million in a short time to U.S. players after the indictments were unsealed the amount seized must be at least that much, especially since half of that amount getting seized did not affect the online poker rooms at all in 2009.

At this point the DOJ has seized $550-$600 million.  That is close to the amount of one year’s tax gain if online poker was legalized.  The government did not have to set up any type of safeguards, gaming commission or anything else to get paid.  All they had to do was threaten companies that may not have been doing anything illegal.  There is also a conflict of interest.

The DOJ can take this money as a cash grab.  If online poker were legalized the DOJ would have to find some other way to generate $600 million other than court ordered bank seizures from online gambling sites that they know are not willing to fight them.  They could have gone after AIG or Lehman Brothers execs that wrecked our country but that may have actually required a trial to bring in any money.

OK DOJ, I am done picking on you.  Thank you for being a good sport with my 1st amendment rights.  Now it is time to move on to our alleged internet freedom.

Earlier this year Secretary of State Hillary Clinton spoke out against internet censorship in China.  Our government has also been open about how they condemned Egypt for censoring the internet during their recent uprising and Iran for oppressing free speech and internet rights.  In fact she condemned quite a few countries for their internet atrocities.  Many of these country’s residents can still play online poker at PokerStars and Full Tilt Poker.  No, I am not trying to say online poker equals internet freedom.  I am trying to show how if we do not have complete internet freedom in our country then we do not have the right to tell other countries what they should do with their internet rights.

Obviously our government is the biggest hypocrite in the world.  When I go to Pokerstars.com I see a DOJ message in the U.S.  Players outside the U.S. do not see this message.  They can download the PokerStars software, deposit and play.  When I go to Pokerstars.eu it forwards back to Pokerstars.com.  When I login to PokerStars I see players from countries that our government wants to see the internet liberated in.  This is embarrassing to say the least.  How can someone in Iran be able to play online poker at PokerStars but not someone in the U.S.?

Our country’s legal system is profiting off of our inability to regulate online poker like so much of the world already has done.  The DOJ has seized bank accounts related to EwalletXpress, EchecksUS, UseMyWallet, QuickTender, Absolute Poker, UB, PokerStars, Goldenarchcasino.com, Betmaker.com, 2betsdi.com, Doylesroom.com, Betehorse.com,  Betgrandesports.com Beted.com and Funtimebingo.com  and Full Tilt Poker.  I doubt most players that played at any of those sites will ever see their money.  While the DOJ parties from money owed to U.S. residents many players with funds seized cannot pay their bills.

When will this end?  It is time to put an end to the thefts made by the U.S. government.  Poker players have never been known to be activists but it is time.  It is time to remove anybody from office that is taking advantage of our pathetic legal landscape for their own gains.  We are one of the few developed countries in the world that restricts internet freedom to this extreme but yet we are the first to try and force our opinions on other countries.

It is time to have our voice heard.  A vast majority of the population is against government online gambling restrictions but yet a handful of senators were able to shove their agenda through without even a reading of the bill by attaching the law to a must pass.  By doing so they forced their opinion upon the entire country.  I completely respect that people are against online gambling but nobody forces them to play online poker.  We are talking about our government restricting freedom.

Even if you do not care about online poker will you care when the government bans your favorite internet entertainment?  There is no reason for the small minority to dictate what the entire country’s policy should be while allowing the government to steal from those that choose to play poker without any law to back them up.  Contact your representatives and tell them that you demand the same internet freedom most of the world already has.

This post does not even touch on the tens of thousands of technology jobs that would be created if our country got its act together or the taxes paid by winners and licensees.  It also does not go into the fact that the U.S. has already lost multiple WTO rulings and has paid millions in fines from your tax dollars to multiple countries for violating our trade agreements.

There were also thousands of jobs lost related to the government’s actions.  The DOJ also overstepped their boundaries by stealing domains related to these companies and then making agreements that the companies could use the domains to do business outside the U.S.  It sure is nice that our government is allowing companies to do legal business outside of our borders since it seems they cannot allow it inside of our borders.

We cannot continue to allow an archaic law that violates everything this country was built on to stay on the books.  We must convince our representatives to undo the atrocities that the UIGEA placed upon our country and take our internet back.

2 thoughts on “U.S. Government and Their Online Poker Cash Grabs

  1. Addict - I never knew about the search engines settling for “aiding and abetting illegal gambling” (nor Disney) - that truly makes me nervous as an affiliate - even though I clearly target the world and not USA centric.

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