DOJ’s online poker crackdown reverses progress on legalization front

Amanda Carey Contributor
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In the highest escalation to date in what has been described as a “game of cat and mouse,” the Department of Justice last week seized three online poker websites (PokerStars, Full Tilt Poker, Absolute Poker) and indicted 11 individuals. It is the most far reaching step federal law enforcement officials have taken against the online gambling industry, which allows consenting adults to wager money in a game enthusiasts say requires more skill than chance.

“From the legislative front, I thought we were making progress in the opposite direction – to legalize and regulate,” John Pappas, executive director of the Poker Players Alliance, told The Daily Caller. “If Congress wants to ignore thousands of poker players that have contacted them in the last few days, they do so at their own peril.”

According to Pappas, more than 65,000 emails in the last 48 hours have been sent to Congress, President Obama, and Attorney General Eric Holder.

Just last month things looked like they were going in a more positive direction for the industry when the Nevada Gaming Commission approved a partnership between Caesars Entertainment Corp., which runs the World Poker Championship and owns more than 50 casinos worldwide, and 888 Holdings PLC – a United-Kingdom-based business that runs online casinos.

There have been many efforts to legalize online poker at the state level. Countless states, including Iowa, California, Florida, and Nevada, have at least considered bills that would legalize online poker. And last summer, the House Financial Services Committee approved legislation to legalize online poker.

In October 2010, it was reported that old, establishment casinos were actually beginning to warm to the idea of online poker – something that they initially opposed. Then, the American Gaming Association (AGA) issued a statement saying it was working on a plan to work with Congress to legalize some form of the game online.

When contacted by TheDC, Gary Thompson, spokesperson for Caesars Entertainment, Inc., said, “We have not lobbied at all for any law-enforcement crackdown.”

Another casino group – Wynn Resorts – had previously publicly stated it was opposed to legalization because it could produce a decline in casino attendance and casino revenue. But even its chief executive, Stephen Wynn, announced a partnership just last month with the online gambling site PokerStars.

The alliance lasted only a short time, however, as Wynn severed the partnership after the DOJ’s actions last week.

After the indictments last week, the American Gaming Association was singing a slightly different tune. “Tough law enforcement is the key to making such a system work, and the AGA supports strong enforcement against illegal online gambling activity in this country,” said AGA president and CEO Frank Fahrenkopf in a statement.

“But illegal activity – and the risk of consumer fraud, money laundering and underage gambling – will continue until the U.S. passes laws ensuring that only licensed, taxed and highly regulated companies can operate in the U.S. market,” he added.

“The poker community was shocked by the far-reaching actions of the Department of Justice,” said Pappas. “Not only have their actions targeted online sites, but the real victims are the millions of Americans who have enjoyed online poker as a hobby and in many cases, a livelihood.”

“But the players have committed no crimes, though they are the ones being victimized,” Pappas added.

He went on to say that the DOJ’s reasoning behind the seizures – that the sites violate federal law (through a 2006 addendum to the 1961 Wire Act) that prohibits a “wire communication facility” to take money “on any sporting event or contest” – is bogus.

“The 2006 law clearly doesn’t make online poker illegal,” said Pappas. “In fact, it makes no action illegal.”