I have to apologize for being quiet lately. I’ve been in the backwaters of Thailand and the best I can get up here is GPRS which is about as slow as dialup so I’ve only been checking emails.
However I received an email from a friend telling me about the US taking aim at Tilt, Stars, and UB/Absolute and at first I thought he was joking. Since then I’ve been slowly (remember I’m on GPRS) trying to reach out to people in the industry to get a feel for what’s going on.
Many people are calling this the online poker industry’s Black Friday. Interestingly enough I have always called Oct. 13, 2006 Black Friday because it was the day that President Bush signed the UIGEA into law.
Back in 2006 I wrote about how brilliant the UIGEA was in terms of what it could do. I never supported the UIGEA nor do I applaud this DOJ move but the first thing people need to understand is that no matter how many times someone screams “This isn’t illegal,” or “Its not fair,” it doesn’t change the reality that the US government does consider it illegal and they can bring down the full weight of the entire legal system on you.
Ask anyone who has tried to fight the IRS. They seize first and prove later. It’s pretty hard to fight them when they have all of your assets and you can’t pay a lawyer. This is the same tactic being used here. Hit hard. Deal a crippling financial blow and then see how long they can fight you with limited resources.
And that was one of the reasons I always thought the UIGEA was such a brilliant move (yes, you can admire your enemy’s tactics). They left the definition of whether online poker was illegal vague. Then when the DOJ asserted it was it gave them the legal tools needed to shut down big payment processors.
Once they drove out all of the big processors it forced the online poker sites to resort to increasingly shifty payment processors.
Enter Daniel Tzvetkoff, the financial payment processing whiz kid who “allegedly” helped US facing poker rooms to sidestep those troublesome laws. Then he “allegedly” got greedy and ripped off the online poker rooms for $100 million.
Apparently, not thinking things through, “allegedly” one or more of the online poker sites decided to rat out Daniel to the Feds and told them when he would be on US soil where he was arrested. “Allegedly” he struck a deal with prosecutors to rat out his former clients and thus we find ourselves where we are at today.
“Allegedly” that led prosecutors to a financially strapped bank that “allegedly” took in an investment from several online poker sites that just happened to be having problems processing legitimate transactions in the US.
If all of the alleged parts are even remotely true this is no longer a case of illegal gambling. The additional charges being sought by prosecutors of money laundering, bank fraud, and wire fraud are very, very serious.
The DOJ is basically saying, “You may beat us on the UIGEA rap but these money laundering and fraud cases are pretty solid.”. And while many countries might elect to decline extradition requests for UIGEA violations when online gambling is not a crime in their own country, it’s a whole new ballgame when you throw money laundering and fraud into the mix. Those are crimes in most countries and they will have no legal out.
This is like getting Al Capone on income tax evasion. The Feds don’t even care if the UIGEA violations stand up. They were “allegedly” able to force these companies into committing other illegal acts which could eventually see them worse off than the law that they were trying to avoid in the first place.
Stay tuned. I’ll have more input when I get back to Bangkok on the likely impact on: