Black Friday in the Poker World

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Yesterday was Black Friday in the poker world when the US Department of Justice unveiled indictments against eleven individuals including the founders of three US customer facing online poker sites accused of multiple charges including Violation of Unlawful Internet Gambling Enforcement Act (UIGEA), Illegal Gambling, Conspiracy to Commit Bank Fraud and Wire Fraud, and Money Laundering with fines totalling more than $3 Billion and maximum prison terms amounting to 30 years for the most serious of the charges. Among the accused are three Canadian citizens including Isai Scheinberg, Nelson Burtnick, and Ryan Lang. Mr. Scheinberg is by far the most high profile of the three considering he is the primary owner of Poker Stars, the world’s largest poker site.

Friday’s indictment specifically targeted PokerStars, Full Tilt Poker, Absolute Poker, and UB.com whose domains have been seized by the FBI. When players try to access the primary domains of these sites, they are welcomed by an official seizure statement. These companies have redirected the traffic to www.pokerstars.eu and www.fulltiltpoker.co.uk .

The poker sites have also suspended traffic real money play in the US until this case is resolved.

Where Did Evidence Come From?

It is believed that Daniel Tzvetkoff is assisting federal prosecutors in New York, the branch of the DOJ behind the indictment. Tzvetkoff was arrested April 16 of last year in Las Vegas and charged with the same counts the poker site owners are being charged with for allegedly processing $523 million in Internet gambling earnings through his payment processing company Intabill. Though he was originally denied bail as a flight risk, he was released on bail in August after cooperating with federal authorities, and is living in a secret location in New York City. The arrests of the people who allegedly ran payment processors could be a move to get more people knowledgeable of the business transactions of the Internet poker sites to co-operate against the sites.

Major Tournaments Affected

The affected poker rooms have begun lowering their guaranteed tournament prize pools as a result of the US player stoppage. Full Tilt has cancelled the upcoming Onyx Cup. The PokerStars sponsored NAPT will likely be affected as well as TV coverage of such tournaments across networks like ESPN.

The 2011 WSOP will also likely suffer from lower than average turnout as the two major sites running satellites to the WSOP will surely not be sending as many players to Vegas. Player sponsorships will likely also be affected as the rooms become more cash conscious and benefit less from patch sponsorships specifically in the USA now.

ESPN has also removed the PokerStars sponsored Inside Deal from the ESPN.com website. Media companies will likely also suffer from lost advertising revenues from these poker sites.

Who’s Next?

Will there be additional indictments against other poker operators such as Bodog, Cake Poker and the Merge Network?

Bodog is one of the world’s online sportsbook leaders whose founder Calvin Ayre has become infamous for taunting US lawmakers in the past. Bodog accept American poker players but they also accept online sports bets, which violates the long time Wire Act in the States, they would appear to be a likely prime candidate of prosecution. The question remains why haven’t they been charged much sooner due to their sports activities?

Cake Poker network pretty much emerged from nowhere when the UIEGA laws were introduced in late 2006 to become one of the leading poker networks by filling the gap to accept players from the US in addition to international players when many of the online networks pulled out of the US market. Their network has been in dire straits this past year due to the exodus of major poker partner Sportsbook.com and recent problems with Doyle’s Room and reported player cash out problems but those incidents could represent a mere fraction of the headaches that may be headed their way.

The Merge network was a smaller network founded by Australians and known for top notch poker software but it wasn’t until recently when they were bought by Sportsbook.com who have migrated their poker traffic from the Cake Network. The player liquidity, consisting mostly of American traffic boosted the Merge network.

What about other high profile sites like Doyle’s Room who have been accepting US traffic for years on a number of networks? Can 77 year old poker hall of famer Doyle Brunson survive an ordeal such as this?

 What should players be concerned about?

Players should be concerned mainly about their money. The players are not target of the legal action but the owners of the poker sites and processors. With the bank account seizures (76 banks) and a hefty fine demanded by the DOJ, the poker rooms wishing to cooperate in some way will need to scramble for cash and there could be a possibility that players funds may become a much needed source of capital for buying any sort of amnesty.

The fact that bank accounts have been frozen and player cash outs rumoured to be running rampant on these sites across the world, it will surely be impossible to pay out all players. Players in the US with major dollars in their bankrolls will likely not be able to cash out, at least not to a US bank account. We can expect major chip dumping and buddy transfers to occur between poker players from US to foreign friends as an attempt to salvage their hard earned dollars. Canadian poker players should proceed with caution if poker friends south of the border ask them to handle their funds as they could be held legally accountable for these actions. Some poker players are known to share poker accounts with friends. If you are Canadian and have a friend in the US who asks to play on your account through a proxy, you should be cautious about this.

The poker sites have issued statements to players assuring them that their funds are safe and for the most part, there is no indication that the poker rooms are on the verge of closing. But even they cannot predict the government’s next step and from experience, when somebody says “don’t worry” that is when people should start to worry.

Where to play?

Playing poker is pressure enough, but when your money is on the line because of these legal problems, having uncertainties in the back of your mind can affect your game in a negative way. The legal problems specifically mention US poker activities; however, everything becomes intertwined with regards to liquidity and banking. It is not certain yet if players’ funds are in fact in any major danger or if the Feds will move towards permanent shut-downs of these sites. Canadian poker players who are still keen to play online still have some options. They may find themselves playing in smaller poker networks, in tournaments with much smaller guaranteed prize pools and against a pool of European players. Canadians can still play on sites like Party Poker, Titan Poker, 888 Poker, Paradise Poker, and of course EspaceJeux and PlayNow, the two government rooms available to residents of Quebec and BC though you may only play against other Canadians.

Online poker traffic has been affected on the various poker networks. PokerStars traffic is down 18% from last week, Full Tilt Poker traffic is down 40% from last week, Cereus Network (Absolute & UB) down 20%, Bodog up 21%, Party Poker is up 6%, iPoker Network is up 10%, Ongame Network is up 3%.

We’ll keep you up to date as new information comes in. Check out our site regularly for more info.

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