Getting Away With Poker

How is helping people play a card game like murder?

At the beginning of last year, Daniel Tzvetkoff, the young Australian entrepreneur who cofounded the online payment processor Intabill in 2007, owned a yacht, 15 luxury cars, a Brisbane nightclub, and a Gold Coast mansion. A year later, facing a $43 million lawsuit by a former customer and a $100 million lawsuit by a former partner who accused him of diverting company funds to his own use, he filed for bankruptcy.

But when Tzvetkoff was arrested last week in Las Vegas, his mismanagement of Intabill, which once had more than 5,000 clients worldwide, was not the issue. His crime, according to the U.S. government, was doing precisely what Intabill purported to do: facilitate online payments, including bets by American poker players. His unindicted co-conspirators are the same creditors who are lining up in Brisbane for the money they say Intabill owes them. Viewed as legitimate businesses in the rest of the world, they are treated as criminal enterprises in the U.S., and Tzvetkoff could face life in prison for serving them.

When the U.S. Attorney’s Office in Manhattan unsealed Tzvetkoff's indictment on Friday, it was the first time anyone had been publicly charged with violating the Unlawful Internet Gambling Enforcement Act (UIGEA). The UIGEA, enacted in 2006, makes it a federal crime for someone "engaged in the business of betting or wagering" to accept a payment in connection with "unlawful Internet gambling."

Since Tzvetkoff did not run any gambling businesses, he is accused of conspiring with others who do, including the operators of such popular websites as PokerStars and Full Tilt Poker. The indictment also alleges a conspiracy to violate the Illegal Gambling Business Act.

Based on the same transactions, U.S. Attorney Preet Bharara threw in two money laundering counts and a bank fraud charge, which alleges that Tzvetkoff misled American financial institutions about where money drawn from their customers’ accounts was going. Since the only gain from the alleged fraud was the banks' usual services at their usual rates, this charge seems legally questionable.  

When you add together all the maximum sentences—five years for the gambling conspiracy, 20 years for each money laundering count, and 30 years for bank fraud—you see that Tzvetkoff faces up to 75 years in prison for the crime of helping Americans play poker. To top it off, Bharara is demanding more than $2 billion in asset forfeiture, representing the four criminal counts multiplied by $543 million, which he says is the total amount of payments the company processed in the U.S., most of which involved gambling.

All this is based on a New York State offense, "promoting gambling in the second degree," that is classified as a misdemeanor and that arguably does not cover poker. Because New York’s definition of gambling hinges on the relative roles that skill and chance play in a game, poker may not qualify.

Now that the UIGEA finally has been used in an indictment, it's still not clear that it will be much help to prosecutors. The law could make it somewhat easier to pile charge upon charge, converting the act of helping people play online poker into a crime on the level of first-degree murder. But the Justice Department already had tremendous power to coerce plea agreements from businessmen, such as the founders of Neteller and the CEO of BetOnSports, who were guilty only of providing honest services to eager customers.

What's clear is that the UIGEA, which was supposed to stop online gambling by preventing Americans from placing bets or claiming winnings, has done nothing of the kind. The government can scare companies such as PayPal and Neteller out of the market, and it can prosecute successors such as Tzvetkoff if they're foolish enough to visit the U.S. But because poker prohibitionists cannot impose their will on the entire world, there will always be plenty of alternatives for Americans who dare to defy their government's ridiculous recreational restrictions.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist.

© Copyright 2010 by Creators Syndicate Inc.

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  • Untermensch||

    Guten Tag, Suki!

  • Untermensch||

    On a more serious note, this case should be troubling to anyone who believes in the idea of a justice system, since it shows how much is up to the personal discretion of prosecutors. But the public as a whole tends to ignore the arbitrariness of such actions if the subjects are “bad guys” (and the fact that they’re being prosecuted at all usually counts as sufficient proof because the government wouldn’t go after “good guys” now, would it?). One of Reason’s great contributions over the years has been to focus on things like this where the personal moral preferences of spotlight-hungry prosectors determine what does or does not happen. I just wish stories like this ever had a chance of cracking into the hermetically sealed world of broadcast “journalism” so that more people would realize the caprice and vindictiveness of our government.

  • Mark Mason||

    I agree, we are at the mercy of any idiosyncracies the powers that be deem feasible at the time. Whether you agree with gambling or not there has to be a firm directive about the right of choice.

  • Untermensch||

    On a more serious note, this case should be troubling to anyone who believes in the idea of a justice system, since it shows how much is up to the personal discretion of prosecutors. But the public as a whole tends to ignore the arbitrariness of such actions if the subjects are “bad guys” (and the fact that they’re being prosecuted at all usually counts as sufficient proof because the government wouldn’t go after “good guys” now, would it?). One of Reason’s great contributions over the years has been to focus on things like this where the personal moral preferences of spotlight-hungry prosectors determine what does or does not happen. I just wish stories like this ever had a chance of cracking into the hermetically sealed world of broadcast “journalism” so that more people would realize the caprice and vindictiveness of our government.

  • Untermensch||

    Sorry about the double posting. I'm not sure why it appeared twice.

  • Comment Cop||

    Sure, bub. Please step out of the blog.

  • Jimmy 'Crack' Corn||

    Some politicians at the state level can make matters even worse.

    A few years back, the Washington State Governor, Christine Gregoire (D), proposed and signed into law a bill that made playing poker online a felony.
    This was done within months of an extremely large donation (in the millions of $) was made to the State Democratic Party by a group of Indian Casinos who do not like the competition.
    Playing poker on line in Washington State is treated as the same type of felony crime as child molesting.

  • West Texas Boy||

    Agreed 100%

  • Zenmaster||

    200%

  • yojimbo||

    300%

    Bring it

  • ||

    Like internet sales, gambling monies are huge piles of cash governments are salivating to get their tax grubs on.

    It's also why more intrusive internet laws are on the horizon.

  • JD||

    This is also part of why the old claim that the government is run for the benefit of the rich is not quite accurate. If you're rich, you'd better play ball with the government, or they will view you as a big fat target. All this could probably have been avoided had Tzvetkoff just made some campaign donations and taken a few Senators out on that yacht...

  • old guy||

    Gov't is run for the existing rich to keep the new rich who do not benefit the old rich out. If he started a company they could invest and make money with fine, if not jail.

  • ||

    Another in a long line of laws designed to protect us from ourselves.

    We should require a casino built in the middle of Capitol Hill. Congress would then be too busy to spend any time passing more stupid laws. Add a brothel and you will never have a quorum to do anything.

  • ||

    I have to believe there are some other motives and the real purpose behind these laws- as with virtually all these sorts of laws - is to protect the financial interests of some select group with political influence. Certainly there are nanny laws inspired by some busybody's notion of controlling other's behaviors for their own good, but many such laws have even more sinister motives. Certainly, for example, casinos have a particular interest in having a captive market.

  • West Texas Boy||

    Certainly, for example, casinos have a particular interest in having a captive market.

    As do state lotteries and horse racing monopolies.

  • ||

    Dan, you think there are no brothels in Washington, D.C.? Aside from the House and Senate, there are some very active ones with working females (and males). I think the former governor of New York could probably do a tour if requested.

  • ||

    Amen. One of the things that has really chapped me is seeing the big anti-online gaming pols who are whales in Vegas.

    But I wouldn't accuse them of being unethical.

  • West Texas Boy||

    I certainly don't want a casino next door to my house due to the negative side effects that seem to come with them - organized crime, petty crime, etc - but by God, that's a decision for my community (or state) to make and absolutely not a decision the federal government should be giving one shit about.

    And banning internet gambling inside one's own house with one's own money on a private computer network is even worse and more cynical.

  • ||

    It isn't the gambling that concerns the government, it's the inability to get in on the revenue stream. If there are large amounts of money involved, there is incentive for government to siphon off it's "share". This is called the "whore factor" of government and it's soldiers.

  • West Texas Boy||

    Hence I said it was cynical.

    The "whore factor gravy train" concept is what this is all about, I 100% agree.

  • ||

    In looking at the potential sentences, I can't help but wonder: How many people have gotten away with far less, for doing things far worse? Why hasn't anyone claimed "cruel and unusual" for these types of laws? Is this really as serious (or more) than murdering someone in cold blood?

  • ||

    This is raw election year grandstanding. The UIGEA is even worse than Mr Sullum thinks- the regulations don't contain a definition of what "unlawful Internet Gambling" even IS. Which is a flagrant violation of due process from the get-go.

    We need rules of engagement. We need a Truce of God to the on-again, off-again, fundamentally dishonest anti-gaming jihad, especially against the Internet, by states that license plenty of their own gambling, and Federal prosecutors hunting headlines.

  • ||

    I certainly don't want a casino next door to my house due to the negative side effects that seem to come with them - organized crime, petty crime, etc - but by God, that's a decision for my community (or state) to make

    I'm pretty sure you meant to say that's a decision for your neighbor to make. Its his property, isn't it?

  • bob||

    We are the greatest country on earth and we are wasting it. We're a trust fund country now.

  • ||

    Drink it up all you Joe-sixpack-bin-ladens. Bharara joins Bloomberg, Guiliani, and others on the fastrack to national power with this billion dollar Jihad.
    Gamblers will take it just as quietly as did the smokers, NYC landlords, and most of the rest of us.
    Give me liberty, or else a two-party social/religious oligopy we get to vote for every few years.

  • ||

    Welcome to politics 101, where you learn how much clout the Mafia has with congress, the judiciary, and most everyone in government, more or less, directly or indirectly. After all, it was to protect their bricks and mortar operations that this silly nanny-state law was enacted in the first place. Who else does it protect? Think about it.

    We're just being had, again - this is just another facet of our weakness facing an oppressive government which favours its "friends". If you're not a "friend", they'll get around to your business eventually.

  • π||

    The more the debt rises the more creative the "tax" system becomes.

  • ||

    As long as we're outlawing internet wagering, let's also ban internet stock trades, book purchases, and bill paying. Those activities also involve risk that you might not get a return on your investment. What moralistic busybodies, legislative nannies, and condescending chief executive tyrants like to do is try and save us from ourselves by outlawing personal risk-taking.

    Why not go further then, and outlaw sports, driving, and jogging? In fact, the only way to ensure that we won't kill ourselves is if we are already dead. so I advocate government-assisted, mandatory euthanasia for all Americans. Then we will be completely safe from ourselves.

  • Matches Malone||

    Again, the 5% of the population that has a problem with something, is making it harder if not impossible for the rest of us to enjoy it. I just hope that the PPA and the IPPA can get something done soon.

  • blancpain replica watches||

    which limited the actions of Congress and by extension had to be incorporated, the Second Amendment stated that RKBA was not to be infringed, and lacked detail as to by whom, and therefore applied to all government. By its very language it was already applicable to the states!

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