Online Poker's Real Victim Is the Government

So argues Andrew Cohen at The Atlantic.

There are plenty of victims of (allegedly) illegal online poker, starting with the desperately-short-of-cash federal and state governments which are deprived of all the taxable revenue ($3 billion, say the feds) from the now-suspected operations.

This is wrong on a number of levels. First, the only reason federal and state governments are being "deprived" of taxable online poker revenue is because they've made the activity illegal in the first place. Second, if we were all morally upstanding citizens who obeyed the law like we're supposed to (the larger theme of Cohen's post), those taxable revenues wouldn't necessarily exist in the first place. I suppose some online poker players would spend their money on other things, most of which would be taxed. But that isn't a given. And some of the money won by U.S. players came from overseas players.

Cohen also says casinos and dog racing are "victims" of online poker. I doubt poker is a common substitute for betting on dogs. Casinos may have lost some money to online poker, but I also doubt it's all that much. Online poker is a different game than in-person poker. And it seems unlikely that a high percentage of the people playing at home in their boxers would otherwise be playing in a casino. It's more likely they'll be playing in a neighborhood game. (At least until the SWAT team comes.) In fact, I'd, er, wager that online poker has actually helped the casinos, in that it has brought millions to the game who otherwise wouldn't have patronized a casino. (Because it's a game that involves some skill, poker also doesn't have the profit margin of other casino games, where the house can set the odds. Before the poker craze, which was driven mostly by televised poker and online poker, the game wasn't a major source of revenue for casinos.)

Cohen's other point basically boils down to "the law is the law", and that we shouldn't allow people to openly flout it. True enough, I guess. I presume this means Cohen believes the millions of Americans who routinely ignored the law by playing online poker should be arrested, too.

The Unlawful Internet Gaming Enforcement Act also wasn't exactly passed after an honest national debate about the merits and harms of online poker. It was tacked on to a port security bill, then passed in the middle of the night on the last day of that particular session of Congress. Your option as a senator was to vote for the ban, or vote against it—and also vote against funding security measures for the country's major ports.

Finally, if Cohen wants to talk about liars, he'd be better off pointing his finger at the politicians who pushed the online gambling ban. The (mostly) Republicans who sponsored the ban dishonestly cited the need to cleanse the Congress of Jack Abramoff. Abramoff, you may remember, is the disgraced lobbyist whose clients included Indian casinos and state lotteries. It was rich listening to these GOPers talk about how they were going to absolve themselves of their party's corruption . . . by banning people from playing online poker.

Thing is, they ended up passing the very bill Jack Abramoff was lobbying for: a ban on online gambling, with carve-out exemptions for politically-powerful interest groups like horse racing, state lotteries, and fantasy sports. (The American Indians got screwed in the deal—again.) The bill's supporters also claimed online poker sites were rife with money laundering and terrorist activity—with zero actual evidence, of course.

Finally, if Cohen's looking for dishonesty, he might also look to Rep. Spence Bauchus (R-Ala.), who tried to blame online poker for the fact that minors were playing poker in pool halls 30 years ago.

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  • jester||

    deprived. yes, that's it.

  • jester||

    depraved. just one vowel sound away.

  • Zeb||

    Just like in the war on drugs, so many people miss the most important detail. The government isn't missing out on the tax revenue because of online poker. It is missing out on revenue because of laws making online poker illegal.

  • ||

    Pretty sure that's why it's Balko's first point.
    I'm hoping if you're commenting you read his first line, at least.

  • ||

    Boo, hoo.

  • Doc S||

    give me my poker back.

  • rather ||

    They also claimed online poker sites were rife with money laundering and terrorist activity—with zero actual evidence, of course

    That's not what I read:

    Daniel Tzvetkoff was arrested in Las Vegas under strange circumstances considering the former money processing executive was under investigation for improper dealings and should not have been present in the USA. The native of Brisbane, Tzvetkoff was accused of creating an illegal system that allowed the poker sites to skirt U.S. laws against online gambling and collect more than $500 million in transactions.

    The trail went cold rapidly and information about the young internet whiz kid was no where to be found as if he was placed in the witness protection program and made to disappear. It is thought he rolled over on the people who have been hounding him for a $100 million dollar shortfall in the accounting to the Online Poker firms he did business with. It is thought they are the ones who tipped off FBI agents that Tzvetkoff was going to enter the USA.
  • ||

    That's because you can't read, rectal. How many times do we have to cover this? I know that you're developmentally disabled, but you really have to try and get this through your Rocky Dennis head.

  • Radley Balko||

    I don't doubt that this stuff went on to get around the bans. But the argument was that people were using poker sites to launder money from other illegal activities. Or to fund terrorism. That seems unlikely.

  • Mike M.||

    You mean the Isle of Man isn't a sponsor of global terrorism? Next I suppose you'll tell me that the Easter Bunny isn't real.

  • jester||

    Washington is the best place to launder money. C'mon.

  • Brad Warbiany||

    The standard definition of money "laundering" is taking money that was obtained illegally and funneling it through legitimate businesses in order to make it appear to look like it was legally obtained.

    This is the exact opposite. The poker sites were trying to find ways for Americans who had legally earned money to find ways around laws that made depositing/withdrawing it illegal.

    They were not trying to "launder" money. They were trying to purchase a service the gov't didn't approve of with it.

    Now, if mobsters & drug dealers were using the poker sites to move illegally-obtained money and give it the appearance of legality, that's money laundering. But I believe that's the evidence that Radley claims is lacking.

  • Cyto||

    In fact, online poker would be the worst place to launder money, in the US at least. Since moving large sums of money outside of normal channels can quickly get you on the FBI/IRS radar, depositing your poker winnings in your bank account will get noticed. Telling them that you got the money playing illegal poker may or may not be better than telling them where you really got the money, but it isn't a good answer.

    Nah, those guys stick to traditional money laundering schemes: restaurants, car washes, strip clubs... anything with large amounts of cash transactions. I've always operated under the assumption that the all-you-can-eat chinese buffet down the street was a money laundering scheme. For $5 you get fresh shrimp, oysters on the half-shell, mongolian barbeque, sushi, various chinese dishes... You'd have to work pretty hard at it to eat less than $5 in raw materials in that place. But they sure do seem to make it up in volume....

  • ||

    I was once told (by a convicted dealer) that casinos are a great place to clean money. He would get a group together and have them load up the high dollar slot machines, hit the button a couple of times to get a win, then cash out. The casino would pay by check for amounts over $1500 and withhold income tax on the now clean money.

  • sahil||

    pokerCool

  • Fist of Etiquette||

    See, there is no such thing as a victimless crime. In lieu of an actual human one, the victim will always then be the government and/or its delicate sensibilities.

  • mr simple||

    See, there is no such thing as a victimless crime.

    What about punching someone in the dark?

  • Fist of Etiquette||

    Exception that proves the rule.

  • ||

    I thought it was that there was no such thing as a victimless crime because if you get caught, the gov't will sure as shit make you a victim.

  • Joe R.||

    Cohen's other point basically boils down to "the law is the law", and that we shouldn't allow people to openly flout it.

    I suppose he would have supported making the darkies eat somewhere else, too.

  • Andrew Cohen, to Rosa Parks||

    Back of the bus, bitch!

  • Andrew Cohen to Harriet Tubman||

    Back to the plantation, bitch!

    The law, after all, is the law.

  • Mike C||

    Why online poker will never be legalized....One simple fact.....The government should be able to realize there is no way to prevent players from colluding while playing (i.e. talking on the phone, team play)and because this cannot be controlled it could lead to large organized crime rings manipulating the game. The only type of "online poker" they might allow is "brick and motar" locations where you could go and play. Of course no cell phone use, texting, or online chat would be allowed....just like in a regular casino!

  • West Texas||

    So what? So long as the - ahem - licensed poker site pays the relevant fees and taxes, the government wouldn't necessary care if it actually helps or harms the player.

    Exhibit A: Most horse races are crooked and the governments in those states just look the other way.

    Exhibit B: Many people even claim most sporting events are fixed, too, and Vegas still allows sports betting.

    Exhibit C: The lottery preys on people who are stupid and can't do math (and are disproportionately poor and minorities) and you're not seeing the lottery going away any time soon.

    And the mafia is involved with all of them.

    Try again.

  • Cyto||

    The mafia is involved in state lotteries? Hey West Texas, are you a software patent attorney?

  • West Texas||

    Yeah, I kind went to far with that. But it's certainly involved with other forms of otherwise legal gambling and all of those governments that regulate those activities certainly aren't going to kill all gambling just because of it.

    No, I'm not a patent attorney.

  • CatoTheElder||

    Collusion may be a problem in some ring games, but it is easily detectible in SNG play and poses absolutely no problem in large-scale tournament play.

    If the terms used in the foregoing sentence aren't clear to you, you simply do not have a clue about online poker.

    As long as its poker-bots can't see my cards or influence the cards dealt, I really don't care whether a Russian syndicate makes a hundred entries in a large-scale tournament and shares all the poker-bots' hand information. Very few tables would have more than one syndicate poker-bot, and it's unlikely that any would end up at the final table anyway.

  • Somalian Road Corporation||

    The shady Russian poker accounts I've seen online have not been bots really, more so one account with multiple guys running in shifts 12 hours a day every day to max VIP bonuses on it.

    Not too worried about bots, myself. I don't know anyone else who's won over millions or even hundreds of thousands of hands who is.

  • Somalian Road Corporation||

    Openly available hand histories and statistical analysis makes indefinitely sustained collusion impossible.

    If players are constantly at the same table and seldom/never show down against each other/never show KK against AA/are running best hand/button squeeze plays, it gets found out.

    "Superuser" hole-card viewing is another issue entirely and why I recommend that nobody play on UltimateBet/AbsolutePoker, because they've personally fucked me over and they're still quite shady.

  • Gray Ghost||

    Not sure if anyone's still viewing the thread, but there was a lot of bitching at places like 2+2 about Stud/8 ring games on PokerStars being overrun with colluding players, usually Chinese.

    As you note, enough players got together, started posting and comparing hand histories, and it looked like the complainers might have had a point. Not sure what the end result was, and it's a bit moot now. With all of the dead cards in stud/8, I can see it being a game where that tactic might pay off. Maybe Omaha/8 too? Of course, confederates colluding and squeezing a mark with raises is much older than online poker.

  • Somalian Road Corporation||

    Also, the casinos around here don't care if you're talking/texting/messing around on a cellphone while playing live. There's a rule against it but people are generally only harangued for cell phone usage when they're slowing the game down.

    I don't mind because I've been known to mess around on a cellphone myself and the conversations people are having are pretty much always the "honey, can you pick up something from the store on the way home?" variety.

  • ||

    Charity Rooms allow cell phone use while at the table in my state (MI), and they're legal.

  • Warty||

    Online Poker's Real Victim Is the Government

    I had assumed women and minorities, but I guess it amounts to the same thing.

  • mr simple||

    What about the children?

    I remember some congressman talking about a letter he had received from a woman constituent of his who complained that her husband had lost all of their grocery money playing poker and that was why it should be illegal. My thought: I hope I was the one who took it from him. As Amarillo Slim said, "it is a sin to let a fool keep his money."

  • ||

    Count me as one that would never have walked into a meatspace poker room without having my internet winnings in hand as a grubstake. And I assure you, Reno's Atlantis, Peppermill, and GSR are all happy that I've discovered the game.

    I'm a pretty optimistic person, but I'll be honest, the gall behind this prosecution sent me into a funk for a couple of days.

  • CatoTheElder||

    I'm still in a funk about the United States of America joining the ranks of the Islamic Republic of Iran, the Kingdom of Saudi Arabia, and the Peoples Republic of China in blocking Internet access to online poker sites.

  • ||

    The (mostly) Republicans who sponsored the ban dishonestly cited the need to cleanse the Congress of Jack Abramoff. Abramoff, you may remember, is the disgraced lobbyist whose clients included Indian casinos and state lotteries.

    So, if I follow, the Republicans cleansed themselves of the Abramoff taint by passing a law supported by Abramoff's clients.

  • ||

    Well, the thing is, his clients were both the (Indian) casinos and the anti-casino lobbies.
    He was playing both sides directly against one another.

    The Indians not only didn't get their casino, they also lost all the money they paid Abramoff...and didn't even get a fair shake in the bribe-the-state game.

  • Homophone guy||

    Wait, Abramoff rubbed his taint on Republican lawmakers? No wonder they crucified the guy... There's just no call for that.

  • Anonymous Coward||

    governments which are deprived of all the taxable revenue ($3 billion, say the feds) from the now-suspected operations.

    #54 on my list of things that will happen when I become President:

    Sign an Executive Order stating anyone calling money obtained from taxes, licensure fees, inspection fees, penalties, seizures, or any other means by which the government obtains assets, "revenue", will be hanged.

  • ||

    I think the Dean Administration would kick off with a massive executive order, signed at the podium immediately after I took the oath of office. Stuff like redirecting the DEA to inspecting inbound cargos for real contraband, establishing an Office of Jailing Elected Officials at DOJ, ordering every agency to rewrite their regulations and submit them for Congressional approval. You get the idea.

    Then, before the outrage could build too much over what I had done there, I'd hit 'em with my budget, and they'd forget all about the executive order.

  • CatoTheElder||

    Even worse are the latest tax-related entries in the Newspeak lexicon: "tax expenditure" and "refundable tax credit".

    Obama and his ilk like saying that they want to cut tax expenditures because it sounds like they want to cut spending. This sounds better than raising taxes and boosting effective tax rates, which is the real meaning.

    Obama and his ilk like "refundable tax credits" because they are really just wealth redistribution from real taxpayers to non-taxpayers. IRS Form 1040 lists such credits as actual payments of tax. I really hate a government that insists that it be recognized for "Making Work Pay".

  • ||

    The first time I heard of the Making Work Pay credit, honest to God, I thought it was a joke.

  • Robert||

    But I hope you took it! They snuck it onto line 63 of the long form and made it look as if it was some obscure credit few would qualify for, when actually the great majority did, and then required you to fill out schedule M which wasn't in the standard packet.

    Although refundable tax credits do theoretically allow you to wind up with a net positive, you'd have to have a very low income to come out that way. For most people such credits just reduce their tax take, and the few who actually get a refund of money not withheld are in such bad shape I wouldn't begrudge them. And when you count all the other ways gov't costs them, nobody's really coming out ahead that way.

  • ||

    If you go to almost any casino and ask them about their poker room, they will tell you that they had to either build it or expand it due to internet poker. At least 50% of those casinos had no poker rooms before the craze.

  • Pham Nuwen||

    I work in a casino. You are correct. But we don't make any money from them. The take just barely covers the expenses. We want more poker players because they burn out sitting in a chair for hours on end. Then they play . . . black jack, craps, roulette, slots, etc. Only a handful of poker players have the discipline to play poker and only poker.

  • Cyto||

    Plus they bring their wives, girlfriends, etc. who end up playing those lucrative slots...

  • ||

    Allow me to sum up mister Cohen's argument: http://www.youtube.com/watch?v=q6cyDsuNx_U

  • Robert Fellner||

    Hello,

    I think this is the opportunity for avenues such as Reason.com to address the real fundamental problem here. And that is that our system of legislative law is fundamentally anti-liberty. Ironically enough there is a quote on the Department of Justice's homepage that reads, "The common law is the Will of Manking Issuing from the Life of the People."

    Ignoring the overwhelming hypocrisy of the DOJ using this as their slogan, the fact remains that is what law truly is. The problem here is not that the government hasn't exempted poker as a skill based game, or that this bill wasn't passed etc. It is that legislative law is not legitimate law at all. We live in a society where there are literally millions of pages of rules and regulations that serves tp create an environment where if you pushed hard enough, virtually anybody could be found guilty of some violation of the law on any given day.

    Where is the debate over this? Where is the cry for a restoration of government's only legitimate purpose, to protect private property rights and existing common law as it is. We have instead surrendered our rights and liberties to the tyranny of democracy and now face the consequences. Until there is legitimate analysis and discussion of this, no substantial change is possible.

  • Rrabbit||

    +100

    The US, the country of red tape.

  • Esoteric Knowledge||

    In my opinion and as far as I know, The UIGEA is illegal as agreed by the WTO. Because of this, I think that it's possible and totally legal that these sites can work and operate outside of the USA, just like it was before 2006. And the DOJ, FBI, and these Republicans are not happy about how the law works so they try to get around it. And they try to get their hands on someone else's money--a poker site's money, or your money.

  • SABBATH66||

    I can play poker down the street( indian cosnio) but not on line?

  • SABBATH66||

    I guess now my 3rd round freeroll to the WSOP with one more to go won't count!!!! if I WIN?!?!?AHHHH CHIT!

  • ||

    Right? As soon as this happened I just thought about people who were in the middle of Steps or multi-round satellites...either leave the country and gain internet access, or somehow exchange your seat to someone who can use it for a nominal fee.

  • SABBATH66||

    Sorry I met (casino) I've been crying to much.

  • matt||

    Most U.S players will just move to another site. I already did and know many others who have done the same. Carbon Poker has been a solid site for awhile, it's just been overlooked by many. Traffic is up and will continue to rise unless the DOJ decides to go after it.
    http://www.carbonpoker.com/_vi.....7ZgqdRLk/1

  • ||

    Stop sending spam to my email, fuckwit.

  • دردشه عراقية||

    Thanks

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