Poker Bars

Why should anyone go to prison for helping people play cards?


Preet Bharara seems to be haunted by the fear that someone, somewhere, may be playing poker. Last year Bharara, the U.S. attorney in Manhattan, threatened an Australian payment processor with up to 75 years in prison for helping online poker companies do business with their U.S. customers. Last Friday he announced similar charges against 11 people associated with the three leading poker sites serving American players.

If you type in the Web address for PokerStars, Full Tilt Poker, or Absolute Poker, you will see a notice that the domain name has been seized by the FBI. The notice cites some impressive-sounding crimes, but the statutory language cannot conceal the legal weakness and moral triviality of Bharara's charges.

This is only the second time that the Justice Department has used the Unlawful Internet Gambling Enforcement Act (UIGEA) in a criminal indictment. That 2006 law made it a federal offense, punishable by up to five years in prison, for a gambling business to "knowingly accept" payments "in connection with the participation of another person in unlawful Internet gambling."

But the UIGEA glaringly failed to clarify what "unlawful Internet gambling" meant. Bharara does not claim online poker directly violates federal law, which prohibits the use of "a wire communication facility" to accept bets "on any sporting event or contest" but is silent on the legality of other online wagers. Instead he piggybacks on a New York statute that makes promoting "unlawful gambling activity" a Class A misdemeanor.

In New York, gambling is unlawful if it is "not specifically authorized." But the law states that "a person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome."

As a pretty poor but regular poker player, I can testify that it is not merely "a contest of chance"; it is a game of skill, like Scrabble or backgammon, in which chance plays an important role. That is the position taken by the online poker companies as well as the Poker Players Alliance, whose chairman, former Sen. Alfonse D'Amato (R-N.Y.), declared on Friday that "online poker is not a crime and should not be treated as such."

Bharara's indictment also mentions "the laws of other states," a few of which do explicitly ban online poker. But it is bizarre to give those laws nationwide force, such that the federal government closes down a poker site's entire American operation because Washington state does not want its residents to play the game online. If respecting a particular state's paternalistic policies were the goal, blocking access by people in that state would be a more sensible solution.

Bharara takes an alleged New York misdemeanor with a maximum penalty of one year in jail and turns it into multiple federal felonies—including UIGEA violations, money laundering, wire fraud, and bank fraud—that could send the lead defendant, PokerStars CEO Isai Scheinberg, to prison for 65 years, assuming that Scheinberg is foolish enough to set foot in the U.S. and hardy enough to reach the age of 129. Based on the same allegations, Bharara is also seeking billions of dollars in asset forfeitures.

The fraud charges are especially dubious, since they stem from various tricks the poker companies and their payment processors allegedly used to conceal the nature of their transactions from U.S. banks. The banks did not suffer any losses as a result of this purported fraud; to the contrary, they earned millions of dollars in transfer fees.

More important than the question of whether Bharara can win this case is the question of why on earth he brought it to begin with. Is there so little real crime in the Southern District of New York that Bharara feels free to waste taxpayer money on a pointless puritanical crusade?

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

© Copyright 2011 by Creators Syndicate Inc.