Online Gambling

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.

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83 responses to “Poker Bars

  1. Did y’all here there’s an Atlas Shrugged movie out? Make sure you get my name right for the H/T. LOL


    1. Is this a spoof?

      1. The bot has gained sentience. In some threads, his comments have been better than mine.

        Low bar, I know, but…

      2. JM is a spoof of anon bot, yes.

    2. I hear they want to build a mosque at Ground Zero.

  2. “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.”

    I wonder if they’ve heard of Wall Street.

    1. See, in a land of fully informed juries, the only crapshoot here would be getting a conviction.

      1. But see, everyone knows that poker is gambling, just like they know that marijuana is a gateway drug that leads to a heroin habit in a gutter somewhere.

        1. Pot led me to be a UNIX Systems Administrator. I’m not too sure if heroine might not have been better.

          1. “There are two major products that come out of Berkeley: LSD and UNIX.
            We don’t believe this to be a coincidence.”
            – Jeremy S. Anderson

    2. That sounds a whole lot like the futures market.

      1. Only when you play the futures market, Tim.

        For some players — like JPM and the silver & copper markets — “future contingent event[s]” are indeed “under [their] control or influence”.

        1. Yea, JPM & GS have done a bang up job of controlling silver! I believe they have been fraudulently shorting silver since the low teens… Silver printed $45.40 today. Spare us your bullshit conspiracy theories.


    3. Unlike Wall Street, poker players cannot get bailed out by congress when they lose.

      1. Depends if you know the right politician.

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

    Because this is America, dammit. Everyone should go to prison for something.

    1. On any given day, each one of us probably does at least one thing that could land us in prison. Or at least earn some jail time or a fine. The catch is, you probably don’t even know you did anything “wrong.”

      1. 3 Felonies a day baby……..120&sr=8-1

      2. …and of course ignorance or the law is no excuse, as if any of us could actually comprehend all laws we are subject to at all levels of government.

      3. Isn’t there a famous quote about making everyone a criminal? I swear it said something about making everyone a criminal so that they’re easier to control. Anyone?

        1. Did you really think we want those laws observed? said Dr. Ferris. We want them to be broken. You’d better get it straight that it’s not a bunch of boy scouts you’re up against… We’re after power and we mean it… There’s no way to rule innocent men. The only power any government has is the power to crack down on criminals. Well, when there aren’t enough criminals one makes them. One declares so many things to be a crime that it becomes impossible for men to live without breaking laws. Who wants a nation of law-abiding citizens? What’s there in that for anyone? But just pass the kind of laws that can neither be observed nor enforced or objectively interpreted ? and you create a nation of law-breakers ? and then you cash in on guilt. Now that’s the system, Mr. Reardon, that’s the game, and once you understand it, you’ll be
          much easier to deal with.
          –‘Atlas Shrugged’

          1. Thank you, thank you, thank you. It’s been about 4 years since I’ve read Atlas. I think it’s time to pick it up again.

          2. But the Feds in AS are toothless compared to the real thing. In AS the Feds maliciously manipulate the legislative process and impose barriers for the hero capitalists.

            In the real world, the Feds issue arrest warrants, search warrants, subpeonas, seize property and bank accounts, force asset forfeitures without due process, shut down Internet access, and threaten life imprisonment of family and friends for technical infractions of law. When necessary to accomplish their ends, the Feds will lie and manufacture evidence to support their case.

            Online poker is just the most recent example.

            Last month it was NotHaus, who was give a life sentence and whose property was expropriated for the crime of facilitating the use NotHaus Metal (i.e., 0.995 fine silver) for transactions in commerce. For this “crime”, Federal agents literally accused NotHaus of being a “terrorist”.

            The film AS is set in 2016, but the oppressiveness of the Federal government already far surpasses that envisioned by Rand’s novel.

            I’ve played me a bit of online poker. The Kingdom of Saudi Arabia, the Islamic Republic of Iran, the Peoples Republic of China are about the only countries outside of sub-Saharan Africa that I’ve never seen at the tables. The United States of American has proudly joined this exemplary list. (BTW, I’ve even played online poker with somebody located in the Holy See. It seems even the Pope is cool with online poker.)

        2. Lavrentiy Beria, Stalin’s head of the dreaded secret police is reported to have said, “Show me the man and I’ll find you the crime.”

  4. Was this case brought about because online poker was a threat to Las Vegas and other traditional casinos, or was this simply a matter of an anal lawyer wanting to make a name for himself.

    1. Jacob Sullum wonders why Bharara is investing so much effort in a pointless puritanical crusade.

      The Cossacks work for the Tsar. Just remember that.

    2. Doubt it. Card tables take up a lot of physical space and don’t bring in all that much money. I’m sure the big boys would rather have online gaming legalized so they can shrink their card rooms and replace them with slots.

    3. [Was this case brought about because online poker was a threat to Las Vegas and other traditional casinos, or was this simply a matter of an anal lawyer wanting to make a name for himself.]

      Smarten up dude, and follow the money. Online poker has gained the attention of the federales as has online commerce. Statists everywhere see money changing hands without the government exacting it’s entitled share, and they chaffe at such. Expect this to go away when government is allowed to tax the act.

    4. I read recently that the District of Columbia is going to set up online gambling for itself. I suspect the various states don’t want any competition to their lotteries. The casino industry has heavily funded members of congress who are working to pass laws against all forms of online gambling. All this is just the usual government corruption. Ayn Rand wouldn’t have blinked an eye at this.

  5. I’m sure the fact that DC is now set to allow internet gambling is just a coincidence here.

  6. Senior Editor Jacob Sullum wonders why Bharara is investing so much effort in a pointless puritanical crusade.

    Because Bharara is a grandstanding asshole who cares more about seeing his name in the papers than the rule of law?

    Just spitballing.

    1. I think that one sticks.

    2. He’s just following the grand tradition of Giuliani.

    3. Nailed it.

  7. We’ve been approached over the past several years by most of the Internet players who wanted to combine with us and take advantage of our brand, and we finally became convinced, sort of hesitantly, about PokerStars, because there didn’t seem to be any interest in the government to enforce restrictions on the game of poker. …

    1. The situation cries for regulation so that states can get money at a time when they need money and the federal government can get some money at a time when it could use the money. It seems like an intelligent thing to sit down and regulate.

      1. Another example of the established players loving regulation, since it protects them from new competitors.

  8. the inet poker crackdown came at a time that washington dc was allowed govt sanctioned gambling and the current president’s campaign kickoff…. coincidence? i think not.

    I think you can donate to the presidents campaign @

  9. The Chinese have better poker sites. They will win. They always win. If only we could play poker as well as they do.

    1. Perhaps you’d like to subscribe to my newsletter. It’s called the “New York Times.”

  10. Not to worry, we’ll have legal internet poker soon enough, courtesy of Harry Reid’s biggest campaign contributors, and it will be taxed at the transactional level (i.e. a “government rake”) and winning players will also be issued 1099’s and be subject to income withholdings just like in a B&M casino.

    Just watch.

    And not that I necessarily disagree with that outcome, my major problem is with the corrupt way these fuckers are using the “law” to clear out the competition.

    1. [And not that I necessarily disagree with that outcome,..]

      Therein lies the issue, you don’t agree shouldn’t get it’s “share”. One reason I enjoyed online gambling was the same reason I shop on ebay and Craig’s, you cut out the state/federal hand in your pocket.
      The idea that wealth passes hands and the government is cut out of the transaction makes me hard.

  11. Not that I agree, particularly as I have from time to time played online, but so many states are licensing casinos it may not mean much soon.

    Anyway this kind of stupidity exemplifies the idiocy run amok in DC, but hey they just caught one of the biggest criminals ever and it only cost them 100 million dollars. Barry Bond should have known better.

  12. I’ve got a decent amount of money locked up on one of the shut down websites. This was the worst tax day ever, since I “lost” more to not being able to access this then I got back from my income tax refund…

    1. I suspect the domain names have only been blocked in the US. If only you could get a secure remote session or VM on a computer in a foreign country to log in to and transfer your money. Not that I am recommending you do this, as that might be illegal. I just don’t know.

      1. I’ve read bank accounts of the companies have been frozen. Not sure what that means for players.

      2. Hello, I am a millionaire poker player from Nigeria… er… the United States…

        1. Actually, come to think of it, this would read more like:

          “helo, i am mi1lnion $$ pooker and needd trusst peeple# gibe mee bank numberand u git lots $$$”

      3. Unforutunately they know my account is registered in the US, so even though I’m in another country right now I can’t access it either.

    2. All the affected sites have issued statements saying that people’s balances are unchanged and that you haven’t lost any money. I’m not sure how you can get it out right now but it’s there waiting for this to blow over.

      1. Yeah I’m sure I’ll get it back, but it’s still a few thousand dollars that I could be doing other stuff with.. Like making more money.

      2. It ain’t going to blow over. The Feds are going to steal the money.

        1. Er … seize the money.

      3. In case you have not read (little to no coverage) the DoJ has blinked already making a deal with the sites to return domain names and set up an orderly transfer of ALL U S Players funds to them.

        Credit and an outcry of players calling the DoJ, Facebooking them (our version of Egypt!) and calling FB the White House.

  13. Wow, I never thought about it quite like that before dude. Wow.

  14. 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.

    Actually, the answer to that can be found two paragraphs above.

    Based on the same allegations, Bharara is also seeking billions of dollars in asset forfeitures.

    New York is broke. So what does it do? Send in the attorneys.

    There’s absolutely NO DIFFERENCE between the activities of the govt and the Mafia when it comes to stealing money from private citizens; the only difference is in what happens after they steal the money – one group goes to prison, the other goes to higher office.

    1. Beat me to it. The money is the Bharara’s and the state’s objective. Which means, aren’t they engaging in gambling. I mean this case has all the same elements of poker. Chance (the jury), some facts (the up cards). The only real difference is the government isn’t using its own money for its ante. Its using ours!

    2. Problem is, despite the gigantic amount of rake online poker sites took in, I doubt the sites have billions of dollars to give the Feds. Unless they also go after the amount deposited in the players’ accounts.

      At the least, it is conceivable that the sites will have to seek bankruptcy protection, and I don’t know what status the players’ claims for their accounts will have. I can easily see a civil or criminal money judgment being higher in priority than a player’s unsecured claim for his illegally deposited funds. True, IIRC, most people got their money back after the whole Neteller brouhaha, and probably it will go down the same way here,(IMHO, after a forced asset sale to some B&M entities—goodbye to most of your rakeback or player points, though.) but if this gets butchered/the DoJ gets desperate for $$$, it’s not impossible for the players to lose their money.

      And as far as the impetus being a desire to give the market to favored B&M entities in Nevada, the Wynn Group announced it was severing ties with PokerStars. Not sure what that practically means, if they’re just getting a better posture to manage any liability, or what else may be going on. Interesting case, what with the international players, the liability of the gaming entities vs. the payment processors vs. the banks.

      1. The banks will get a cut of the take for cooperating.

  15. On the internet you can be anyone you want. Who would want to be the old bald guy with the ridiculous Hawaiian shirt?

  16. Preet-y, Preet-y, Preet-y dumb. *Theme from “Curb Your Enthusiasm” plays*

  17. The government knows best. Never question daddy. You cannot make decisions for yourself. Poker is bad for you, and so daddy will not let you.

    We have some real nutjobs on a power trip in governments across this country. I just wish that people would stop and question daddy about these stupid laws.

  18. “” U.S. Attorney Preet Bharara took an alleged New York misdemeanor and turned it into multiple federal felonies that could send several of the defendants to prison for 65 years.””

    With a skill like that, this person can go far in the DOJ. Just the type of people they are looking for.

    1. It helps when you get handed on a silver platter, a talkative chief architect who developed the means for processing the payments.…..ents-18784 From the linked article, the case was pretty much wrapped up with a bow to the Feds. Still doesn’t excuse the fact that this is an outrageous use of DoJ resources, nor does it excuse the unconscionable way the UIGEA was passed into law, but it is easy to see why they are picking now to do this.

  19. So, wdwgtctri?

    No, wait….

    Is not our government beneficent?

    Stories like these only serve to confuse the children. Please, take care in criticizing people who only want to protect us!

  20. Have you ever thought that this is nothing more than an attempted money grab?


  21. The righteousness of the person writing is merely as bad as those opposed to gambling – he calls their arguments bizarre, when, in fact, Bharara stands to gain politically and financially by standing up for benefactors such as casinos and churches with the money and political position to aid his career.

    This is the angle I wish you’d focus on in a future article. These people are not “righteous moralists” at all. They are hypocrits, some of whom even gamble themselves!

    1. Just like that “other guy from New York” with the prostitutes.

  22. Still reading plenty of nauseating commentary online screaming for Bush/Republican blood for this when last I checked there was a Democrat heading the executive branch, also a period of a Democratic president and Democratic legislative supermajority which could have repealed UIGEA/etc.

    Not to give the worthless Republicans a pass here but seeing the continued prechoreographed defenses makes me a sad panda. A pox on both their houses, but idiots like this are enablers and they’ll keep in voting in the wrong people because they on the “right” team.

  23. It is way past time for government to get out of the business of outlawing transactions between consenting adults. Just because someone does not like something should not be justification for government making it illegal.

    Government should be concentrating on real crimes against people such as robbery, rape, murder, etc.

    Government should also, I think, be putting people in prison who are violent predators against others. Get these kinds of people out of polite society.

  24. I like how the government doesn’t want me playing cards online, and instead says if I want my poker fix, I need to stop playing for pennies like I do online and pony up hundos at my local casino.

    …I see the logic in that.

  25. Very well written article. I just want to be able to play poker on the internet in the privacy of my own home. Is that really too much to ask of my government?

    Also, just because the American casinos missed the boat on this industry(they were previously in support of laws to prohibit it, and some still are like the indian casinos), doesn’t mean we should have to reset everything just to let them catch up. Bring back PokerStars and FullTilt. They have done so much to bring poker to the popularity it has today.

  26. Pretty simple why he brought it, 2 reasons:

    1) High-profile career maker (hopefully breaker in this case).

    2) He’s in the pocket of politicians who are in the pocket of big U.S. casino interests.

  27. People need to get outraged at this sort of tactic. The government creates these shitbag laws, then the party they go after has to insist that the law doesn’t apply to them. Not because the law is shitty, or because they are a free person, but because of some bullshit definitional deficiency. What is not being recognized here is it doesn’t fucking matter if poker is a game of chance or not. It only matters that consenting, free adults should not be subject to abuse from the state. But since they passed a “law” the only defence you can have is a technical one. So it goes; the government chips away at rights little by little, always small enough that most people don’t care enough about exercising their right to prevent shitty laws from passing simply because the right is not exercised by enough people, and eventually it encroaches on every right. This is not acceptable. Not everyone exercises their human right to consume a mind altering substance, not everyone exercises their right to start a business or carry a firearm; not everyone chooses to exercise their right to play online poker or eat fast food, and because of this, they are able to only outrage an insignificant amount of people, and the majority simply doesn’t give a shit. A line needs to be drawn at self-ownership, private property and voluntary exchange. If the government violates any of those basic human rights, everyone needs to get outraged and speak out, regardless of what “specific behavior” the nanny wants to regulate now.

  28. Basically this is all about Harrah’s using their influence to clear out existing competition before they introduce their now “authorized” poker site.

  29. Here’s an interesting analysis of the charges against Full Tilt, etc.: http://www.relentlessdefense.c…..e-on-tilt/

  30. Wonder if woodchipper dot com is next?

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