Cha-Ching: DOJ Goes After Online Poker
Let’s look at the facts – last year, the Department collected over $1 billion in fines and disgorgement from just its top-8 FCPA settlements. In its case against PokerStars, Full Tilt Poker and Absolute Poker, DOJ seized 75 accounts around the globe, totaling approximately $3 billion. That is just on one case.
DOJ’s persecution of online gambling has been very profitable — just last year they extracted $33 million from Sportingbet, and in 2008, PartyGaming.com co-founder Anurag Dikshit agreed to pay U.S. authorities $300 million .
DOJ has found a new and even more lucrative cash cow. Could this be the real reason for its picking on the online poker industry?
The focus of the prosecutions centers on payment processors and online poker sites which supposedly misrepresented the source of the proceeds which were in turn funneled through the unsuspecting banks. For that reason, DOJ claims the banks were the victims of a bank fraud carried out by the online poker companies and payment processors. But wait, something is missing from this picture. Typical bank frauds involve a “loss” to a victim, meaning they are defrauded for money. Here, no one was the “victim” of any bank fraud. What did the banks lose by processing the transactions? Nothing. So where is the fraud?
The second linchpin to DOJ’s prosecution is that online poker is not a game “subject to chance.” Say what you will about getting good cards, but there is no doubt that skill is an essential component of the game. Does DOJ really want to litigate this narrow claim? For $3 billion, I am sure they will but is it the right use of resources, especially when everyone can think of better uses of prosecutorial powers to detect and prosecute more serious crimes?
DOJ’s prosecution stands out as troubling especially in light of the fact that Congress is actively considering reversing the internet gambling ban, at least for online poker, and the fact that several states – Florida, New Jersey and the District of Columbia, are likely to legalize online poker playing.
It is even more ironic that the Southern District of New York’s US Attorney’s Office has lead the battle against online gambling — this is the same office responsible for prosecuting big time insider trading cases and some may say, should have been focused on key players involved in the financial meltdown, not the players holding poker cards in online games.