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Poker's Black Friday. . .just what happened?
We woke up, we logged on, we found out. A month on from online poker’s infamous ‘Black Friday’, Matt Broughton looks at what actually happened.
Having been a poker enthusiast and player for nearly 15 years, I can report that it’s been something of a rollercoaster ride. Back in 1999, no one gave a hoot that I played poker. If I wanted to watch it on TV I had to sit up until 1:15am on a Friday night/Saturday morning to see the one show brave enough to broadcast this niche interest sport, and if I wanted to play online I had only a couple of places to go and very little in the way of options.
By the early 2000s poker life was looking brighter, with WPT (World Poker Tour) proving to be something of a phenomenon as far as televised poker went, and more online sites springing up by the week.
2003 saw amateur poker player, Chris Moneymaker, turn an online $39 qualification into a $2.5 million payday by winning the main event at the World Series of Poker in Las Vegas, kicking off what is known as the “Moneymaker Effect”: effectively drawing thousands of new players to the game hoping to repeat his feat. Hundreds of players at the WSOP turned into thousands over the next few years, and the Main Event was boosted by these numbers, ultimately reaching an incredible $12 million first prize by 2006 thanks to 8,772 entrants and their $10,000 buy-ins. Things were good…
Then, in October of 2006, the Unlawful Internet Gambling Enforcement Act (or UIGEA) came into being, prohibiting “gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.”
All European-listed poker sites immediately withdrew from the USA, effectively shutting out American players. Others, such as PokerStars, Full Tilt and Absolute Poker, positioned poker as a skill game, exempt from any legislation aimed at illegal online gambling. It was this stance that allowed these three major players to become the market leaders in the years following the passage of the UIGEA.
AND THEN
On Friday 15th April 2011, it was announced that US Attourney for the Southern District of New York, Preet Bharara, had filed charges of bank fraud, money laundering and illegal ganbling offenses against 11 defendants and comployees of PokerStars, Full Tilt and Absolute Poker, along with other individual payment processors and a bank executive.
PokerStars’ Isai Scheinberg and Paul Tate, Full Tilt’s Raymond Bitar and Nelson Burtnick, and Absolute Poker/Ultimate Bet’s Scott Tom and Brent Beckley were accused of having allegedly: “arranged for the money received from US gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls”.
Preet Bharara commented: “As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some US banks and effectively bribing others to assure the continued flow in illegal gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud.”
In addition to the 52-page criminal indictment, the Department of Justice also filed a 68-page civil complaint, demanding forfeiture of monies, bringing the DoJ’s claims to around $3 billion in forfeits and penalties. As a result of this, 76 bank accounts in 14 countries around the world were immediately hit with restraining orders, cutting American players off from their money.
WITH IMMEDIATE EFFECT
Almost immediately anyone trying to visit the dot com sites of ‘Stars, ‘Tilt, Absolute and Ultimate Bet were greeted with an FBI holding page advising: “This domain has been seized by the F.B.I. pursuant to an Arrest Warrant…” reminding visitors: “Conducting, financing, managing, supervising, directing, or owning all or part of an illegal gambling business is a federal crime.”
In the week of ‘Black Friday’ Full Tilt suffered a week-on-week traffic decline of 48%, PokersStars numbers were down by 25%, and UB and Absolute dropped by 39% (source: Pokerscout). For the first time ever I found myself playing in hugely reduced playing fields against all manner of nationalities I didn’t even know liked poker; there wasn’t an American in sight! The sites were still operating for non-USA players, but had to immediately reduce their guaranteed tournament payouts to reflect this drastic reduction in player numbers. Meanwhile my inbox filled with Euro poker sites offering me new deals, reload bonuses, and generally trying to make hay while the sun shined. Or shone. I’m never quite sure…
A week after ‘Black Friday’ PokerStars came to an agreement with the DoJ and began allowing players to withdraw the funds in their accounts, although what still isn’t clear is what happens to the Frequent Player Points that players have accumulated over the years. At the same time Absolute Poker issued a release stating: “…the US Attorney’s Office has agreed to provide all necessary assurances that third parties may work with Absolute Poker to facilitate the return of funds to players located in the US. This provision is an important first step to returning US player funds.”
CHIN UP
While many people saw all of the above as the end of the world, others put a more positive slant on proceedings, seeing this as perhaps a ‘cleansing’ of the industry in readiness for a regulated template to be laid down.
Zvi Lando, President of TableBrain Corp. (creators of Party Poker’s new “Double Hold’em”) believes that this could be the first step in the right direction: “Last month’s crackdown against the big online poker companies (each of which generates billions of dollars per year in revenue) was a first step, but was it an attempt to begin setting up a controlled environment where regulation is possible, or was it the start of a total shut down? The US government is faced with a simple choice: regulate the blossoming skill-based online poker industry and reap up to $42 billion in tax benefit (JCT’s projection) or try for a “prohibition era” type crackdown and spend countless millions struggling to enforce it. The choice seems easy, doesn’t it?”
Indeed it does, but only time will tell. As they say in the trade, ‘watch this space’.
