SUNDAY, OCTOBER 9, 2011 • THE BULLETIN
Poker Continued from A1 Federal authorities had blocked access to Full Tilt and two other top poker sites, Absolute Poker and PokerStars, and accused all three of money laundering and fraud. In poker circles, April 15 became known as Black Friday. But Black Friday was just the start. A bigger bombshell hit Sept. 20, when prosecutors asserted that Full Tilt was, in effect, the biggest bluff in poker. In a civil complaint, the Justice Department said certain Full Tilt executives, among them Ferguson and Lederer, had defrauded players of hundreds of millions of dollars. Full Tilt, the accusations went, was not just a poker site, but also a vast, global Ponzi scheme. However this scandal plays out — Full Tilt and its executives have denied wrongdoing — the Internet poker debate is now stretching from Las Vegas to Congress. (Absolute Poker and PokerStars are reimbursing American players; PokerStars denies that it broke laws, and Absolute said it would not be appropriate to comment on the case.) In a bid for legitimacy, poker sites and players are pushing for the federal government to legalize, regulate and tax online poker. Big-name casinos, sensing opportunity, have thrown their weight behind the idea. Pushing back are conservative Christian groups like Focus on the Family, which argue that such a step would put a federal seal of approval on Internet gambling, with potentially disastrous consequences.
In the face of federal law Could online poker go legit? It might sound crazy, given the uncertain future of online poker in general, and of Full Tilt in particular. (The French investment firm Groupe Bernard Tapie has agreed to buy Full Tilt, provided that the site’s legal troubles are resolved). And yet Big Poker and its fans say the best way to safeguard players would be to give Washington a piece of the action. Prying the game out of the dark recesses of the Web could yield many billions of tax dollars for public coffers, these people say. The push to legalize the game comes despite a federal law that tried to curtail online gambling in 2006. Banks and credit card companies are basically prohibited from processing payments from online gambling companies to individuals. But many legal experts say the law is murky, and the industry is itching to expand. Whatever the qualms about online gambling — nightmare situations, real and potential, are many — Uncle Sam is leaving a lot of money on the table. Over 10 years, legal online gambling could generate $42 billion in tax revenue, according to the Congressional Committee on Taxation. An estimated 1.8 million Americans played online poker last year, and some make a living at it. Because of the legal issues in the U.S., online card rooms typically base their computer servers elsewhere, in places like Costa Rica or, in the case of Full Tilt, in the Channel Islands. Online poker fans, including some with money frozen in accounts at Full Tilt, are among the most vocal proponents of legalization. “It’s the only industry on Earth that is clamoring for the U.S. government to impose regulations,” said Bradley Cole, an online poker player in Oxford, Miss. Cole said he had about $5,000 in his Full Tilt account on Black Friday. Oddly enough, Internet gambling is already legal in the nation’s capital. Earlier this year, the District of Columbia became the first jurisdiction in the U.S. to legalize it. Officials there said they hoped the move would bring in $13 million to $14 million a year in tax revenue. But Washington may only be the start. Several bills now working their way through the House of Representatives would give online poker the run of the country. In five-card poker, there are 2,598,960 possible hands. A four-of-a-kind is dealt once in about 4,000 hands, a royal flush once in 650,000. And yet aficionados say poker isn’t really a game of chance. Instead, they argue, it is a game of skill — of mathematical probabilities and human psychology, played with artful direction
“It’s the only industry on Earth that is clamoring for the U.S. government to impose regulations.” — Bradley Cole, an online poker player in Oxford, Miss., about those pushing for legalization
and misdirection. The answer to this one question — chance or skill? — may well set the course of the multibillion-dollar business of online poker.
‘It’s not dice’ Alfonse D’Amato, the former three-term senator from New York, is a longtime poker buff and chairman of the Poker Players Alliance, a trade group that lobbies on behalf of poker players. In an op-ed article in The Washington Post in April, he sharply criticized the Justice Department for corralling Full Tilt and the other sites. He argued that online poker has never been explicitly outlawed, in part because, unlike, say, craps, the outcome doesn’t depend purely on luck. His views have been echoed — and amplified — by the online poker world and its friends in Washington. “It’s not dice,” Rep. Joe Barton, R-Texas, said of poker. “It’s not just randomly watching where the roulette wheel stops.” He continues: “It’s people who can think and analyze probability and analyze their opponents.” Last March, before Black Friday and the scandal at Full Tilt, Rep. John Campbell, RCalif., introduced a bill that would legalize online gambling. But it’s Barton’s bill, introduced in June, that industry experts believe has the best chance of passing because it focuses specifically on online poker. Rep. Barney Frank, D-
Mass., has supported online poker for years. He said that, if anything, the scandal at Full Tilt has only strengthened his resolve to legalize it. So, despite the imbroglio over Full Tilt and, in many ways, because of it, confidence is building that Washington will deal poker a winning hand. “It’s no longer a question of if, it’s a question of when it will be passed,” said Jim Ryan, the co-chief executive of Bwin.party, which owns the poker site PartyGaming .com. Groups like Focus on the Family say legalizing online gambling would be a huge mistake. For some people, gambling becomes an addiction, these groups argue, and the Internet makes it easier for many more, including those who are under age, to pick up the habit. Chad Hills, who analyzes the gambling industry for Focus on the Family, says the skill-versus-chance argument is nonsense. True, players can improve their game with practice and so on — but the cards ultimately determine who wins and who loses. Not even the best players “can tell you what the next card flipped over is going to be,” Hills said. “If you regulate it, you’re cracking the door open for one of the largest expansions of gambling ever in the history of the United States.” But poker advocates question how politicians could say no to billions of dollars in po-
tential tax revenue, particularly in tight economic times. Besides, many states have already embraced gambling, in the form of popular lotteries. “It’s a political no-brainer,” John Pappas, executive director of the Poker Players Alliance, said of legalizing and regulating online poker. In recent years, online poker has spawned its own subculture. Some avid players have even turned to the game in the hope of supplementing their income in lean times. Others have made poker their full-time job. Brian Mogelefsky previously worked at his father’s mortgage brokerage firm in Northport, N.Y. But when the housing market crashed, he turned his poker hobby into an occupation. At one point, Mogelefsky says, he was making about $5,000 a month. He uprooted his wife and two small children and moved to Charlotte, N.C., to hold down his living expenses. Then came Black Friday. “I was in complete shock,” said Mogelefsky, who says he has $29,000 frozen in an account at Full Tilt. “I felt completely blindsided.” Smaller poker sites, such as Bodog, Merge and the Cake Poker Network, have been hoping to pick up players. But Cole, down in Mississippi, for one, is reluctant to sign up. “I’m worried about the feds going in after another site,” he said.
Still playing Others have found creative ways to stay in the game. Olivier Busquet, who says he has earned about $2.5 million since he started playing poker professionally six years ago, says he had about $100,000
in his Full Tilt account and about $50,000 in PokerStars on Black Friday. PokerStars reimbursed him, but he’s still waiting for his money from Full Tilt. To get around the American blockade on real-money games, he flew to Toronto, opened a bank account there and leased a furnished apartment. Then he kept playing. Other diehards are considering similar moves. In fact, one poker player started a new business, PocketFives Poker Refugees, which helps poker players set up temporary residences and bank accounts in countries like Canada and Costa Rica. For years, the casino industry lobbied against online poker. But its resistance appears to be waning. Wynn and MGM, for instance, are now behind the legalization effort. Several casinos are in discussions to either form their own online gambling sites or team up with existing ones. Wynn has announced a partnership with PokerStars, although the agreement was on hold after Black Friday. There is chatter on Wall Street that Wynn is also eyeing Bwin.party for a possible acquisition. And so the poker world now finds itself in a situation many liken to Prohibition. Americans didn’t stop drinking when the government outlawed alcoholic beverages in 1919. And, in this Internet age, it won’t be easy to prevent people from gambling online, whatever the government says. “It’s a game of whack-amole,” said Behnam Dayanim, an expert on online gambling and a partner at the Axinn Veltrop & Harkrider law firm. “They’ve whacked three very large moles, but over time, more moles will pop up.”
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Italians protest austerity measures By Katie Kahle McClatchy-Tribune News Service
ROME — Tens of thousands of Italians protested in Rome and Milan on Saturday against the government of Prime Minister Silvio Berlusconi and austerity measures it is enacting. In Rome, public service employees, families, school pupils and students took part in the demonstration organized by trade union CGIL under the motto, “Without the public (sector) you’re deprived of your rights.” The protests targeted the public sector job cuts that are part of austerity measures worth a total of 90 billion euros, aimed at balancing the Italian budget by 2013. Trade union representatives warned that a total of 300,000 jobs could end up being cut in the five-year period leading to 2013. However, demonstrators also criticized scandal-ridden Berlusconi. “The international financial markets reject bungabunga,” read one placard, in reference to sex parties that allegedly took place at the premier’s house. The protests came a day after rating agency Fitch downgraded Italy’s creditworthiness to A+.