Le Monde du Poker.

November 11 2011, Chad Holloway

On Friday, Pokerati reported that the United States Department of Justice filed a response to the pretrial motions of Chad Elie and John Campos, two men indicted on Black Friday for their roles as payment processor and Utah banker, respectively. The DOJ contends “that the Court should deny the defendant’s motions to dismiss in their entirety.”

In a 52-page response to the pretrial motions, U.S. Attorney Preet Bharara, through assistant U.S. Attorney Arlo Devlin-Brown, suggested that the defendants’ claims, that poker isn’t gambling and the Unlawful Internet Gaming Enforcement Act (UIGEA) is a futile law, is without merit. As the response states:

“Elie alone also contends that IGBA [Illegal Gambling Business Act] is unconstitutionally vague as applied here because it is charged with reference to New York law and because 'reasonable minds can differ' as to 'whether poker constitutes gambling' under the provisions of the New York Penal Law referred to in each of the IGBA counts charged in the Indictment. Elie IGBA Brf. at 27-30. Reasonable minds cannot.”

In addition to laying out endless precedent dating back to the late 1800s, the DOJ suggests that unlike sports betting, poker is not a game of skill:

“First, defendants claim that in each of the listed games, the bettor has 'no role in, or control over, the outcome' and that the game is instead subject only to chance. That is not true with respect to bookmaking, at the very least. Betting on the outcome of sporting events involves 'substantial (not ‘slight’) skill,' including 'the exercise of [a] bettor’s judgment in trying to . . . figure [out] the point spreads.' Office of the Attorney General of the State of New York, Formal Opinion No. 84-F1, N.Y. Op. Atty. Gen 11 (1984). Sports bettors have every opportunity to employ superior knowledge of the games, teams and the players involved in order to exploit odds that do not reflect the true likelihoods of the possible outcomes. Indeed, academics who have argued that poker should not be treated as a form of illegal gambling on the grounds that it is a 'game of skill' make the same argument with respect to sports betting.”

In essence, the DOJ’s latest response attempts to discredit Elie's and Campos’ various defenses. Instead of contending the skill element of poker, the response focuses on the fact that the game, at least in some respect, is a “game subject to chance,” which makes it applicable to the UIGEA. Filled with legalese, the response asserts that there exists proper precedent to disrepute the defendants’ arguments and that the DOJ is willing and prepare to prove their charges.

Some other highlights from the response include:

”The fact that there is, indisputably, some skill in poker is irrelevant given UIGEA’s application to any game ‘subject to chance.’””There can be no serious dispute that poker is both “subject to chance” and contrary to numerous state laws and, therefore, the defendants’ as applied challenge should again fail.””Contrary to the defendants’ arguments, there is nothing in UIGEA that reflects Congressional intent to exclude agents or employees of virtually any participant in financial networks who knowingly and intentionally facilitate illegal gambling transactions that violate UIGEA.””In light of the plain language of the statute, supported by its structure, defendants face a heavy burden in demonstrating that Congress intended UIGEA to specifically exclude poker from its ambit, particularly given that IGBA (which like UIGEA incorporates by reference state gambling law) had been consistently applied to poker gambling at the time the UIGEA was enacted.””The evidence will show that, despite losing millions on the SunFirst Processing, Full Tilt Poker and PokerStars encouraged Elie to make similar arrangements with similar kinds of banks. Full Tilt Poker, in fact, was growing desperate: given its illegal operation and desire for “transparent processing” it was left with virtually no access to the U.S. financial system at all.”

The DOJ’s response, which cannot be taken lightly, will no doubt come across as a farce, at least in part (i.e. suggesting there is more skill in sports betting than poker), to those in the poker industry. It doesn’t help that in its response, the DOJ cites the classic Kenny Rogers poker song, The Gambler, and attributes it to Willie Nelson, making one wonder whether they know what they’re talking about.

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Clinging to the fictions of the past (and no doubt riding to work with horse & buggy, buggy-whip in hand) ... the powers that be in the US DOJ continue their journey into the rediculous lumping poker with blackjack and roulette. An intelligent position is to realize that the game of Bridge, like poker, is a game of skill. I still remain shocked that this argument is rarely used to make the point. You don't see Bridge Clubs that host Bridge tournaments for cash being shut down. Skill wins at poker and the new WSOP champion is a good example of that ... in fact, the entire Final Table of the WSOP is a great example of that.

Skill, like cream, rises to the top. Recognizing that is a sign of intellect. Poker is a game of skill.

The counter-claim by the DOJ uses all the old arguments as well as valid banking violations in a shotgun approach in their case ... after all, the DOJ wants to win.

The real question is why? The answer is money and a lot of it.

By winning this case and launching new "investigations" against all the evil-in-the-eyes-of-the-DOJ (but legal) poker sites such as LockPoker, etc, the DOJ will be able to seize hundreds of millions with impunity. The DOJ has made fortunes off PartyPoker (who is still paying off the dubious deal made years ago), PokerStars (the settlement includes a monetary payment that is mind-boggling), and recently FullTiltPoker. Groupe Tapie will take over the FullTiltPoker site and pay a small fortune over a number of years to the US DOJ is my guess ... a very safe bet IMHO.

The longer the DOJ Poker Prohibition in the US goes on, the more money the DOJ will be able to seize from the safety of warm offices, coffee at hand. It really is inconvenient hunting down real criminals and organized crime who have this bad habit of shooting back when you have all this low-hanging fruit worth millions in enforcing a virtual online Poker Prohibition.

I was not surprised to hear that a deal had been reached with FullTiltPoker, after all, the pattern is clear. Indict, roll out a civil case, seize every dollar possible, them make a deal for a few hundred million dollars.

Like the corporate executive being paid a salary of umpteen millions, it is legal, but is it right?

Like the Prohibition in the US (1920 - 1933) the online Poker Prohibition by the DOJ is doomed in the long term. The alcohol prohibition drove alcohol consumption underground pitting the government against a large percentage of the population until finally, faced with the reality that the US did not want to criminalize most of their voting population, it was repealed ... and taxed.

Online poker in the US is now solidly heading underground and the DOJ is fighting against it the same way as they used to send agents in to conduct raids on speakeasys (unregistered bars packed with people drinking alcohol). The use of VPN (Virtual Private Networks) allows anyone to play completely undetected. The online sites PartyPoker, PokerStars, & ultimately FullTiltPoker already have agreed to enforce the Poker Prohibition on behalf of the US DOJ by not allowing US citizens in the US to play on their sites. This leaves the thousands of other sites to fill the demand.

Since the DOJ cannot easily make it a crime for a US citizen to play poker online (that Constitution is a real barrier sometimes ... lol) due to the one thing that the DOJ hates ... political headaches ... they have to fight a losing war against the underground market.

Ultimately the US will see the light and also the tsunami of tax revenue that countries like France are tapping. Once regulated the DOJ will have to go back to chasing real criminals instead of twisting the UIGEA into a pretzel to criminalize profitable businesses and in the process confiscate moneys that belongs to US citizens.

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