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Black Friday: U.S. Poker In Crisis

by Card Player News Team |  Published: Jul 01, 2011


On Friday April 15 poker players across the U.S. were shocked to learn their three favourite online poker rooms, PokerStars, Full Tilt, and UB were gone — domain names seized by the Department of Justice, principals indicted, and players locked out by the sites themselves.
In the subsequent weeks to “Black Friday” the chaos turned to concern and confusion about what would become of players’ money, those who were indicted, and, indeed, the future of poker in the U.S..
Card Player followed this story every step of the way and here we give you a definitive timeline of events and comments from those affected by this momentous event to date.
April 15 – Indicted
The Wall Street Journal, Reuters, Forbes and other financial media outlets are reporting that the U.S. Attorney for the Southern District of New York has indicted the founders of PokerStars, Full Tilt Poker, Absolute Poker and UB and seized their websites in the latest attempt to crack down on online gaming.
Instead of the site’s usual homepage, visitors are given the message, “This domain name has been seized by the F.B.I. pursuant to an Arrest Warrant in Rem obtained by the United States Attorney’s Office.”
The U.S. Department of Justice released a press release about the indictment, naming 11 site representatives as defendants for allegedly violating the terms of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. The allegations state that the poker companies illegally coerced U.S. banks into processing payments after the UIGEA was passed.
In addition, restraining orders were issued against 76 different bank accounts and payment processors who were named in the Department of Justice’s recently unsealed indictment.
April 18 – Domain Move
Shares in publicly-quoted Euro-facing online poker operators rose after a weekend which sent the poker world into a tailspin when the U.S. Department of Justice indicted 11 people connected with three leading online poker rooms operating there.
PokerStars has now made the move to and will continue to serve non-U.S. customers. Likewise Full Tilt made the move to and business continues as normal outside the U.S..
Speculation abounds over what will happen to the millions in online funds currently sitting with the federally indicted Internet card-playing sites. It is unclear at this time what the situation is regarding player withdraws and transfers.
Despite all the commotion within the online world, Full Tilt pro Tom “durrrr” Dwan is confident players will be able to receive their money eventually. He has said on Twitter that Full Tilt will find a way to make payouts, and if they don’t “Phil [Galfond] and I are out $1 million each”.
On Saturday, Dwan wrote that the odds are “way lower than 10 percent of Full Tilt Poker not paying.” He also said, “Would strongly assume [PokerStars] is the same.”
April 19 – Frank Opinion
Rep. Barney Frank had some harsh words for Friday’s government crackdown on the major online poker sites. In an interview with The Hill, Frank called the indictments “an incredible waste of resources”.
Using witty poker lingo, Frank said the feds were “protecting the public from the scourge of inside straights” and that the government should “go after the people responsible for empty houses, not full houses”. Frank made it clear that he didn’t endorse violating the law, but he thinks law enforcement should be working on other things.
April 20 – Fraud Squad
Full Tilt Poker and PokerStars have reacquired their respective dot-com sites in an effort to return player funds, according to a press release from the United States Department of Justice.
U.S. attorney Preet Bharara said, “On April 15th, this Office and the FBI took specific legal action against 11 individuals who allegedly engaged not merely in the operation of illegal gambling businesses, but in massive wire fraud, bank fraud, and money laundering, despite repeated warnings and clear notice that their conduct was illegal in the United States. No individual player accounts were ever frozen or restrained, and each implicated poker company has at all times been free to reimburse any player’s deposited funds. In fact, this Office expects the companies to return the money that U.S. players entrusted to them, and we will work with the poker companies to facilitate the return of funds to players, as today’s agreements with PokerStars and Full Tilt Poker demonstrate.”
April 21 – The Commish
The Alderney Gambling Control Commission, the Isle of Man Gambling Supervision Commission, and the The Kahnawake Gaming Commission have released statements regarding the indictments of their respective licensees — Full Tilt Poker, PokerStars, and Absolute Poker.
Alderney Gambling Control Commission:
AGCC will review the documentation affecting its licensee and to facilitate this AGCC will undertake its own investigation into these allegations; no further general commentary will be provided pending progress in these matters.
AGCC notes that its licensee, trading as Full Tilt Poker, denies all of the allegations. Upon the grant of its licence Full Tilt Poker identified that it had obtained specific legal advice relating to its proposed activities. AGCC further notes the current public statements made by Full Tilt Poker to its customers and its recent decision to suspend ‘real money’ play in the USA. based in Alderney.
Isle of Man Gambling Supervision Commission:
While we are discussing the matter on an ongoing basis with PokerStars and watching developments, we can confirm that PokerStars licensing status in the Isle of Man remains unchanged.
We are aware that PokerStars have suspended the availability of cash-play games in the USA and we are currently endeavoring to ensure that any player who wishes to withdraw money from their account can do so.
The Kahnawake Gaming Commission:
The KGC’s principal concern is that players are not adversely affected by the actions taken by US authorities. The KGC is presently engaged in discussions with its licensee concerning the status of player accounts.
Upon completion of its review, the KGC will determine what steps may be required and will issue a further statement at that time.
April 21 – B&M Boom
The official numbers have yet to be released, but there has been a modest reported increase in bricks and mortar poker-room traffic thanks to the recent Department of Justice indictment on the major online sites.
With online assets frozen, it could be a while before poker rooms experience any substantial customer gains and the availability of those withdrawals will certainly have an impact on the success of the upcoming World Series of Poker.
The Aria poker room has been one of the most affected by the inability to play Internet cards. According to shift manager Danielle Hackney, they have been “wire-to-wire full of 24 tables since Friday”, which is unusual. In addition, Aria’s $125 twice-daily poker tournament has had a field size increase of about 50 percent (each running) since the news broke last week.
The largest card room in the United States is Commerce Casino located in the Los Angeles area and with more than 200 tables on the premises there are a lot of options for players.
“We saw a slight increase in traffic over the weekend,” said John Griffo. “In tournaments we have seen a 15 percent increase in entries.”
April 22 – W.T.O. Outrage
The Caribbean nation of Antigua and Barbuda, home to Absolute Poker, is ready to continue a fight in the World Trade Organization over the United States’ actions to prevent Americans from playing online poker, according to an article on Reuters.
The nation’s stance is that this past Friday’s shutdowns of the major online poker sites are illegal under international law, since gambling is widely permissible in the United States — U.S. brick-and-mortar casinos allow wagering and online betting on horse racing is state regulated.
“I don’t think there’s another country in the world that puts people in jail for engaging in trade that’s lawful under international law,” Mark Mendel, the Caribbean government’s legal adviser, told Reuters. “It’s as if Antigua would put Americans in jail for selling pineapples.”
Antigua’s finance minister, Harold Lovell, issued a statement on Wednesday calling the federal indictments an illegal attempt to kill competition. “I am concerned that at this point in time United States authorities continue to prosecute non-domestic suppliers of remote gaming services in clear contravention of international law,” Lovell said.
April 26 – Cash Us In
On Tuesday afternoon at around 4 p.m. EST, PokerStars sent out an email to its United States players, explaining that cashouts are now available. The move comes 11 days after the site was shutdown in American cyberspace, and less than a week since PokerStars regained its dot-com domain to facilitate returns.
The emails said (in part), “The PokerStars Cashier is now available for you to cash out the funds in your real money account balance. We strongly recommend that you use the bank transfer option; to use it, you will need to have your current banking information at hand. Please note that due to the expected high volume of cashout requests, we anticipate a delay in processing and delivery of your funds. Rest assured that your funds are safe and we will process your request as soon as possible.
April 26 – Loveman Love In
On Tuesday, Caesars Entertainment President and CEO Gary Loveman expressed his thoughts in an article for the online edition of Fortune Magazine, stating that the Department of Justice and their recent federal indictment of the major online poker sites has created an opportunity to create jobs and generate revenue for U.S. citizens.
Loveman went on to compare the current situation with online poker to the Prohibition era of the 1920s and offered up his suggestions for future legislation. Although he recognised prior efforts made at the state level as well-intentioned, he stated that federal legislation will be more beneficial to future U.S. players.
“The goals of legislation are simple,” he said. “Let Americans play online poker in the privacy of their homes, and create jobs and revenues here in America. Only federal legislation can accomplish that, by creating a well-regulated system of online poker. And only federal legislation can clear up the current ambiguities in U.S. law and crack down on other online gambling like sports betting and casino games.”
Loveman went on to explain that, “As a game of skill, poker deserves to be treated differently than other forms of gambling.” He also encourages future legislation to put safeguards in place that combats underage players, prevents money laundering and fraud and identifies cheating.
April 29 – Busted
The Department of Justice has now racked up its fourth arrest following the indictment of 11 owners and representatives of the major online poker sites.
Ira Rubin, a man who allegedly acted as a payment processor and is accused of illegal gambling, money laundering, and wire fraud, was arrested on Monday.
According to the DOJ’s press release, Rubin allegedly tricked banks into accepting funds by disguising payments. He is charged with nine counts, including violation of the UIGEA, conspiracy to commit bank and wire fraud, money laundering and the operation of an illegal gambling business.
The 52-year-old was arrested in Guatemala before being extradited back to the United States. He is currently being detained in Miami while he seeks legal counsel.
The three others who have been arrested following Black Friday are Chad Elie, John Campos, and Bradley Franzen. All three were released on bail.
April 30 – SCOOP Droop
After the indictments by the United States Department of Justice on April 15, PokerStars has tweaked its Spring Championship of Online Poker (SCOOP), which starts on May 8.
In order to accommodate European players, all events have been moved up three hours. In addition, with the absence of the American market, the online site has slashed the guarantees, dropping the total from $45 million to $25 million. The $10,300 no-limit hold’em main event originally had a $5 million guarantee, but has seen that figure cut in half.
May 5 - Blanca Expression
Blanca Gaming issues a press release concerning company restructuring. It said (in part), “As previously stated, Absolute Poker and UB ceased their U.S.-facing operations… The company is currently restructuring and is focusing its resources on consolidating its non-U.S., rest-of-the-world operation and software business. The workforce has been liquidated, and the process of rehiring approximately 20% of staff in key positions has commenced. All affected employees have been informed of this necessary restructure.”
The company spokesperson also addressed erroneous reports that Blanca has filed for bankruptcy saying, “The apparent confusion over this issue stems from the fact that Blanca recently informed a debt holder, Madeira Fjord, that it was terminating debt payments to, and its relationship with them. As a result, Madeira Fjord apparently filed a notice of bankruptcy in Norway. This notice has no negative impact upon Blanca, the operating company, or its brands. As stated previously, Absolute Poker and UB continue to operate their non-U.S. facing business around the world.”
On Wednesday, MSNBC reported that Madeira Fjord, a debt holder for Blanca Gaming, the owner of the Cereus Poker Network that includes both UB and Absolute Poker, would be filing for bankruptcy in Norway.
In the email sent to shareholders, Madeira Fjord stated that they had “no cash on hand and no prospects for any cash flow for the foreseeable future.” Blanca Gaming “is currently unable to make any payments towards its debt obligations” and “has further advised that there will be no future payments.”
May 6 - Repossession
On Thursday, Forbes reported that federal prosecutors filed for supplemental forfeiture of five homes connected to Ray Bitar and Chad Elie, two of the 11 indicted by the Department of Justice on Black Friday.
Four California homes have been connected to Bitar, one of the founders of Full Tilt Poker, who is believed to be currently living abroad. Included among the properties is a 5,100 square-foot estate in Glendora, that was purchased in 2008 for $2.9 million.
The fifth home is a $1.5 million, 7,200 square-foot mansion owned by former Playboy Playmate Destiny Davis, who married Elie the day after he was arrested. Elie pleaded not guilty and was released on a $250,000 bond.
May 9 - You’re Fired!
On Monday, Blanca Games released a statement explaining their decision to sever ties with 11 of their U.S.-based sponsored pros on both UB and Absolute Poker.
Due to the negative impact Black Friday has had on the financial situation of the company; Joe Sebok, Eric Baldwin, Prahlad Friedman, Adam Levy, Bryan Devonshire, Brandon Cantu, Maria Ho, Trishelle Cannatella, Dave Stann, Scott Ian, and Tiffany Michelle were all laid off. Former team members Phil Hellmuth and Annie Duke left the company last December.
Part of the statement read, “Regrettably, the negative effect of ‘Black Friday’ has extended to the Company’s highest profile group of poker professionals, known as ‘Team UB’. Consequently, Blanca’s executive management team today informed its roster of sponsored pros that, in accordance with the provisions of their agreements, their contracts have been terminated. Each of the ten Team UB pros, plus one player representing Absolute Poker, has received personal notification that their sponsorship arrangement with Blanca’s respective online poker room is now invalid.”
May 11 – Absolutely Fabulous
Absolute Poker has reached an agreement with the United States Attorney’s office for the Southern District of New York (SDNY). 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, currently held by third party processors, to players located in the US.
The company has also notified the SDNY that it has closed its US-facing operations, and it has agreed to cease all real-money play in the US.
May 13 – New Bill
The American Gaming Association (AGA) is currently working towards an online poker bill, which will likely be drafted and introduced to Congress in the next month or so, as lawmakers and casino executives have been in discussions since the events of April 15, according to Frank J. Fahrenkopf, Jr., President and CEO of the AGA. The potential federal legislation would align fundamentally with the constitution, allowing states to decide on the issue. “You have to make sure each state has the right to say yay or nay,” said Fahrenkopf, who supports the Department of Justice going after gaming entities that are violating federal law.
May 14 – Doyle’s Room Empty?
After reported that 10-time World Series of Poker bracelet winner Doyle Brunson will be leaving his online poker site, DoylesRoom, the 77-year-old poker pro showed up at the Bellagio on Saturday for the $25,000 World Poker Tour Championship sporting a site t-shirt.
When asked for comment on the situation with the online site, Brunson refused and said he had nothing to say. However, Steve Gross, who is still sponsored by DoylesRoom, confirmed to Card Player that the poker legend is leaving the online business. “He wants out because of the potential legal ramifications,” said Gross. However, according to Gross, Brunson may return to the site once the legal mess in the country regarding online poker is sorted out.

Check in with for regular updates on the unfolding online poker situation in the U.S. and pick up Card Player Europe next month for a round up of the reaction from poker players affected by the drama.