Tuesday, June 16, 2009

U.S. Deals Blow To Online-Poker Players

CM Comment: This week's big news from the world of online gambling.

June 10, 2009: summarized from The Wall Street Journal -- In an apparent crackdown on Internet gambling, federal authorities in New York have frozen or seized bank accounts worth $34 million belonging to 27,000 online poker players, according to representatives for the players and account holders.

In an operation that began last week, the office of the U.S. Attorney for the Southern District of New York froze or issued seizure orders for bank accounts in Los Angeles, San Francisco and Arizona held at Wells Fargo, Citibank, Goldwater Bank and Alliance Bank of Arizona.

A spokeswoman for the U.S. attorney's office had no comment.

The accounts are managed by Allied Systems Inc., and Account Services, which handle cash for popular online poker sites, including Full Tilt Poker, Poker Stars, Ultimate Bet and Absolute Poker. Though the money belongs to the poker players, it is held for them in accounts managed by the two service companies.

Account Services, which had an account worth $15 million frozen in its San Francisco bank, doesn't accept deposits, but writes checks to players who are cashing out, said lawyer for the company, Jeff Ifrah. As a result, thousands of players receiving checks from the company won't be able to cash them, he said.

The seizures come as a debate over Internet gambling heats up in Washington. Last month, U.S. House Financial Services Committee Chairman Barney Frank (D., Mass.) introduced a bill that would legalize and regulate Internet gambling.

Federal authorities say online gambling is illegal, but Internet-gambling advocates say it is a gray legal area. In 2006, Congress passed a law making it illegal for banks to processing payments for unlawful Internet gambling. Critics say the law is unclear.

Poker players don't consider poker a game of chance, but a game of skill, and argue that poker shouldn't be lumped in with sports betting, for example.

The government has prosecuted Internet gambling in the past, including sites that allow users to bet on sports and play poker. The massive seizure by the U.S. attorney is the first time federal authorities have targeted online poker accounts, according the Poker Players Alliance, a Washington-based lobbying group for online poker players.

The Alliance said there are 10 million Americans who play online poker for money, and estimated the market at $6 billion.

The Alliance "is disappointed that this unprecedented action has been commenced against law abiding poker players," said former U.S. Senator and Alliance Chairman Alfonse D'Amato in a written statement.

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