Loveable Rogues Poker

 The Tribecca Network is so gutless.  I urge players to avoid the network.

by Haley Hintze

First published in PokerNews

In a move that caught many online poker sites by surprise, the Tribeca Tables network on Thursday confirmed that they will begin blocking all computers shown as originating from U.S.-based IP [Internet Protocol] addresses as of February 28th, ending Tribeca’s software services to these American players. In addition, no new sign-ups of U.S. players will be allowed on any Tribeca member site, effective immediately. Doyle’s Room was by far the largest room affected, with other notable sites including Platinum Poker, BetUS Poker, GoldenPalace.com and the new StraightFlush.com Poker among the temporarily impacted brands.

The move comes as Tribeca continues its ongoing merger/acquisition process with Nicosia-based Playtech, in a move that will still unite over 200 smaller and mid-sized sites into a single network. The Playtech merger includes sites formerly on the Tribeca, Tain and i-Poker networks. Tribeca was the only segment of the planned, enlarged Playtech network that was still offering services to U.S. players, and even at that, not to all 50 states; at last count, slightly more than half of the hundred or so listed Tribeca sites were still offering partial U.S. connectivity.

Tribeca had announced a grace period that Doyle’s Room and many other sites were using as they worked to launch their own, new poker network, open to U.S. players; it is this grace period that is ending at the end of the month. In addition to the two other Doyle’s Room poker skins, Platinum Poker and Never Lose Poker, a listing at the Doyle Brunson Poker Network site lists 25 more sites that were among those still allowing some U.S. play and are likely part of the upcoming DBPN launch. Tribeca’s unexpected cessation of services may be connected to issues with the ongoing Playtech deal — no press release has yet been issued — but in the meantime, U.S. players on Doyle’s Room and the other affected sites have been left without a means to play on their accounts.

Work continues as Doyle’s Room and others rush to get their own network up and running, with a new network expected to be active by March.

by Amy Calistri

First published in PokerNews

Yesterday’s announcement by Neteller that it was withdrawing its online gaming funding services to US residents marked a critical disruption in the online gaming food chain. And it is likely that other funding companies will join suit, as Citadel has, rather than risk facing criminal charges from a zealous US Department of Justice. While there is a big dark cloud hanging over the online poker community this week, it is hardly the stuff that Chicken Little feared.

First and foremost, while UIGEA motivated, the charges brought against Neteller’s former executives were not as a result of the UIGEA law. This is a classic case of enforcement of the 1961 Wire Act, which to date has only been able to be interpreted to make sports

books illegal. Since 1998 when Janet Reno issued the first Wire Act charges against six offshore sports betting operations (two of which only solicited wagers over the internet), the internet has been interpreted as a relevant transmission for Wire Act related prosecution.

I guess it should be said that if you are an executive of an offshore online sports book, you’re sky is falling. But then it’s been falling since 1998. And if you run an offshore online funding operation that transmits money to and from offshore online sports books, I wouldn’t vacation in the US any time soon.

But if you started a private offshore online funding company today and didn’t allow any transmissions to sports book operations, it’s far less probable that the US would come knocking at your door. Likewise, if you are an offshore online gaming operation that didn’t offer sports wagering, federal prosecution is probably not in your foreseeable future. Obviously, the changing landscape of state law has to be negotiated, but ’sky falling’ material on the federal front would take passage of a new law, or a vastly different interpretation of the Wire Act then currently exists. While both of those prospects are possible, it would take strong motivation and some heavy lifting from Congress and the courts to walk that path.

It was probably more than a coincidence that Reno’s initial charges against online offshore sports books occurred just one week before the NCAA basketball tournament. And it is probably not a coincidence that in the case against the former Neteller executives, the transmission of money for bets on NFL football was used as the crucial evidence. As stated above, the Wire Act has only successfully been applied to sports books. But it shouldn’t be a shocker that both the NCAA and NFL have been lobbying hard and fast for a long time to eradicate online sports betting; rightfully believing that a large amount of money riding on the outcome of a game is a recipe for a cheating scandal. And it is no secret that the NFL’s lobbying effort was behind Frist’s quarterback sneak relative to passage of the UIGEA.

I often hear about how poker is now a major sport. It has grown in popularity and has great mainstream appeal. But online poker is a virtual punter when compared to the NFL’s steadfast lobbying clout. Unless we want to keep looking at the sky waiting for it to fall, the so far individual interests of the major players have to be put aside to address the collective industry’s interests. New law could be enacted. Interpretation of the Wire Act could be expanded. And while the Poker Player’s Alliance appears to be a well meaning group, their list of names and appealing rhetoric is hardly a wall of defense, let alone an independently viable offensive brigade.

We need to stop looking upward and start looking forward. We can wax poetic about skill vs. chance all day long, but for the long-term interest of the sport, poker needs a UIGEA carve-out. It will take a lot of influence (money and lobbying clout) and hard work to get there. The first step is a unified industry that can demonstrate that it is willing and able to be self-regulated and, ultimately, US regulated. A willingness to cough up taxes is also a given; it’s hard to ask someone to throw their Congressional life on the line for an offshore company not paying its US dues. But most of all, the industry has to recognize that this is their problem, their responsibility, requiring their unified plan of action.

On a misguided hysteria-driven journey, Chicken Little’s supportive and well meaning friends get eaten by Foxy Loxy. The moral of that story, and ours, is that hysteria isn’t an action plan and we must defend against real, not imagined, risk.

by Amy Calistri

First published in PokerNews

Today Neteller suspended trading of its company’s shares on the London Stock Market and confirmed that two of its former company officials and founding members had been detained in the US. Neteller further stated that they have not heard from US authorities.

The mainstream press is treating this as just one more legal wrangle in the string of well publicized actions taken by the US to crack down on online gambling. But on the face of it, the current Neteller situation appears to be far different than last year’s moves against Peter Dicks, chairman of SportingBet and David Curruthers, chief executive of BetOnSports. If charges are filed in the Neteller detentions, could this set new legal precedent? Is this the harbinger of 

UIGEA related cases to come?

While headline grabbing, last year’s actions against Dicks and Curruthers were consistent with the US’s current enforcement of the US Wire Act. Starting in 1999, the US broadened its interpretation of the sports betting focused act to better target online sports betting operations and since that time, a number of online sports betting operations have run afoul with the law. Convictions (and indictments pending trial) netted executives of companies like World Sports Exchange (WSEX.com), Paradise Casino, Gold Medal Sports, Safe Deposit Sports.com, betWTTS.com, and bettheduck.com.

Neteller is not an online sports book nor does it run any online gaming operation. And while they are currently under more scrutiny because of their online funding operations in light of the October 13, 2006 passage of the UIGEA, Neteller has publicly stated that they will comply with UIGEA regulations as they become available. Even if the US move was UIGEA motivated, neither of the detainees were company employees after the passage of the UIGEA.

Speculating; this could just be the US’s way of firing a well publicized warning shot across the bow of a visible and publicly traded UIGEA poster child. But if the US is planning on using their shiny new UIGEA legal stick, they will set a very dangerous precedent felt throughout the investment community at large. Post-UIGEA, the only affiliation founders John LeFebvre and Steve Lawrence had with Neteller was as share holders; granted they may have been significant shareholders. But would that mean that any large institutional share holder was somehow legally liable for a company’s actions? If MGM had a legal issue, could Tracinda and Kirk Kerkorian be taken to task? If I owned an oil stock, could I face charges if the company skimmed a little off their federal royalty fees? Legally, it’s a dog that won’t hunt, but that doesn’t mean it won’t work as a tactic. Neteller may feel more heat to self-regulate prior to the release of formal UIGEA regulations and the US may not have to put another dime in the pot on its legal bluff.

Of course while still UIGEA motivated, the US may try working a technicality that somehow fits within the sports betting paradigm. When the US couldn’t convict the mob of racketeering, they went the tax evasion route. In the world of online gaming affiliations, money laundering may become the new tax evasion. Did Neteller facilitate the transfer of money to online sports books while they were taking US action? That alone might be enough of a sticking point to force Neteller’s hand.

The US has only one tried and true hammer to beat down on online gaming and that is the sports betting related wire act. It’s my guess that if this situation progresses, the wire act will be the US legal tool of choice; even though Neteller doesn’t resemble the typical online gaming nail. The short-term ramifications for the online gaming community are obvious should Neteller alter its current services in the US, but the Neteller detainees are unlikely ushers into a new UIGEA legal era.

by Amy Calistri

First published in PokerNews

I’m always a little annoyed with the NFL this time of year. Like the fictitious town of Lake Wobegon, where all the children are above average, decidedly average NFL teams are in the process of locking up “championship” and wild card berths. But this year I’m more peeved than normal, because, of course, this is the year that the NFL ruined online poker’s Christmas.

Even the most politically challenged online poker player knows enough to wish a lump of coal in Bill Frist’s stocking this year. But surprisingly few are aware at just how pivotal the NFL was in ramming the UIGEA into last minute “must pass” legislation. With the shock of the bill’s passage, followed by the many aftershocks as online poker sites withdrew from the US, many missed Geoff Earle’s scintillating New York Post article outlining the NFL’s role in the passage of the UIGEA entitled, “NFL Makes Fantasy Pass.”

Apparently the NFL hired big buck lobbyist Marty Gold, (not coincidently) former counsel to Former Senate Majority Leader Bill Frist, to push through the UIGEA (again not coincidently) which exempted fantasy football. If the lobbyist wasn’t enough, both the current NFL Chairman Roger Goodell and past chairman Paul Tagliabue wrote Senate Armed Services Committee Chairman John Warner (R-Va.) in an attempt to sway him to tag the UIGEA onto “must pass” defense spending legislation. When Warner balked, they threw their weight behind Frist’s last ditch attempt at tacking it onto the Safe Port Bill.

It is not surprising that the NFL was backing anti-gaming legislation. The NFL has been almost rabid in its stance on gambling. In the past, the NFL has even gone so far as to forbid NBC from running promos for its “Las Vegas” television series on its Sunday night football broadcasts. The NFL knows that nothing destroys the integrity of a sport more than a cheating scandal. Their argument is that where there is gambling, there is a lot of money. Where there is a lot of money, there is incentive for cheating. Their fear is suffering a major backlash like those that followed the NCAA basketball’s point shaving scandals or the 1919 Baseball “Black Sox” World Series.

I agree with the NFL on at least one point; money can be corrupting. But to me, the NFL has proved that by their own curious actions. If this was only about principle and prevention, the NFL would have pushed the UIGEA without the fantasy football carve-out. But you see, the NFL makes a lot of money off of fantasy football. The NFL runs its own fantasy football site and receives royalties from other fantasy football sites. The second and third largest fantasy football websites are cbssportline.com and espn.com. Both sites are owned by networks that pay the NFL $1.7 billion in contracts to televise NFL games.

Nelson Rose recently said of the fantasy football exemption, “It doesn’t seem to be consistent. It doesn’t make sense to me given how antigambling the pro and college sports have always been.” Another attorney specializing in gaming and the internet, Anthony Cabot, also has consistency issues with the carve-out, “Why is sports gambling unlawful and fantasy sports legal? Is there a real difference between rooting for Tony Romo to throw a bunch of touchdown passes and rooting for the Dallas Cowboys to win?” Why of course there is; the NFL makes money on the former and not on the latter.

I wonder how the NFL would feel if online poker lobbied to support Senate Judiciary Chairman Arlen Specter’s (R-Pa.) current plans to introduce legislation taking away the NFL’s antitrust exemption. Beware NFL Grinch. We are not like the warm hearted Hoo’s of Hooville. If the mid-term elections proved anything, it proved we know a little something about revenge.

by Nelson Rose

First published in Poker Player Newspaper

The Unlawful Internet Gambling Enforcement Act, “Prohibition 2.0,” has already caused as much panic, joy and confusion as the first Prohibition. Prohibition 1.0, the ill-fated 18th Amendment to the U.S. Constitution, went into effect in 1919 and was repealed in 1933. The “noble experiment,” as it was called, was the 19th Century Puritans’ efforts to end sin in the U.S. by prohibiting the “manufacture, sale, or transportation of intoxicating liquors… for beverage purposes.”

Now, Republican Majority Leader Bill Frist, who aspires to be the next Puritan President of the 21st Century, is going to save our souls by prohibiting the transfer of funds to online gaming sites. Who would have thought that gambling, one of America’s fastest growing businesses, when legal, would become the ultimate sin?

Prohibition 2.0 requires federal regulators to make rules for banks, e-wallets and other payment processor to identify and block all transfers of funds for unlawful gambling transactions. Only gambling. Congress has mandated that financial institutions must prevent people from using their own money to buy this one product. There are no similar rules covering heroin or child pornography.

Whenever there is demand for something, there will be entrepreneurs willing to act as suppliers, even if the product is illegal. The most long-lasting, significant result of the first Prohibition was the creation of modern organized crime.

There are loopholes in the hastily written new Act. Like other Puritans, Sen. Frist feels he has a direct hotline to God. He didn’t need to have hearings or expert testimony or even have anyone proofread his bill. He attached it to the unrelated SAFE Ports Act, and under the rules of Congress, the only way any representative or senator could read the bill would be to vote against port security.

Entrepreneurs are already overloading my email mailbox with ideas to get around Prohibition 2.0. The most obvious loopholes are contests of skill and games in which no purchase is necessary to participate.

Like all prohibitions, the Frist bill contains silly exemptions. Prohibition 1.0 allowed alcoholic beverages used for medicines and sacramental wine.

A movement started to have beer declared a medicine, and it is amazing how many men decided to become, or at least dress like, priests and rabbis. Besides not changing the law on interstate horseracing, Prohibition 2.0 authorizes fantasy sports or “educational” games, whatever those are. And purely intra-state gambling has now been expressly made legal.

Of course, the individuals most happy with Prohibition 2.0 are the online gaming companies that are still taking bets from the U.S. The principals of privately owned online poker companies won’t be able to become instant billionaires by going public. But they are consoling themselves with the hundreds of millions of dollars that would have otherwise gone to PartyPoker.

by Amy Calistri

First published in PokerNews

Online gaming advocates were high fiving after the mid-term elections as many of their mostly Republican foes were unseated. But this was an admittedly small battle in the war to undo the UIGEA. If online gaming is to win the war, they have an uphill struggle relative to the issue of regulation with the new Democratic Senate Majority Leader Harry Reid.

On the surface, Nevada Senator Harry Reid looks like the perfect focal point for the issue of internet gaming. In 2001, Reid was awarded an Industry Leadership Award from the American Gaming Association. Accepting the award Reid said, “I’ve been proud to help educate America about the contributions gaming entertainment makes to Nevada and across the country.”

Reid was not happy with Frist’s tactic of sneaking the UIGEA into the Safe Ports Act saying, “I can assure you that I was disappointed with the Majority Leader’s inclusion of an Internet gambling ban in an unrelated bill that plays an important role in protecting our nation from the threat of terrorism. I was also dismayed that the Minority Party was denied the ability to participate in the political process and be involved in the negotiations of the conference report. Consequently, those who opposed the online-gaming ban had no realistic opportunity to object.”

Reid has called the President a “loser,” Supreme Court Associate Justice Clarence Thomas an “embarrassment,” former Federal Reserve Chairman Alan Greenspan “a partisan hack,” and said the “nation’s capital had been overrun by organized crime Tom Delay-style.” But when it comes to online gaming, perhaps the most important thing he’s said is “Internet gambling cannot be controlled and, therefore, it should be illegal.”

What does Harry Reid know about gaming regulation? Plenty. Reid was the Chairman of the Nevada Gaming Commission from 1977-1981. It was a particularly challenging period in Nevada gaming history as mob influence was prevalent and public opinion was low. As Chairman, Reid ushered in a new era of responsibility, paving the way for Nevada’s almost epic economic development. But it wasn’t easy. His life was threatened on numerous occasions; once when a car bomb was placed in his family’s station wagon. When Reid denied a gaming license to Stardust Casino executive and convicted sports fixer Frank “Lefty” Rosenthal, the showdown was so dramatic it was eventually portrayed in the movie Casino.

But even with his public anti-online gaming position, maybe Reid is the right person at the right time for online poker. He obviously understands the economic benefits of the gaming industry and he has been open to legislation that would study the potential to legalize and regulate online gaming in the US. But to do this and do this right, it means that online companies can’t just hide behind the cloak of offshore locations and hope that a skill vs. chance argument eventually filters through the court system. To turn Reid into an ally, online poker needs to come forward and articulate its ability to be regulated and demonstrate its willingness to contribute to the US economy via taxation and jobs. Those are the issues that resonate with Harry Reid and, to every extent, have defined his career.

by Nelson Rose

First published in Poker Player Newspaper

The fallout from the new Unlawful Internet Gambling Enforcement Act of 2006 has been nothing short of amazing. Every publicly traded gaming company is running for cover, and many of the private ones as well. Operators as big as PartyPoker and the payment processor FirePay stopped taking bets from the U.S. when President Bush signed the bill into law on Friday, October 13th. Other companies have said they will cut off U.S. players once regulations are in place.

The main question is: Why? The new Act should add little to an online operator’s worries. Legally, it creates a new crime, accepting money for unlawful Internet gambling transactions, that only applies if the gambling is unlawful under some other federal or state law. Practically, this was not a drive by the federal Department of Justice or any state prosecutors. It was merely an underhanded ploy by a hypocritical politician, Bill Frist (R.-TN), to score some points for his presidential ambitions with the religious far right.

Some legal commentators have said that the new Act is something new, because it makes an operator guilty of this new crime in every state, since every state makes non-licensed gambling illegal.

But, half the states do not have laws on the books against bettors. In those states, betting even with an illegal bookie is not a crime.

The other states do make betting under some circumstances a crime. Of course, in the history of the United States, only one person, a sports bettor in North Dakota, was ever charged under these archaic statutes. I have heard it argued that up until now, the only potential criminal liability was on the bettors in those states, not the foreign operators.

Imagine what such a law would say: It a crime in this state to make a bet, but it is not a crime to be in a gambling business that accepts the bet.

There never has been a law that penalizes only the players and not the operators.

More importantly, these laws were on the books long before this new Act was passed; so were the many state statutes outlawing unlicensed gambling businesses. If an Internet poker operator was violating any of these state laws it was already in trouble.

Years ago, Congress made it a federal felony to be involved in any way in a “gambling business,” defined as five or more people violating state gambling laws for 30 days or with gross revenues of $2,000 in any single day. Worse, if those were state felonies, the operators were already guilty of the federal crime of racketeering, which has far worse penalties than this new Act.

Internet poker operators had looked at the state and federal anti-gambling statutes and concluded that they probably did not apply. The federal Wire Act, for example, was held to be limited to sports bets, while the state statutes are flawed because they do not expressly apply to out-of-state operators.

This new Act does not extend the reach of the Wire Act or any other federal or state anti-gambling law. There may be good reasons for folding a business that is making millions of dollars a day, including the risk of prosecution. But this new Act did not change those odds.

by John Caldwell

First published in PokerNews

E-wallet company Neteller issued a statement announcing a modification in their policy toward Unlawful Internet Gambling Enforcement Act (UIGEA). The company, which processes a significant amount of the online poker, and online gambling transactions from the U.S. indicated they are going to abide by the rules of the act, but will continue to do business as usual until the rules of the act are written by the Treasury Department. The Treasury Department has a 270 day window to issue the rules by which the financial providers must adhere to.

“NETELLER, a company registered outside the US, will comply with the Act and its related regulations as if it were subject to the Act’s jurisdiction. This action is intended to ensure that the Company is able to continue to operate with the support of its principal commercial partners and to protect its shareholders, business partners, employees and reputation.” The company said in its statement.

However, the company also said it will continue to conduct business as usual with U.S. customers for the 270 day window, or until the rules are clearly defined.

“In the interim, US-resident customers are able to use the NETELLER service as normal. The funds of US-resident customers are held in trust accounts and will be available for withdrawal, on demand. The ability to withdraw funds will exist regardless of the customer’s location or ability to transfer to any site.”

The rules in the UGIEA are not yet clear as to what responsibilities non-U.S. based companies like Neteller would have. However, if the company views itself as a U.S. financial institution for the purposes of this act, one would assume the company would have to stop taking transactions from U.S. based customers that direct toward online gambling companies.

If, as it turns out Neteller would stop doing business with U.S. customers, it could have a devastating impact in the short term on the players abilities to fund accounts. Certainly, solutions will pop up to give players options to fund online gambling accounts, but many of these new solutions may not have the financial stability and reputation of a publicly traded company like Neteller.

Some in the gaming community see this as a natural action, with Neteller simply announcing they are going to comply with any rules before they actually have to be bound by the statement, in an effort to not fly in the face of U.S. authorities.

Stay tuned to PokerNews.com for more updates on the legislation, and reaction from the companies and people affected by this pending law.

by Amy Calistri

First published in PokerNews

If Senator Bill Frist thought that the inclusion of the Unlawful Internet Gambling Enforcement Act (UIGEA) into the Safe Port Act would play well to the conservative base, he may have miscalculated. Today’s New York Times Opinion-Editorial page featured a lengthy piece by Charles Murray entitled, “The G.O.P.’s Bad Bet.” Murray is a scholar at the conservative think tank, The American Enterprise Institute, and the author of the controversial book, The Bell Curve.

Murray points out that the UIGEA not only erodes the Republicans chances this fall, but also will damage American’s respect for the rule of law. He points out that the bill catered to the few Americans that had an issue with online gaming without taking into account the millions they have now outraged; millions, he speculates, that are disproportionately Republicans and Reagan Democrats.

Murray compares the UIGEA with Prohibition and other current regulatory laws that are problematic to law abiding citizens and corporations, “not because they cut into profits, but because they are simply, stupid.” He further argues that Americans are less inclined to obey stupid laws that are unenforceable and notes that in this respect, “the attempt to ban online gambling is exemplary.” He notes that American’s “reflexive loyalty” to the rule of law is one of our country’s key assets and that it is irreparably damaged by laws like the UIGEA.

The American Institute is one of the most influential conservative think tanks, affecting a number of key public policy issues within the Bush administration. More than two dozen AEI alumni have served in a Bush administration policy posts or served on government commissions. So it is almost like harsh criticism from within when Murray summarizes the UIGEA by saying, “And so the federal government once again has acted in a way that will fail to achieve its objective while alienating large numbers of citizens who see themselves as having done nothing wrong.”

The statement might be some what more surprising if Charles Murray didn’t confess that he plays poker on four different internet sites. But in that respect he makes his case; he is just one more member of the conservative base who feels alienated and disillusioned by the new law.