In a shocking and unexpected blow, the United States government have effectively shut down internet poker within the U.S.

In what is now being dubbed 'Black Friday' by the online poker community, April 15th (tax day) brought an end to the three largest poker sites operating within the United States.  Online poker had been made illegal back in 2006 by the US government, but the seizure of three poker domains Friday, along with charging eleven owners of the sites with bank fraud, saw the three largest poker sites close their (figurative) doors for good.  

For now, Pokerstars, FullTilt, and UtlimateBet/Absolute Poker (these companies are one and the same, essentially) have shut down their servers to Americans.  In addition to the charges of bank fraud, civil money laundering charges have also been filed for close to $3 billion.  

The Unlawful Internet Gambling Enforcement Act, known as the UIGEA, has been quite a problem for online poker since its creation.  The charges and arrest stem from the sites using illegal methods to get around the law, most notably for money laundering and fraud.  The techniques that the companies were using involved online shell companies posed to look as legitimate so that the poker sites could funnel funds through.  The sites were not supposed to be operational to Americans and these techniques helped the sites get around the law.

The seizure of the domains and the closing of the online sites have brought about a large conundrum to poker players in the US.  Many online poker professionals have spent the weekend fighting to get access to the money in their accounts, with no avail.  As of this reporting, Americans have no access to their funds in Pokerstars and FullTilt Poker (conflicting accounts exist for American accounts on Ultimate Bet/Absolute Poker).  Some players have only a few hundred dollars in their accounts, while other reports from professionals claim much higher losses, upwards of six digit figures.  Transfers from accounts to non-US accounts are currently not available either.

The online poker sites are telling their customers, for now, that their funds will remain intact until the issue is resolved.

Internet poker forum sites such as TwoPlusTwo have seen a huge flux of information being passed along to its users, with some quotes below to help explain the situation.

"Because U.S. banks and credit card issuers were largely unwilling to process their payments, the Poker Companies allegedly used fraudulent methods to circumvent federal law and trick these institutions into processing payments on their behalf. For example, defendants ISAI SCHEINBERG and PAUL TATE of PokerStars, RAYMOND BITAR and NELSON BURTNICK of Full Tilt Poker, and SCOTT TOM and BRENT BECKLEY of Absolute Poker, arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls."

 

"By late 2009, after U.S. banks and financial institutions detected and shut down multiple fraudulent bank accounts used by the Poker Companies, SCHEINBERG and BITAR [owners of Stars and FTP respectively] developed a new processing strategy that would not involve lying to banks. PokerStars, FullTilt Poker, and their payment processors persuaded the principals of a few small, local banks facing financial difficulties to engage in such processing in return for multi-million dollar investments in the banks. For example, in September 2009, ELIE [a payment processor] and others approached defendant JOHN CAMPOS, the Vice Chairman of the Board and part-owner of SunFirst Bank, a small, private bank based in Saint George, Utah, about processing Internet poker transactions. While expressing "trepidations," CAMPOS allegedly agreed to process gambling transactions in return for a $10 million investment in SunFirst by ELIE and an associate, which would give them a more than 30% ownership stake in the bank. CAMPOS also requested and received a $20,000 "bonus" for his assistance. In an e-mail, one of ELIE’s associates boasted that they had "purchased" SunFirst and that they "were looking to purchase" "a grand total of 3 or 4 banks" to process payments."
 

News on the matter has been somewhat light over the weekend, and we're expecting next week will bring a lot more information to the forefront.  We'll continue to update on the matter as more information becomes available.
 

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