What will poker crackdown mean for online sports betting?

Apr 15, 2011 |
Are sportsbooks the next online gambling business to get charged?
Are sportsbooks the next online gambling business to get charged?
Online gaming companies with U.S. customers, including offshore sportsbooks, are paying close attention to the federal crackdown on major poker sites announced Friday.

"Any U.S.-facing online gaming or betting enterprise is watching this with great interest," Toronto-based gaming attorney Stuart Hoegner told Covers.com late Friday afternoon.

He said it was too soon to gauge the effect on sports wagering.

However, many U.S. residents fund their online poker and sports betting accounts the same way.

Banking transactions are at the heart of the indictments handed down. The government alleges the poker firms used fraudulent methods to circumvent the 2006 Unlawful Internet Gambling Enforcement Act, tricking financial institutions into processing payments on their behalf.

The U.S. attorney for the southern district of New York indicted 11 people associated with PokerStars, Full Tilt Poker and Absolute Poker, the three largest online poker companies operating in the United States.

Charges include bank fraud, money laundering and illegal gambling.

"These defendants, knowing full well that their business with US customers and US banks was illegal, tried to stack the deck," FBI assistant director Janice Fedarcyk said in a statement. "They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee.

"The defendants bet the house they could continue their scheme, and they lost."

Hoegner told Covers.com the indictments detail specific mechanisms used by the poker companies "to fund their sites and carry on their business, and I don't know if those same mechanisms were in place" at offshore sportsbooks.

"That said, if they were in place, there's nothing conceptually that would bar sportsbooks from being caught up in the same thing."

In addition to the indictments, authorities issued restraining orders against 76 bank accounts in 14 countries used by the firms and their payment processors.

Former U.S. Sen. Alfonse D’Amato, chairman of the Poker Players Alliance (PPA), the leading poker grassroots advocacy group with more than one million members nationwide, had this reaction to the federal action taken Friday:

“On behalf of the millions of poker players across the country, we are shocked at the action taken by the U.S. Department of Justice today against online poker companies and will continue to fight for Americans’ right to participate in the game they enjoy. Online poker is not a crime and should not be treated as such. We are currently gathering all of the information around today’s announcement and will offer detailed analysis when the full facts become available.”
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