Prosecutions turn online poker into a shaky bet

LAS VEGAS - America's multibillion-dollar run at the online poker tables has been interrupted by what could be a killer hand: federal prosecutions of the three biggest websites.

The government has blocked U.S. gamblers from logging on to the offshore sites, which are accused of tricking and bribing banks into processing billions of dollars in illegal profits. Now gamblers who dreamed of enormous prizes in Las Vegas, or even used online poker to make a living, can't access online bankrolls that in some cases reach six figures.

Some predict the American online poker industry, estimated to be worth up to $6 billion, may fold under the weight of the investigations as it threatens amateur and professional players, televised tournaments and the marketing machine that helped Texas Hold 'em emerge from smoky casinos to become a dominant form of gambling on the Internet.

"It just cut the head off of everything," said Robert Fellner, a 27-year-old Las Vegas poker pro whose roughly $250,000 bankroll on PokerStars was frozen after the indictments. "It's scary. It's much more scary."

Pay-to-play poker sites have been on shaky legal ground for years in the U.S., but the government hadn't prevented gamblers from playing on the three biggest sites - PokerStars, Full Tilt Poker and Absolute Poker - before last week's indictments of 11 executives and bank officials.

More than 75 company bank accounts in 14 countries have been frozen, and authorities are seeking $3 billion in fines and restitution.

Poker players, meanwhile, now see an FBI notice where the websites once were. Some of them had treated their poker accounts like savings accounts, leaving significant portions of their net worth online and ready to wager anytime.

It appears that they will get that money back, though it's not clear when. The government said Wednesday it had reached agreements with PokerStars and Full Tilt Poker to restore the companies' domain names so they can return money to U.S. players. PokerStars said on its website that said it expected cashouts to be available to U.S. residents within several weeks.

Full Tilt said in a statement that the agreement was a good first step, but that it won't be able to give players refunds until the government gives up control of those funds. U.S. Attorney Preet Bharara of the Southern District of New York, however, said in a statement that "no individual player accounts were ever frozen or restrained."

Federal authorities consider the poker sites illegal and follow a 2006 law that made it a crime to process financial transactions related to illegal online gambling. But last week's indictments are the government's first attempt to hold poker site operators to that law.

Players and companies have long argued that the 2006 law didn't properly define illegal gambling or outlaw online poker, which many consider a game that involves more skill than luck.

Alexander Ripps, a legal analyst in Washington for independent gambling market analysis firm Gambling Compliance, said it's not yet clear who might step in to take over the U.S. market. The firm estimates the market to be worth $4 billion to $6 billion, but the government's pursuit of the top companies suggests the entire industry is in danger.

Brian Balsbaugh, an agent for famous poker professionals including Daniel Negreanu, Tom Dwan and Phil Hellmuth, said the effects go far beyond players. Full Tilt and PokerStars have spent some $200 million per year on marketing, he said, directly or indirectly funding almost all poker-related television shows, news websites, magazines and several live tournaments.

"These companies, Full Tilt and PokerStars, were wholly responsible for the poker economy and its growth over the last five years," Balsbaugh said.

Cable network ESPN, which counted Full Tilt and PokerStars among its sponsors for poker programming, said in a statement that it has moved quickly to remove TV shows and Web content related to the companies, though it still plans to air the World Series of Poker, by far the most popular tournament for fans and players. An airing of part of the North American Poker Tour - a live tournament organized by PokerStars - was pulled on Monday.

World Series of Poker officials declined to comment, and it's not immediately clear how the indictments will affect its attendance. The 2011 series in Las Vegas includes 58 bracelet tournaments that cost at least $1,500 to enter, including the main event, poker's richest tournament.


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