Online poker players want justice after feds crush $2.5 billion industry

Online poker players want justice after feds crush $2.5 billion industry
Illustration by Jesse Lenz

On family trips back to her grandparents' town in Chile, Paula Barros spent long nights battling it out with her relatives for penny stakes. She was calling bluffs before she turned 10.

Later, as a poor actress trying to land gigs in blustery wintertime Chicago, the recent Florida International University grad quickly realized she had the patience to wait out hands that her wealthier online opponents lacked.

Put the two together, and she had a winning recipe for online poker. In 2009, within a month of signing up for PokerStars — then the largest online table — Barros was consistently winning almost every pot. The games paid out only around $20, but she spent winter nights hunched over her laptop, grinding out four or five wins before morning.

"If I didn't make an audition or get a part, online poker would give me the extra cash I needed for the week," Barros says.

By the time she came to Miami in late 2010, she had moved on to the higher stakes and bigger rooms at PokerStars. She kept refining her technique: betting only when she had the best position, far from the dealer; timing her games during the day, when most Americans were at work and easier-to-beat Europeans and Asians were stocking the rooms; looking hard for "donkeys" — obviously wealthy players throwing around chips and bets with little skill.

Between February and April, she cleared more than $1,000, scoring cash while her boyfriend played PlayStation games next to her on the couch in her Kendall apartment.

"It was awesome," Barros says. "Poker supported my acting career. I could get to auditions instead of working some day job."

Then came April 15, 2011. The night before, Barros had won $200, cashed out $150, and left the rest in her PokerStars online account to play the next morning. But when she logged on, an ominous message appeared: Your account is unavailable because your government doesn't allow online poker.

"I felt like I was living in a communist country," she says. "I couldn't believe 'my government' would put an end to this entire online gaming world just like that."

Yet that's exactly what happened on a day that the poker world now refers to as Black Friday. In one swoop, the U.S. Department of Justice seized the assets and shut down the three biggest companies serving the American market — PokerStars, Full Tilt Poker, and Absolute Poker — charging them with bank fraud, money laundering, and illegal gambling.

Tens of thousands of American players such as Barros woke up to find their accounts suspended, their millions of dollars frozen. For the thousands of people who made a regular living with trump cards and flushes on the web, a whole way of life disappeared overnight.

The feds had shuttered a $2.5-billion American industry at the height of the recession, all because of an obscure provision sneaked into a spending bill by two conservative politicians working with Las Vegas lobbyists.

Today, players are still trying to adjust to life without online poker while the feds and states fight over whether online gaming has a place in the United States.

"They took away my way of life, and most people don't even realize it happened," Barros says. "Why can't I do what I want with my own money online? Why can't we play poker with the rest of the world?"

Hardly anyone noticed when the Unlawful Internet Gambling Enforcement Act passed in 2006. Moralists and casinos, which were trying to protect their turf, had been pushing it for years without luck. That's when Senators Bill Frist (R-Tenn.) and Jon Kyl (R-Ariz.) got the bright idea to stuff it into a port security bill as a last-minute amendment.

In true Washington, D.C. fashion, most legislators never read the final bill. Many didn't even know an anti-gambling measure was in it. But in one secretive stroke, the two senators had declared war on poker.

It didn't actually outlaw online play. Kyl and Frist preferred their attack on the American pastime to remain surreptitious. Going after individual players would have meant a huge backlash. Instead, they targeted the financial institutions that handled the sites' money, making it illegal to deal in gambling proceeds.

Party Poker, the world's largest site, decided to cash in its chips. It agreed to pay a $105 million fine and leave the American market in exchange for not being prosecuted.

That left the world's most lucrative market up for grabs. PokerStars and Full Tilt, also-rans at the time, were quite willing to step into the breach despite the legal risks.

Why not? PokerStars, based on the Isle of Man, and Full Tilt, headquartered in the UK's Channel Islands, figured they were outside the reach of U.S. prosecutors. It wasn't long before the two companies had cornered some 70 percent of the American market with revenues of nearly $2 billion a year.

But because the feds were squeezing banks and credit card companies, finding payment processors to handle the gambling sites' money grew increasingly difficult.

"By early 2007, suddenly the payment options are becoming much more tricky for PokerStars and Full Tilt," says Melinda Sarafa, a New York lawyer who has represented gamblers. "That's where they're starting to look into alternative providers."

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11 comments
BadDude
BadDude

mmm seem the fed want part of the profit, or will shut it down.

Daho78
Daho78

This is little more than an outstanding example of the American government bending to the demands of the few rich pricks out there that got their panties in a bunch because someone else came up with an idea first and was making money. God forbid people in "The land of the free" be able to have the choice between driving (which costs money) to a "local" casino to play poker and paying ridiculous house takes, and choosing to stay home and play at their leisure. With all the crap "we the people" have being crammed down our throat by our elected officials its not going to be a big surprise when one day we wake up and find that many people are fed up and will take violent action against these affronts by the fatcats. Mark my words, its coming and likely a lot sooner than later. This isnt a rant, if people are blind to whats happening in our society than thats your problem but dont act amazed when people just start snapping.

Free to Speak ^^
Free to Speak ^^

Next The Feds should concentrate their efforts in shutting down Wall Street Big Bank Crooks and Politicians that keep flagellating us with higher gas prices and rich bailouts ;(

Alejandro
Alejandro

How about doing something important like craeting jobs or lowering gas prices ?!

Myriam
Myriam

Many unemployed people were able to pay their bills by playing in these sites. Shame, shame GOP. But the GOP act very similar like Fidel, trying to control every aspect of Americans.

The GOP also use the Bible like Castro uses the communist manifesto, to control, control, control and destroy DEMOCRACY.

John Garzaniti
John Garzaniti

Online gambling is illegal. Why am I supposed to feel sorry for people who made a living doing something illegal? sorry you don't get to indulge every vice including gambling while sitting in your underwear at home.The opportunity to play poker is readily available at licensed casinos and virtually every state including Florida has multiple casinos. If licensed casinos think there is sufficient demand for poker playing between players at separate locations whats to stop them from doing it? Incensed race tracks operating casinos and casinos operate simulcast horse racing betting don't they?

Roberto R.
Roberto R.

Tell me what the difference is between online poker and going to a casino??? What, being fully clothed and only in your underwear? Bullshit.

Donald058
Donald058

It would seem that shortly after the Feds shut down online poker, The world went bankrupted. Think about that.

Sheryl J
Sheryl J

Thanks for this informative article about online poker and what the government did to it. An entire industry was destroyed last year. This is the first article that really illustrates the situation. We need federal legislation that licenses and regulates online poker in the U.S. and brings back an industry.

Elareh
Elareh

FARK ONLINE POKER

runrandrand
runrandrand

AND YOUR GUNS MAY BE THE NEXT TO GO-SO-YOU KNOW WHAT TO DO---

 
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