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The feds' pressure was working. By 2009, an audit of Absolute Poker revealed that almost one-third of its revenue went to disguising the money trail.
Says Sarafa: "The allegation is that the companies tried to find banks that were essentially in distress, providing them with a very lucrative lifeline, and that the transactions were disguised as other types of transactions so it wouldn't raise regulatory eyebrows."
Some congressmen, realizing that playing a few hands of poker after work wasn't exactly the height of fiendishness, tried to fight back. Rep. Barney Frank (D-Mass.) authored a bill to legalize online games.
But while that measure was winding through the House, the U.S. Attorney's Office of the Southern District of New York was pressing ahead. In 2009, it filed charges against Allied Systems and Account Services for processing poker money. The feds seized $34 million owed to 27,000 players.
The sites reimbursed their customers and rolled on. PokerStars and Full Tilt discovered that SunFirst, a struggling Utah bank, was willing to handle the payments in exchange for fees and an investment.
But the feds killed that deal a year later. They also quashed Full Tilt's attempts to make similar arrangements with two Illinois banks.
Full Tilt's problems especially were multiplying. Believing their revenue stream would soar eternally, its owners had pulled $444 million in profit from the business over the previous four years. But when the government began seizing their payment processors' funds, the company had no war chest to cover the losses.
By last March, its customers held $390 million in their accounts. But Full Tilt had only $60 million in the bank to cover them. When the feds seized the company's assets a month later, American players alone were owed $150 million. The government accused the company of running a "global Ponzi scheme."
Four summers ago, Maxwell Fritz was making minimum wage serving cotton candy and curly fries at an amusement park. He had just finished his first year at Princeton, where he was studying to become a math teacher.
Fritz had played online casually with friends back in high school. He had turned a few hundred dollars profit, and that planted the seed for the next summer's job. It had to pay better than minimum wage.
He made $10,000 after school let out, so he continued gambling during the school year. Over 18 months, while still attending Princeton and working his teaching internship, Fritz took home $100,000. Over the next six months, he would grab $200,000 more.
Then Black Friday hit. Suddenly, Fritz had not only lost his income but also $65,000 that was seized from his Full Tilt account.
He was among the fortunate to recover quickly. A fellow player provided a reference that allowed him to move from one kind of gambling to another: Wall Street.
"I figured if gambling online is illegal, I might as well go to legalized gambling in the form of the stock market," Fritz laughs. A friend had gone to a Wall Street firm and "just blew the doors off, and he said what he learned in poker really helped him. They were like, 'Well, we need to hire more poker players.'"
For Michael LaTour, the game was a way out of unemployment. The Syracuse man landed a job out of college selling mortgages and personal loans for American General Finance. But a year later, spectacularly inept bets by American General's parent company, AIG, put him back on his ass.
"There weren't many jobs out there, and I'd been on unemployment for a while," LaTour says. "I saw some people being successful at poker, and I decided if I was ever going to seriously take a shot at it, now would be the time to do so."
He played for two years, earning $50,000 in 2010. He was doing much better last year, averaging $10,000 a month until the feds came calling. In an instant, the $35,000 in his PokerStars account was seized.
"The days after it was really a panic," he says. "Nobody knew what was going on. It's been draining emotionally."
If he and his girlfriend hadn't bought a house, LaTour might have gone to Canada. Instead, he has taken the Syracuse police officer exam, but the academy doesn't offer classes until April. Two years after pulling himself off unemployment by his wits, he's back to searching for a job.
"This isn't something I wanted to do my entire life," he says, "but the money was out there, and it made more sense than any entry-level job just because of the potential to win such huge amounts of money."
Players weren't the only ones thrown out of work. The feds blew up an entire industry. In 2003, Michael Minkoff started a business that handled the shipping of poker books and videos sold on websites. His Las Vegas company also did freelance video production. It was a modest affair, employing three people and a passel of part-time help.
Then came Frist and Kyl's stealth attack in 2006. Sites began closing and paring costs, hurling little guys like Minkoff to the side of the road. Black Friday nearly finished him. At the height of his success, he was moving more than a thousand books a month. Nowadays, he sells fewer than 50, hardly enough to employ himself part-time.
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.
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 ;(
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.
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?
It would seem that shortly after the Feds shut down online poker, The world went bankrupted. Think about that.
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.