News Category: Poker Player Newspaper 1983-2016

Since the April 15 indictment U.S. v. Scheinberg et al, and the related civil forfeiture actions, the warring protagonists have not been short on words. The media has lapped them up, sometimes with more accuracy, sometimes less.

Do facts matter?

In September, the Wall Street Journal hopped onto a US Department of Justice press release, reporting the DOJ’s amended civil forfeiture action that named additional defendants. The publication missed the nuance and mistakenly referred to the online poker companies referenced in the DOJ’s criminal and civil actions of April 15th as indicted; this was not and is not the case.

After being questioned by Poker Player Newspaper, the Wall Street Journal got their facts straight — but without owning up to the original error.

Other media picked up on the same press release and referred to the newly named defendants in the amended civil forfeiture action — Full Tilt Poker directors Howard Lederer, Chris Ferguson, Rafe Furst, and Ray Bitar — as indicted. The only FTP director indicted thus far is Ray Bitar.

Is the US Attorney gearing up to bring more charges?

Meanwhile, Preet Bharara, US Attorney for the Southern District of New York, continues to hype his ongoing investigation — without elaboration, Mr. Bharara’s now familiar refrain spawns periodic speculation in both the poker world and the legal world. But, according to one former senior federal prosecutor, “The Government cannot expand the current indictment; there would have to be a new grand jury empanelled to proceed down the road of an indictment of additional parties related to the current cases.”

Are “off the record” conversations and anonymous quotes guaranteed?

Careless homework, loosely analyzed speculation treated as fact, and miscommunications between reporters and their sources are always potential trouble. Take the case of CNN in its dealings with legal counsel representing Group Bernard Tapie, the company presently expected to complete a deal to acquire the Full Tilt Poker brand.

In November, CNN, one of the biggest stakeholders in news broadcasting, blew its obligations on an embargoed story. One of its reporters pulled the trigger on an article prematurely and misstated critical facts along the way. In a visible commitment to damage control, CNN took responsibility for the errors and corrected them. But CNN never filled in the blanks as to how and why the story saw the light of day before it was reviewed for accuracy or approved by Tapie’s lawyer, as apparently had been agreed.

Will the media stop misreporting on the anticipated deal among GBT-FTP and DOJ?

Bad reporting invariably leads to sources closing off access. This has never been truer in the poker world than this past month. A big buzz was created by GBT’s decision to share with the public the contents of an agreement with the DOJ that would create a framework for acquisition of FTP’s assets. Since the agreement required dissemination of the details to FTP shareholders for their approval, it may have seemed like a no-brainer to put the company’s lawyer in charge of publicly explaining the document.

But after the CNN misfire, a slew of additional related misstatements by reporters far and wide appeared soon thereafter. According to one source inside the tent, among the faulty assertions was the claim that Full Tilt approved the GBT-DOJ deal, well before the matter was placed on the table for the necessary vote. Similarly, there have been reports of a transfer of assets in progress without a scintilla of public word from any of the parties that would be responsible for such maneuvers.

Information related to the GBT’s proposed acquisition of FTP has come to a virtual standstill since late November. Several lawyers familiar with the ongoing talks say it is not plausible that a deal will be done before the end of January and caution that there could be plenty of tension in the deal before it is resolved one way or another.

It stands to reason that the escalated flow of misinformation is disruptive to the parties involved in trying to make a deal, and increasingly frustrating for FTP customers who have been riding an interminable roller coaster between resignation about substantive losses and high hopes for a speedy recovery of their locked funds.

But this may be the real reason for the DOJ’s decision to remain mum on negotiations in progress — including even the existence of a DOJ-GBT agreement that was confirmed to Poker Player Newspaper by lawyers for Tapie and Full Tilt.

Has the DOJ muzzled the protagonists?

In recent weeks the lawyers surrounding the deal have lost their collective voices, begging off all interviews and queries about the ongoing negotiations. The best one can get from them is that matters are moving along, and that in due course in an orderly way — news will be released, but not necessarily on the media’s preferred timetable.

Lawyers engaged in other parts of the DOJ’s prosecution of online gaming have observed that the US Attorney’s Office — especially the Southern District —does not appreciate others stealing their thunder. One senior partner from the world of “big law” adds, “There will probably be a much tighter lid on communications in general and the poker press will probably feel it more.” Yet it is the mainstream press that has published far more visible little bloopers.

Did the New York Times do justice to the DOJ’s memo on the Wire Act of 1961?

Last week the New York Times let no grass grow under its feet following the DOJ’s curve ball in its release of a startling internal legal opinion memo shifting its longstanding policy toward the Wire Act of 1961.

The New York Times reported that DOJ had called a foul on itself. In doing its homework, the “Old Gray Lady” noted DOJ’s assertion that the 1961 Wire Act’s prohibition of online gambling would be no more. Evidently, DOJ finally concluded this was a half-baked idea that should be tossed to the winds.

DOJ reverted to its original position from back when the legislation was originally passed. The Feds now say the Wire Act is directed at sports events and contests, effectively dismissing it as irrelevant to other forms of gambling – particularly noting lotteries.

Like most of the poker media, the Times heralded the opinion in its headline, “Ruling by Justice Dept. Opens a Door on Online Gambling.” True! Things are looking mighty fine for the prospects of legal intrastate poker. But the incomplete tabloid-like headline gives no hint of critical facts that could present a bundle of thorny issues for online poker — until deep inside the article. In paragraph 18 of the NYT report, the reader first learns, “The new policy merely reverses the Justice Department’s longstanding position that all forms of online gambling are illegal in the United States. It does not necessarily pave the way for national rules governing online gambling.”

Did the New York Times prove itself confused about FTP?

In another lapse, the “newspaper of record” also would have readers believing that Full Tilt Poker was based (licensed) either in Antigua or the Isle of Man. By this time, most of Full Tilt’s customers probably know better and so does most of the media. FTP has roots in California, was incorporated in Aruba, has its headquarters in Dublin, a secondary license with the Mohawk tribe of Kahnawake in Canada, and held its primary license in Alderney until late September.

FTP’s overseers finally sent the Company packing, after obtaining all of its outstanding licensing fees. The Alderney-based regulators got a token Christmas gift from the New York Times—a rare pass on its association with FTP.

Did the New York Times miss the tug boat?

Most press has become increasingly scathing in its criticism of Alderney as the base of operations of FTP’s online gambling business. Many FTP players see Alderney’s oversight — or lack of it — as the primary cause of their troubles. The Former Chairman of the British Gambling Commission, Peter Dean CBE, is presently heading an independent investigation into AGCCs handling of the affair. The AGCC sought out the independent investigator, but at this point, it is of little solace to players who expect to be bogged down with burdensome responsibility in efforts to reclaim their funds.

While the FTP-DOJ-Tapie machinations ripen in the Manhattan US Attorney Office, the DOJ’s legal opinion memo released last week has put the poker world and the legal world into full throttle as the proponents and naysayers in the development of intrastate poker jockey for winning positions.

Online Poker Goes Down

In its crackdown on online poker earlier this year, the Manhattan US Attorney for the Southern District of NY pounced hard on founders, operators, and operations of the most popular online gambling companies. In an indictment unsealed April 15, 11 defendants were named and a civil forfeiture action for $3 billion was revealed, and the domain names of the corporate defendants were seized — worldwide.

Contrary Policies are Unfolding

The DOJ is making its case in New York, a state that has wrestled with plans for expanded legalization of gaming for decades but to little avail. In recent days, New York’s Governor Andrew Cuomo, a former prosecutor, has put an aggressive economic plan at the top of his priorities. It is designed to bridge a $350 million deficit; key to his plan is expanding gaming destinations in the State. Meanwhile, in downtown Manhattan, US Attorney Preet Bharara’s talented whippersnappers are dancing as fast as they can toward a trial of two defendants in the highly publicized federal prosecution of online gambling in the United States.

The Hearing That Could Launch a Trial

Arguments in a landmark hearing last week, involving the cases of Chad Elie and John Campos (two of the 11 defendants in the April 15 indictment United States v. Scheinberg) brought fair warning from the judge presiding over the criminal case. District Court Judge Lewis Kaplan told the parties to get ready for a March 2012 trial.

Judge Kaplan did not mince words in expressing doubts as to the solid footing of defendants’ counsel in the motion to extricate their clients from the indictment. A review of prior gambling and money laundering cases assigned to Judge Kaplan (both of these offenses are issues in the indictment) indicate his tough-mindedness in these matters.

In the Government’s papers in opposition to a motion to dismiss the cases against defendants Elie and Campos (one a payment processor, and the other a banker, each of whom supposedly facilitated verboten financial transactions for online poker companies), DOJ summarily dismisses the notion of poker as a game of skill, both as a matter of law and of social acceptance. In their argument, DOJ asserted that poker is merely a gambling game.

The issue of skill vs. chance could become a critical issue throughout the proceedings. In an upcoming article, the “skill v. chance” issue will come under the microscope, but for the moment we’ll only touch on it as it relates to the Government’s charges of illegal gambling activities and the offenses related to them—from a business person’s perspective.

UIGEA Breeds More Hubris than Caution

Even before the UIGEA legislation got into full throttle mode, major online companies saw the need to unify online poker enthusiasts in a “grass-roots” organization that would be front and center in support of online poker — in Washington.

Following the passage of the federal UIGEA legislation,  public online gaming companies exited the US marketplace leaving private companies like PokerStars, Full Tilt, and AbsolutePoker/UB to pick up huge chunks of business left behind. However, given the newly enacted legislation, their access to sudden windfalls and rapidly accelerating profits were not without risk.

It was not long before these companies and/or the lawyers they brought in to advise them began to talk themselves into believing their businesses, and the liberty of their founders and key employees, were safe from unwieldy prosecution. The general consensus seemed to be that legal troubles would be manageable and would show themselves to be cost-effective.

Additionally, inside the Beltway and far beyond it many lawyers theorized that there were reasonable, if not necessarily winning arguments against the Government in the event it moved forward to prosecute online gaming as an illegal gambling activity.

It wasn’t only Executives of PokerStars, Full Tilt, and Absolute Poker/UB that were caught unawares when the DOJ hammer came down. Several high-profile gaming executives, as well as lawyers for online gambling sites, had previously expressed confidence that the Government would avoid bringing cases reliant upon federal gambling statutes that seemed not altogether clear in their mandates regarding poker. None of those interviewed for this article, however, anticipated an indictment that would include bank fraud and money laundering, or a civil forfeiture action that would include asset and domain name seizures worldwide.

DOJ Brings Down the Hammer

Only after the DOJ laid bare its wrath, did the many warning signs from the Federal Bureau of Investigation and DOJ resonate in the ears of the defendants and the rest of the world. DOJ’s public statements have been clear; online poker companies disregarded explicit warnings of their plans to prosecute online poker as illegal gambling activity. “There were multiple signals of potentially serious consequences during the past several years but the companies continued to flaunt the DOJ’s admonition to get out of town – until Doomsday,” says one former federal prosecutor.

The additional consequence for the poker world is a trial that will bring to a head the unified position of online poker businesses and other poker organizations that carry the banner for legal designation of poker as a game of skill — albeit for different reasons.

In its preliminary statement in the Government’s Response to Defendant’s Pre-Trial Motions, the DOJ has begun to shape its stance more concretely, scoffing at the notion of poker as a game of skill. Assistant US Attorney Arlo Devlin-Brown opined in his opening, “Playing poker for money has, since the birth of the game in the 1800s, been treated both in American culture and law as a form of gambling.”

Gambling Matters are State’s Rights Issues

DOJ claims that “New York courts, for their part, have treated poker as illegal gambling in reported opinions dating back 100 years.” Gaming lawyers generally concur in the belief that things are not nearly as clear as the US Attorney’s Office suggests in their opposition papers submitted to Judge Kaplan.

More generally, however, several lawyers familiar with statutes around the country contend that litigants against state governments have had little success in efforts to prove poker as a game of skill—especially at the mid-appellate level. Presently, as DOJ acknowledges, there is a case under review in the South Carolina Supreme Court in the Town of Mt. Pleasant v. Chimento (No. 2009-CP-10-001551 (S.C. Ct. App. Oct. 1, 2009)) following the appellate division’s favorable ruling that upheld a lower court’s determination of poker as a game of skill. The arguments heard before the Supreme Court in 2009 have not been addressed in an opinion.

In the State of New York, poker is addressed in the penal code, Section 225.00 and 225.05. During the early period of Governor George E. Pataki’s administration, I served as the Governor’s senior advisor. Gaming issues were in my portfolio. I was responsible for putting out feelers on the Governor’s inclination to support expanded commercial gaming operations but the mandate was short-lived. The Conservatives — an important part of the Governor’s political base — wanted no part of it and neither did the City’s real estate interests.

Tribal Gaming is a Whole Other Issue

In 1993, the year before Governor Pataki took office, the Oneida Indian Nation (OIN) set up shop at Turning Stone Casino near Syracuse, New York, relying on overriding approval by the federal government after failing to obtain poker in its compact with the state. Under the Indian Gaming Regulatory Act (IGRA), OIN won approval for a nonprofit poker club in an opinion by the National Indian Gaming Commission.

Historically, the relationships between Indian nations and the New York State Government have been volatile with ever-present tax disputes, trust land issues, and underlying fights over who is boss. The poker world, however, would likely bond better with the Oneida Indian Nation than with the State’s traditional bureaucrats.

Sentimental Journey to the Mayfair Club

In pushing for a poker club as part of their operations, OIN Counsel provided an ironic twist in legal papers. In pleading the part of their case that required them to prove that poker was not prohibited in the state, OIN Counsel used news stories of the legendary, underground, New York City-based Mayfair Club’s longstanding nightly poker fare, which was never prosecuted.

According to their counsel, Niels Holch, the OIN demonstrated that poker was actually authorized in New York by a legal analysis that included the citation of cases that stemmed back to the 1930s.

The Mayfair Club was never raided during its reign next door to the Appellate Court until 2000, when the City changed its mind about poker as an innocent American pastime after stumbling into games with five-figure pots and at least one high stakes player on the FBI’s “wanted list.”

Others have pointed to the history of prosecutorial discretion in dealing with poker games in New York, citing a notorious case of gun toting robbers who emptied the pockets of Mayfair customers and were then disrupted by a police swat team that learned of the hold up in progress. Post-trial, the victims were invited to come to the police precinct to collect their cash and jewels.

Modernizing the Philosophy of Gambling and the Law

Fast forward to this week! The United States Congress dawdles over serious deliberation of licensed, taxed, and regulated online poker. The Manhattan US Attorney sprints forward in prosecution of UIGEA. And New York Governor Cuomo is rarin’ to go with his new economic plan, which definitively includes expanded gaming business. The Governor explains, “Through this plan, we can promote job creation and recapture revenue that is currently being lost to other states.”

Now, are the Governor’s goals practical arguments for the Congress to follow suit? And for the millions of American–based online poker enthusiasts, is the civil liberties issue connected to the right to play poker online a more useful or better alternative debate in Congress than the online companies’ promotion of poker as a game of skill – as a means by which to advance the defense of their business activities in America since 2006?

FTP’s customers seek to retrieve the monies in their FTP account balances. The journey to answers as to if and when they can bank on the eventual return of their monies has been a long one, marked by rising expectations and dashed hopes. The CNN story and a feed of it to Yahoo.com produced a surge of increasing confidence, catching immediate attention of surfers and media reporters alike.

CNN, Yahoo, and PPN Collide in Space

Poker Player Newspaper, however, questioned the story before reporting it — understanding that players are depending on a done deal as key to their seeing a return of their funds. PPN became the first media outlet to set the record straight as to the current status of negotiations. The PPN headline of the same afternoon read:

“DOJ & GBT Reach Signed Agreement For Acquistion Of Full Tilt; Tapie Agrees To Pay U.S. Government $80 Million For FPT’s Assets”

The sub-head, also above the article read:

“Stunning Move By Government Paves Way For Tapie Deal To Go Forward”

GBT-DOJ Signed Agreement is Here Again

The confirmed details of the DOJ-GBT agreement, and interview comments of GBT’s counsel, appeared in PPN last Thursday afternoon. Key points are recapped later in this article.

Since publication of the PPN article, CNN has updated its story, revised its headline, deleted the byline of one of the two original reporters, and added an Editor’s Note explaining that a deal for GBT’s acquisition of FTP has not been finalized. CNN made a prodigious and successful effort to put things right as to the impact of the signed GBT-DOJ agreement. For FTP players, however, it was just one more instance of confused and frenzied media coverage.

For now, as we go to press, there is nothing more to report on the progress of the deal at this time, according to GBT Counsel Dayanim — except to say, “It will take more time.”

How Will FTP Customers Fare?

While the DOJ has signed an agreement with GBT and the negotiations roll on, Dayanim, the chief architect of the GBT acquisition plan, shies away from commenting on how the DOJ might actually process FTP customer claims. He is focused on the rest of the world (“ROW” players), for whom his client would have responsibility to repay or make whole.

Other lawyers familiar with the talks (but not part of them) who were queried for this story take a hard look at the statements that have been made by the DOJ, and by both FTP and GBT and their counsels.

The first notable statement came from the DOJ on April 20th following execution of their “Domain Names” agreements with Full Tilt and PokerStars in which the Government said, “As part of Agreements, use of domain names Pokerstars.com and FullTiltPoker.com will be restored to facilitate return of U. S. player funds.” The same press release also quotes United States Attorney for the Southern District of New York, Preet Bharara: “This office expects the companies to return the money that U.S. players entrusted to them, and we will work with the poker companies to facilitate the return of funds to players…”

Thereafter and upon receiving cash out requests, PokerStars processed full refunds to players. Full Tilt says it has not been in a position to do likewise but is involved in negotiations designed to end the separation between players and their monies entrusted to FTP.

Shortly after amending its civil forfeiture claim of April 15 (the related papers dated September 19th), the DOJ acknowledged rising inquiries from FTP customers concerning funds locked up in FTP accounts. The DOJ’s response was measured with more caveats than promises concerning the return of funds. Media swooped in on the glimmer of light paying little attention to the parsed words and warnings.

Several lawyers consulted for this article argue that a done deal will do significantly more for the DOJ, FTP, and GBT than for some of the sites’ most faithful players—especially successful American-based poker pros.

Chuck Humphrey, a former partner at Kirkland & Ellis and a recognized gaming lawyer, suggests that American-based FTP customers may be in for a rude awakening. Mr. Humphrey explains that the Government has made no promises and is likely to resist player demands for compensation related to winnings:

“I believe it is unlikely the DOJ will return the total account balances to Full Tilt players. Even in the face of a few contrary court precedents, the DOJ continues to maintain that all online gaming is illegal. Returning the portion of a player’s balance that represents winnings would undermine that position as well as its underlying positions in the pending criminal charges.”

A. Jeff Ifrah, counsel for FTP, and Ray Bitar spoke in carefully guarded words shortly after the signed DOJ-GBT agreement asserting, “The letter of agreement helps pave the way toward restarting Full Tilt’s operations outside the U.S. and paying back players whose deposits were frozen along with Full Tilt’s assets.” He refrains from any reference to the agreement’s reported reference to DOJ consideration of “compensation for player losses.”

One lawyer not related to any of the parties quips pointedly: “Before you count on any winnings as part of your net worth statement, consult your lawyer on his bet as to whether you will see a penny beyond lost capital.”

A Clean Slate of Relevant Facts

The events of poker’s “Black Friday” have triggered many debatable reports and sometimes misstatements of fact as if they were gospel. Parsed words by the parties and unclear media accounts go hand in hand to create misimpressions. Here are a few notable facts that have more than occasionally gotten lost in the shuffle:

1. None of the FTP directors except for Ray Bitar has been indicted.

2. No company was indicted in the April 15 criminal case U.S. v. Scheinberg et al.

3. None of the parties involved in the current discussions — DOJ, GBT, and FTP — have made any promises that American-based players will be made whole.

4. According to GBT counsel, the four directors of FTP as of April 15th would be prohibited from holding any shares in FTP going forward, but contrary to a report by CBS News (November 18), there is no such prohibition against any other shareholders from doing so.

5. Despite poker media speculation that the DOJ was expected to announce the GBT-DOJ signed agreement last Friday, no such announcement has been made by the Government.

6. Contrary to reports in myriad news stories of late, anyone who claims that the deal needs only to get the necessary approval of FTP has vastly simplified the remaining steps, so as to create a substantive misimpression. Well-placed optimism notwithstanding, Mr. Dayanim acknowledges there are still many details that need to be worked through.

Recap of DOJ-GBT Signed Agreement

For those who were occupied on Wall Street or elsewhere last week, here is a recap of a few key points of the DOJ-GBT signed agreement reported November 17, as re-confirmed with GBT’s attorney Behnam Dayamin: GBT would hold at least a majority interest in the company; none of the FTP directors as of April 15th would be permitted to hold shares in the company. (Note change from “current” directors in prior online article). All other shareholders could own shares in the company without limitation except to the extent that GBT would be required to hold the majority interest. With respect to FTP’s US customers, they would be able to submit petitions to the U.S. Government for compensation of their losses. With respect to players outside of the U.S., GBT would “repay or make whole”, all of those customers.

Jeff Ifrah Steps Up to the Plate

In a statement reported by InsideIreland.ie, just as PPN is going to print, Ifrah calls the anticipated deal “a very creative solution,” noting, “The agreement [is] behind us. The next step is how is it going to work?” For the first time, Ifrah takes the bull by the horns and publicly acknowledges critical unanswered questions — “Are the players going to get everything back, what’s the process for filing claims, and so on. These are things that the players are concerned about now.” For most players, repayment of their funds is the thing they have probably cared about most from the moment they were locked out of their accounts.

Dayanim and Ifrah are Well-Matched to Make a Deal

Although uncertainties abound as to how well players will fare, especially those who must look to the U.S. Government for repayment of income they earned at the tables, all of the lawyers who have responded to questions for this article agree that players appear to be well-positioned to recoup their losses, to the extent monies in a player’s account reflect deposits made by him or her.

The team of Ifrah and Dayanim in the deal making process should be very good news for a substantial part of the poker community with deposits at FTP, including “Rest of the World” players who, under the agreement, are to be repaid or made whole. Dayanim and Ifrah, who have known each other since their college days, are respected experts in their field and of good stock—each were formerly practitioners at the same nationally acclaimed law firm.

In a letter signed by Laurent Tapie, the contents of which this writer has confirmed with Groupe Bernard Tapie’s outside counsel, the United States Department of Justice has signed off on an unprecedented agreement with GBT, allowing Tapie to “buy” FTP’s full assets from the Justice Department — subject to approval of FTP.

Upon approval by Full Tilt, the deal can and will be put in place as follows:

1. FTP agrees to forfeit all of its assets to the United States in consideration of the Government’s dismissal of the forfeiture action against the companies comprising FTP.
2. The DOJ takes possession of FTP’s assets for the purpose of selling them in their entirety to GBT for the sum of $80,000,000 and on the understanding that GBT will re-establish FTP based on the following understandings:

1. GBT will hold at least a majority interest in the company.
2. None of the current FTP directors will be permitted to hold shares in the company.
3. The Agreement does not bar any other shareholders from owning shares in the company.
4. With respect to FTP’s  US customers, the Agreement provides  that such customers can submit petitions to the US government to “request compensation for their losses.”
5. With respect to players outside of the US, the Agreement provides that GBT will, “repay or make whole,” all of those customers.
6. The US customer list is a part of the assets, but GBT has no plans of any kind to utilize that list except to assist the DOJ to identify customers who are due or entitled compensation, according to GBT counsel Behnam Dayanim.

Mr. Dayanim says, “The next step is to obtain an agreement from the Full Tilt Companies. ” Dayanim emphasizes, “I anticipate it will happen,” explaining his optimism; “It allows for players to be repaid, and resolves the FTP forfeiture action by the Government.”

It should be noted that there is nothing in the signed agreement between GBT and DOJ to suggest any relationship whatsoever between the proposed resolution of the April 15 forfeiture action (as amended September 19) and the DOJ’s prosecution of any of the defendants in the April 15 indictment, U.S. v. Scheinberg, et. al, which notably includes FTP CEO and board member Ray Bitar, among others.

In the preceding months of 2009, Mr. Dayanim had obtained non-prosecution agreements and had settled related forfeiture actions brought by the Department of Justice against two high-profile companies operating in the e-gaming space.

Benham Dayanim’s Bona Fides are Established

 In April of 2009, Dayanim acted for PartyGaming PLC. A non-prosecution agreement was obtained with the company’s forfeiture of $105 million. Dayanim also served as co-lead counsel for Optimal Group, Inc., settling the Federal Government’s forfeiture action for a total of $19,182,418 on October 30, 2009. He obtained a non-prosecution agreement in this case too.

At the newly established “November 9” festivities of the 2009 World Series of Poker just a few days later, Mitch Garber, the recently appointed CEO of Harrah’s Interactive Entertainment (now Caesar’s Interactive Entertainment) and a formerly practicing lawyer in the gaming space, introduced himself to this writer. In a quick mental note to self, Yours Truly recalled Mr. Garber’s prior background as a gaming lawyer, former CEO of Optimal Group, Inc. and CEO of PartyGaming, PLC, before joining Caesar’s.

 A few days later, Mr. Garber was one of Eolis International Group’s first calls for recommendations of suitable law firms for an e-gaming client. Mr. Garber promptly responded, waxing poetic over the extraordinary abilities of Behnam Dayanim and the law firm at which he was a partner. Little could anyone have projected in November 2009 that Dayanim would become the go-to lawyer for Groupe Bernard Tapie in its bid to acquire Full Tilt Poker.

 Meet the Credentialed Tapie Counsel.

Sitting with Dayanim in a kosher restaurant in downtown D.C., this writer (who also serves as a consultant to corporate clients seeking special counsel) interviewed Dayanim for a “dicey bet the ranch” legal problem, listening to the lawyer’s laid back account of his career.

Born in 1967, Dayanim proved his smarts early, first graduating from Yeshiva University summa cum laude followed by a J.D. degree from Harvard. He then accepted a year-long clerkship for the late federal Judge Frank A. Kaufman in Baltimore.

From there, he joined as an associate at the Washington office of the nationally acclaimed law firm of Paul Hastings, LLP where he was elevated to partnership. He remained at the firm until 2010 when he joined the high-powered boutique law firm of Axinn Veltrop & Harkrider LLP. Dayanim came on board to help bring increasing cachet to the firm’s growing practice in Washington, D.C. Like Mitch Garber, AVH name partner Steve Axinn also opines on the dynamism and creativity of Behnam Dayanim, mentioning both his team player abilities in growing the firm and his passion for his practice.

 Advocate for Legalized, Regulated Online Gambling

Dayanim says he was a vocal proponent of legalized and regulated internet gaming long before the Government’s April 15th assault on the online gambling operations of the former “big three”— PokerStars, Full Tilt Poker and Absolute Poker/ Ultimate Bet.

He says, “I respect gambling as a legitimate online activity. He adds, “I believe in the message,” and goes on to explain, “I see no reason not to allow internet gaming regulated with safeguards and protections, but available to any adult who chooses to participate. The people should be free to engage in it as they do with other forms of leisure activity online.”

Observing the Scene

Over this past summer, Dayanim kept abreast of the developments arising from the DOJ’s April 15 crackdown and the subsequent suspension of Full Tilt’s license by its regulators, the Alderney Gambling Commission. Apparently, however, it was like a bolt out of the blue when Dayanim learned of Groupe Bernard Tapie’s plan to acquire FTP.

Shortly after the Full Tilt hearing got under way during the week of September 19, Laurent Tapie, the son of GBT’s patriarch, contacted Dayanim to discuss representation of the Company in negotiations for Full Tilt Poker, noting they would require intimate involvement and approval of the DOJ.

By all accounts made by lawyers and law firms familiar with Dayanim’s practice and results for clients, he is well suited for his current role. Still, a multitude of issues will undoubtedly survive the anticipated deal Dayanim is expected to complete in the near future. While Dayanim demurs as to the specific points in the deal he is attempting to put together, lawyers around town speculate that the originality and cleverness of the plans on the table would stun even the most seasoned veterans of the Bar.

The DOJ has Multiple Horses on the Betting Line

In recent days, there has been nary a word from the protagonists. This has led some to wonder if the DOJ has slowed down the tempo of final negotiations with the GBT-DOJ-FTP while publicizing opposition to the dismissal of cases against John Campos and Chad Elie. Mr. Campos and Mr Elie are two of the eleven named parties preparing to stand trial in the April 15 indictment U.S. v. Scheinberg et al.

Last Friday, the DOJ trumpeted its latest and most inflammatory assault on online gaming operations in a fifty-one page document filed in connection with Campos and Elie’s respective bids to extricate themselves from the charges against them.

The Feds not only claimed that e-gaming is flat-out illegal under gambling statutes in place, they also scoffed at the notion that poker is a game of skill (lawyers debate the applicability of UIGEA, some claiming that poker should be exempt from enforcement because it is a game of skill) and upped the ante with more warring words, suggesting that online poker operations have been infiltrated by the infamous Cosa Nostra, the formal name applied to the organization better known worldwide as the Mafia.

The Government Shines Light on Scheinberg

The Government has taken particular aim at PokerStars’ founder Isai Scheinberg, claiming that he pursued Mr. Elie for restitution of monies Elie had allegedly embezzled from the online site. The Feds allege that a “collector” assisted in obtaining partial restitution of stolen monies. According to the Government, Elie was later hired by Scheinberg to develop “transparent payment processing” relationships with banks willing to take the business in exchange for fees and investments. Mr. Elie supposedly hooked up online poker payment processing with Campos’ Sun Bank of Utah until stopped by the FDIC. The DOJ claims the scheme violated multiple statutes. The cases against Elie and Campos have led to the DOJ’s litigation against online gaming companies’ activities as illegal under the Illegal Gambling Business Act of 1970 and under the Unlawful Internet Gambling Enforcement Act of 2006.

 Another Assault in Progress

The Feds’ response in last Friday’s papers provide fair warning of significant consequences if their allegations and arguments prove correct.  These papers have upstaged the noise of impending victory for FTP customers with shudders of looming doom for the online operators. For the moment, however, the saber rattling is just part of the game.

Only time will tell whether or not the Justice Department’s extraordinary record of convictions in the Southern District of New York will be reflected in the resolution of the Government’s April 15 criminal and civil cases related to online gaming operations.

 Ben Dayanim is Poised to Please!

In the meantime, Behnam Dayamin, GBT’s prodigious counselor, is keeping his eye on the ball and not on the flack. He appears to be patient and determined and prepared to work through the final details of a deal that will allow his client to put the Full Tilt Poker brand back on the map, against a backdrop of a reasonable process by which to address player repayments.

 As we go to press, there is no further word yet as to when the FTP-DOJ-Tapie plans will reach a conclusion one way or the other, but the smart money continues to bet that a stunning deal will be done.

The Smart Money Analysis.

As reported last week, the Justice Department apparently allowed Full Tilt poker CEO Ray Bitar to inform FTP shareholders of plans for a deal that would turn over the company or its assets to Groupe Bernard Tapie. A recap of this writer’s in-depth look at the email that triggered premature jubilation is provided for those less up-to-date on the recent, fast-moving events

The Bitar Email to Shareholders

 1. The email excludes any language to suggest that the company is being sold outright from FTP to GBT.

 2. The insertion of an alternative between the company and the company’s assets as the basis for the acquisition makes the presumption of an asset sale of sorts the likely vehicle for the acquisition.

 3. The careful language that refuses to refer to a sale at all–only to an acquisition by GBT–suggests that Full Tilt might be turning over or forfeiting its assets to the DOJ and the DOJ might then flip the assets over to GBT for a price payable to the U.S. Government by GBT not necessarily even made known to FTP.

 4. The “understanding” that “DOJ will reimburse US players” could be a very economical truth; lawyers around town insist that the DOJ may not see itself as responsible for paying out the entire player balance total, noting that the monies reflect not only player deposits but also winnings which may be looked upon differently.

 5. The email’s reference to the DOJ settling the outstanding civil litigation with the companies comprising Full Tilt is silent as to the DOJ’s responsibility, if any, to settle civil litigation between FTP and anyone other than DOJ.

DOJ—MARCHING TO THE BEAT OF ITS OWN DRUMMER

 For the moment, it still looks like only the DOJ is playing with a full deck in this power poker game. While Groupe Bernard Tapie’s legal counsel continues to move the ball down the court, Dayanim closed this evening’s interview noting there was no news he could report at this time. He left open the possibility of big news on the horizon.

Since the shutdown of Full Tilt Poker’s operations in the United States on April 15 and in Europe on June 29, players have eagerly awaited news regarding their account balances on the site. Yesterday they got a blast of news shortly after FTP CEO Ray Bitar shot off an intriguing email to FTP shareholders.  The email was leaked to media and quickly saw the light of day.

At first it seemed as if there was little more than the email to report , but on further inspection it was a veritable gold mine for analysis of Full Tilt Poker’s  current state of affairs .  A close reading of the email is as startling as it is reassuring that genuine progress has been made in completing a deal  that resolves the fate of player funds as well as the DOJ’s forfeiture action against FTP.

There is no indication of a possible non-prosecution agreement in the works, and it would seem individual directors may still have their hands full. I’ll come back to these topics at a future time.

The email told shareholders to get ready to vote on a proposed deal that will allow Group Bernard Tapie “to acquire the companies or assets that comprise FTP, and to do so in a manner that will make DOJ responsible for repayments to American players and GBT responsible for repayments to players in the rest of the world (“ROW”).

To say the reverberating elation in the air is premature is an understatement, as the wheels of justice continue to turn at a calculated pace determined by the United States Department of Justice (DOJ).  According to a former Assistant U. S Attorney (S.D.N.Y) now in private practice, “The Office  (Manhattan U.S. Attorney Office) might well be scratching its collective head as to how and why the poker world seizes on what it wants to hear.”

The Bitar Email to Shareholders Produces Plenty of Food for Thought.

You are invited to feast on a few morsels while shareholders wait for an agreement  on which to vote:

1. The email excludes any language to suggest that the company is being sold outright from FTP to GBT

2. The insertion of an alternative between the company and the company’s assets as the basis for the acquisition makes the presumption of an asset sale of sorts the likely vehicle for the acquisition.

3. The careful language that refuses to refer to a sale at all–only to an acquisition by GBT–suggests that Full Tilt might be turning over/ forfeiting its assets to the DOJ and the DOJ might then flip the assets over to GBT, for a price payable to the U.S. Government by GBT not necessarily even made known to FTP.

4. The “understanding” that “DOJ will reimburse US players” could be a very economical truth; lawyers around town insist that DOJ may not see itself as responsible for paying out the entire player balance total, noting that the monies reflect not only player deposits but also winnings which may be looked at differently.

5. The email’s reference to the DOJ  settling the outstanding civil litigation with the companies comprising Full Tilt is silent as to the DOJ’s responsibility , if any, to settle civil litigation between FTP and anyone other than DOJ.

So far, it looks like only the DOJ is playing with a full deck in this power poker game.

The smart money is betting that we are nearing an historical deal; both in originality and cleverness, and maybe a deal that will effectively bring about a fair deal for players.

In a press release last Tuesday, the Government labeled Full Tilt’s operations as that of a Ponzi scheme, one that had bilked its most loyal players mercilessly. The mainstream media as well as poker media took the bait, catapulting the Justice Department’s latest allegations against Full Tilt and its Board of Directors into page one news worldwide.

The DOJ’s gambit to present, in a press release, FTP and its Board as crooks to be likened to the famously loathed Bernard Madoff was backed up in legal papers presented by the U.S. Attorney’s Office for the Southern District of New York before Federal District Court Judge Leonard Sand, one day earlier.

The Government asked permission of the Court in its September 19th filing to amend its April civil forfeiture action against Full Tilt, Poker Stars, and Absolute Poker/Ultimate Bet to include a seizure warrant against various bank accounts related to FTP board members Ray Bitar (who is also facing a related criminal indictment), Howard “The Professor” Lederer, Christopher “Jesus” Ferguson and Rafe Furst.

By the end of the week, Judge Sand had granted the Government’s motion but not without Full Tilt lawyers and other attorneys excoriating the DOJ as somewhere between over-zealous and downright wrong in calling FTP’s operation a Ponzi scheme.

The DOJ’s recent actions have not only incensed the defendants’ lawyers, but their press release has also raised questions as to the teachings in 9th grade civics classes! We are left to ponder:

Was the public effectively misled by the Justice Department’s rhetoric? Was the U. S. Attorney using its bully pulpit to showcase its power? Was the press release a carefully crafted document designed as a one-two punch to topple Full Tilt’s chances of retaining its Channel Islands-based license while attempting to deflect player grievances toward DOJ–for disruption of their poker activities and likely loss of their deposits— back to FTP? Has the Justice Department provided a stunning eye-opener on just how unscrupulously online poker business has been conducted—albeit at the peril of players?

Meanwhile, in an effort to set the record straight on some of the inaccuracies that crept into the last week’s reports by the likes of the Wall Street Journal as well as poker press, here are a few notable facts:

 1. The U.S. Attorney’s Office in Manhattan has confirmed that, contrary to a report last week in the Wall Street Journal, NONE of the online poker companies referenced in the DOJ’s criminal and civil actions of April 15th has been indicted—only the eleven individuals so-named.

 2. Likewise, none of the Full Tilt Directors, except for Raymond Bitar, have been indicted.

 3. According to the AGCC’s website, licensees are permitted to co-mingle participant monies with corporate funds; they are required to disclose such facts to AGCC, and FTP did so. They are similarly required to advise their players. Various FTP public communications as well as reported emails  effectively hid this fact.

 4. Publicly available AGCC documents also indicate that Full Tilt put itself at immediate risk with its regulators by failure to reimburse player deposits due to them in a timely manner.

 5. Since the suspension of the FTP license by the AGCC, FTP was ordered to “ring-fence” identifiable player funds under their control.

 As we go to press, the AGCC remains mute as to continuation of the Full Tilt license. The DOJ has cast a further cloud over FTP’s ability to find a viable investor to rescue its players. And, for the moment, Full Tilt customers are forced to wonder if the warring parties are more intent on jockeying for position in the court of public opinion ahead of dealing with the fallout for innocent victims.

 In the next edition of Poker Player Newspaper, I’ll discuss pressing questions and issues as the DOJ’s actions in the world of online poker continue to grow in impact, challenges, and instructive opportunities.

Fallout from the Government’s unsealed indictment in U.S. v. Isai Scheinberg et al.—including founders and associates of Poker Stars, Absolute Poker/Ultimate Bet and Full Tilt—and the related civil forfeiture actions against the companies—has reverberated throughout the poker world. For the moment, customers of Full Tilt Poker find themselves in the eye of the storm as they await word on an estimated $150,000,000 in deposits owed to them. Worse, perhaps, there is little understanding among online players of the ever-present risks of depositing funds into online sites without knowledge as to where they reside and whether or not they are protected.

Full Tilt Troubles

In recent weeks poker media has widely reported the impact of Black Friday on players, leaving on the back burner much discussion of the churning wheels of justice and our collective responsibilities to protect that process.

Barrister Mark Heslop, acting for Full Tilt, sallied forth to the Full Tilt license hearing, in London on July 26, with the full weight of those responsibilities on his shoulders as he sought to turn a scheduled public hearing into Full Tilt’s license into a private tête-a-tête with regulators.

Interim Report Card

Score three big points for Full Tilt’s eloquent counsel. Mr. Heslop prevailed on his pre-application to bar the media and the public from learning why he was seeking an adjournment of the hearing and then won his application to adjourn the proceedings. He also succeeded in holding back payment of Full Tilt’s overdue license fees until reasonably assured the regulators did not intend, summarily, to send Full Tilt packing upon receipt of the monies.
Score two big points for the Alderney Gambling Control Commission (AGCC) which successfully showcased its Channel Islands base of operations as among the most permissive venues for online gambling licenses while positioning itself at center stage in determining Full Tilt’s fate.
Score one small point for Full Tilt customers who were lost in the shuffle as Full Tilt and the AGCC jockeyed for position with each other, but who may benefit from the extension of time for Full Tilt to hunt down a mechanism by which to pay them back.
Score one big goose egg for attendees who found no redeeming reason for being there all day—engaged in “being and nothingness.”

Attendees Are the Show

In a hearing that barely got off the ground, it paid to make the best of it by observing and mingling with the eclectic crowd of attendees who quietly waited for Godot in the hotel’s lower lobby. Only a smattering of the early-birds lasted the whole day. The cast included mostly European-based poker media (a pretty sharp group of them),  a fair share of downtrodden unknown poker players (mostly presumed to be Full Tilt customers), and one longtime London-based pro who stole the show with cries of foul when the public hearing stalled. There were also cameos by two Party Poker Executives who just happened to be in town instead of Gibraltar.

Poker Stars Does Its Homework

More curious was a contingent of lawyers closely associated with Poker Stars. One flew in from Israel, dispatched by the Company’s longtime corporate counsel, Herzog, Fox and Neeman. Another arrived from the Poker Stars office in the Isle of Man. A third, Tom Goldstein, traveled from Washington, describing his presence as mere duty to an industry in which he is active. Mr. Goldstein didn’t stick around for long, but the other two did—to the very end.

The Proceedings

In a 20-minute presentation at the license hearing, Mr. Heslop, Full Tilt’s lead counsel, confirmed that talks are ongoing but referred only to “sensitive negotiations” with “potential investors.” He cited these discussions as well as the prospects for a better outcome for players and a deep concern for “untainted” justice in his bid to shoo the media and other viewers out of the room.

Ring-Fenced Funds

Grappling with the issues that surround Full Tilt’s predicament is a tall order. Learning if your online deposits are held in ring-fenced funds is easy. Look at your terms of service or ask the regulator of your favorite site. It could make all the difference to your next online poker deposit. “Only segregated and protected funds—they should be established as ring-fenced funds—can shield players’ monies effectively,” says one gaming law expert at an AmLaw100 firm. He adds, “Think of ring-fenced funds as monies in trust and earmarked as monies not belonging to the online company. “

Check That License!

Under the rules of AGCC, which apply to Full Tilt, ring-fencing player accounts is generally permitted but not required. It appears that the Commission initially approved the company’s plans to co-mingle participant monies with corporate assets. The laissez-faire policy of the AGCC in the little known state of Alderney also permits licensees to locate their physical operations elsewhere. Full Tilt is headquartered in Dublin. The Kahnawake Gaming Commission in Canada, which licenses the operations of the Costa-Rican based Absolute and Ultimate Bet Poker sites, is similarly lax, allowing site operations to be set up thousands of miles from them and without obligation to separate player monies from their own.

Immediate Note to Self #1:

Full Tilt has obtained a secondary license from the Kahnawake Gambling Commission just in case the AGCC decides at some point to revoke its license. This state of affairs sounds like a good fall-back position for Full Tilt and a promising development for a pitch to a potential investor, but don’t count on segregated and protected player funds if the active license is with the Kahnawake authorities.

Banking On Full Tilt

From the beginning, Full Tilt Poker positioned itself to use player funds to increase its earning power for itself rather than as a custodian of others’ monies, taking advantage of the permissiveness of the AGCC. Generally, its licensees may select one of three options by which to hold participant monies; placing them either in co-mingled, segregated, or segregated and protected accounts. However, since the suspension of their license, the AGCC has imposed a requirement that “licensees comprising FTP arrange for the ring-fencing of identified players’ funds under their control.” This late-coming consideration to player protection has not disguised the Commission’s higher priorities. AGCC commissioners’ first order of business at the recent hearing was payment of Full Tilt’s overdue licensing fees for renewal. Promptly upon receiving it, the license was renewed though AGCC was quick to point out that the suspension of the license continues until adjudicated at an upcoming hearing that will take place not later than 15 September.

Stricter Rules in Isle of Man

Players who choose to ante up at Poker Stars make a far better bet on genuine player protection. Poker Stars operates under the rules of the IOM Gambling Act of 2001, as additionally updated in 2010. The tax haven home of the online poker giant offers no option to engage in flexible business principles and practices with players. According to the Commission’s public statements, licensees must set up segregated and protected accounts and retain sufficient reserves to insure payouts of customers. Ring-fenced player accounts are obligatory. This means if you choose to set up shop there, player deposits must be segregated from other corporate assets, available and held in the manner of trust monies, and out of the reach of creditors and the kind of seizure activity that was implemented Black Friday. The Isle of Man also requires licensees to maintain their headquarters locally. Poker Stars is one of the island’s largest employers. Compliance is monitored locally by Isle of Man authorities who have the power to enforce Isle of Man GSC regulations. The potential effect of different licensing rules on licensees cannot be overstated for players with monies in any online poker site— anywhere in the world.

Immediate Note to Self #2:

You should make certain that an online poker company’s license to operate includes a mandatory provision to put your deposits in ring-fenced accounts or equivalently protected trust funds. Even then, putting your funds into an online poker site is not as secure as a bank. The Isle of Man is the first to make this clear with a public warning that absolves itself of protecting monies that flow through third party payment providers engaged by license holders.

Immediate Note to Self # 3:

The integrity of an online site and its payment processor are as critical to the welfare of your deposits as the safeguarding of the accounts themselves. The ability to understand the applicable laws that affect the business of online poker, and the risks associated in interpreting them differently from the government, can be more critical—as is now evident to both operators and players who have been stung. Here is where the rubber meets the road in the DOJ’s case against the defendants in a country that is saddled with the Unlawful Gambling Enforcement Act of 2006 which triggered the events of Black Friday.

Editor’s Note: Ms. Eolis is CEO of EOLIS an internationally recognized legal/business/government affairs consultancy with 40 + years of experience in the worldwide gaming industry. In her spare time she has proved it doesn’t take a pro to beat a pro. She was the first woman to cash at the WSOP and counts 10 more cashes in major competitions.

The Government’s Dramatic Press Release

The Department of Justice and Federal Bureau of Investigation teamed up for the press release that signaled the imminent shock-and-awe attack that would turn internet-based gambling in America on its head—in a matter of hours.

The Government began by bullet-pointing the criminal charges of bank fraud, laundering of billions in illegal gambling proceeds, and illegal gambling offenses against eleven defendants connected with Poker Stars, Full Tilt and Absolute Poker, including the companies’ respective founders—Isai Sheinberg, Ray Bitar and Scott Tom.

The press release also highlighted a civil complaint, citing a multi-billion dollar civil money-laundering and forfeiture action against the “Big Three” poker companies, their assets, and the assets of several of their payment processors. The plainly pleased government representatives also pointed to the restraining orders that were issued against seventy-six bank accounts purportedly utilized by the poker companies and their payment processors, as well as the government’s seizure of their dot com domain names.

 The Going Gets Tough

By day’s end, the poker companies had switched to alternate domain addresses to serve clients outside of the United States. Poker Stars and Full Tilt re-engineered their software so as to immediately shut off all money games to U.S.-based players. However, Absolute Poker refused to yield its position, insisting it was free to engage American players. It continued to welcome Americans to their sites. As we go to press, their site is not accessible but the company has issued a statement that it is communicating with the government.

No matter the trials and tribulations of the defendants, online players loomed as innocent losers—shut out from online poker as a livelihood, an income-producing hobby or a favorite pastime—unable to access the millions of dollars tied up in the online accounts.

The Tough Get Going

The initial press releases from each of the sites on April 15^th, following the civil complaint and seizures, did little to calm the shattered nerves of players despite the best efforts of the companies’ public relations teams. The safety of client deposits was simply not credible against the backdrop of the day’s events. However, once the Justice Department announced that domain agreements with Poker Stars and Full Tilt would “facilitate” return of customer monies, player fears of losing their account balances began to dissipate.

The Crux of the Agreement

The domain name agreement permits both Poker Stars and Full Tilt to return to their seized dot com domains for the purpose of doing business with non-American-based players, with the explicit understanding that neither American players nor visitors to the United States can patronize the sites’ real money games or play for anything of value. The agreement also expressly allows for the two companies to use their dot com domains to facilitate player refunds, but it does not otherwise address the seized monies or the process by which player funds might be returned. Poker Stars has emphasized that player monies are not co-mingled with company assets.

Prior to the execution of the domain names agreement, the Justice Department was reportedly inundated with complaints from outraged players. This could explain part of the Justice Department’s press release of April 20^th which acknowledged in large print, “As Part of Agreements, Use of Domain Names Pokerstars.com and Fulltiltpoker.com Will Be Restored to Facilitate Return of U.S. Player Funds.”

Reading further into the agreement, U.S. Attorney Preet Bharara also made clear, “The Complaint, a related Indictment, and a related Restraining Order issued against multiple bank accounts utilized by the companies and their payment processors did not prohibit the companies from refunding players’ money.” The Office added, “Nevertheless, this agreement will facilitate the return of money,” by allowing players “to register their refund requests directly with PokerStars and Full Tilt Poker.”

Refunds May Not Come So Fast

Poker Stars and Full Tilt each released statements following the execution of their domain names agreements. The two press statements showed sharp differences in tone and content.

Full Tilt stepped up to the plate cautioning players to be patient. However, their caveats relating to practical and legal issues were not well received among some customers. One player, who claimed that he reflected the sentiments of many, saw the press statement as “lacking a commitment to expeditious resolution of refunds.” According to a lawyer who has reviewed the domain names agreement,  “Full Tilt’s statement was well advised.” Full Tilt refrained from any comment as to how or when the process of player refunds might begin.

In contrast, Poker Stars sounded a more soothing and optimistic tone telling its audience, “The U.S. Department of Justice Agreement expressly states that the domain name (pokerstars.com) can be used by PokerStars outside the U.S. to facilitate the provision of real money poker services, and that PokerStars can pay out player balances to its former customers in the U.S.” It continued, “Returning U.S. players’ funds is a top priority for PokerStars, and the company can now start the process of returning money to its former U.S. customers.”

The Poker Stars press release had the effect of making Full Tilt look more credible to some players while raising questions with others as to whether it was deliberately dawdling on plans to return player funds.  
In a subsequent statement, Poker Stars acknowledged, as had Full Tilt, that it would first have to find a suitable processor. The company expressed hope that it would be able to return American players’ monies within a few weeks.

What is the Point of UIGEA?

Lawyers interviewed for this article have explained that the charges brought by the Justice Department are rooted in the Unlawful Internet Gambling Enforcement Act of 2006 which prohibits financial institutions from processing financial transactions for the purpose of certain gambling over the internet. They concur that UIGEA does not directly address the legality or illegality of online poker. Moreover, they point to a schism between the Government and online poker businesses due to their different interpretations of the provisions of UIGEA. One of the lawyers tutored on the finer points of UIGEA: “The UIGEA does not directly reference poker as an illegal gambling activity.” In Section 5362 of the act, he explained, “a wager or a bet includes the risk of something of value over the outcome of a contest, sporting event or any game subject to chance.” However, he went on to say, “A game or contest that involves betting with a strategy that is subject to some chance (like poker), rather than having a predominance of chance (like roulette) in determining the outcome, may be viewed as a legal activity.

In any event, lawyers hither and yon insist that if, as a matter of law, poker were to gain widespread acceptance in state courts as a game of skill, it would lead to an exemption from enforcement under UIGEA. In my next article, I’ll explore the status of poker as a game of skill and the potential impact if poker is treated as a skill game.

Online Poker is on the Rocks

Meanwhile, for the moment, here in America the Justice Department’s position on UIGEA prevails; the DOJ is holding the hammer and wielding it ferociously against these off-shore operators who have accepted bets from American resident poker players.

While the Big Three defendants have come around to embrace licensed, regulated, and taxed online poker operations, even if they escape from the hefty criminal and civil penalties currently bandied about in the Government’s case to date, most of the lawyers interviewed say the road back to online gaming in America may be a long one. As to the defendants’ prospects, one experienced white collar attorney summed up, “It is not reasonable to expect that Poker Stars, Full Tilt or Absolute Poker will be exonerated in a manner that will allow them to re-enter the U.S. market in the future.”

Nevertheless, one of the queried lawyers posits a scenario in which legalization of online gambling is accelerated, led by state legislation. Another dissenting optimist predicts the Justice Department is only looking for money and really does not want to face a fight over the skill factor. He says if the government’s proof in the criminal charges is weak, we should anticipate that Full Tilt and Poker Stars will be flying high in the States again.

For the time being, however, professional poker players and enthusiasts are deprived of jobs and treasured recreational respites—with neither control nor precise information regarding how and when their funds deposited in these sites will become available to them.

Note: This article also appears this week in it’s entirety in PokerPlayerNewspaper

WSOP Tournament Director Jack Effel: Gentleman Sheriff

He acknowledged the presence of a few men at the tables, explaining that Harrah’s would not deprive the intruders of the right to play in the event. Lawyers had advised it might not be legally permissible to do so. He made himself clear: his warm welcome was reserved for the ladies. The tournament had been planned strictly for them.At the end of the 2010 Ladies Championship, WSOP officials remained unyielding in their passion for the rich tradition, and unapologetically supportive of their noble cause on behalf of women poker players who seek to continue this special event at the WSOP.In a post-tournament conversation, Effel expressed special empathy for women who had been offended by a crude man who sported a tampon as a card protector. Though Effel did not eject him from the tournament (the offender was given a two-round penalty) Effel warns, “Just because that player was not removed from the tournament shouldn’t give anyone the idea that the next person who tests the boundaries of permissible conduct won’t be shown the door.”

Men Do Drag and Gab Their Way Into Ladies Event

The competition began with a bit of low-brow but less criticized drama. At least one young gun among the fourteen male entrants pranced to his table in drag. The men’s arrival did little to dampen the spirits of experienced women pros who salivated at the chance to teach them a lesson by seizing their chips. But many of the ladies had looked forward to the unique networking opportunity and the fun of a ladies-only affair. For them, the event did not give them quite what they paid for.

Ultimately, tournament staff were unable to reason with 14 men as to why they should take their balls and bats and go home for the day. So grudgingly, on the advice of their legal department, WSOP officials allowed the intruders to hijack the tradition.

Boys Will be Boys at the Venetian

It was only a matter of days after the WSOP Ladies Championship that three male players trotted over to the Venetian ready to put up their dukes at yet another Ladies event. To their chagrin, Poker Operations Director, Kathleen Raymond took the starch out of their sails, ordering that the male imposters be granted seats at the table without a discussion about whether they were pranksters without a cause or protesters making a viable political statement. It was a simple strategy of take the buy-in money and run— back to the rest of the business at hand.

Harrahs and the Venetian Move On

Tournament executives at the Venetian, like their colleagues at the WSOP, expressed disappointment that a day carved out as much to honor the ladies as to encourage them to participate more broadly in serious poker competition, had been changed unexpectedly.

Both Harrahs and Venetian officials now say they are more concerned about looking further into the issue and will consider future options once they are more fully informed.

At the WSOP Ladies Championship just one male cashed in the event. The losers were roundly applauded. The Venetian’s “Ladies Do” took a harder hit. One of the imposters cashed in fifth place.

Joanne Liu— a Poker Lady Who Fears No Man!  

Wendeen H. Eolis, The WSOP Grand Dame of Poker with Poker Star JJ Liu

Weeks later, poker forums and online poker blogs were still debating the biggest controversy of the season, and last night, so was the mini United Nations of poker players assembled for a big birthday dinner in honor of longtime poker enthusiast Dan Alspach. Top female tournament pro Joanne “J.J.” Liu was holding court in celebration of husband Dapper Dan Alspach’s most recent addition to his 21+ birthday. Alspach introduced the couple’s two-year-old daughter along with his wife’s 18-year-old son, and then turned the tables on his Ms. JJ, singing her praises, both as a “top mother” and a top player in open events at the felt.

Joanne Liu’s poker resume includes enviable performances at the 2010 WSOP—where she played in the Ladies Championship “with pleasure”—even though she didn’t cash in that one. Ms. Liu is a hold’em specialist, keen on all variations. She has posted a third place finish, a seventh place finish, and a third cash, putting her into a tied position of 105 points with Jennifer Harmon—the highest standing among women—in the competition for the 2010 WSOP’s Player of the Year.

Birthday Party Revelers Weigh In on the Ladies Event

No sooner had Alspach finished his testimonial to Liu, than the mini United Nations of Poker Players that Liu had assembled turned to the topic of the WSOP Ladies Championship. Bertrand (ElkY) Grospellier a WPT and EPT champion player noted that his Koreanborn girlfriend Cathy Hong had cashed in the Ladies event. He said, “Men shouldn’t have played the event.” Smiling at his honey, he added, “It is not necessary for women to play in a restricted environment. They don’t need to do it.”

Irishman Alan Smurfit, a WSOP bracelet winner pressed his fiancée Guadalupe Santiago, a ravishing Mexican beauty, to try the WSOP ladies event next year. Tom McEvoy, a former main event winner and victor at last year’s tournament of champions at the WSOP did a serious rant on the insulting behavior of men who entered this year’s Ladies event, describing it as “totally outrageous and an inexcusable affront.”

The beguiling Taiwanese-born Ms. Liu said she “played with pleasure, despite the guys being around.” A nominee to this year’s class of Women in Poker Hall of Fame, Liu says, “I believe women who are successful should embrace other women and cheer them onward and upward.” She explains, “Ladies events are the easiest and most exciting tournaments for a newbie to get her feet wet.” She hopes the men will consider respecting the tradition better next year.

The Lawyers Rule

Sadly, the concept of ladies poker events is probably subject to near-term extinction unless organizers can determine they have a reasonable legal basis on which to include them in their schedules and lady poker players unite against the few women who would criticize ladies events as a means by which to try to elevate themselves in the eyes of male competitors and the press.

What are the perils of a successful bias claim against organizers of a Ladies Poker Tournament, if marketed as such? Inquiries to a half dozen lawyers in Nevada and Washington yielded no help, as none could offer up any case law—federal or state— to corroborate the supposition that such tournaments would be proven illegal in Las Vegas. Is it not time for the WSOP and other organizers of poker tournaments to look further for guidance rather than reacting solely to the fear of repercussions?

Ladies Can be More Trouble than Men

At the 2010 WSOP, a few high profile poker women were bigger troublemakers for Ladies events than even the uninvited men! Not content merely to stay away if they were uninterested in playing the event, they presented themselves to men as toughies and to the press as worthier celebrities with snarky comments about other women’s poker aptitude and disdain for the existence of the ladies event.

Annette Obrestad and Annie Duke were among a handful of women who used the contretemps as an occasion to broadcast their views. Early in the Series, Obrestad, the Norwegian prodigy, who had previously bragged about playing poker online as a 15 year old minor said, “It’s easy money… I’ve always said that girls suck at poker.” When push came to shove. Ms. Obrestad took a pass on competing in the “easy money” ladies event.

Ms. Duke, who has regularly served as a paid instructor to prepare women for competition right around the time of the ladies event, has nevertheless firmly opposed participation in such restricted competitions since the inception of her career. She told reporters that she could care less “if two or two hundred men crashed the event.”

Then there was the case of another female blue ribbon winner, an emerging poker pro. The evening before the WSOP ladies event, she reportedly walked with a male friend to a tournament cashier cage assigned to diamond-card holders. She smiled coquettishly and asked to register for the next day’s festivities. In the next moment, she made a quick switch ofplayers, presenting her companion’s card for the entry ticket. Ten Franklins later she had fooled WSOP officials into giving him a seat, instead of looking to him to act like a man. She registered herself the next day. This lady did more to tarnish this year’s Ladies Championship event and harm the image of women in poker competition than the act of any man who simply chose to take his seat without respect for a rich and harmless tradition.