US Online Poker Shutdown – GBGC assessment
FBI Shuts Down 3 Top Poker Sites – arrests made & bank accounts seized
On Friday 15 April 2011 The FBI and the US Department of Justice issues arrest warrants in the Southern District of New York to three companies (PokerStars, Full Tilt, and Absolute Poker) engaged in the business of betting or wagering committing a federal crime to knowingly accept in connection with the participation of another person in unlawful Internet gambling, credit, electronic fund transfers, or cheques. Penalties range from five years’ imprisonment and up to US$250,000 fine.
PokerStars quickly guaranteed players deposits and it was business as usual outside the US. Wynn Resorts immediately terminated its joint venture agreement with PokerStars.
Quoted in the Kansas City Star Nevada Gov. Brian Sandoval said the allegations made by federal prosecutors against the three companies were of “grave concern.” But he added that he remained committed to the possibility that federal legislation will eventually permit Internet gambling in a way that matches the same rigorous standards that apply to traditional gaming institutions.
Following the Unlawful Internet Gambling Enforcement Act (UIGEA) there was a significant weakening of the publicly traded companies as they grappled with a negotiated settlement with the Justice Department in New York and having to refocus their business on markets in Europe and elsewhere.
The irony is that the US federal government has been planning to introduce poker legislation and various states such as Nevada, California, New Jersey and Florida have been planning to introduce intrastate legislation.
Events of the last few days in the USA justify PartyGaming’ stance on settling with the US and they are likely to be the main beneficiary assuming they will eventually win a licence in the USA.
“The arrests in the USA are a game changer – no question. We are moving toward a global high tax, high regulation regime.”
“Some countries will be slow to join but as governments restrict competition (as in Italy, France, Spain and more likely than not Germany), operators will target those that remain giving rise to complaints from land-based operators who will see market share fall. As government tax revenues decline those countries will then act, following suit and join the “high tax, high regulation, low profitability” club.”
It was not so long ago that e-gaming executives were sitting on CEO panels at conferences saying “We want to come on shore” and “Yes, please tax us and let us apply for licences”.
Be careful what you wish for. Governments might just give it to you with both barrels.