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US Online Poker Domains Seized

By: Shirley Spicer, Tuesday April 19th 2011
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Online poker rooms are distinct from online casinos. Online casinos offer games like roulette, blackjack and slots where the players bet against the casino. At online poker rooms players compete against each other with the operator taking a rake. Even if an operator offers both products it is on different portals. However both operate largely in the same technological, financial and legal environment and therefore what affects one can affect the other. An event of major importance occurred with respect to some US online poker rooms that everyone engaged in any form of online gambling should keep tabs on.

On Friday April 15, the US Department of Justice (DoJ) seized the American domains of the three largest online poker rooms – Poker Stars, Full Tilt Poker and Absolute Poker. A notice for the arrest of the owners of these online gambling sites is out. These owners are presently not in the United States. A demand of over $3 billion in penalties has been made.

The indictment has been made under the UIGEA 2006. Conducting illegal online gambling is one of the charges made by the DoJ, but this is the least severe of the charges. The ones that will really matter in the end are bank fraud and money laundering. The allegation by the DoJ in its indictment is as follows. Payments have to be received from players by the online gambling sites. The UIGEA has made the funding of illegal gambling a criminal offence and has held the bank accountable. Therefore American banks are wary of transferring funds to online gambling sites. Allegedly the three online poker sites used payment processors who declared to the banks that these payments were being made to online merchants for purchasing merchandise like jewelry and golf balls. And it is this aspect of the transaction that can get the poker sites into trouble according to legal experts.

The action of the DoJ has been condemned by everyone in the online gaming industry, particularly those associated with online poker. However there has been no official reaction from the three online poker rooms. Apparently their domains outside America are running for now, though the traffic is lower. Also there has been no reaction from the other online poker rooms and online casinos that service American players. Legal experts are advising players to wait and watch for a few days.

Though the event will have industry changing repercussions, it was not totally unexpected. When the UIGEA was enacted in 2006 software providers like Playtech and Cryptologic and payment solutions provider Neteller withdrew from the American market. Two years later Microgaming followed suit when the Kentucky domain name case started. Whether this event will cause further flight of online gaming service providers or not remains to be seen.

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