Do you play online poker for profit? Not anymore...

[Gutboy Barrelhouse]

http://abcnews.go.com/print?id=7808131

Feds Freeze Poker Champ's Winnings
Federal Officials Order Banks to Freeze Millions in Online Poker Winnings
By RUSSELL GOLDMAN
June 11, 2009—


On the Sunday before Memorial Day, David made the big time.

Winning $10,000 in an online poker tournament made him eligible for the upcoming World Series of Poker, the game's premier event, where hundreds of players -- amateur and professional -- descend on Las Vegas from around the world to play for a multimillion-dollar pot.

To register, he simply had to cash a check cut by a company that processed payments for the poker Web site Pokerstars.com and use the $10,000 to buy into the series.

When he went to cash the check from Account Services Wednesday, it bounced, he said.

What David, a 41-year-old from Virginia who spoke on the condition that ABC News use only his first name, initially thought was a glitch turned out to be part of an unprecedented government crackdown on online poker that affected some 27,000 people.

Late last week, the federal government ordered five banks to freeze a total of $30 million in payments owed to the players from companies that process payments from two offshore gambling sites, according to the Poker Players Alliance, a group that represents the interests of the companies and players.

"It's not like the government went after money that the site made, instead they seized money that belonged to me," David said. "There is no law that restricts citizens from recovering money."

According to the alliance, federal prosecutors working out of New York's Southern District ordered Citibank, Wells Fargo and three smaller banks to freeze funds in accounts belonging to Allied Systems and Account Services, companies that process funds for the poker sites.

Some affected players who gamble at the popular sites FullTiltPoker.com and PokerStars.com first realized they could not access funds in their accounts over the weekend when checks issued from the companies bounced.

Online poker, a $9 billion to $12 billion a year industry, is legally a gray area, experts told ABCNews.com. Washington is the only state with a law on its books that bans residents from playing on the Internet. The sites themselves, however, are not allowed to operate in the United States and are all registered overseas.



Online Poker Players Alliance Criticizes Freezing of Accounts
"There is no legal precedent for what the government is doing," said John Pappas, executive director of the alliance.

"We contend playing online poker is not unlawful. The government is going after the players' money, not the sites'. The fact is, there is no federal law against playing online poker," he said.

Though the government maintains that online gambling is illegal, the U.S. attorney's office in New York would not comment on the case or confirm an investigation was under way.

According to federal documents obtained by The Associated Press, a judge in the Southern District of New York issued a seizure warrant last week for an account at a Wells Fargo bank in San Francisco. The AP reported that the documents also showed that a federal prosecutor told a bank in Arizona to freeze an account.

In a letter dated Friday and faxed to Alliance Bank of Arizona, Arlo Devlin-Brown, the assistant U.S. attorney for the Southern District of New York said that accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture "because they constitute property involved in money laundering transactions and illegal gambling offenses," according to the AP.

In another letter, Devlin-Brown asks that the bank treat the funds "as legally seized" by the FBI, saying that the government has probable cause that the gambling payments of U.S. residents had been directed to offshore illegal Internet gambling businesses, the AP reported.

A source at Citgroup familiar with the government request, however, confirmed the "bank has been contacted and is cooperating" with the authorities.

According to the alliance, the laws cited by prosecutors "appear to allege violations of the Wire Act and the Illegal Gambling Business Act" and not to a more recent piece of legislation on online gaming called the Unlawful Internet Gambling Enforcement Act.

Another player, Sam Friedman, a 24-year-old accountant in New York City who plays every night in tournaments on FullTiltPoker.com, said he realized the company had last week removed an option to deposit winnings directly into his Citibank account.



Internet Poker Players Say Feds Are 'Reaching Into People's Bank Accounts'
"There are lots of ways to deposit and withdraw money and payment options are always disappearing, but something didn't seem right," Friedman said.

"I can't believe the government is reaching into people's bank accounts like this," he said. "For a lot of serious players this is their lifeblood. This is how they make ends meet."

Both FullTiltPoker.com and PokerStars.com have reimbursed players who tried to cash out and were unable to.

"In light of recent events involving the freezing of certain accounts, Full Tilt Poker would like to assure all players that their funds remain safe and secure," spokeswoman Michelle Clayborn said in a statement.

"All players who were affected by the current situation have had their funds returned to their accounts," the statement said. David, the World Series hopeful, said he had been reimbursed by PokerStars and given an additional 10 percent credit.

He used his own savings to buy into the World Series and will use the winnings from his championship game online to pay himself back as soon as he gets them, he said.

[Merusk]

"I can't believe the government is reaching into people's bank accounts like this," he said. "For a lot of serious players this is their lifeblood. This is how they make ends meet."

Yeah, how dare the government seize illegal assets!  They should totally get together with the drug cartels and the mafia and file a lawsuit.

[rattran]

This is not in Politics. Keep things civil and reasonable here, and it will stay here. Otherwise to the den it goes.

[Abagadro]

They aren't illegal assets as there is no federal law making playing online poker a crime.  They tried under the Wire Act and got shot down by a court.

[Trippy]

If the payments from players are used by the online poker companies for illegal activities (like money laundering) and then some of that money is paid back out to players, is the paid out money considered illegal assets?

[Grimwell]

I'd move this to politics now... you know it's going to slip over the edge.

Plus, the government is stupid. Seems that it really doesn't seem to matter who's in charge. 

[WayAbvPar]

This is such fucking bullshit. I was hoping that Obama would help unfuck online poker. Obviously not. I was 1 step away from a WSOP seat a couple of weeks ago. Maybe it is good I didn't make it.

[Morat20]

This is such fucking bullshit. I was hoping that Obama would help unfuck online poker. Obviously not. I was 1 step away from a WSOP seat a couple of weeks ago. Maybe it is good I didn't make it.

Has he replaced the relevent folks for that area yet? Bush's Justice Department moved a lot of anti-gambling and anti-porn folks into the woodwork, and I know that not all their bosses have been replaced.

Stupid move though -- can't see it holding up in court given the current laws and precedents.

[Broughden]

This is such fucking bullshit. I was hoping that Obama would help unfuck online poker. Obviously not. I was 1 step away from a WSOP seat a couple of weeks ago. Maybe it is good I didn't make it.

Has he replaced the relevent folks for that area yet? Bush's Justice Department moved a lot of anti-gambling and anti-porn folks into the woodwork, and I know that not all their bosses have been replaced.

Stupid move though -- can't see it holding up in court given the current laws and precedents.

This ^.
Plus cant the people who had their money seized sue the NY Attorney's office for illegal search and seizure?

[trias_e]

"because they constitute property involved in money laundering transactions and illegal gambling offenses,"

 

This is just plainly incorrect.  Playing online poker is not illegal in the U.S. (except for Washington state, I believe).   The UIGEA specifically makes the player's winnings exempt from any action as well.  As someone who makes a meager living playing online, who pays taxes on all his winnings, fuck these law-breaking thieving bastards.  

Of course, Full Tilt took the hit for me on the check that bounced.  And gave me a small bonus to make up for it.  They are desperate to keep their customers, for good reason, as these sites are basically moneyhat factories.

But if the government can get away with illegally seizing my money whenever they feel like it, clearly this will eventually become a problem.  I doubt that Poker Stars and Full Tilt will take too many hits like this without giving up on the U.S. market.

[Ironwood]

I don't understand.  Can someone summarise for me ?

Is gambling actually illegal ?  Or is it online gambling ?

How does that work if someone manages to sign up - how the hell can they refuse the winnings once those winnings were issues without also booking the issuer ?

[trias_e]

Oh, and to add to all of the bullshit, I recently found out that I'm soon to become an alcoholic depressed child abuser. 

http://www.cnbc.com/id/15840232?video=1148592712&play=1

[HaemishM]

I don't understand.  Can someone summarise for me ?

Is gambling actually illegal ?  Or is it online gambling ?

How does that work if someone manages to sign up - how the hell can they refuse the winnings once those winnings were issues without also booking the issuer ?

We are a weird fucked up country when it comes to sex gambling. For instance, in Mississippi, it's illegal to gamble - technically, it's illegal to run a poker game out of your house with your buddies. BUT - if you go to the Gulf Coast and the gambling is on a boat docked RIGHT AT THE FUCKING BEACH (which is apparently international waters only for the purposes of gambling), it's legal. Or if you do it on Indian Reservation land... or the Mississippi River. Anywhere else in the state, it's illegal to do any kind of gambling. Look at a map to see how fucked up and stupid that is. We have boats just miles south of Memphis (which is in Tennessee, our northern border state) where gambling is done legally. And little more than a decade ago, our attorney general (the same cunt who helped start the tobacco lawsuits) said that BINGO nights where money or prizes were won was also gambling and thus illegal.

The state of Nevada, however, gambling is legal. Oh and it's illegal to bet on sports matches here, unless you are placing the bet through Vegas.

Yes, it's that fucked.

[Teleku]

Or, in short, Gambling isn't illegal in America.  Every state sets it's own laws concerning Gambling.  Same with prostitution (and technically the drinking age, but the federal government has a standing threat to stop giving all highway funds to any state that lowers it below 21).  Its not really weird or fucked up, just that their is no federal mandate, and everybody gets to decide on their own whether they want to tolerate it or not.

ONLINE Gambling appears to be illegal (or something) at a national level...

[Trippy]

To make it more confusing, some states don't consider Poker "gambling" since it's a game of skill and you aren't playing against house. So, for example, in California, gambling where you are playing against the house is illegal except in Native American land. "Parimutuel" betting where you are playing against other people and the house only takes a small cut is legal in California in some situations like in horse racing. Poker is also legal in California since it's considered a game of skill.

[MahrinSkel]

I don't understand.  Can someone summarise for me ?

Is gambling actually illegal ?  Or is it online gambling ?

Gambling is legal in some form in virtually every state, but which forms, and what exact part of the gambling process might be illegal, changes from state to state, within counties inside those states, inside cities/towns within those counties, and even from one block to the next in some cases.  In some states Native American tribes can set up casinos, in others they can't, and in many they can with state legislature approval (which leads to a lot of money getting spread around as a tribe fronts for a major casino operator).

Americans love to gamble, and hate people who gamble and people who operate gambling schemes, and they love to split hairs about exactly which part of gambling is bad (or is even gambling), and pass confused laws about gambling that inevitably have the side effect of making somebody rich because they have the most convenient form of legal gambling for a certain population.  For example, under federal law, operating an online gambling site is illegal, and passing money from the players to the site operators is illegal, but actually engaging in online gambling is not, nor is collecting your winnings (as long as you pay the IRS their cut).  However, horse-races are an exception, you can bet at venue-authorized OTB operations as long as the jurisdiction doesn't prohibit it (licensing of this form to casinos of all stripes, in Nevada, Atlantic City, Indian reservations and dockside "boats" that were built on site and barely float, is about the only thing keeping horse racing financially viable)  In many places operating a Keno game gets you five-to-ten, but churches run cash bingo games with the priest calling the numbers.

And there's always the worst odds in town: The state and multi-state lotteries.  Only 6 states, mostly low-population (Alaska, Alabama, Mississippi, Missouri, Hawaii, and Utah), do not have some form of this particular flavor of legalized state-operated gambling.  As near as I can tell, all but one of them has some form of legalized (and heavily taxed) gambling.  Even Utah has a "games of skill" exemption for private gambling, and allows commercial bingo parlors under special licensing and taxation.  Strangely, Hawaii is the only state where there are absolutely no loopholes in the gambling statutes (besides taking a boat 12 miles offshore, and returning to Hawaii with any gains from that including physical prizes or foreign bank accounts is illegal unless you touch base in another land-based jurisdiction first).  I remember that in the 80's some game show got in trouble for taking a road trip to Hawaii, when the cops decided they were an illegal gambling operation and arrested everybody.

--Dave

[Lantyssa]

Yes, it's that fucked.

It's further messed up because all the casinos in Biloxi that were wiped out by Katrina are now on land.

[HaemishM]

Yeah, one of the good things Haley "Bubba" Barbour did after Katrina was remove that retarded restriction that said you have to do the actual gambling on the water and can only run a gambling outfit if you have a hotel on land. THAT was super-retarded.

[SnakeCharmer]

Aren't the only casinos on land are the ones that were there before Katrina (i.e. grandfathered in)?  Or is it any and all future casinos?

Anyway, the reason the govt outlaws online gambling is because they can't regulate it - otherwise known as taxing the shit out of it for both winners and the owners of the site.  They like to claim its for protection of the 'consumer' but the reality of it is they're losing billions in taxable funds.  States don't like it it either, since it shorts their taxable revenue as well.

Which is really fucked up because if I buy something from newegg.com, I don't pay Alabama (or local) sales tax.  I don't think I pay whatever sales tax where ever newegg is located.  Granted it may be built into the sale and I just don't see it.  But given just how much people buy online these days, you'd think local and State governments would be jumping up and down about it.

[HaemishM]

Aren't the only casinos on land are the ones that were there before Katrina (i.e. grandfathered in)?  Or is it any and all future casinos?

That I'm not sure about.

Which is really fucked up because if I buy something from newegg.com, I don't pay Alabama (or local) sales tax.  I don't think I pay whatever sales tax where ever newegg is located.  Granted it may be built into the sale and I just don't see it.  But given just how much people buy online these days, you'd think local and State governments would be jumping up and down about it.

Oh the state governments have giant raging hard-ons to tax online sales. They just hhaven't been able to get the Federal government to go along with it. Some states do collect the tax for some retailers... it mostly just depends on the retailer. But for instance, MS has just in the last 2-3 years tried to go back and collect back taxes on things like web site design (which they used to exempt from charging sales tax on) claiming it should now be taxed like any other design service as opposed to a programming service.

[NowhereMan]

I always hated shopping in America where you've got to mentally add local sales tax onto the advertised prices of everything. Would it be that difficult to print out price stickers that add in sales tax rather than waiting to find out how much it adds on when you go to pay (I say that primarily as someone who never knows what the sales tax actually is, since it doesn't seem to be the most important fact to research before visiting). Of course the other option would be for local states to charge you whatever the excess for sales tax is upon delivery and have courier services/the post office handle charging. I'm guessing the legality as well as logistics would be very tricky though.

[Teleku]

Aren't the only casinos on land are the ones that were there before Katrina (i.e. grandfathered in)?  Or is it any and all future casinos?

Anyway, the reason the govt outlaws online gambling is because they can't regulate it - otherwise known as taxing the shit out of it for both winners and the owners of the site.  They like to claim its for protection of the 'consumer' but the reality of it is they're losing billions in taxable funds.  States don't like it it either, since it shorts their taxable revenue as well.

Which is really fucked up because if I buy something from newegg.com, I don't pay Alabama (or local) sales tax.  I don't think I pay whatever sales tax where ever newegg is located.  Granted it may be built into the sale and I just don't see it.  But given just how much people buy online these days, you'd think local and State governments would be jumping up and down about it.

The way tax with Newegg works, as well as any other online retailer, is that you pay sales tax on the item if the company is located in the same state you live in.  Though, this definition is expanded for big sites like NewEgg and Amazon.  With them, if they own any distribution centers (or any other physical brick and morter buildings I guess) in the state you live in, then you also must pay your local sales tax on it.  If neither of these two situations apply, then you don't pay sales tax.

Because of all this, living in California, I pretty much pay sales tax on almost everything I order online, because most of them are headquarter here anyways.

I always hated shopping in America where you've got to mentally add local sales tax onto the advertised prices of everything. Would it be that difficult to print out price stickers that add in sales tax rather than waiting to find out how much it adds on when you go to pay (I say that primarily as someone who never knows what the sales tax actually is, since it doesn't seem to be the most important fact to research before visiting). Of course the other option would be for local states to charge you whatever the excess for sales tax is upon delivery and have courier services/the post office handle charging. I'm guessing the legality as well as logistics would be very tricky though.

I believe the biggest reason is that the stores want to present their items as low priced as possible, and don't want to take the blame for the added charges the government throws on.  They're showing you what they are charging for the item, anything else is between you and the government.

edit: Not to mention, it would be a pain in the ass to keep track of everything.  Tons of items (like beer) have special taxs thrown in on top of sales tax, and these are always being changed.

Only way it would change is if the government passed a law forcing absolutely everybody to show the price with tax factored in.

[Abagadro]

In Utah you are required to declare all of your out of state purchases (including online) on your state income tax form and pay sales tax on them.

[Teleku]

And how exactly do they enforce this?

[rattran]

Illinois has the same laws, I think most states do. Enforcement is an issue, except for things like cars, where you can't register it in the state until you pay the tax.

[Righ]

Only way it would change is if the government passed a law forcing absolutely everybody to show the price with tax factored in.

That's what they did where NowhereMan is from. I believe that it is still a requirement to enforce such laws and to have a tax rate of between 15 and 25 percent to remain within the EU. It's fun for the retailers because anybody who is registered for charging value added tax (including any sole proprietor such as a taxi driver or a plumber) can claim back tax they have paid on any business expense, so the can ask any retailer for a VAT invoice and the retailer is required by law to produce one.

[Tebonas]

I believe the biggest reason is that the stores want to present their items as low priced as possible, and don't want to take the blame for the added charges the government throws on.  They're showing you what they are charging for the item, anything else is between you and the government.

Thats retarded. Personally I don't give a shit why I pay as much as I pay. They might feel better about themself, but they inconvenience their customer who has to fucking research how much he really pays!

[pants]

When I was in USA many years ago and said that that was retarded - it was explained to me that it was due to the whole revolution thing, and no taxation against representation or something like that (someone who is actually american can probably describe this better).  But apparently one of the big complaints against King George or whoever it was - he upped taxes and the average person didnt realise since they thought the price of things were just naturally going up.  So thus the whole 'must show actual item and sales tax separately'.

So if thats true (and I havent been bothered to google it), it at least has some logic to it.

[Cyrrex]

Having lived significant amounts of time in systems that both include tax in the price and don't include tax in the price, I find that the truth is this:  People are fucking stupid at the maths.  Just like you can't figure out how do add 8% sales tax to $10.99, they have no idea how much their 100 kroner item actually costs without the VAT.  Both ways are equally stupid when you cannot figure out the math.

[Mosesandstick]

It's much easier to work out post-tax prices from pre-tax prices! In the UK with VAT - divide by 20 and mutiply by 23 (15% VAT). Compare that to dividing a post-tax price by 23 and then multiplying by 20  .

[Cyrrex]

If that's how you figure out how to add a post-tax to your price, then you are one of those "stupid at math" people I was referring to.  You're in good company, so don't feel too bad.

[Righ]

But apparently one of the big complaints against King George or whoever it was - he upped taxes and the average person didnt realise since they thought the price of things were just naturally going up.

King George? Britain adopted value added tax in 1973. Clearly the Americans were prescient and were revolting against Edward Heath.

[Lantyssa]

I asked when I was about twelve and was told it was actually illegal to advertise the cost including the tax.  I never bothered to research it (being twelve and all), but still think it's dumb regardless of the reasoning.

[Jeff Kelly]

All over the EU every business (unless it sells to other business costumers who would be eligible for tax refunds) is required to give the price including VAT, because that's the price you actually have to pay.

[Koyasha]

Personally I think the price you have to pay should have the prominent 'large spot' on the sticker/ad/whatever, but taxes should also be required to be displayed (and not in tiny fine print that nobody reads either, somewhere obvious) so that people know how much they're being taxed without going to the effort of working it out.