Holder is the head of the U.S. Department of Justice (DOJ), which is currently stripping online gaming entrepreneurs of their intellectual property rights. Technically, online gambling has never been declared “illegal” in the U.S. and yet the DOJ is citing a hazy law in order to allege that online gambling is a crime.
On Monday, July 2, the federal government arrested Los Angeles native Ray Bitar as he landed at John F. Kennedy International Airport from Dublin, Ireland. Bitar is the CEO of Full Tilt Poker, an online gaming operation that is headquartered in Dublin. The DOJ accuses him of criminal activity, including allegedly running “an international Ponzi scheme” to take money from online gamers and enrich Full Tilt ownership. If convicted, Bitar faces a maximum sentence of 145 years in prison.
The Wall Street Journal points out: “The site's users, thousands of individual poker players, had set up accounts with Full Tilt in order to have money to wager with, the government says. Yet toward the end of 2010, it became increasingly difficult for Full Tilt to transfer money due to the government's crackdown on payment processing for poker.”
So it appears that the government played a role in exhausting Full Tilt’s funding and is now accusing Full Tilt of running a Ponzi scheme. Admittedly, Full Tilt ownership held out hope for revival and erroneously portrayed its operations as healthy to its players until late in the government’s investigation. But this seems like poor judgment, not a Ponzi scheme.
Holder's game of "strip poker" began on April 15, 2011, when the DOJ and the FBI clamped down on the online gaming industry that does business in the U.S. The DOJ charged the founders of the three largest internet companies, Absolute Poker, PokerStars and Full Tilt Poker, plus eight other defendants, with illegal gambling offenses, money laundering and bank fraud.
No individual player was charged with criminal activity, however, the DOJ seized five key internet domain names and put restraining orders on over 75 defendant company bank accounts that process payments, effectively freezing online poker in the U.S.
Holder’s DOJ cites the Unlawful Internet Gambling Enforcement Act (UIGEA) in this prosecution. The integrity of UIGEA is suspect because dirty politics played a key role in passing it. On Oct. 13, 2006, presidential hopeful and then-Senate Majority Leader Bill Frist slipped UIGEA through Congress by attaching it to a high priority port security bill, in a clear attempt to win political favor. The New York Times notes that
Additionally, portions of this prosecution cite state gambling laws while the three defendant companies operate overseas where federal law governs international commerce. So, it’s not entirely surprising that foreign-based poker companies persisted in servicing the U.S. market.
Furthermore, the Fourth Amendment forbids Holder from snatching private property from American gaming entrepreneurs like Bitar and his Full Tilt founding partner, professional poker player Chris Ferguson.
The Fourth Amendment grants all Americans the right “to be secure in” their private property without the threat of “unreasonable searches and seizures.” And private property includes intellectual property, such as internet domain names and online businesses. Running an online gambling business is “virtual” and “risky” but these factors alone do not give the federal government the right to seize the business and arrest the owners.
Interestingly, some of the online poker players with the most money tied up in Full Tilt do not seem as frustrated with Full Tilt ownership as they are with the U.S. government—and they have moved to Europe, where online gambling is legal.
For example, one of America’s biggest online gambling superstars (with up to $6 million currently tied up in Full Tilt) is Daniel ‘Jungleman’ Cates. Cates moved to London after the DOJ’s crackdown and he recently told the UK edition of PokerPlayer magazine: “It was just the (online) poker that brought me here, no offence to the UK. It’s a lot easier living in the US. But until they regulate poker in the US I will stay in Europe.”
Holder could be answering Congress’ questions regarding Fast and Furious. Instead, Holder’s DOJ is denying America thousands of jobs from the $6 billion U.S. online poker industry.
What’s the big deal if some Americans prefer gambling online to betting around an antiquated poker table? It’s about time that the federal government stops stripping online gaming entrepreneurs like Bitar of their constitutional Fourth Amendment rights by referencing state laws that have no jurisdiction over overseas operations and by pretending that gambling online is a crime.