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Online Poker And Fraud: What Is The Problem?
When three of the biggest companies in any
particular industry find themselves indicted on charges of fraud as well as
other financial misdemeanors it should rightfully give some cause for concern.
The online poker industry is massive. Tens of millions of Dollars is gambled on
a daily basis with companies raking in huge profits. However, executives and
owners of websites such as Full Tilt Poker, PokerStars, and Absolute Poker,
non-US companies, find themselves being investigated by the authorities with
regards to a number of issues including using tactics to circumvent Federal laws
to prevent their business from being restricted.
The problems originate more from the 2006
Unlawful Internet Gambling Enforcement Act rather than the earlier Illegal
Gambling Act of 1955 as the 2006 version is clearly the more up to date and
incorporates issues such as online payment processing. How big is the problem?
Considering at the initial indictment $3 billion in civil penalties was being
sought it does indicate both how big the industry is with just these three
companies.
The reason as to why this is such an issue
is that this 2006 Act specifically looks at what is known as restricted
transactions with them being banned when conducted via the Internet. Of course
this does then mean that you are unable to process payments as part of a bet or
wager making it illegal to play games such as poker online due to Federal and
State laws. The companies involved in this case do appear to have believed that
they could play the system, perhaps due to them being based outside the United
States, and indeed beat it while managing to keep hold of all of their profits.
In total, 11 people were indicted, more than
75 bank accounts had limitations placed upon them, and domain names were also
affected. It is clear that these charges were the result of a lot of work by the
authorities prior to them laying charges against those at the top of these three
companies. It may also be worthwhile to point out that the charges laid against
these three companies are the same as those laid against the payment processing
companies in an earlier case. Not every company is involved in this as others
such as
party poker room have
paid fines to stop them being prosecuted and the fact they are paying $105
million shows how big the industry is.
So what are the concerns at least from a
legal perspective?
The main problem, as was mentioned earlier,
is in the way that these companies are trying to beat these gambling acts
although closer inspection on the indictments does show that the problem is
bigger than initially thought. Instead, it does appear that people within banks
are also guilty of what could be classed as accessory to commit fraud and the
potential ramifications are clear for all to see.
What has been said about these companies is
that they are guilty of tricking banks, although sometimes with what appears to
be insider help, into processing payments by lying about their business. This is
startling especially when you add in that it is believed they bribed people in
order to allow their profits to continually flow through their bank accounts.
Basically, what they have done is they have used banks in the United States to
effectively launder money that was gained illegally thanks to the 2006 Act and
have done so on a huge scale. The fact that they were able to find banks that
would simply ignore the law and work alongside them for a fee does mean that we
have to not only consider corruption in the poker industry, but the banking
industry as well.
By doing this, the companies involved
managed to keep their vast profits even though they knew they were breaking a
number of laws. It comes across as them believing that they were perhaps too big
to shut down or that they would simply get a slap on the wrist and a fine that
would be dwarfed by their profits. However, this is clearly not the case as can
be seen by the actions taken by the authorities.
What happens now with the industry? People
such as
party poker
room now have to look at how they deal with
people in the United States due to this legislation although clearly the
industry believes that this is going against their ability to operate as a
company. These companies are desperate to get Congress to change the laws as
they know that they are missing out on a huge market thanks to the popularity of
the game in the United States. Companies have to be careful in how they attract
people from the United States or they face the same general charges as the 11
defendants initially caught up in the original case.
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