The Department of Justice (DoJ) left a Chicxulub crater on the U.S. online poker industry on April 15th.
And when something like that hits, there’s typically a lot of misinformation to sift through in the rubble.
We plan to get back to regular poker news reporting this week, but before we do, here’s the biggest myths/misconceptions we’re hearing about the events of Black FridayTM. We’ll continue adding to this post as needed.
Myth: The DoJ has declared war on online poker.
Fact: The DoJ has not declared war on online poker. The Southern District of New York (SDNY) and DoJ spent years building a money laundering and bank fraud case against PokerStars, Full Tilt Poker, and AP/UB. If the allegations are true, then the Big 3 operators purchased/invested in at least part of a bank and miscoded their transactions to dupe banks into processing non-gaming related charges. In bringing these indictments, the Government will likely realize a financial windfall of over a billion dollars. That’s what happened on April 15th. There was no war against online poker.
Myth: The DoJ busted PokerStars, Full Tilt, and AP/UB to help clear the way for the U.S. Government to regulate online poker.
Fact: The indictments against PokerStars, Full Tilt, AP/UB happened completely independently of any legislative actions happening at the state or Federal level.
Had Senator Harry Reid pushed the Reid BillTM through in December of 2010, these indictments still would’ve occurred. The only way these indictments wouldn’t have occurred is if Stars/Tilt hadn’t (allegedly) purchased/persuaded/invested in a bank and (allegedly) miscoded transactions and laundered money.
If you need more info on how many levels deep the sites went to allegedly commit fraud, read this.
Myth: Your 65,000+ electronic letter submissions to our elected officials helped quickly spur the DoJ into striking deals with Stars/Tilt to unfreeze funds.
Fact: Stars/Tilt eagerly cooperating with the DoJ, as well as angry calls from Federal officials to the SDNY to unfreeze accounts so they could get their money out, is why the agreements happened so quickly.
The PPA tried to take some credit here (likely to keep themselves relevant and your donations coming in) and should be applauded for their Action Center (which should be FRONT & CENTER on the homepage and not something we needed to Google search to find–face palm) and making it as easy as possible for you to voice your displeasure with our elected officials, but those electronic letters had absolutely no bearing on the DoJ agreements with Stars and Tilt.
Myth: Once online poker is regulated in the United States, we’ll all get to play again right away.
Fact: If a bill is passed at the Federal level tomorrow, it’ll be at least a year until anyone is playing in the U.S. on a major, regulated operator.
There will be a regulatory process/structure period, as well as licensing period, as well as ramp up period for licensees to launch. Further, there are about 15 states where you can’t even play subscription-based poker right now–so your state will also have to opt-in as well. It’s going to be awhile.
Myth: You can safely play poker just as you did on Stars and Tilt on other U.S.-facing sites right now.
Fact: This one is partly true, with some caveats.
As some of the less popular sites (as of two weeks ago) become more popular (as of today) they too will experience similar issues with payment processing (it’s not going to get easier, that’s for sure), and could eventually be shut down, or face other scenarios that will keep you from getting money out. We’re not saying don’t take your business to Merge or Bodog or Doyle’s Room, but if the hammer comes down, the chance of you getting your money out will be something close to nil, unlike with Stars, Tilt, and presumably AP/UB. How come? Those smaller operators have significantly less international presence (Bodog) and money in the bank to facilitate a mass evacuation of cash-outs.
Further, don’t expect any of these sites to reach any level of critical mass like Stars and Tilt were able to achieve. The DoJ indictments will scare away most of the casual players, and none of these sites have the money or desire to bankroll TV productions (like the PokerStars Big Game or Poker After Dark) that will reach and attract new players. Not to mention, well, there are not a lot of TV shows willing to accept online poker money (or programming, or advertising) right now.
Myth: This is the end of the road for PokerStars and Full Tilt.
Fact: This myth we hear more from people outside of the industry than within, but it’s still something we’ve heard enough to address.
Stars was doing only 25-30% of the business in the States. Tilt was around 45%. Clearly it’ll impact Tilt more (bye-bye 100+ random Red Pros) but both will survive and continue making money hand over fist in Europe and other emerging markets.
As for AP/UB, this may be the end of the road. We’ll have to wait and see.
We’ll continue adding to this post as needed and welcome your myth/fact suggestions in the comments.