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Feds Freezing Online Poker Payouts

by Warren Riddle on June 11, 2009 at 02:20 PM


Although gambling is illegal throughout much of the United States, online poker has exploded in popularity and managed, for the most part, to avoid government interference. Online casinos are typically operated from overseas, safe from prosecution, and can also be considered a "peer-to-peer" activity, not a transaction between a bettor and a casino.

Despite the gray poker area, the U.S. Attorney for the Southern District of New York has begun instructing financial institutions to freeze the accounts of payment processors who dole out online casino winnings. So far, those assets include $33 million owed to 27,000 players on four prominent Web sites, including PokerStars.com and FullTiltPoker.com. (They could just tax those earnings to bolster depleted government coffers, but what do we know?)

I. Nelson Rose, a law professor at Whittier Law School in California, told the New York Times the move is a "gamble on the part of the prosecutors" due to the person-to-person nature of poker. In their own words, prosecutors are basing their case on the argument that the frozen monies "constitute property involved in money laundering transactions and illegal gambling offenses," since the casinos take a fraction of the winnings.

We're not sure of the legality of online poker, or the validity of this case, but this has gotten us thinking. Could the government order the online casinos and payment processors to provide restitution (a bailout?) to the people who lost money? Hey, it's worth a shot. [From: MercuryNews.com and The New York Times]

Tags: gambling, law, online poker, online poker ban, OnlinePoker, OnlinePokerBan, top

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