The Search for the Real Victim

Been thinking some more about what the future will bring for online poker in the United States. As The Entites at Wicked Chops Poker pointed out yesterday, it's a minimum of two years until licensed, regulated online poker returns to the U.S. It would be a shame if Poker Stars and Full Tilt Poker weren't let back into the country by then.

Look, I remain convinced that the fraud and money laundering charges against the Poker Sites are damning. The lawyer in me says a crime is a crime, whether "justified" or not. Nobody with any experience processing payments (even from a player perspective) should be surprised by the charges in light of the allegations. The payment processing facts are not in the Poker Sites' favor.

But the court of public opinion SHOULD be in their favor. As Todd Witteles wrote yesterday, this was a victim-less crime. Try to find a victim here. I dare you. Was it poker players? Certainly not. The actions of the payment processing departments allowed players to continue playing a game that is arguably not illegal under Federal law[FN 1] and that has no consequent societal, and no or few consequent individual, harms that derive from it. In fact, charging the Poker Sites with these crimes has victimized poker players more than the crimes themselves ever did by destroying a great source of entertainment and, for some, destroying their livelihoods, whether they were pros or were employed by the coterie of poker-related industries that online poker sustained.

[FN 1 - We can re-visit the circularity of the definition of "unlawful internet gambling" under the UIGEA another time but the statute could be unconstitutional for that definition being vague. Check out a piece I wrote in September 2010 for more information.

EDIT: Grange brings up iMega in the comments, a case from 2 years ago I had forgotten about. While it's not good precedent, it's also not binding in the 2nd Circuit where these charges have been brought.]

Were the banks and the payment processors the victims of the crimes? Only if your definition of a victim includes someone who was tricked (perhaps winking and nudging at times along the way) into doing something that he'll never be prosecuted for -- and for which he has an affirmative defense anyway -- and that netted him millions of dollars in profits. Yes, the banks sound very victimized. God, can you imagine ANYONE having any sympathy for the banks even if they were the victims here?

The poker sites couldn't have been the victims. They're the ones charged with crimes.

That leaves the government, where we get to the real rub. The government was victimized in that it lost out on its share of the (large) poker regulatory and tax pie by enacting the UIGEA in the first place. The government was victimized in that the Poker Sites stuck their tongues out and said, "Nah nah nah nah you can't touch us!" What we have is the DOJ protecting the rights and the ego of the federal government to get its cut and to put the Poker Sites in their place. The DOJ certainly isn't protecting any of its citizens, be they natural or juridical.

At one time I thought this case would end in a settlement, as most of these cases tend to do. But the more I think about it, the more I'm convinced it will go the other way. The government is going to have a tough time trying to extradite Ray Bitar or Isai Scheinberg or most of the other named defendants. Countries generally don't like going along with extraditions for charges that aren't crimes on their own soil. That won't create much pressure on the poker sites to ease the plight of their fearless leaders.

Without any real threat of jail time, there's nothing to be gained by the Poker Sites from a settlement. A settlement would almost certainly take the form of a hefty fine [FN 2], the possibility of some jail time for some of the individual defendants, and (this is the killer) an admission of guilt. Any admission of guilt by the Poker Sites will seriously jeopardize their chances of being licensed in a regulated future. If the Poker Sites are going to be shut out of the US market anyway, they might as well tell the DOJ to F itself in the A and tie this thing up in the court system for the next two years.

By then maybe regulation will have come to the U.S. and the DOJ will want this embarrassment of a case to just go away.

[FN 2 - As I said on Twitter last night, I note that the last installment of the PartyGaming DOJ settlement money is to be paid in September 2012. If 18-24 months is a realistic timeframe for regulation (and who knows), that is an interesting coincidence.]