On Friday, Preet Bharara, the United
States Attorney for the Southern District of New York announced the unsealing of
an indictment charging eleven defendants, including the founders of the three
largest Internet poker companies doing business in the United States - - Poker
Stars, Full Tilt Poker, and Absolute Poker - - with bank fraud, money
laundering, and illegal gambling offenses. In Dublin, a company called Pocket
Kings employs 700 people and provides services to Full Tilt Poker.
domain of Full Tilt Poker has been seized by the FBI and American Raymond
Bitar (39), chief executive of Full Tilt Poker, and a director of Dublin-based
Pocket Kings, is one of 11 charged with violating the Unlawful Internet Gambling
Enforcement Act, passed into US law in 2006.
The Act prohibits the transfer of
money from US financial institutions to online gambling sites.
Founded in September 2003 with the
goal of creating the best online poker experience anywhere, Pocket Kings
provided exclusive software development and marketing consulting services for
one of the world's fastest growing poker sites, Full Tilt Poker.
Designed in conjunction with some of the world's best poker players, including
Phil Ivey, Howard Lederer, Chris "Jesus" Ferguson, Jennifer Harman, and
Andy Bloch, the software provides players of all skill levels with a variety of
game choices, including variants on Hold 'em, Omaha, Razz, and Stud. The
software features leading-edge technology, superior graphics, a user-friendly
interface, and customizable avatars and backgrounds.
The company said on its website that since its official release in June 2004,
Full Tilt Poker has become one of the most successful and recognizable brands in
online poker, and is the only online poker community that allows players to
regularly learn, chat and play poker with 28 of world's best poker professionals
Pocket Kings employs some 700 staff
at the Cherrywood Science and Technology Park in south Dublin, and was
established in 2006 to provide functions such as IT support, fraud detection,
marketing and customer services to Full Tilt Poker, which is licensed in
Alderney, Channel Islands.
Some people who have been
interviewed in recent years for jobs in the company,
expressed reservations about the operation.
On Friday, the United
States filed a civil money complaint seeking at least $3bn in civil money
laundering penalties and forfeiture against the 3 Poker Companies, their
assets, and the assets of several payment processors for the Poker Companies. In
addition, restraining orders were issued against more than 75 bank accounts
utilized by the 3 Poker Companies and their payment processors, and five
Internet domain names used by the Poker Companies to host their illegal poker
games were seized.
Manhattan U.S. Attorney Preet Bharara said:
"As charged, these defendants concocted an elaborate criminal fraud scheme,
alternately tricking some U.S. banks and effectively bribing others to assure
the continued flow of billions in illegal gambling profits. Moreover, as we
allege, in their zeal to circumvent the gambling laws, the defendants also
engaged in massive money laundering and bank fraud. Foreign firms that choose to
operate in the United States are not free to flout the laws they don’t like
simply because they can’t bear to be parted from their profits."
FBI Assistant Director-in-Charge Janice K.
Fedarcyk said: "These defendants, knowing full well that their business with
US customers and US banks was illegal, tried to stack the deck. They lied to
banks about the true nature of their business. Then, some of the defendants
found banks willing to flout the law for a fee. The defendants bet the house
that they could continue their scheme, and they lost."
According to the Indictment and the Civil
Complaint unsealed on Friday: On October 13, 2006, the United States enacted the
Unlawful Internet Gambling Enforcement Act (UIGEA), making it a federal crime
for gambling businesses to "knowingly accept" most forms of payment
"in connection with the participation of another person in unlawful Internet
gambling." Despite the passage of UIGEA, the 3 Poker Companies, located
offshore, continued operating in the United States. In a press release dated
October 16, 2006, Absolute Poker announced that the company would continue its
US operations because "the US Congress has no control over" the company’s
Because US banks and credit card issuers were
largely unwilling to process their payments, the 3 Poker Companies allegedly
used fraudulent methods to circumvent federal law and trick these institutions
into processing payments on their behalf. For example, defendants Isai
Scheinberg and Paul Tate of PokerStars, Raymond Bitar and Nelson Burnnick of
Full Tilt Poker,and Scott Tom and Brent Becjley of Absolute Poker, arranged for
the money received from US gamblers to be disguised as payments to hundreds of
non-existent online merchants purporting to sell merchandise such as jewelry and
golf balls. Of the billions of dollars in payment transactions that the 3 Poker
Companies tricked US banks into processing, approximately one-third or more of
the funds went directly to the 3 Poker Companies as revenue through the
"rake" charged to players on almost every poker hand played online.
As alleged in the indictment, to accomplish
their fraud, the 3 Poker Companies worked with an array of highly compensated
The Irish Times reports that
accounts for Pocket Kings for last year show the company made an operating
profit of €14.9m, up from €2.7m a year earlier. In February, Pocket Kings
announced plans to recruit a further 100 staff for its Irish operation. “The
accessibility to a skilled and educated workforce in Ireland along with an
attractive corporation tax rate continues to be deciding factors in our
decision to remain here,” it said.
The Wall Street Journal reports
that Bwin.Party Digital Entertainment PLC and Playtech Ltd. shares rose
sharply Monday morning with expectations the latest crackdown on Internet
gambling by US authorities will benefit European online-gaming groups.
European online-gaming companies that pulled out of the US a few years ago
because of the government's ban on online gaming have since been less
competitive than those still accepting money from US residents as their
betting pool is smaller. But the US crackdown on online poker could turn
the tables in favour of the European operators.