On April 15, 2018, the federal government seized several domain names and apprehended the heads of several online poker sites in a crackdown on what they call a large scale tax evasion and money laundering scheme operated by several different on-line poker sites. These sites include Full Tilt Poker and Poker Stars both of which have become very prominent in the last few years with television advertising and sponsorships of sporting events. 

The government claims that money obtained through the websites was being recorded in a way that it appeared that the site was selling merchandise to customers who were really depositing money into an account used to play games for money. The money was then transferred to banks that were operating outside of the law and or country for a fee and allowed the poker sites to keep the money tax free. The poker sites had to use this method of operation due to a bill that was passed in September of 2006 making it illegal for banks to fund on-line gambling sites. The amount of funds the government claims to be obtained in this manner is in the six billion dollar range though no determination on which site accounts for what amount has been established. 

Although these sites continue to operate in the rest of the world, U.S. residents are no longer able to participate in cash games but are still allowed to use the play money sites of the same companies. It begs the question, are we still the land of the free if we are told how we are allowed to spend our money? An estimated 8 to 10 million Americans play online poker for cash and their accounts’ status is the unknown as the government has seized the bank accounts of the offending poker sites. Most people play as a form of entertainment, a few, and by few, I mean thousands, actually make a living playing on-line. This is why it is recommended that if you are interested in playing poker should try credible and legal options such as that way you can keep your winning safe and can enjoy the poker games as much you like.

How these sites, at least the legitimate ones, as well as brick and mortar casinos, make money is on what is called tournament entry fees and the rake. Tournament entry fees are exactly that, a player pays a small fee, typically a percentage of the buy-in, to enter into a tournament. An on-line example would be a $10 tournament with a $1 fee. So the player would have to put up $11 in order to enter. The casino or site would keep the fee and put the rest in a pot to be divided up by the players based on how they placed in the tournament. The rake is a method of collecting a percentage of a pot at standard games where players come and go. Every hand creates a pot, where money from players involved in the current hand is placed in the center until the hand is over. The poker site or casino, commonly referred to as the house, takes a small percentage before dispersing the rest to the winner. The amount is typically small. An example would be $0.10 of a $2.00 pot. The amounts vary depending on the stakes and by the house rules. The players are aware of the percentage beforehand an there are many levels to choose from.

Many people not familiar with the on-line poker world claim that these sites exist only to rob and steal from its members by altering percentages, inserting house players with advantages, and selling account information like credit card numbers and bank account info to third parties. While there are sites out there that probably do operate in that manner there are more the do not. There is no long term incentive to cheat members as there is a great deal of money to be made legitimately and with the amount of competition and the speed at which news travels, sites set up to steal info do not last long and the ones that are there to offer a true service maintain a loyal following. The fact that there are sites set up to steal is the fault of the government as they fail to regulate an industry that will continue to exist as long as the Internet does. It is funny to think that the government claims they shut down these sites in the name of consumer interest yet they only went after ones that are trying to be legal and those that seek to cheat every cent out of you, remain untouched.

The argument that these sites and their players have been making for years is that poker in itself is a game of skill and not wholly gambling. One famous poker player Chris Ferguson tried to prove this point by starting with no money and working his way up to over $20,000 in a few weeks. Another complaint is gambling is regulated at the state level yet the federal government is the one leading the charge against online gambling. Most if not all states allow some form of gambling whether it is casinos, the lottery, or bingo at your local church. And while the online sites may have broken federal banking laws, they were forced to do so in order to continue to operate in the U.S. Despite attempts to be legitimate by pressing for government regulation and definitions the poker companies continued to operate with the assumption that because they were located outside the U.S. they did not fall under U.S. regulations. It does seem ironic though that the U.S. would ignore an industry that screams and begs to be regulated and taxed in order to operate in the U.S. and also offer tax-free incentives to other industries that fight tooth and nail to not be regulated and taxed.

As the Internet is a worldwide system, the government has lagged far behind the technological growth in its ability to legislate, regulate and simply define what is allowed, what will be taxed, and what is considered private property. This slow government action has led to a large gray area that many companies and individuals operate in. Most legislation involving the Internet has been introduced by companies and associations trying to protect their profits, like the MPAA and record labels. Now that on-line poker has grabbed the spotlight it will be interesting to see what the future holds for all users of the Internet as many rights and privileges will be called into question.

About The Author

Erik Allaire is a master poker player who has won many professional poker events, wishes to represent his country at the world level.

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