By Martin Owens
Throw Me in 'Dat Brier Patch:
The Final Result of the "Black Friday" Poker Prosecutions
In these politically correct times, it is perhaps a risky thing to mention the "Uncle Remus Stories", 19th century folk tales of Southern slaves as related and copied by Joel Chandler Harris. Notwithstanding, however, that our first black President has been chosen for a second term, these quaint old stories are worth pondering, not least as the genuine folk wisdom of the West Africans shanghaied into America so many years ago, and imperfectly absorbed even yet.
Because one of the great themes of folktales is the victory of the small: how relatively unsophisticated heroes pit their native savvy against the establishment- and then they win.
The particular story I have in mind is when Brer Fox, a mean so-and-so if ever there was one,
caught Brer Rabbit by trickery. Well, the Fox was meditating various cruel ways of ending the poor Rabbit - but at each suggestion, Brer Rabbit agreed to whatever new barbarity, praying only that he wouldn't be thrown into the thorn bushes- the "Briarpatch". Believing that to be the ultimate cruelty, then. the Fox heaved the Rabbit into the thorn thickets. To be rewarded with laughter. For the Rabbit had been "born and bred in the Briarpatch". He had been thrown into safety.
This week Chris Ferguson, one of the chief players and architects of Full Tilt Poker, got his comeuppance at the hands of the Federal authorities. It cost him, no doubt - he had to forgo massive distributions, and some other money to be paid on the side, totaling about $15 million. But take good heed of this: Mr. Ferguson did not admit to, and was not required to admit to, any wrongdoing. Any violations of state gambling law in the USA. Any violations of American Federal gambling law. He is free to resume his poker activities as well as he ever did.
Likewise, Howard Lederer and Rafe Furst, Ferguson's codefendants in the Federal civil action, have also made their peace with Uncle Sam. When we recall the solemn predictions and warnings made at the time of the Black Friday arrests - 20 and 30 years in jail, shoot the wounded and set the hospital on fire - we can see that the real outcome is more or less a happy landing in dat ole briar patch.
There are a few loose ends left to clean up. About eight individuals, accused of handling the money for Full Tilt's US operations, have cut plea deals; mostly fines and no jail time above three years. The remaining management of Full Tilt - Ray Bitar, Paul Tate, and Scott Tom - are apparently "in the wind"- outside of Uncle Sam's reach, and determined to stay there.
Has this smashed US online poker? Dream on! In at least one case, the Black Friday has been the path to new successes in bigger markets.
Persecuted into success
Let us recall that there were three online poker sites named in the Black Friday charges: Full Tilt, Absolute Poker( Cereus), and Poker Stars . Absolut was on the decline anyway, behind a previous cheating scandal. Full Tilt, from the far perspective available here, had retreated into fantasy. They had become a legend in their own mind. No mouse grows fat, that fights a hungry cat, goes the saying from Norway . And Full Tilt's position contained a large element of "you can't touch us." Technically speaking this might be true, but this position reckoned without the near-total eclipse of traditional Constitutional protections that has taken place since 9/11.
Technically speaking the defendant may be completely correct, but that's not the problem. It's not even in the scenario. The Federal executive branch, which very much includes the Department of Justice, thank you, has assumed near total power. It can and does seize assets and bank accounts first, and ask questions later. And how can one mount a legal defense with no money? So time after time, as with PayPal, Neteller, and so many others, the matter is converted from a legal question to a business decision. It may indeed be possible to conduct a fight to the finish in court and prove the government wrong- at vast expense- but the accused must also consider that they can lose, and be subject to horrific penalties for such charges as money laundering and bank fraud. So the lesser of two evils is to pay what they ask, issue an obviously phony apology, and avoid the US market for a while.
Full Tilt could not successfully hang in there, and lost its license. Absolute Poker lost its assets including the software. But what about Poker Stars? What terrible fate was in store for them? Well, a funny thing happened on the way to the total destruction of American online poker (again). After negotiations with the DOJ, Poker Stars not only purchased Full Tilt and started taking care of its customers - it came into the US brick-and-mortar poker market! Far, far from being eliminated offshore, online poker is branching out to include traditional casinos, as Poker Stars purchases the Atlantic City Club. This in addition to ongoing brick-and-mortar projects in Macau and London.
And so the box score of the latest US DOJ blitzkrieg against wicked online gambling is as follows: a few fines, a few quicky plea deals, major public figures associated with online poker make settlements without admitting any wrongdoing. And the end result was to create a major new winner in both online and land-based gambling. Poker Stars got thrown so deep in the briar patch they may never get back out. And may never quit smiling.
We should seriously think of turning the same federal prosecutors loose on the American petroleum industry - gas would be fifty cents a gallon in no time.
Brer rabbit does not merely survive in the briar patch- he thrives there.
Mr. Owens is a California attorney specializing in the law of Internet and interactive gaming since 1998. Co-author of INTERNET GAMING LAW with Professor Nelson Rose, (Mary Ann Liebert Publishers, 2nd ed 2009) ; Associate Editor , Gaming Law Review & Economics; Contributing Editor, TSN. Com
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