The Mouthpiece


By Martin Owens
Contributing Editor


  • Recent Articles

    Martin Owens

    Ponzi, We Barely Knew Ye:

    "A plague upon it when thieves cannot be true to one another!"
    Shakespeare, Henry IV, Part I


    New Accusations Against Full Tilt Put Internet Poker Licensing Back On The Burner.

    Just when it looked like it was all over, lightning struck and it's all begun again. The prosecutors of the U.S. Southern District of New York have modified its civil complaint against Full Tilt Poker to include, not merely violation of US state or Federal gambling laws, but plundering its customers' ADW accounts, the playing money they deposited with the Full Tilt site. From the point of view of the gambling public, it is not too much to say FTP would have been better off accused of murder. In fact, that probably goes for the rest of the offshore gaming community too. Whether or not any transgression is ever proven , the mere accusation of such activity is absolute poison in the Internet gambling world, precisely because so much of it is unregulated. If you're an online gambling operator, your reputation is your life. The customer is king in this world, and knows it. He can always go someplace else. Anyone who has been around this industry for any length of time can point to examples of online gaming operators who were ruined by the mere rumor that they might be slow pay, no pay, or fly-by-night operations. No doubt about it, the players talk to each other.

    Up to this point, in the competition for America's online poker dollars, it was the offshore sites first , the rest nowhere. State licensing authorities could not or would not get their acts together, with the lone exception of Washington DC, and anyone with actual assets and agents in the USA was taking their chances. So our online poker market went offshore by default. UIGEA or not, poker sites like Full Tilt moved to places like Ireland, and prospered- obtaining local licenses in many instances. Even the "Black Friday" indictments didn't change the basic assumption that online poker players had grown used to. Whatever a reputable poker site's problems with the government, they wouldn't steal your money, because that would ruin their reputations, and reputation is irreplaceable in this game. They could be counted on, in their own interests, to take care of the customers.

    Reprieve from a Determined Suicide Attempt

    The misnamed "Ponzi" allegations change that, very much for the worse. (A Ponzi scheme is a completely bogus investment offer; FTP had been offering actual poker games). Whether or not the new charges' release was timed to coincide with Alderney's hearings on revoking Full Tilt's license, they introduced an element of doubt that was not there before. When an offshore site gets rousted by the Feds on gambling charges, it's all in the game. When they're accused of robbing their customers, that's different. Very different. Not only do these new allegations cast a heavy shadow on FTP and Associates; they are also causing many American players to wonder just how safe their accounts really are, anywhere offshore.

    And that, in turn, is giving an unexpected and largely undeserved new lease on life to US state efforts to license Internet gambling expansion. 2011 marks the fourth straight year that legislation to license the expansion of Internet gambling , was blocked or left to expire in every state that was considering it - (though DC is slated to go live October 1st). To put it plainly, until September 20th America had been well on the way to ruling itself off from the next phase of Internet gambling altogether. By now many reputable online operators, the natural choices to partner with state gambling interests, have simply given up and gone home, repelled by statehouse political squabbles that seem determined to never be resolved. Or they have been so thoroughly intimidated by arbitrary, high handed official muggings, such as Kentucky's "seizure" of 141 I-gambling URLs, the "settlements" that DoJ squeezed out of Neteller and PayPal, and the airport arrests, that they never inquired at all.

    But if the state governments hadn't said yes, they at least hadn't pronounced a final 'no', either. And they do still possess one unique advantage- a license from them is a seal of approval for their home market. That's an important selling point, because even if an offshore gambling site has a license from its host government, there is still not very much that an aggrieved player can do if he thinks he's been badly treated. In many cases, figuring in time and travel, the cost of the complaint itself would be as much or more than the amount of money in dispute. Being able to pick up the phone in the home jurisdiction is a definite plus toward assuring a players piece of mind.

    Until now, however, it wasn't all that much of a plus. That was because the standard assumption on all sides was that the bigger, better known online poker operations operating offshore from the USA could be counted on , in their own interest, to run straight games. The accusations against Full Tilt are not yet proven- and we need to stress that. Further, it seems curious that an allegation of criminal wrongdoing should be couched as a civil complaint rather than prosecution for an actual felony. Nevertheless, rightly or wrongly, a new and potentially dangerous degree of doubt has been introduced into the relationship between online operators and their customers,.

    This would seem to make the state power to regulate and control as part of its licensing regime a very valuable protection for nervous players. Because of course, a condition for the grant of a state license would be an and submitting to the states jurisdiction. This would include such things as background checks, audits, regular reports of income, and so forth. To be sure, this is not and never will be perfect protection: Alderney is a diligent and honest licensing authority, and there is little doubt that the investigation will be thorough and above board, without fear or favor. Nevertheless, as we pointed out before, it means something to a potential players confidence to know that he can pick up the phone right here where he lives, in Cleveland, or Tampa, or San Diego, or Oklahoma City, and get somebody from his own state government to look into his complaints.

    The market for the state licensed Internet gaming program has just received a huge boost.

    It remains to be seen, however, whether they will bestir themselves to take advantage of it.

    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 Comments and inquiries welcome at to mowens@trade-attorney.com.

    Copyright 2011


  • HURLEY - The BCS win it all odds
  • FRANK: Louisiana - A lock to win the Sun Belt
  • STURGEON: Getting ready for NFL Pre-season