This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Justice Plays a $731 Million Winning Hand After Full Tilt Poker's Flop

Stocks in this article: CZR

The DOJ worked to web poker operations in the U.S. following the 2006 passage of a federal law that banned online poker. As part of a widespread online gamine crackdown, U.S. Attorney Preet Bharara also filed fraud charges against PokerStars founder Isia Scheinberg. While Tuesday's settlement resolves Bharara's inquiry into PokerStars, Full Tilt's Bitar continues to face criminal charges. He is awaiting trial and has pleaded not guilty.

The U.S. Attorney's investigation has led to a half dozen guilty verdicts, while 11 others have been hit with various fraud charges. Seven of those charged in the U.S. Attorney's inquiry remain at large.

Additionally, the U.S. Attorney's office filed a motion to settle with online gaming company Absolute Poker/Ultimate Bet, in a move that will force the company to forfeit all of its assets. All of Tuesday's poker settlements do not constitute an admission of guilt, wrongdoing, culpability or liability, the U.S. Attorney noted.

The poker settlements stem from the Unlawful Internet Gambling Enforcement Act, passed by Congress and written into law on October 13, 2006. Once the law was passed, internet gambling became a federal crime, however the likes of PokerStars, Full Tilt and Absolute Poker/Ultimate Bet continued to operate in the U.S. through offshore entities.

In its settlement, the U.S. Attorney alleges that poker companies arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of fake online merchants purporting to sell merchandise such as jewelry and golf balls, in a move that made it possible for banks and credit card issuers to unwillingly process law-breaking payments. "Poker companies allegedly used fraudulent methods to circumvent federal law and deceive these financial institutions into processing payments on their behalf," said the U.S. Attorney in a statement.

There is still the prospect that lawmakers re-open U.S. to online gaming, with the prospect that Tuesday's settlement augurs well for PokerStars. Forbes reports that Las Vegas casinos like Caesars Entertainment (CZR) are petitioning for Congress to pass federal laws to reinstitute online poker. Forbes adds that states like California are also pushing for online poker legalization, on the state level.

In late 2011 -- well after the U.S. Attorney's case was brought -- the U.S. Justice Department's Office of Legal Counsel issued a legal opinion stating that the 1961 Wire Act prohibited online betting only for sporting events and contests, not Internet games such as poker or lotteries, providing a legal intepretation for future attempts to set up online poker companies in the U.S.

For more on the U.S. District Attorney in Manhattan, see details on a bank rate fixing inquiry and the insider trading conviction of Rajat Gupta, a former Goldman Sachs board director.

-- Written by Antoine Gara in New York

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,814.94 -2.96 -0.02%
S&P 500 2,067.03 -2.38 -0.12%
NASDAQ 4,758.2520 +3.36 0.07%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs