Black Friday wasn’t about banning poker

April 15, 2011 is now commonly being referred to in the online gaming industry as “Black Friday” (not because of taxes being due, but because of the 11 individuals associated with three prominent Internet poker sites being charged with operating illegal gambling businesses in the US).  The Poker Players Alliance (PPA) immediately sprung into action with an email campaign declaring that the U.S. Department of Justice (DoJ) “took from us the ability to play online poker”.  While technically true, I don’t think that was the DoJ’s motivation.

If the DoJ charges are factual, PokerStars, Full Tilt Poker and Absolute Poker worked with and directed others to apply ‘incorrect transaction codes to their respective companies’ Internet gambling transactions … to create the false appearance that the transactions were completely unrelated to internet [sic] gambling.”  They also created phony companies such as flower shops, a golf ball supplier and pet product stores in order to trick the credit card companies into approving the transactions.  You can’t do that.  It doesn’t matter whether you’re an online poker site or any other kind of business, you can’t commit fraud and expect to get away with it.  (Note that as of the date of this post, at least some of the defendants have come forward and denied the allegations listed above.)

In my view, contrary to the ominous “Black Friday” moniker, the future of legal online gaming in the U.S. is bright.  Thanks to the District of Columbia, only days before Black Friday, online gambling proponents achieved a historic victory.  There is explicitly legal online gambling in the United States for the first time in history.  Furthermore, the dramatic exit of PokerStars, Full Tilt Poker and Absolute Poker from the U.S. market means the landscape is wide open when Internet gambling becomes legal, either on a state by state basis or (more likely) nationwide.  Before last Friday, it would have been nearly impossible to compete with PokerStars, Full Tilt Poker and Absolute Poker in the U.S.  Now, however, with the dark cloud of federal indictments and arrests hanging over them, the gates are open for competition in the U.S. online gaming space.  In other words, despite the very serious short term negatives, the recent actions by the DoJ may end up as an overall net positive for online gaming in the U.S.

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