The US Attorney in Manhattan has filed fraud charges against Full Tilt Poker and two other online companies. The move is roiling the US poker community, and it plays into a larger debate about the legal status of online betting.
Criminal fraud charges against three large Internet poker companies have stirred an uproar in the world of online poker, and are reviving a broader debate about the future of online gambling in the US.
On Friday the US Attorney in Manhattan, Preet Bharara, filed charges against Full Tilt Poker, PokerStars, and Absolute Poker, alleging that they have been violating a US law that bans companies from knowingly accepting payments that relate to illegal online gambling.
The move comes as some congressional lawmakers have been pushing to legalize online gambling in the US.
Critics of online gambling argue that legalization could make problems like compulsive and underage gambling an even bigger social challenge in America.
Proponents of the concept say legalization would support consumer choice and steer traffic toward licensed and regulated businesses. It would include provisions designed to prevent underage or compulsive gambling.
Boosters of poker, moreover, say it's a game of skill, where betting is different from betting on games of chance.
Former Sen. Alfonse D’Amato of New York, who chairs an advocacy group called Poker Players Alliance, issued a statement following the legal action Friday.
“On behalf of the millions of poker players across the country, we are shocked at the action taken by the U.S. Department of Justice today against online poker companies and will continue to fight for Americans’ right to participate in the game they enjoy," he said. "Online poker is not a crime and should not be treated as such."
Mr. D'Amato said the group would offer "detailed analysis when the full facts become available.”
The indictments unsealed on Friday allege massive fraud and money laundering totaling in the billions of dollars, involving companies that operate offshore.
"These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck," Janice Fedarcyk of the FBI said in a statement. "They lied to banks about the true nature of their business. Then, some of the defendants found banks willing to flout the law for a fee."
The case revolves around current US laws, but the broader debate is over the future of betting activity on the Internet -- one of gambling's most easily accessible venues.
Rep. Barney Frank (D) of Massachusetts, a leading backer of a bipartisan bill to allow licensing of online gambling companies, has argued his case by quoting John Stuart Mill on the virtues of letting citizens pursue "our own good in our own way, so long as we do not attempt to deprive others of theirs."
But others in Congress oppose the bill. Critics say that allowing online gambling to flourish could cause great harm, including to people who don't have lots of money to burn.
University of Illinois professor John Kindt has called online betting "the crack cocaine of gambling, putting it in every living room, on every school desk and work desk, and on every iPhone and BlackBerry."