A full-tilt federal shutdown of online poker

Federal indictments of online poker websites Full Tilt Poker, PokerStars, and Absolute Poker should be a sign of further diligence against cybergambling.

Gambling is hardly a harmless game for those addicted to it – as well as for the poor or young who get hooked on its false lure of easy riches. So it was heartening last week to see the Obama administration finally go after three of the largest Internet poker companies.

Indictments were issued against the founders of PokerStars, Full Tilt Poker, and Absolute Poker. Eleven people were charged, five websites were shut down, and restraining orders were issued on more than 75 bank accounts allegedly used to process payments illegally.

The global cyberwagering industry is in shock. For the first time since 2006, when Congress effectively outlawed Internet gambling, the government has come down hard in blocking access to these overseas enterprises. It also seeks $3 billion in damages for the alleged money laundering.

The indictment claims the companies snookered banks – often with bribes – into processing cash without revealing the real purpose. “They lied to banks about the true nature of their business,” said FBI Assistant Director Janice Fedarcyk. “Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.”

Such sleight-of-hand practices should give the legal bricks-and-mortar gaming industry, mainly in Nevada, second thoughts about signing deals with Internet operators.

The defendants in the case may try to convince a federal court judge that poker isn’t a game of chance but really all a matter of skill. If that were the case, why is Las Vegas so keen on the game – and making easy money off of it?

Internet gambling isn’t like going to a casino. Compulsive gamblers and teenagers can’t be screened at the door. And it’s all too easy to click away a few thousand dollars in an instant. That’s why Congress decided to outlaw it.

Last year, however, as some lawmakers in the House moved to reverse the law in order to raise tax revenue from the industry, President Obama himself seemed ambiguous about Internet gambling. An estimated 10 million Americans engage in some sort of cyber-wagering, while 1.8 million played poker for money online last year.

But now his Justice Department has shown that he may be serious about this economic crime that damages families and lives. And these indictments should also send a strong signal to a few states, such as New Jersey and Nevada, that federal approval of online gaming is a long way off and that they shouldn’t keep trying to gear up for it.

It took too long for the FBI and Justice Department to take such a big step against a practice that has been pretty public since the 2006 law was passed. Let’s hope more legal action against other industry players will follow soon.

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