Among other denials, Campos and Elie sought to get much of the case thrown out on the grounds that the UIGEA is a bad law and/or poker isn’t gambling. With the action back on the DOJ, Preet Bharara assistant Arlo Devlin Brown delivers some rather compelling legal composition (the best writing is in the footnotes, imho) that reads like a big STFU from SDNY … with a message of hey, better watch it or we could indict the whole damn poker industry!

I’m paraphrasing, obv … but here’s the full Government’s Response to Defendants’ Pre-Trial Motions. They purport to have a mountain of evidence ready for trial … and show a century’s worth of precedent to snuff out any hopes that poker people could actually win this case.

With the standard disclaimer of “I’m not a lawyer but …” some fascinating elements include:

Federal courts have repeatedly and consistently upheld the application of the IGBA to poker. For example, at least three Circuits have specifically affirmed a defendant’s IGBA conviction where the sole gambling business at issue was the operation of a poker room. See United States v. Rieger, 942 F.2d 230 (3d Cir. 1991) (upholding IGBA conviction based solely on operation of a poker room); United States v. Zannino, 895 F.2d 1 (1st Cir. 1991) (same); United States v. Tarter, 522 F.2d 520 (6th Cir. 1975) (same); cf. United States v. Trupiano, 11 F.3d 769, 774-74 (8th Cir. 1993) (upholding IGBA conviction based on weekly card games hosted at individual’s home). Multiple Courts of Appeals – including the Second Circuit – have similarly upheld the application of the IGBA to gambling businesses offering video poker. See, e.g., United States v. Gotti, 459 F.3d 296, 342 (2d Cir. 2006) (affirming IGBA conviction for operating video poker machines, and specifically rejecting argument that IGBA and referenced New York gambling law did not apply to games that involved an element of skill); United States v. Lanzotti, 205 F.3d 951 (7th Cir. 2000) (affirming video poker conviction under IGBA); United States v. Hill, 167 F.3d 1055, 1064 (6th Cir. 1999) (same); United States v. Grey, 56 F.3d 1219 (10th Cir. 1995) (same). Additionally, multiple Courts of Appeals, again including in the Second Circuit, have applied IGBA to gambling operations that offered poker alongside other traditional casino games such as craps or blackjack, without the slightest suggestion that the IGBA’s definition of gambling excluded poker. See, e.g., United States v. Cook, 922 F.2d 1026 (2d Cir. 1991); United States v. Giovanetti, 919 F.2d 1223, 1225 (7th Cir. 1990).

4 E.g., Utsler v. Territory, 10 Okla 463 (1900) (“The witness Fisher also testified that he saw gambling carried on in the room with cards, being known as ‘stud poker,’ and he also testified that liquor was sold in the same room.”); In re Selling’s Estate, 17 N.Y. St. Rep. 833 (1888) (“The proof submitted by the petitioner also shows the respondent Joseph Selling to be a man of utterly worthless and irresponsible character; that he is a professional gambler, know[n] as ‘Poker Joe….’”).

For example, Willie Nelson’s classic poker song, about knowing when to “hold ‘em” and when to “fold ‘em” is called – based on the movie by the same name — “The Gambler.”

[Aha, your honor, with this sort of investigatory flaw, I move for dismissal, and instant restoration of Full Tilt poker funds and PokerStars points!]

First, defendants claim that in each of the listed games, the bettor has “no role in, or control over, the outcome” and that the game is instead subject only to chance. That is not true with respect to bookmaking, at the very least. Betting on the outcome of sporting events involves “substantial (not ‘slight’) skill,” including “the exercise of [a] bettor’s judgment in trying to . . . figure [out] the point spreads.” Office of the Attorney General of the State of New York, Formal Opinion No. 84-F1, N.Y. Op. Atty. Gen 11 (1984). Sports bettors have every opportunity to employ superior knowledge of the games, teams and the players involved in order to exploit odds that do not reflect the true likelihoods of the possible outcomes. Indeed, academics who have argued that poker should not be treated as a form of illegal gambling on the grounds that it is a “game of skill” make the same argument with respect to sports betting.11 Ultimately, the outcome of the bets that poker players make on the cards, just like the outcome of the bets on sporting events.

In making this argument, the defendants conflate two distinct concepts under IGBA – what it means to be “conducting” a gambling business in a certain place and whether certain employees can be construed as being involved in “conduct[ing]” the business. Becker addresses only the latter issue and holds, consistent with legislative history, that “Congress’ intent was to include all those who participate in the operation of a gambling business, regardless of how minor their roles and whether or not they be labeled agents, runners, independent contractors or the like, and to exclude only customers of the business.” 461 F.2d at 232. The footnote in Sanabria says the same thing. 437 U.S. at 70-71 n.26. The cited cases do not address (much less limit) what it means for a gambling business to be “conducted” in a state, and the logic of the argument that defendant’s advance is absurd: a New Yorker who buys a hot dog from a street vendor is not of course “conducting” that hot dog business, but it would be incorrect to claim that this means the business is not being conducted at all, by anyone.

Elie alone also contends that IGBA is unconstitutionally vague as applied here because it is charged with reference to New York law and because “reasonable minds can differ” as to “whether poker constitutes gambling” under the provisions of the New York Penal Law referred to in each of the IGBA counts charged in the Indictment. Elie IGBA Brf. at 27-30. Reasonable minds cannot.

[OK, OK, so they're taking this kinda seriously. Strong means weak, maybe?]

30 18 U.S.C. § 2 provides that “[w]hoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.” 18 U.S.C. § 2(a).

C. The UIGEA, As Applied to Online Poker, Is Not Void For Vagueness

In the end, it could come down to a matter of who’s gonna sing, or who’s already sung. Meanwhile, The Gambler does make a great metaphor for how Full Tilt (and PokerStars?) may or may not have misplayed their hand:

http://www.scribd.com/doc/53170382/3bb-Civil-Complaint-DOJ-vs-PokerStars-Full-Tilt-UB-AP-et-al

The Feds’ allegations tell a rather compelling narrative of illegal gambling, bank fraud, money laundering, and conspiracy to circumvent US law — that if proven calls for the forfeiture of not just domain names, but also:

$1.5 billion from PokerStars
$1 billion from Full Tilt
$500 million from UB/AP

The court documents also spell out the details on the 76 bank accounts money allegedly passed through … in multiple countries and currencies, making USA vs. PokerStars+ not just a federal case but also an international one. And with the US Feds seeking to freeze these accounts, industry types get a hint of which Stars- and Tilt-funded paychecks may soon be in jeopardy … if they aren’t already.

With the criminal indictment and civil complaint together, federal prosecutors Arlo Devlin Brown and crew, seem unafraid to telgraph their intent: People have to go to prison and we take their money, but if that’s not gonna work, we’re at least gonna get $3 billion guaranteed … and we now have two tries to take it down!

(I use the term we because these cases are technically “the people of United States of America vs.” … thus it really is you and I and my dad and grandma and her priest and the electrician and Bristol Palin and Justin Bieber … claiming that all those online poker spoils are rightfully ours.)

The regulated online poker-only “Reid bill”, if you recall, promised to generate $1 to $4 billion a year for the US government. So you gotta figure $3 billion in forfeitures buys another year for the forces who do wanna see fully legal licensed and regulated online poker — and other casino games — to craft a bill to their liking.

This is a semi-significant ruling because while the First Amendment has stood up for such requests in most criminal prosecutions, there is less case law directly addressing matters of civil forfeiture, according to Judge Laura Taylor Swain … but ultimately, yes, when thousands of American citizens are having funds they believe to be theirs seized by the government, yes, the public has a right to know what’s going on.

Click here for 49 pages of freshly released legal documents, not all of which look like this:

The losing side, btw, in this mini case-within-a-case are ultimately the same Manhattan federal prosecutors who followed up these payment processee seizures with an indictment against Douglas Rennick — the Canadian payment processor who faces more than 50 years in prison (cumulative), $1.75 million in fines, and the forfeiture of nearly $566 million on charges of fraud, money laundering, and illegal gambling operations for his doing business with websites such as Full Tilt, PokerStars, Ultimate Bet, and others.

That indictment, of course, may or may not have come coincidentally on the same day Sen. Robert Menendez (D-NJ) introduced a Senate bill that would effectively make all the issues being adjudicated above moot in the future.

Regardless of what’s in play there, I think it’s clear why, indeed online poker related money issues really can’t be handled in the shadows — as much as some federal prosecutors would like such transactions to stay that way.

Documents obtained by the AP show that a judge in the district issued a seizure warrant last week for an account at a Wells Fargo bank in San Francisco, and that a federal prosecutor told a bank in Arizona to freeze an account.

In a letter dated Friday and faxed to Alliance Bank of Arizona, the prosecutor said that accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, the assistant U.S. attorney for the Southern District of New York.

In another letter faxed the same day, Devlin-Brown asks that the bank treat the funds “as legally seized” by the FBI, saying that the government has probable cause that the gambling payments of U.S. residents had been directed to offshore illegal Internet gambling businesses.

Meanwhile, the British press is reporting:

America might be about to loosen its gambling corsets

These two stories aren’t as mutually exclusive as they might seem. Often, when times are changing, old holdovers from a previous philosophical era will turn uber-aggressive with their means and methods trying to give their way one last shot, and at a minimum hoping to take a few folks down with them as their kind are pushed out.

That’s certainly plausible considering how emphatic bureaucrats in the DOJ have been about the illegality of online poker/gambling even when the people and courts have repeatedly disagreed.