First UIGEA Conviction in the Books The DOJ logged their first win on UIGEA charges — making the supposedly weak law thus far undefeated — against online sportsbook operator Todd Lyons. His arrest back in May 2010 shoulda been a big warning sign to American online poker operators (and players?) — and Full Tilt specifically — that the DOJ was coming to get them! [CalvinAyre.com]

First Black Friday Trial Date Set John Campos and Chad Elie, the Utah banker and PokerStars payment processor indicted for their role in online poker criminal activity, have a trial date in March … creating a tangible timeline for Black Friday cases and added pressure on the big fish the DOJ really wants — Isai Sheinberg, Ray Bitar, and Scott Tom. [Legal Poker Sites]

MGM Sues Poker Domain Squatters Just as Caesars sued (and won) to obtain the domain WSOP.com, MGM has filed suit to repossess the domains mgmpoker.com, bellagiopoker.com, luxorpoker.com, mandalaybaypoker.com, and ariapoker.com. Apparently the casino giant thinks they’ll have need for them soon. [VegasInc]

Barton Says Online Poker Bill Still Alive This Congress Rep. Joe Barton (R-TX) gave a luncheon keynote at the DGLP, where he spelled out how his online poker bill is moving forward as a piece of stand-alone legislation and/or still could be absorbed into some omnibus bills. Pretty straight-forward, honest-sounding stuff as Barton even talks about his own live real-money play and admits to multi-accounting for play money on PokerStars. [Pokerati Soundcloud]

Adelson Balks at Readiness for Online Poker The poker masses got spun into a tizzy after Vegas politico Jon Ralston “reported” that Las Vegas Sands Chairman Sheldon Adelson has been buzzing around DC that he is morally opposed to online gambling … and that age-verification technology isn’t ready yet. Ralston concludes that this could kill online poker’s chances in Congress as if Adelson alone is more powerful than the combined forces of Caesars, MGM, Steve Wynn, Station Casinos, Boyd Gaming, Michael Gaughan, et al. Quick to cry, some poker players have begun calling for a boycott of Venetian Poker. [Las Vegas Sun]

Nevada Regulations Almost Ready While so many chatter about complex details of future online poker, the Nevada Gaming Commission and State Gaming Control Board seem to be the only ones systematically moving forward with thorough, enforceable rules and regulations for online gaming. In one of the biggest overhauls to state gaming regs in history, they just released a whole bunch of revisions for licensure and suitable ownership that Big and Small casinos alike are paying close attention to. [gaming.NV.gov]

Fry Howie? Funny/sad, shortly after Black Friday I thought we might be seeing T-shirts that said “Free Howard!” not “Fry Howard!” But loyalty can be a fickle bitch when you eff up with someone else’s money. Hence this flash creation for players wishing to express their personal outrage against Full Tilt and Howard Lederer violently. [PokerListings]

UB Player Database Leaked Lots of offline debate over how and why nearly 3 million poker-player IDs leaked out. Work of a disgruntled employee or scuttling the ship before UB ultimately hits sea-floor? And will there be more such pressings of self-destruct? [Haley's Poker Blog]

Rest o’World: Cyprus on Crackdown, South Africa’s Open-Market Mind, German Pre-unification Some of the other key political moves from the rest of the world, as the future of legal online poker (and gambling) actively takes shape … the mediterranean island that isn’t Malta doesn’t have moral opposition, they just want their cut (kinda like Kentucky) … while South Africa continues its progressive-minded movement from staunch opposition to tolerance to active support of online gambling … all while the German province of Schleswig-Holstein’s acceptance of new online poker rules is so big it actually moved some major market needles. [Legal Poker Sites]

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:

a) He had a change of heart and realized he was wrong. Apologies accepted, hugs exchanged.
b) His attorney advised him that he was putting himself at risk by potentially taking the stand.
c) Sitting through a even just a deposition could prove less profitable than sitting in a cash game.
d) He settled, obv, meaning Ivey and Full Tilt somehow got square, even if you did not.

Meanwhile, French regulators ARJEL yanked Full Tilt’s gaming license in France, Ray Bitar says his feelings are hurt by Wicked Chops insinuations that he’s no longer CEO of Tilt (as if! scroll down to bottom) and everyone seems to have forgotten that the leaders of AP/UB are apparently on the run with however much player cash and T-shirt swag they can stuff on a southbound plane.

With all that, whether in a nick of time or too little too late, a group of New Yorkers is suing Tilt class-action style, with a complaint that looks like it was cut-and-paste together from DOJ press releases and 2+2 threads.

Can we expect a rash of lawsuits to come? Should they?

The PPA has put out a legal guide for anyone considering court-action as a way to get an everated online poker site pay up:

The PPA’s legal team has prepared a legal analysis of the options available to individual players who still have not been able to access their online poker funds held on account.  The document, “Legal Rights of Players with Unpaid Account Balances – A PPA Information Guide” seeks to provide our members with facts and information about how individuals can seek to claim their online poker account money.    We hope you find this document useful and informative.  Should you have further inquiries about players’ funds you can contact our Litigation Support Network at: legal@theppa.org.

The document attempts to explain the complexities of forfeiture law, as well as what the remedies are for someone who believes the government unjustly seized their property. I feel like I’ve seen this seizure list a dozen times … but what’s new to me is realizing the government asserts they flat out own the companies — Full Tilt, PokerStars, AP/UB, et al … regardless of whether or not players got their money back.

1. that Tiltware breached its contract with him on a number of fronts;
2. that certain contractual covenants are over-broad, oppressive, and contrary to public policy; and,
3. that Full Tilt’s actions separate and apart from the contractual breach have damaged Ivey’s reputation.

For this, Ivey essentially wants in excess of $150,000,000 in damages and a declaration that the non-competition covenants in the contract are void. Ivey’s contract with Tiltware is not included with the filings, which isn’t unusual, but presumably a copy will come out if this action grinds on long enough; that should be a compelling read when it surfaces.

The complaint describes Tiltware as a supplier of “software and related support for the conduct of legal online poker.” Ivey endorsed Tiltware’s product with his name and likeness, and the software was then provided to Full Tilt Poker (not named – yet – in the suit). According to Ivey, then, he only endorsed the software, and not the site itself, although the upshot of the arrangement was that Ivey “became widely recognized as being associated with Defendant, with Defendant’s product, and with Full Tilt Poker.” Quaere whether Ivey’s endorsement was ever limited to the software produced by Tiltware, and not “Full Tilt Poker” itself, but let’s ignore that factual issue for now. (The use of “Defendant” in the complaint, though undefined – unlike “Plaintiff,” which is defined as Ivey - presumably means Tiltware, even though there are several defendants.)

Without a copy of the endorsement contract, it’s impossible to say whether or not Ivey’s claims have traction or not. According to Ivey, ”Defendant asserts that for the entire existence of the Company [again, presumably Tiltware], Plaintiff is prevented from owning, acquiring, assuming or participating in any investment or interest that is adverse or otherwise in conflict with the Defendant’s business or prospects, financial or otherwise, without prior written consent of the Board of the Defendant, which consent may be withheld in the Boards’ [sic] sole and absolute discretion.” If that’s what the contract says, then it may well be overly broad and contrary to public policy on its face. Non-competition clauses aren’t supposed to preclude one’s ability to earn a living forever.

However, the alleged contractual breach based on what Tiltware, Full Tilt, and Ivey apparently knew about the legality of the US poker market is potentially more interesting. Ivey claims that neither Tiltware nor Full Tilt advised him of the “repeated warnings and clear notice that their conduct was illegal in the United States,” nor “that Full Tilt Poker was allegedly using ‘fraudulent methods’ to avoid banking restrictions.” Ivey may very well not have known about the bank fraud alleged to have been orchestrated by Full Tilt and others. The “repeated warnings and clear notice” is also vague. The complaint recapitulates the US Attorney’s press release on this point, but from whence the warnings and notice? The Department of Justice? Full Tilt’s lawyers? The players themselves?

Setting that aside, it strains credulity that Ivey didn’t have constructive notice of the alleged illegality of Full Tilt’s conduct in the United States. (And, for now, that illegality is still just alleged. The purported illegality is what Ivey complains caused him the harm.) Full Tilt consistently took the position that offering Internet poker was not illegal in the United States (except in Washington state, which it eventually shut off). If Full Tilt believed that assertion but was just wrong about it, what does that mean for Ivey? Did he honestly have no view on the matter? Did he and his lawyers consider all of the arguments and also decide that Internet poker was okay in the States? Ivey’s a brilliant guy and one of the best poker players in the world. It’s hard to conceive of a scenario in which he wasn’t aware of the arguments that Internet poker wasn’t legal in at least some states and therefore potentially under federal law. It just seems like wilfull blindness.

At the same time, Full Tilt’s public response to the lawsuit was less than edifying. There are vague references to Ivey helping and enriching himself at others’ expense. Assuming without deciding that Ivey has a valid claim against Tiltware and others, it may be that Full Tilt has to pay back the players and its disgruntled pro, irrespective of their trying to spin the matter into a zero-sum game of “we can pay back the players or we can pay Ivey, but not both.”

It will be interesting to see how this case shakes out. At the time of writing, Ivey is still listed as part of Team Full Tilt on www.fulltiltpoker.com. One has to expect that to change soon. One theory about why this action was started is that Ivey simply wants to take steps to publicly distance himself from Full Tilt, which I think is rational on his part. If that’s true, then the merits hardly matter; what’s important is the display of Ivey getting his narrative into the public record.

This case has nothing to do with casinos or video poker.  This case is about the freedom of adults to play a game of skill, like poker, in their own home and that is it.

- John Pappas, Poker Players Alliance

Fair enough. But it does stand to set precedent and interpretation that other states will at least look at upon (finally) recognizing their own old gambling laws may not really work in today’s day and age.

Sure, we all know that poker is a game of skill and therefore Truth is on poker’s side here, but that may not be the deciding factor when all is said and done. Likewise, the private residence argument could ring a bit hollow because we all know the difference between a self-dealt home game and a for-profit poker room.

But regardless, clarity in and of itself could be a worthy end-result, no? Is it legal to host a weekly sit-n-go and take a “rake” for pizza and beer? What about to pay for nice tables and utilities? Professional dealer maybe? Would it make a difference if you operated as a non-profit? And If an undercover cop wins the bad-beat jackpot, do they have make-up in their backing deal with taxpayers?

Obviously, the South Carolina Supreme Court won’t be making such scenario-specific determinations. However … assuming they don’t just kick it back like Kentucky and Washington did (saying essentially, “eh, not our call”) … this court is being asked to decide, ultimately, just how far the government’s reach extends when dealing with a game of skill played for money … and that’s a question powerful people are wrangling with in different jurisdictions all around the world.

If you haven’t already, help Pokerati determine where poker falls on the spectrum of luck vs. skill here, and read below for the PPA’s official take on today’s important poker activity in South Carolina:

South Carolina Supreme Court Hears Poker Case

Washington, DC (October 19, 2010) – In oral arguments presented today before the South Carolina Supreme Court, lawyers for the Poker Players Alliance (PPA) adeptly debunked the supposition that the private residence in which a game of Texas Hold ‘Em was played was a “house of gaming,” while continuing to reinforce, as South Carolina lower courts agreed, that Texas Hold ‘Em is a game based predominantly on skill and therefore does not constitute gambling under state statute.  The PPA, the leading poker grassroots advocacy group with more than one million members nationwide and more than 10,000 in South Carolina, has been involved in this case since five South Carolina men were arrested for playing Texas Hold ‘Em in a private residence.

“This is an important case for the rights of individuals in the state of South Carolina.  It is ludicrous that in my state playing poker in the privacy of one’s home would be considered a crime.  The state’s antiquated laws have created significant ambiguity and we look forward to the Supreme Court providing much needed clarity that ensures South Carolina residents can enjoy a game of Texas Hold ‘Em without fear of violating the law,” said John Ridgeway, SC State Director of the PPA.

In 2008, five individuals were convicted of illegal gambling for playing Texas Hold ‘Em in a private residence. The trial court found that poker is a game of skill and therefore not illegal, but left it to a higher court to decide if state gambling laws were overly vague as they could be used to convict anyone playing poker in their home.  In addition to holding that the law was overly broad and vague, the higher court embraced the use of the predominance test, citing the “overwhelming” evidence that skill dominates chance. The South Carolina Attorney General, however, appealed this ruling on the law’s vagueness, taking it to the State Supreme Court today.

“As this case has moved through the state judicial process, it has been encouraging to see each court rule that poker is indeed a game of skill.  To be clear, the PPA is not advocating for gaming in South Carolina and this case has nothing to do with casinos or video poker.  This case is about the freedom of adults to play a game of skill, like poker, in their own home and that is it,” said John Pappas “South Carolina poker players are fortunate to have two excellent lawyers, former Federal Judge Billy Wilkins and Jeff Phillips, arguing to protect their right to play poker in the state, and we look forward to a ruling in the coming months.”

The decision, which will likely reverberate throughout the Carolina underground and beyond, will rely heavily on matters of skill and chance involved in poker, as gamecock law calls for a “dominate factor test” to determine whether or not a game violates South Carolina gambling statutes. Like we saw in Kentucky and Washington, the SC SC will just be hearing arguments tomorrow, for about 30 minutes from both sides combined, and not issuing a ruling for a few months. But when they do … well read below for what’s at stake beyond a few misdemeanor convictions.

In the meantime … we know there’s skill in poker, but how much is often debatable. Where on the continuum do you draw the lines for these different “games”?

Legality of “G-Vegas” underground in the balance

The case stems from a police raid of a Mount Pleasant “home game” in 2006, where two tables of raked low-stakes action in a private residence constituted a for-profit operation. Five arrested players fought the misdemeanor charges, saying they weren’t “gambling” … they were playing poker! They lost in municipal court, but won on appeal, with the judge ordering convictions thrown out because Texas hold’em was skill-based, he declared, and the state’s anti-gambling laws were “unconstitutionally vague and overbroad.” The state attorney general screamed balderdash — if an underground poker room soliciting players on the internet ain’t illegal gambling then what is? — which brings us to tomorrow’s testimony.

If the high court agrees poker is indeed a game of skill — and therefore violates no law — poker rooms in South Carolina could become as ubiquitous as pot shops in California and Colorado. Gotta think that won’t be lost on the justices when they consider the application of relatively old laws to a 21st-century poker world that couldn’t have been imagined when they were written.