November 23, 2010

Playing Iron Cross with Poker Litigation


A couple of decades ago, I was a college student just learning to play poker in the dorms (with ringleader Santa Claus).  Although it was a nickel-dime-quarter sort of setup, some of the games turned into relatively high stakes affairs, at least as judged by poor college kid standards.  One of the regular games with routine monsterpotten was Iron Cross, particularly when the middle card (and others like it) played as wild.  There's nothing more exhilarating than seeing the middle card give you quads or a straight flush, and nothing more tragic than seeing your only out hit the board—sitting on the wrong arm of the cross.

Several news stories recently reminded me metaphorically of Iron Cross, as poker was in the news for reasons other than litigation, yet the news still directly intersected with ongoing poker litigation battles. For starters, in South Carolina, a low stakes poker game was recently raided by a police vice squad using a SWAT team.  Unfortunately, the raid went poorly, with the game operator shooting through the door and hitting a police officer (apparently out of fear his game was being robbed), resulting in the operator himself being shot in the return fire by the police.  From the comments to the Pokerati article, it seems very hazy as to whether a SWAT team was appropriate for the circumstances; KenP offers some thoughts as well.

I honestly don't know enough about the pertinent background facts to comment on the propriety of the police officers' actions.  Certainly, serving warrants is dangerous business, and police often do not know the risk connected with any particular raid, so it's entirely understandable if they err on the side of too much force.  On the other hand, there are plenty of reports of overzealous law enforcement vice squad raids where families (in particular young children and pets) are placed in harm's way, only for the police to find out they are at the wrong location, or they discover only trivial amounts of drugs.  All I can tell you is to read the news reports and draw your own conclusions.

What I do find interesting is the timing of this particular raid, less than a month after the South Carolina supreme court heard oral argument in the Chimento poker-legalization appeal.  If local law enforcement officials are anti-poker, arranging the well-publicized raids of a few poker games makes for a pretty effective campaign strategy.  Regardless of the motivation for the raid, it's undeniable that the optics of this raid could hardly be worse for the pro-poker side—"illegal" home poker game raided, SWAT forces used, police officer shot in a gun "battle", all in time for the late night news.  I'm not sure the pro-poker side had much of a chance of winning in Chimento as it is, but this raid likely was the last nail in the coffin.  There's really no way I can see the court handing down an opinion now which essentially would say, "That cop who got shot last November?  Never mind, those folks weren't committing a crime." 

Turning our attention across the continent to that great bastion of moral purity, Washington state, where gambling is strictly forbidden—except for lotteries, horse racing, tribal casinos, and state-licensed card rooms.  OK then, Washington state, where online gambling is strictly forbidden (a policy preference roughly akin to legalizing swingers clubs and escort services, while outlawing sexting and online porn sites).  In the first intersection of news and poker litigation, the Washington supreme court's Rousso decision, upholding the state's ban on internet gambling (including internet poker), was back in the news as Full Tilt Poker followed the lead of PokerStars and banned players from within the state of Washington from playing real-money games.  Frankly, my prior comments on the PokerStars withdrawal from the Washington market apply equally to Full Tilt:

For PokerStars to tie its decision to pull out of the Washington state online poker market to the Washington supreme court's Rousso decision is beyond disingenuous.  PokerStars has been violating Washington state gaming laws since at least the enactment of the online gambling ban, and most likely as long as it has been in business....  There was nothing magical about the Washington supreme court ruling that suddenly made online poker illegal in the state.  The PokerStars withdrawal is all about creating the appearance of caring about state gaming laws, while generating a smokescreen to hide its past blatant disregard for those laws.

Of more interest to me was news that the author of the Rousso decision, Justice Richard B. Sanders, lost his re-election campaign, apparently in large part because of his rather interesting personal life.  To poker players, seeing the outspoken and rather libertarian Sanders not only voting against legalized online gambling, but also writing the opinion, had to have been a cruel disappointment.  However, in an election where Iowa voters ousted three qualified judges merely because they had the temerity to do what they felt justice required, it sort of balances the scales a bit to see Sanders—who voted against gay marriage and joined a stridently anti-gay concurring opinion in doing so—also looking for work.

The most interesting intersection of news and poker litigation, however, arises from the recent announcement that federal authorities in Washington seized over $550,000 in cash from a Canadian payment processor, and is seeking to seize the company (or its assets) for what the federal authorities are alleging to be illegal money laundering activities.  Essentially, the legal mess arises from UltimateBet's use of the company to process cashout checks for its players, with the company disguising the payments as "payroll" payments.

It's intriguing to me that the investigation began back in July 2009, nearly a year before the Washington supreme court heard arguments in the Rousso appeal.  It makes me wonder if maybe the federal authorities had intended for the investigation to move more quickly, perhaps to be concluded before an adverse decision by the court, or perhaps to influence the court's consideration of the case.  In any event, the seizures have to put something of a cloud over the Full Tilt and PokerStars decisions to withdraw from the state.  If the federal authorities decide to seize, or even merely to track, the massive number of cashout checks for Washington online poker players, one wonders what kind of legal fallout might result.  Don't be shocked to hear of more federal raids of payment processors connected to Washington poker players over the next year.

Finally, in the realm of the purely theoretical at this juncture, the federal Travel Act makes it a federal crime to use "the mail or any facility in interstate or foreign commerce, with intent to:  (1) distribute the proceeds of any unlawful activity ...", and defines "unlawful activity" to include "any business enterprise involving gambling ... in violation of the laws of the State in which they are committed."  I'm not saying PokerStars and Full Tilt have committed or are committing any crimes, but I bet the federal authorities could make the Washington state cashout process really interesting for those companies if they wanted.

High stakes, indeed.

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