August 13, 2012

Did Pappas and the PPA Just Shoot Full Tilt Players in the Foot?

Last Friday, Poker Player Alliance (PPA) executive director John Pappas wrote an editorial for Forbes.com calling for Congress to enact legislation authorizing online poker. The Pappas editorial was headlined, "The DOJ Has Spoken: It's Time For Congress To Legalize Online Poker", which seemed rather strange following the recent $731 million dollar settlement of the DOJ's forfeiture claims. But the headline was not misleading; Pappas in fact asserted:
The hidden gem in this settlement agreement, however, has much larger stakes for American poker players as well as online poker more broadly. In the agreement, the U.S. Attorney’s Office very clearly left the door open for PokerStars, and it’s now-owned Full Tilt Poker, to become licensed online poker operators as soon as the United States decides to license and regulate this great American pastime.

This sends an important message to Congress. The Justice Department could have very easily banned PokerStars and Full Tilt Poker from the United States forever. Yet it chose not to. It chose to clearly recognize that online poker can and should be a viable industry in this country. Now the question is, will Congress listen?
In legal writing, a good rule of thumb is that any statement or contention that uses "clearly" to describe a factual or legal conclusion is likely highly contested. Let's take a quick look at the Full Tilt settlement agreement. In paragraph 7, there is a standard clause stating that the settlement agreement is not an admission of fault. And in paragraph 10, the agreement provides that Full Tilt and its affiliated companies (which would include PokerStars as its new owner):
are precluded from offering online poker for real money in the United States until if and when it becomes permissible to do so under relevant law.
The DOJ press release announcing the settlement contained similar language, as well as a rehashing of the criminal indictments and civil forfeiture claims it had filed, in all their illegal gambling, bank defrauding, money laundering, and Ponzi scheming glory. Certainly nothing in either document contains any indication that the DOJ "chose to clearly recognize that online poker can and should be a viable industry in this country."

In advocacy, it's certainly permissible to argue for a conclusion that rests on an inference drawn from incomplete premises. Here, however, Pappas has crossed the line and falsely insinuated both that the DOJ has taken a position with respect to a thorny and contentious political question, and that the DOJ is in favor of legalization of online gambling despite its recent high profile prosecutions of the major online poker sites.

Blatant misrepresentations like this only serve to undermine the credibility of whatever information or point of view an advocate is attempting to convey. Perhaps Pappas and the PPA felt that their little bit of sophistry would score some easy points with a public unfamiliar with the details of the DOJ-Full Tilt settlement, and was worth risking the PPA's credibility. Even so, Pappas' misrepresentation was a stupid and unnecessary rhetorical gamble.

It's not just the general public tracking the ongoing fight over online poker on Forbes, after all. A much more likely audience for Pappas' article is the DOJ itself. Considering that the PPA is lobbying the DOJ for full repayment of Full Tilt player account balances, it seems foolhardy for Pappas to poke—and probably provoke—the DOJ by publicly asserting the DOJ wants to legalize the very conduct it has just spent years investigating and prosecuting in a high-profile manner. It's certainly not the smartest public relations strategy.

Of course, the PPA probably has little or no credibility with the DOJ in any event. It is no secret that the PPA pre-Black Friday funding came predominately from Full Tilt and PokerStars, the PPA's current funding comes predominately from PokerStars, the PPA's primary founders and directors were owners of Full Tilt (Howard Lederer and Chris Ferguson, who both remain subject to DOJ forfeiture actions), and the PPA's congressional spokesperson was a shill for Ultimate Bet/Absolute Poker (Annie Duke). Given how the DOJ views that poker rogues gallery, the DOJ's granting the PPA permission to submit a letter on repayment of Full Tilt players begins to feel like a classic case of "You'll be given a fair trial and then shot."

Pappas' article in Forbes is simply the latest in a long line of amateur hour moves by the PPA. Poker would be better off if sometimes the PPA just shut up.

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ADDENDUM (16 August 2012):  Today, Shamus over at Hard Boiled Poker took a look at the Pappas op-ed in Forbes, and as usual shared some interesting insights. Give his blog a read every day for great poker commentary.

Earlier this week, Chris Grove at Online Poker Report posted a thoughtful contrarian response to my commentary. First off, I find Online Poker Report to be a consistently solid source for poker news and commentary, and encourage poker players to check it out if it's not already in your regular reading. Second, I do have a few responsive comments, but Online Poker Report apparently does not accept comments, so I will post them here.

Starting with one of Grove's last points, Grove and I are in agreement as to the weakness of Pappas' contention that the DOJ has endorsed the legalization of online poker:

It’s not a great argument.   It’s not even really an argument at all – more just two ideas in proximity.  There is a big, big step between the DoJ leaving the door open for PokerStars / Full Tilt Poker in a future, regulated US market and a full-throated DoJ endorsement of that market.

However, Grove doesn't view Pappas' contention that the DOJ "chose to clearly recognize that online poker can and should be a viable industry in this country" as a misrepresentation. "Instead, Pappas is offering one possible interpretation of what one might read in the tea leaves of legal language – a pretty common pastime that rarely gets you called a liar."

As I noted in my initial post, there is simply no evidence to support Pappas' contention. Let's call a misrepresentation a misrepresentation. Although I understand Grove's instinct to be charitable as to Pappas' intentions, Pappas wrote the piece not as part of an everday run-of-the-mill BS session, but as an op-ed in a major business publication in his role as the leader of an advocacy group which is currently engaging and presumably plans to continue to engage in dialogue with the DOJ. As a lawyer, I am in front of administrative agencies regularly. If I or someone from my company started publishing false statements about key agencies, I would fully expect to receive a cool reception next time I had business in front of that agency, and my company would rightfully hold me responsible for creating tension in the relationship between my company and the agency. Pappas similarly owes a heightened duty to the PPA's members not to provoke the DOJ, particularly when the PPA is actively lobbying the DOJ on an issue considered important by many of its members.

Finally, Grove points out what he feels is an inconsistency in my concerns—how can Pappas' comments affect the PPA's credibility with the DOJ if, as I contend, the DOJ already has a pretty low regard for the PPA?

Well, which is it? Is the DoJ parsing Pappas’ every word like a starstruck schoolgirl triple-reading Tiger Beat? Or could they care less?

My guess, for what it’s worth, is that they treat the PPA just like they treat any lobbying organization interacting with the agency during the course of official business (heavily weighted toward general indifference). I’m sure this isn’t the first time the DoJ has dealt with backed by tainted money.

Perhaps the problem here was a lack of clarity in my initial critique of Pappas and the PPA. It is entirely possible for the DOJ to view the PPA with skepticism as a general matter, and for the Pappas article to further damage the PPA's credibility with respect to the pending remission issue. Look, as a lawyer, I have had numerous cases where my client had credibility issues. In such a case, the last thing I want to do is something that adds fuel to the fire. Here, the PPA was given the opportunity to present the views of its members to the DOJ. Even though the PPA's close connection to Full Tilt and PokerStars likely gives the DOJ a certain degree of uneasiness, the DOJ will still give at least some consideration to the points raised by the PPA. Why on earth would Pappas think it was helpful to achieving the PPA's goals to jab the DOJ by misrepresenting its position in such a public manner? What possible good can come of it?

The Pappas article may in fact ultimately have little or no impact on how the DOJ considers the points raised by the PPA on the Full Tilt remission issue. My point is that Pappas was foolhardy to even take a chance on provoking the DOJ with his ill-advised commentary.

13 comments:

  1. I found two glaring errors in your piece. First, you used the words "PPA's" and "credibilty" next to each other, when those two words should never be in such close proximity. Second, you used the qualifier "sometimes" when describing when the PPA should shut up. The sentence should in fact read, "Poker would be better off if the PPA just shut up".

    Other than that, a most excellent post.

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  2. Why does no one ever talk about the multi/accounts and house accounts used to scam players?

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  3. been a lot of talk about their own pro's multiaccounting. Their security dept was supposingly ordered to err on the side of seizing accounts and funds when any Security was also trying to steal as many player funds as possible to help briing in money. People who didnt seuize funds/freeze accounts were gone and the immoral ones who did moved up

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  4. demonstrates conclusively that the organization is worse than incompetent; it is actually detrimental to the cause of legalizing poker.

    The above quote from one of your previous posts pretty much sums it up.

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  5. To the first poster, since we are living in the dark ages of online poker in the U.S., I would like to know what you are doing about this. If the PPA's efforts at changing things are not the solution, I certainly want to be a part of what is. So please let me know ASAP so that I can join you in your efforts.

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  6. Replied at length here:

    http://onlinepokerreport.com/response-to-craakker-ppa-post/

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  7. @ Chris Grove: Thanks for posting a thoughtful counterpoint. Does your site permit comments (it may and I'm just incompetent at figuring out how to post a comment)? If not, I'll post a short reply here instead.

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  8. Grange,

    This is a fairly outrageous piece in my opinion. Even if you disagree with a strategy here and there, there's no reason to attack the people fighting for this.

    I disagree strongly with your belief that we'd ever be better off being quiet. When the poker community tried that in 2006 and prior, politicians lined up to attack us, believing the American people wanted them to stamp out the "scourge of Internet gambling." They voted to ban online poker in the House by a 3-1 vote (it was watered down in the Senate before being attached to SAFE Ports Act as UIGEA), and the GOP even adopted an anti-online gaming platform plank.

    I've not seen you participate in or promote my Poker Daily Action plan, nor have I seen you propose an alternative to PPA. What is your recommendation? Surely it's not for us all to sit back and hope for luck, is it?

    Rich Muny
    PPA VP of Player Relations

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  9. Shamus at Hard Boiled Poker posted today about this discussion, with links to both my post and the response of Chris Grove. Links to both Shamus' and Grove's posts are in the Addendum I have tacked on to my initial post, along with some quick comments in response to Grove. But please read both Shamus' and Grove's takes on the discussion.

    @ Rich Muny: Thanks for taking time to comment. I think the issues you raised merit a longer response, and I will probably do a separate post in the next day or two.

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  10. I have no idea about any impact of the piece written for Forbes on attitudes within the Justice Dept, but the assertion that because they were allowed to cop a plea therefore the "DOJ has spoken" as an institutional advocate of legislation is just plain silly to the point of childishness, and will be persuasive to absolutely nobody who might need persuading. And, I do not need to propose any damn thing in alternative or produce some sort of poker crusader credential to make that obvious observation, nor does anyone else. The relative value of silence v. speech does tend to depend a great deal on the content of what it is one says rather more significantly than the virtue of the speaker's feelings, righteousness of their motive & goodness of their intended result in doing so.

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  11. I do want to congratulate Mr. Muny on being notably more historically accurate in briefly summarizing some of the legislative history than what I usually see from others pretending (or perhaps believing) that UIGEA was suddenly sprung from the mysterious netherworld at the time of final passage. It matters for credibility when doing legislative advocacy.

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  12. Solid writing in this blog. lol. /sarcasm

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