April 30, 2011

IMOP VI: Santa's 12ish—Section IV
(The Denouement)

Note: The official IMOP trip report will be posted in randomly intermittent installments. Prior entries are: Part I and Part 2, Section 3(A), and Section 3-D (The Jacket Dinner). The author of the report is our cruise director, Santa Claus, with occasional editing by yours truly. Enjoy!


The Ironmen begin to slowly shake off the fog of the Ugly Jacket night and assemble in the Venetian poker room for some Euro-tilting cash game action. Santa gets seated at a table where Barbie and Fat Jesus are already holding court. At one point during their verbal jousting, this hand breaks out: Preflop raise and both are in the hand. Barbie has 64s and flop comes 224. Fat Jesus bets, Barbie calls as Fat Jesus says, “You’re behind”. Barbie’s reply is, “Yes, until I hit my four right here, “and sure enough a four turns. They get it all in and Fat Jesus turns over pocket ducks for quads and takes a big bite out of Barbie. Nothing better than drawing dead and getting there. No mercy!

Grange and River Joe pick up Santa and they get breakfast after standing in the longest line in the world at Bally’s café. As they walk over to Aria to register for the last tournament of the trip, they are passing through Cosmopolitan and they hear giggling. Santa turns and sees Fat Jesus, Colt and Barbie laughing their asses off, drinking cosmopolitans and playing Sex In the City slots. Their waitress is shaking her head as she watches them guzzle the fruity drinks out of martini glasses while shouting, “I hit the shoe shopping jackpot for $300 on pink pumps!” They should definitely have their Man Cards revoked.

Colt and Barbie sip Blood Orange Cosmos and hit up the
Sex & the City slots at the Cosmopolitan.

Everyone makes it to Aria alive. Fat Jesus (who has an uber-generic real name) breaks the computer in the Aria cashier cage when they have to look up his players' club card by name; the computer freezes up and has to be rebooted. This leads to Grange and Fat Jesus prop betting on the over/under for other Ironmen names in the system; Grange is tilted when he takes the under on his and two other uncommon Ironman names and discovers they all have a lot of dopplegangers (perhaps some of whom can actually play poker and/or get better comps). While registering for the tourney, a near fight breaks out in Ivey’s room when Shawn “Sheiky” Sheikhan goes bananas on some guy and Todd Brunson calls security. Great, our closest brush with fame is a world famous douche bag. *sigh*

After nearly bubbling for the third time in four tourneys, Lucky not only cashes but takes home the cash in the largest tourney we entered (over 100 degens). He becomes friends with Yaks as they help him with a timely double up, then his Yaks take out the table bully that refused to chop. The players (including Barbie) finally decide to chop when it is down to four. Lucky has the chip lead, and gets the largest share and is declared the winner of that event.

River Joe had busted earlier and jumped into a cash game. In one hand, he gets heads up with an old short stacked Asian (OSSA) where he flops top two, on an OESD board. OSSA sits there and ponders on what to do. Joe asks, “You have straight draw don’t you.” Finally OSSA answers yes. Joe then says, “You should go all-in, you’re getting the right value.” OSSA tanks, and eventually gets it all-in which Joe calls. You guessed it, OSSA gets there on river. Thank you, lessons are FREE, don’t forget to tip your dealer … rack please.

After having busted out earlier, Bonnie and Fat Jesus headed over to the sports book at the V. At one point Fat Jesus had placed a sports bet along with Bonnie, and had left the VSB to take a nap. Thinking the team he bet on had to win by 3, he watched the end of the game alone in his room rooting for the overtime and cheering when it happened. Then he decided to watch the end of the game at the VSB with the others, still thinking he needed to win by three. Fat Jesus was disappointed when his team and he both “lost” but Bonnie sees his disappointment and says “you know we won, don't you?” laughing at his ignorance.

On their way out of Aria, Mr. Chow, Barbie and Colt decide to see if the blackjack tables are still hot for them. While Colt is sticking to a range of $20-$40 wagers the other two proceed to randomly toss out $100+ while splitting 3’s or 5’s against a dealer 8-10. Gentleman stops by with his wife/girlfriend and asks them to take good care of her while he goes to play poker. (“Dear Penthouse Forum….”). Anyway, they welcome their new friend to the table with a series of “Ca-Caw’s” and random exclamations. After witnessing Barbie go through a series of Benjamins, he stumbles across a pair of 3s against a dealer 9. Colt leans over to their new friend and whispers, “Watch this. You’re about to witness a complete train wreck” as Barbie reaches for more money to split those 3’s and drop $150 total on the hand. Total Ironman net after 45 minutes of BJ = down $850’ish. The cure? Walking over to Planet Hollywood. 

As the rest of the crowd arrives from Aria, Bonnie, Grange and Santa are already grinding away at a 1/2 NLHE game with a crazy drunk Belgian guy, claiming to be the head chef for some restaurant on the Strip. He would frequently overbet, shove in or just plain play blind on nearly every hand. Grange and Santa had taken big bites out of him when he decided he wanted to play 2/5 NLHE. That was the fastest list I have ever seen come together, and half the table followed him. At the new table Grange, Barbie, and River Joe were able to get seats. All three got fat off the guy as he methodically worked his way through the bustout/ATM/$1000 buy-in cycle five or six times, but the funniest hand wasn’t a part of the winning. Barbie and the Belgian get it all in preflop for about $500 apiece. Belgian guy has not looked at his cards yet. Barbie has AQ and feels good after seeing AQ7 rainbow flop. Problem was that when the Belgian finally looks at his cards after the river comes out, turns out he’s got pocket 7’s for a set to blindly felt Barbie! Fukkaw!

Yo dawg! Chico from Planet Hollywood, winner
of the IMOP Most Entertaining Poker Dealer award.


Santa awakens from a short nap to get an early start on tallying up all of the points, sheets and contests to try and figure out who won. He texts Grange from Mirage to see if anyone is playing. Grange’s response from the Venetian is: "Pot Limit Gamboool!!!!"  Santa rounds up the scoresheets and is looking forward to playing a little Omaha to wind down the trip. However, based on the series of tweets and texts he gets on the walk over, he decides to sit this one out and avoid disaster; every other pot seemed to have multi-way all-ins for over a grand each time…

Grange, Mr. Chow and Barbie are in the 1/2 PLO game with a few sketchy locals and one nasty old lady. She was probably 65+, bearing a strong resemblance to the Wicked Witch of the West, and wearing a jacket that would've walked away with Ugly Jacket honors. She was also sweated by her--sister? mother? lover?--who had her own combo chair/walker. Crabby would buy in for the minimum ($200), wait for Aces, then bitch like a sailor when she was inevitably cracked. 
One hand, she called Mr. Chow and Barbie all-in on the flop of 9-9-4 with AAxx double-suited, but of course both our boys held a 9, and their hands held up to chop the old lady’s money. Crabby bitched to her partner with a ton of profanity about the suckout. Barbie said something innocuous about a tough beat, and she hissed at him, “Don’t you f-ing talk to me!” Crabby also refused to let any player offer her chips for her bills; she made a point of only letting the dealer make change.

This was the scene of Grange’s best run good of a trip already filled with running good. He won a monsterpotten with QcJcJdTd, flopping the OESFD on a board of 9d-8d-x. He got it all in against one of the local "pros" who was trying to run the game. They agreed to run it twice. First card off: 7d! Yahtzee! Grange is now pissed that he agreed to run it twice. No worries. Second board runs out: Blank, Qd! Donkey Kong! Luckbox hits both ends of the straight flush and makes the dealer hold off raking the muck while asking Fat Jesus (also spectating with Santa) to take a photo of it. His competitors were not pleased. Within the next half hour, he also hit middle set with 6s (666, baby!) on a board of Q-6-5, and hit two full houses running it twice, for another monsterpotten and a bonus of sending Crabby off on mega-tilt to rip the heads off bunnies (sorry, bunnies). That little bit of run good was also run bad, however, as the straight flushes and monsterpotten occurred a couple of hours after the official cutoff for IMOP points (which includes points for high hands and large pots). Grange would up with what he calls his  "Tag Heuer PLG Watch" after converting some of the profits from his best Vegas outing in 2-3 years (Fat Jesus—a Tag Heuer aficianado—should really get a commission for his superb sales work at the City Center Tag Heuer shop).

The board from Grange's double straight flush hand at the Venetian.
Note Grange's Patron-rocks-lime anti-scurvy beverage (left), as well as 
Crabby and her Amazing Technicolor Eyesore (right).

As the guys walked from the poker room over to the Grand Luxe for the traditional IMOP wrap up, they come across Barbie, Fat Jesus and River Joe searching for one last fourball opportunity. They somehow managed to win yet again. Ca-caw!

After the usual voodoo scorekeeping, Barbie and his miracle table game run managed to squeeze out a repeat victory and rare back-to-back IMOP championship. Hopefully he saves some of his winnings to pay for all of breakfast next year…

Bonnie engages in international drinking
diplomacy in this retrospective pic from IMOP-V.

April 24, 2011

IMOP VI: Santa's 12ish—Section 3-D
(The Jacket Dinner)

Note: The official IMOP trip report will be posted in randomly intermittent installments. Prior entries are: Part I and Part 2, and Section 3(A). The author of the report is our cruise director, Santa Claus, with occasional editing by yours truly. Enjoy!

The IMOP Jacket Dinner has had great influence in Hollywood.

Friday Night:

The highlight of the trip had arrived the annual—the Ugly Jacket Dinner. Grange and River Joe meet up for a pre-Ugly Jacket Dinner martini at Japonais in Mirage. They are standing at the crowded bar talking and River Joe gets tapped by a guy behind him who proceeds to rather brusquely ask if Joe would move, "because I'm trying to eat." In the very next sentence, the yahoo proceeds to say "Don’t get me wrong, I’m not that guy, I just don't like having someone so close"… fukkaw! Honestly, it might have been the smell of the jacket that offended him.

Samba was the venue for this year’s dinner, and we obnoxious our way into the place in full-on ugly regalia. We attract so much attention that we actually had a woman from another table ask us what we were doing, and then insist on being our judge for the worst three jackets. Despite strong entries from Barbie, River Joe (complete with light up glasses and electronic belt buckle) and Baby Los with his “Grandma’s Couch” entry, it is Sahara who pulls the longshot upset and walks away with the Ugly Jacket title. Rumor has it the judge felt sorry for him because he is so short, but this hasn’t been confirmed (actually overheard from the judge's table: "How about the short guy in the red jacket?").

Sahara models his championship Ugly Jacket entry,
with the aid of a pitcher of caipirinhas.

During the course of our outstanding meal of meat on swords and a cornucopia of caipirinhas by the pitcher, Barbie decides he needs a smoke and gets up to have one and play some blackjack. Immediately the prop bets start flying about how much he will win/lose during one cigarette. Sahara, River Joe and Bonnie get their wagers down and Barbie blows away the +$150 line with a $475 win in just under four minutes! At the conclusion of the meal, we attempt to get a redux of the infamous “meat tank” prop from a couple years prior by getting Bonnie to put a gigantic ball of fat in his jacket to bring out to eat during an all-in at a poker table. Sadly, Bonnie was either too drunk or not drunk enough to try to ingest a tennis ball-sized blob of fat, so no hilarity ensued.

The "fat ball" prop bet went unclaimed.

The dinner also was the scene of the single largest wagering sweat of the trip. Thanks to a false sense of confidence in Bonnie’s hot basketball betting streak, everyone was heavy on Notre Dame to beat Louisville. We toasted each other when they were up 12 at one point (and getting points), only to start swearing at our phones as watched the lead dwindle to nothing. The Golden Domers eventually choke, costing the Ironmen somewhere in the neighborhood of $4,000 combined. As they watch it come to a painful end at the Mirage sports book with several hundred other angry losers, Santa laments, “I haven’t seen this many people pissed off at Catholics since the last Mel Gibson outburst.” Time for a change of venue and a mojo-jumpstart, and we begin the walk to PHo for loose action. Fukkaw!

On the way, we make a refreshment pit stop at Grange’s favorite mojito/caipirinha stand outside Caesars, and Grange springs for a round of drinks to ward off scurvy. Baby Carlos decides he is going to sacrifice his jacket to Caesar. He drops it off, but it must have angered fair Caesar, because he makes Los step off a curb into a pothole, where he damn near breaks his ankle. The pain is searing, so he detours to the room to ice it. By Saturday night, it is bruised from heel to toe. Vegas is emotionally, and now physically dominating Baby Los.

We arrive at PHo and get seated at various tables. After losing $225 in the first hand, JeBeDIA gets in a groove with Bonnie at his table and makes a nice comeback. After a day where Bonnie drank 20 Goose & Juices, he starts the night on a Corona binge and never stops rolling. At one point, two drunk clubbers that they nicknamed Garth Brooks (cowboy hat and clothes) and Spiderwoman (fake boobs and a spiderweb tatoo on her shoulder) sit down and promptly begin textbook collusion (showing each other their hands, betting and raising others off hands, then checking it down, etc.) The dealer inexplicably lets this happen, but fortunately they are so bad, even collusion couldn't help them. Bonny felts Garth in one hand and gets verbally berated by Spiderwoman which sets of a table argument—you're awesome, dude, when your girlfriend has to do your trash talking.

Barbie had been playing for a while and decides it’s time to hit the rest of the Strip with Mr. Chow and Lucky. On his way by Santa’s table, a guy pipes up that he wants to buy Barbie’s ugly jacket. A short negotiation occurs and the guy pays Barbie $30 for the thing. However, in true Caribbean flea market style pushiness, Barbie insists on making it $35 and throwing in the tie he’s wearing. Guy does not want the tie but by then Barbie has removed both items and handed them over, now expecting the $35. The guy sheepishly hands over the money and Barbie gets an extra $5 for a tie which was wastebasket bound anyway.

Barbie scams a tourist at Planet Hollywood.

The three Ironmen hit the strip and use Lucky as their canary in a coalmine to find “hot” carnival tables and go on a massive run over the next couple hours. Between yells of “Ca-Caw!” and “ship it, bitch!”, the group won over $3,000 and tipped Lucky $130 for finding the hot tables. They even got so degenerate they pushed their luck and played baccarat at Harrah’s, despite having no idea how to play. "Ca-Caw!" for the profit!

Back at PHo, the last combatants were racking up their profits and heading out. Both groups seemingly walked around the casino twice trying to find the escalator to the taxi stand. Once Bonnie arrived back at the Venetian, he avoided a drunken repeat of last year where he couldn’t get his hotel room door open. He did, however, manage to wake his roommates again by flipping on every light in the room and jabbering away incoherently about his $1400+ victory, causing Colt to tweet: “Drunk Bonnie arrives to room @ 5:30am, says many words”.

Barbie (runner-up) and Sahara (champion) display
some sartorial splendor at Samba.

Grange (left) was shut out of the Ugly Jacket competition for
the first time ever, despite his classic pink Miami Vice brand jacket.
Colt (right) classed up his jacket with a baseball cap.

Baby Los (left) yucks it up prior to having his leg broken 
(well, ankle twisted). River Joe (center) with his glittery green felted 
tuxedo eyesore takes a competition bad beat with a distant third.
Lucky (right), just wanted meat on swords.

Stayed tuned, true believers! We still have Saturday and Sunday to cover!

April 23, 2011

IMOP VI: Santa's 12ish—Section 3(A)

Note: The official IMOP trip report will be posted in randomly intermittent installments. Parts I & II of the report can be found here and here. The author of the report is our cruise director, Santa Claus, with occasional editing by yours truly. Enjoy!


Santa wakes up from his nap and catches up with Fat Jesus and JeBeDIA at the Venetian for an early morning session, the highlight of which was Fat Jesus coining the phrase "Poker Porn"—when you fold a hand either preflop (or worse, postflop) only to see your cards play out to be the nuts for a huge pot. Poker Porn—all the visual but no satisfaction.

Barbie came stumbling into the V a little while later loudly announcing “Good morning, bitches!” still not having slept but managing to roll a poker table pretty well at PHo. This was also about the time Barbie started his “Epic” table game streak. He started the “fourball” blackjack strategy at the Venetian, turning $50 into $870 in three minutes by essentially just letting his first bet ride four times before pulling back the entire stack.  It would prove to be a good thing he came up with this strategy because it made up for some seriously bad poker losses early on. After what amounted to being awake for about two and half days, Barbie finally decides to take a short nap before the 11:00 a.m. Mirage tourney.

River Joe gets to the Mirage early (since he had accidentally checked in and all) and actually plays 3/6 limit of all games; he ends up hitting a few sets and inside straights on his way to a tournament free roll as the rest of the Ironmen make their way in. Early on, River Joe lives up to his nickname and gets it all in with QQ against AA and hits his one-outer on the river for nice double up. Another fun moment occurs on the last hand before the 2nd break. Barbie is put to the decision of calling an all-in bet for roughly 40% of his chips. Foreigner is playing over sound system. A large man in wife beater and straw hat sitting at Barbie's table begins “bouncing” (jiggling?) to the music. Either way, the only part of him moving is his gut. As Barbie is contemplating the call, he sees the guy out of the corner of his eye. Barbie looks up and says to Colt, “I’m distracted” and nods towards the guy. Colt bust out with laughter and has to leave the table as guy continues his belly-dance oblivious to the distraction it is causing. Mirage again turns out to be good to the Ironmen, with three at the final table and Barbie and River Joe both cashing.

Mr. Chow had busted out early on and hopped in a cash game to bide the time. He is doing usual "a-hole maniac with a smile on his face" routine when Sahara joins him. A prime example of why it is best to avoid the Ironmen happens next. Chow straddles and 8 players call the $4. Chow bumps it up another $10 w AsJh and predictably gets five callers. Flop is Js Xs Xh and a nice Canadian who Chow had been chatting up bets $40. Sahara and Chow both call. Turn card is a third spade. Canadian bets $200, leaving $250 behind. Chow pops it to $400 and gets Sahara out. Canadian squirms, thinks, closes eyes, squirms some more, stands up, sits down, rolls over 6s4s and asks Chow, “Do you have the Ace of spades”. After the initial answer of “$200 more will tell you for sure," Mr. Chow rolls over the Ace of spades. Canadian then does the whole routine again before mucking the winner. Sahara tweets, “Mr. Chow has wrecked poker”. Very true.

Post-tourney, it was finally time for another new IMOP event we’ve been trying to pull off for a few years: The Third World Poker Tour. Our gang pretends like we are degenerate, but we always seem to wind up in the cushy confines of the high end poker rooms. Well, we put a temporary halt to the snobbery with this event. If you recall, we all gathered ‘round the Binion’s roulette wheel to let fate both pick our heads up (of sorts) IMOP opponent and the venue where each duo had to play. Rules were simple. Both participants go to the venue together, sit in a 1/2 NHEL game with $200, and play for 90 minutes. First one to bust out loses, otherwise the player with more money at the end of 90 minutes wins. IMOP points are awarded to the winner, with negative IMOP points for the loser. A few in the group were not excited about heading to such exotic locales as Riviera or Sahara, but the tweets were well worth it.

In the first match, Baby Los heads to Luxor with Bonnie but it doesn’t last long as Los plays nearly every hand and busts out in short order as they try to spend the absolute minimum time slumming it away from the Venetian. Bonnie gets in the cab line as Los trams back over toward Monte Carlo. Bonnie hears people yelling "taxicab confessions" as he gets in and he asks Rita-the-cabbie what that was and she proceeds to tell him she has worked for HBO for 14 years and he’s being filmed! Pansy that he is, he discloses nothing interesting, but does tell her his name is Barbie from Cedar Rapids. After the interview, she informs him that he has no shot at all at making it on TV. Kind of sad when our craziest competitor can't make the big time.

In another match, Lucky and Fat Jesus wind up heading to Excalibur, describing the competition as similar to “blowing goats”. After walking half way across Camelot they finally made it to the poker room and after 90 minutes and no seats nearly went medieval on the poker room staff. They finally get seated and see the table bully alternating between going all in or making huge over-bets pre-flop, so Lucky limps from under the gun with AK. Bully pushes all in for about 120 and it folds back around to Lucky who insta-callsl. Bully flips over 34o and manages to turn a 3. Lucky decides that AK stands for "A Kick in nards". However, he works his way up to about even and finds a way to outlast Fat Jesus in the painful heads up match.

Colt and Grange end up next door at Monte Carlo with nothing of note happening, except perhaps applying for their AARP cards and being accepted into the coffee klatch of the 90-somethings who thought they were “cute”. Colt does win the match, but gets disapproving glares from the regulars whenever he bets over $15.

Sahara and River Joe proceed to slum it to the north end for their Third World Poker Tour options of Circus Circus or Riviera. So, after a flyby at CC where they have one limit game going, they proceed over to the purgatory of Riviera. With no air conditioning and no money on the table, Joe took one for the team so they could get out of there, pushing with top pair, weak kicker into three other callers, and loses to top pair. better kicker. The whiny tweets from our resident blue blood, Sahara, were priceless. We may have to declare the Riviera the official venue for next year just to see if his head literally explodes. Highlight of the event was on the return trip, before making their way into the Venetian, the oppressed duo stops to gawk at the Express Runway Models who are having some sort of outdoor event. All they seem to remember are legs, legs, and more legs.

Santa and JeBeDIA head to the Stratosphere for their match, despite having the option to play one very last session at the actual Sahara before it shuts down permanently. (Note from Grange: “Raise a glass of Keystone and a stale cigarette to the grand old home of the kickoff tourney, sadly lacking in tortillas even today.”). Upon arriving at the Strat, they are pleasantly surprised at how (comparatively) nice the place turns out to be. A brand new game starts up and they get seated. On the very first hand Santa raises pre-flop to $17, gets a couple callers and bets $30 on a board of Jx 4x 6x. He gets min-raised by a very large meathead at the end of the table and snap calls. Turn is a 4x and he calls a $40 bet. River is another 6x and he then bets $100 on the river. Meathead asks, “Will you show if I fold” and Santa replies, “The rules of our competition require me to show my hand," and JeBeDIA audibly groans knowing that Santa has luckboxed the Grump into a full house. The guy eventually folds, and after tabling the Grump, Santa successfully tilts not only the muscle head, but also his buddy who was still waiting for chips. JeBeDIA is now significantly behind after one hand, but catches up on the second. He calls a button straddle from early position with Ace-Deuce (that crazy nit!), flops two pair, and check raises to $40, getting three callers. He bets $100 on the turn to chase draws and scoop the pot, so after two hands Santa and JeBeDIA are both up over $100 and have the two buddies at the end of the table gunning for the two "loose aggressive" guys. They end up felting muscle head's buddy at least three times between them, before he leaves the table down $800. Despite posting his best session of the trip, JeBeDIA still loses to Santa and they head back to the Strip.

Hard to believe, but there's still more to come!  Check back soon for the Jacket Dinner report (with pictures), as well as the Saturday and Sunday hijinks.

April 20, 2011

IMOP VI: Santa's 12ish—Part Deux, Duh

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What Is Bank Fraud? Inquiring Poker Minds Want to Know!

As debate continues to rage in the poker community about the legal issues raised by the recent DOJ indictments of the Big Three online poker sites (PokerStars, Full Tilt, and UltimateBet / Absolute Poker), it might be helpful to the poker community to have a general idea of what the serious "bank fraud" charges encompass.

A case with some interesting parallels to the Big Three indictment is United States v. Brown, 31 F.3d 484 (7th Cir. 1994). In Brown, the defendant was convicted of bank fraud and money laundering in connection with a scheme related to credit card processing (sound familiar?). Essentially, the scheme revolved around the fact that the Visa/Mastercard network of banks would either not accept credit card transactions from telemarketers (because of the increased risk of fraudulent charges) or would impose higher fees for such transactions. The defendant implemented a scheme where he recruited legitimate businesses with credit card processing accounts to front telemarketing credit card charges, thereby avoiding the banks' bans / limitations on those types of transactions. The defendant was eventually convicted of bank fraud and money laundering leading to his appeal.

On appeal, the Seventh Circuit Court of Appeals first noted that bank fraud "is also one of the predicate offenses specified under the money laundering statute, which prohibits the use in certain financial transactions of the proceeds of certain predicate offenses affecting interstate or foreign commerce". Thus, if the defendant were guilty of bank fraud, he also was guilty of money laundering based on the same set of financial transactions. Next, the court examined the requirements for sustaining a conviction for bank fraud. The court noted that "Section 1344 proscribes any scheme to defraud or obtain money or property from a financial institution by means of false and fraudulent pretenses, representations or promises." The court continued its analysis by stating:

“Whether a scheme to defraud exists is determined by examining ‘whether the scheme demonstrated a departure from fundamental honesty, moral uprightness, or fair play and candid dealings in the general life of the community. The bank fraud statute condemns schemes designed to deceive in order to obtain something of value.’ This broad definition suggests that each individual component of the scheme need not be specifically illegal, so long as the scheme as a whole constitutes fraudulent conduct.

There is ample support in the record for the jury’s conclusion that Brown and Clague agreed to defraud the banks. There is evidence that they knew that banks would not allow third-party processing because of its potential for increased risk. In addition, the defendants encouraged the recruitment of new merchants, they did not reveal their own activities to the banks and they encouraged other alleged participants not to reveal their activities to the banks. In short, neither appellant’s role was limited merely to buying or selling third-party processing services without accompanying fraudulent purposes. While the appellants argue that they did not know that their activities were illegal and that they consulted attorneys, their purported intent only to “bypass” Visa and Mastercard regulations indicates a departure from notions of fundamental honesty and forthright dealings as required under Hammen. Given the wealth of evidence against the appellants, it was perfectly reasonable for the jury to find that Brown and Clague had agreed to defraud the bank.

United States v. Brown, 31 F.3d 484, 489 (7th Cir. 1994) (citations omitted).

Now many commentators (including my friend, the very astute Poker Grump) have indicated some unease or even outright disagreement with charging the Big Three poker sites with bank fraud. The allegations in the indictment against the Big Three include accusations that the poker sites conspired with various payment processors to intentionally miscode credit card transactions to disguise gambling transactions as ordinary commercial sales, to create fictitious non-gaming businesses to provide cover for gambling transactions, as well as efforts to bribe bank officers or even to outright purchase shares of small banks to process gambling transactions barred by the UIGEA. The allegations include accusations that the poker sites trained customer service representatives to cover up the fraudulent transactions when dealing with customers confused by their credit card statements reflecting transactions with fictitious companies.

In looking at the allegations raised in the Big Three indictment, the parallels to the Brown case are striking. In neither case is there any claim that any bank actually lost money. Rather, the fraud occurred because the deception of the defendants tricked the banks into processing payments they otherwise would have denied; the mere attempt to "bypass" federal banking regulations was sufficient deception to support bank fraud charges. Of course, it should be remembered that banks processing gambling transactions have a real risk of liability for violating federal law in the post-UIGEA world. In any event, the Brown case suggests that the Big Three have some significant exposure to bank fraud charges if the allegations of attempts to circumvent federal bank transaction restrictions are in fact true.

Now, it should be noted that the area of bank fraud and money laundering is subject to a great deal of case law, with different standards imposed depending upon the federal circuit where a defendant is tried. The mere existence of the Brown case is no guarantee that a federal court in New York (part of the Second Circuit) will apply the same legal analysis of the relevant statutes. Nonetheless, Brown is an interesting application of the bank fraud and money laundering statutes that is uncomfortably close enough to the Big Three's alleged misconduct that those charges should be regarded with a certain degree of gravity many poker commentators have thus far eschewed. Still, the Big Three's defense attorneys will certainly have a number of defenses to these charges.

Of course, as I like to say, "There's always a better place to get it in bad."

ADDENDUM (23 April 2011):  Jacob Sullum, a regular writer on the excellent libertarian blog "Reason.com Hit & Run", linked to this post recently in his post, "Online Poker Update". Reason.com and the Hit & Run blog are must-reads for anyone who enjoys smart, informative, and accessible opinions on a variety of personal liberty topics.

The PPA Meets Or Exceeds Expectations

"You know, I have one simple request. And that is to have sharks with frickin' laser beams attached to their heads! Now evidently my cycloptic colleague informs me that that cannot be done. Ah, would you remind me what I pay you people for, honestly? Throw me a bone here!"

—Dr. Evil (Mike Myers), in Austin Powers: International Man of Mystery

As the online poker community begins to sort through the rubble left by the DOJ's carpet bombing run last Friday, all eyes turned to the Poker Players Alliance (PPA) for its leadership during poker's darkest hour. The PPA responded with this inspirational message:

Let's gloss over the fact that the head of a supposed national advocacy group can't find a tie or a camera not previously used for Chat Roulette. While we're at it, let's pretend PPA Executive Director John Pappas' subsequent stumbling performance on national TV never happened. After all, nobody puts the "ROFL" in "professional" quite like John Pappas!

Instead of jeering at the messenger, let's laugh at the message. According to the PPA, the DOJ's action against Full Tilt, PokerStars, and UltimateBet/Absolute Poker (a/k/a "the Big Three") was "nothing less than a declaration of war against poker and the people who play it." Strange how the PPA failed to mention the crux of the DOJ's allegations—the Big Three engaged in money laundering and bank fraud. Although the PPA's misguided and overheated rhetoric deserves some skewering, I'll defer to Bill Rini who, as usual, nails the Triple Lindy.

The PPA's reaction to the recent online poker indictments demonstrates conclusively that the organization is worse than incompetent; it is actually detrimental to the cause of legalizing poker. This conclusion is really not all that shocking to me, as I've long been a critic of the PPA. But let's let the PPA's track record speak for itself.

The PPA has attempted to promote legalization of poker through litigation and legislation. On the litigation front, the PPA's strategy has been an unmitigated disaster. Cases in which the PPA played a prominent role have now resulted in appellate courts in Pennsylvania and Colorado rejecting the PPA's pet "poker as game of skill" argument, with the South Carolina supreme court almost certain to join the anti-poker fold in the near future. The Washington supreme court has rejected the PPA's dormant commerce clause argument, upholding the rights of states to regulate online gaming within their geographical boundaries. As I have discussed previously, the effect of those losses is not limited to those states:

By tilting at the litigation windmill, poker advocates have instead worsened the position of poker. There are now binding appellate court decisions in several states explicitly finding that poker is gambling. These rulings reinforce in the public mind—with the imprimatur of judicial decisions—that poker is gambling, while also removing any arguable ambiguity as to the legality of poker (and online poker) for players in those states.

Similarly, following the Rousso decision, I observed:

Because of the PPA's hubris in pursuing this appeal, the Rousso decision will now be available to be cited and relied upon by other courts when they are confronted with the issue of state regulation of online gambling. Much like the ill-conceived "poker is a game of skill and not gambling" line of litigation, the PPA has taken an area of law which was gray and ambiguous, and forced a state appellate court to clarify the law with a definitive decision adverse to the interests of online poker players.* The PPA's attorneys are from a well-respected national law firm, and clearly are not idiots. Absent any better explanation, the cynic in me wonders whether the PPA's litigation efforts are merely a stalking horse litigation strategy testing the legal waters for the PPA's puppetmasters at Full Tilt and PokerStars.

When the New York federal courts begin to consider the "poker as game of skill" arguments certain to be raised by the defendants in the current DOJ action, the courts will be able to draw on these PPA-initiated decisions in finding that poker is subject to regulation as gambling by state law. If the PPA were a basketball player, it would be scoring layups—on their opponents' basket.

But what about the legislative front? Surely the PPA has a serious role to play as the advocate for poker players in the coming battles over the legalization of online poker?

Not so fast. First off, the PPA's John Pappas has acknowledged that the PPA has little clout when swimming with the sharks like Caesars Entertainment, MGM Resorts, or the tribal gaming interests:

"It's not going to be 100 percent of what players want, though I don't know if any bill would be," Pappas said. "There's been a lot of compromise. We're dealing with a lot of powerful interests who don't necessarily have players' interests in mind. The PPA is one of the seats at the table, and we're fighting for every bit we can get."

—Matthew Kredell, "Reid Pushing for Legalized Online Poker By the End of Next Week", Poker News Daily (12/6/2010).

"Frankly, the proposed blackout period is absurd and the PPA opposes it. And we have fought–and continue to fight – tooth and nail against it. But it is a reality. There will likely be a blackout period of some length included in any legislation that is passed, whether it is in this Congress or future Congresses. Our opponents have been throwing their weight around to get a lengthy blackout period included and, unfortunately, I fear they are winning.

That being said, upon significant analysis, review and reflection, we believe that the long- term benefits of this bill to the poker community make the blackout period a bitter pill we have to swallow."

—PPA statement by John Pappas, reported by Brian Ralentide at Part-Time Poker.com (12/9/2010).

Now there's no shame in being the small fish in the big pond of Congressional lobbying. But the PPA's biggest problem is not its relative lack of financial and electoral clout. No, the PPA's Achilles' Heel is its utter lack of credibility because of its significant ties to the Big Three Poker sites. As I have previously discussed, the PPA's board of directors includes Howard Lederer, Chris "Jesus" Ferguson, and Greg Raymer, all closely tied to Full Tilt Poker and PokerStars. The PPA's go-to celebrity poker spokesperson is Annie Duke, until recently also a long-time spokesperson for UltimateBet.

Of course, Duke's connections to UltimateBet were problematic for the PPA even before the recent DOJ indictments. But the PPA's credibility issues have been compounded now that its primary sponsors—Full Tilt and PokerStars—have also been implicated in money laundering and bank fraud. As I have noted previously, the PPA is so tightly connected with the major online poker sites that the PPA can only be assumed to be more concerned with the agenda of its corporate masters than the concerns of its rank and file members:

[A] cynic might wonder if the PPA is merely used by Full Tilt and PokerStars to give a patina of populism to their lobbying efforts. A cynic might wonder if established sites like PokerStars and Full Tilt regard the PPA as a convenient fig leaf to cover their use of the PPA as a de facto lobbying arm, avoiding the legal complications of being foreign companies with significant lobbying restrictions. A cynic might wonder if the PPA is the political perfume used to cover the stench of lobbyists and campaign donations being funded by companies who currently flout U.S. gambling laws. Frankly, given the tenor of the PPA's litigation and lobbying efforts, a cynic might wonder if the PPA truly wants legalized online poker if it doesn't include a Get Out of Jail Free card for established online poker sites.

Color me cynical.

Given the DOJ's indictments of the Big Three, and the close—even radioactive—relationship between the Big Three and the PPA, one has to question whether the PPA can continue to lobby effectively on behalf of ordinary poker players. The PPA already lacked any notable weight in discussions of online poker legalization on Capitol Hill. Now that the Big Three have been indicted, what Representative or Senator will want to be associated with the PPA and its online poker masters / indictees?

In many ways, whether it's litigation or legislation, the PPA is the yahoo who keeps shooting himself in the foot. Is it too much to ask that the PPA put down its gun before it fires a lethal shot?

April 18, 2011

IMOP VI: Santa's 12ish—Day I

Note: The official IMOP trip report will be posted in randomly intermittent installments. The author of the report is our cruise director, Santa Claus, with occasional editing by yours truly. Enjoy!


Hard to believe we’ve been doing this for six years now. It’s fair to say these trips are aging us before our very eyes. Yet, this is the first year we’ve had every person back from the prior year’s trip (though the reason it’s “12-ish” is because of the in and out nature of some of our participants). For those who haven’t followed our saga through the years, we’ll introduce the players via the way they made their way to Vegas:

Car 1 left downtown Cedar Rapids at 9:05am. Santa, the organizer of all the fun, was able to ride over to Des Moines with Mr. Chow, who had coerced some work associates to schedule a meeting there as a way to not have to drive over. The plan was to spend the afternoon playing cards at Prairie Meadows Racetrack, Casino & ATM before figuring out a way to get to the airport for the evening flight.

Car 2 left Cedar Rapids later that morning with Barbie and Bonnie, who had met for a bloody mary breakfast, along with Fat Jesus and Colt. They also meet up at Prairie Meadows and cards were played. In true IMOP fashion, we begin coolering and beating on each other (including a ridiculous slow roll by Mr. Chow against Fat Jesus) before we even get on the plane. But, between tilted locals and snickers at Bonnie for getting down two buy ins, he used tilt to his advantage by some aggressive blackjack to make a nice comeback. Amazingly enough, as the group was preparing to board their flight, Bonnie says, “Crap – my phone!” and takes off in a mad dash back to the restrooms where we finds his phone right where he left it. Apparently he was trying to get his traditional brain-lock lost item out of the way at the start of the trip, rather than at the end.

Grange had already flown out of Des Moines early that morning to get his usual head start on the festivities and had already tilted off a couple of young DB’s and their adoring girlfriends by flopping a wheel and a set of Yaks and being up a grand before anyone even arrived.

Sahara had to blow the snow out of his driveway in Milwaukee one more time before catching his plane. He promised to tweet his bankroll JRB style, but much like his brother Lucky, he failed to live up to his boast of Tweet-frequency. Speaking of Lucky, he was just landing after having flown in from Cedar Rapids, traveling separately because of a work conference again this year which would keep him around for an extra couple of days.

JeBeDIA was also out there early with a bonus participant, his boss and IMOP home game participant FunBobby. They had to meet a client the day before and were going to meet up with us in time for the kick off. Can you spell "junket"?

Last but not least was another of our returning sophomores Baby Carlos. Baby Los would prove to be a part time participant this year as he both had non-Ironman friends along with him as well as being laid up by a nearly broken ankle (and broken sports betting run). Los gets checked into Monte Carlo and cabs it over to the V just as we are ready to leave. Nice timing! River Joe isn’t quite as lucky as his work commitments prevented him from making it to the limo departure and had to cab it down by his lonesome.

The Fremont Street excursion is Santa's way of giving the Ironmen some poker culture. The crew walks through the Nugget and over to Binion’s to scope out the WSOP Hall of Fame pictures (Hellooooo, Russ "Scumbag" Hamilton!), as well as to find a roulette table to set the pairings for the Third World Poker Tour (more to come on that later).

After predictably creating a long wait list at the cash games, a few degenerates decide to see the ballet at the strip bar on Fremont Street. They learned that the pictures/posters on the outside of the building and the person on the street recruiting are not at all indicative of the quality of the “talent” inside. After about 10 minutes and a near fight between a ballerina and an Ironman over how long a dance is supposed to last, they are out of there!

First session of the trip sees the usual start at the Nugget, namely, two or three tables with multiple Ironmen at each and extremely tilted people leaving roughly 15 minutes later. Table 1 sees FunBobby, Sahara, Grange, and JeBeDIA with a few locals. On a board with three aces, a woman bets and is called. She states, “If you have an ace, you’re good.” JeBeDIA can’t resist and says casually, “Really? An ace was good there?” and is met with a venom laced, “Oh, I’m the only girl at the table and everyone thinks they can F@#k with me???” JeBeDIA then quietly states, "Well, Grange won’t F@#k with you…” Speaking of Grange, he’s running well and says, “Now I can afford to be an idiot” to which JeBeDIA retorts, “I didn’t know there was a charge for that.”

At a nearby table, Santa and Mr. Chow are grinding away when a cute Canadian woman who appears to be a little clueless about betting and etiquette suddenly “shoves” into Mr. Chow’s set. Only problem is that she meant to only go all in for her chips and not the $100 bill she also had in front of her after winning the previous pot. After the dealer informs her that it all is now in, Mr. Chow calls and wins the pot. She has gone from happy woman to very sad woman in a few seconds. So being the nice guy that he is, Chow pulls $100 out of his pocket and gives it to her (only to find out later that she is loaded from the family business and was probably angle shooting him in the first place!).

The 2AM Golden Nugget tourney starts (great structure) and odd things start happening. First thing for the readers to understand is that this year’s “signature hand” is the deuce-four (aka “The Grump” after one of our favorite bloggers The Poker Grump). There are a many ways to win points in our IMOP contest, but one of the favorites is winning a hand holding the Grump. The catch is that it MUST be tabled to count for points, which is usually after a fairly large bluff, inducing raging tilt and subsequent wild loose-ness at the table. True to form, about 10 minutes into the proceedings, Santa makes an obscene over-shove against Sahara and one other player. They both groan and fold, and Santa proudly tables a Grump. However, this doesn’t work as well later when the whiskey takes over and he tries it again with only two tables remaining and gets called by kings and is crippled. Oops. Bad beat for the Grump!

Meanwhile, at another table early in the tournament, it only takes five hands for River Joe and Colt to get it all in with aces and kings against each other, and Colt is the first Ironman out. Bonnie soon shoves with kings and is called by Mr. Chow, and the river makes his J9 off good, giving Bonnie the first of many massive tilt-walks. Final table has Lucky, River Joe, Santa and Sahara—with Santa cashing and Sahara finishing runner up to guy we had labeled “The Dancing Queen” thanks to his celebratory gyrations when he would knock someone out. Was this thing televised?

Bonnie's attempt to photograph our sweet ride that took us from
the Venetian, through the paradise near the Sahara, and into
the Shangri-La of the Fremont Street bizarre bazaar.

Mr. Chow and Barbie intoxicated on Vegas, sleep deprivation,
Euro-tilting, and umbrella drinks.

Mr. Chow, Barbie, and Fat Jesus doing who knows what
who knows where. (No kittens or Euros were harmed in 
the staging of this photo.)

Coming soon—maybe—Part B: "Thursday".

April 17, 2011

The Intersection of Law & Online Poker: Part 3—In Rem, Quasi-Criminal, and Criminal Jurisdiction

Earlier this year, I began a series of posts looking at jurisdictional issues related to online poker (Part 1—Personal Jurisdiction; Part 2—Subject Matter Jurisdiction in Civil Cases). Before I could move on to the meatiest jurisdictional topic—criminal jurisdiction—I was sidetracked by life (new job, vacation, vacation-induced illness, and the sort of general malaise that only the genius possess and the insane lament). At the time, I figured, what will it hurt if I put off completing this series in April or May, well before the WSOP?

Unfortunately, as the entire poker world now knows, the U.S. Attorney for the Southern District of New York ("DOJ" for ease of reference), has been hard at work, targeting PokerStars, Full Tilt Poker, and Absolute Poker / Ultimate Bet (collectively "The Big Three") for alleged illegal gaming operations, UIGEA violations, money laundering, and bank fraud associated with their online poker operations and the related processing of funds into and out of their sites (a fairly comprehensive set of relevant links has been compiled by poker media heavyweight Kevmath on the TwoPlusTwo poker forums, while the folks at Pokerati.com have been working overtime to post breaking updates). In short, the criminal jurisdictional issues related to online poker have suddenly come into play in a very real and immediate manner.

My friend and fellow attorney/poker degenerate BWoP has begun a series of excellent, in-depth analyses of various legal issues related to the indictment. I would direct you to her blog for her initial thoughts on the indictment, a more detailed breakdown of the charges and related issues, and her thorough analysis of the New York state gaming laws which underpin the federal indictment (as the relevant federal statutes are predicated on violations of state gaming laws). Also, BWoP will be posting additional analyses of other laws implicated in the indictment in the upcoming days, so bookmark her blog if the legal nitty-gritty interests you (and if you support online poker, knowing the applicable law should be a paramount interest).

One of the primary defenses many observers anticipate the Big Three will raise is that, because their online poker sites are located overseas in jurisdictions where online poker is legal, they are not violating U.S. federal or state gaming laws. In other words, the Big Three will be raising a defense that neither the U.S. federal nor state governments have jurisdiction to prosecute them for offering online poker which might be illegal in the U.S., but is legal in the country where they are based and licensed. Let's take a look at what legal principles related to jurisdiction might come into play as these cases move forward in the court system.

In rem Jurisdiction

There were two legal documents (pleadings) filed Friday which have combined to cause the effective shutdown of the Big Three Poker Sites in the United States—the criminal indictment and the civil forfeiture complaint. Each of these pleadings is the formal first step for initiating court action in criminal and civil proceedings, respectively. Now each pleading references many of the same facts and legal authorities, but their purposes are very different. Compare the captions—the information about the parties and the court at the top of the very first page of each pleading—for the two legal proceedings. The indictment caption lists only eleven individuals and no companies as defendants, even though numerous businesses (including payment processors, poker sites, and banks) are discussed in the remainder of the indictment. By contrast, the civil forfeiture complaint caption lists quite a number of businesses as "defendants", and then continues to a second list of "defendants-in rem".

The "defendants-in rem" in the civil complaint are listed as "All right, title and interest in the assets of PokerStars; Full Tilt Poker; Absolute Poker; Ultimate Bet; ... including but not limited to the properties listed in Schedule A, such as but not limited to the Domain Names PokerStars.com; FullTiltPoker.com; AbsolutePoker.com; UltimateBet.com; and UB.com; and all right, title and interest in the properties listed in Schedule B". Why is this caption so much longer and full of legal jargon than the criminal indictment, if the underlying actions at issue (alleged violations of gaming laws, money laundering, and bank fraud laws) are essentially the same?

The simple answer is that the civil complaint is an in rem action—a civil action taken against property rather than a person. crAKKer readers might remember in rem actions from my post last fall about the the Pokerhaus lawsuit:
Civil forfeiture actions permit the government (state or federal) to seize and confiscate property used in the commission of a crime, or that represent the proceeds of illegal activity. These types of actions usually arise in the vice crimes—prostitution, drugs, gambling—but can be predicated on a wide variety of criminal offenses. The action is actually brought against the property itself (an in rem action), so you wind up with some weird case names like United States v. $100,000 Cash & a 2009 Cadillac Escalade, or People v. Two Roulette Wheels. But the insidious legal hook for these actions is that the government need not ever actually prosecute or prove the underlying crime. Instead, they merely need to prove a link between the property and a criminal act or conspiracy by a preponderance of the evidence (far easier than convicting the alleged criminal by a reasonable doubt standard of proof). Needless to say, civil forfeiture actions are ripe for abuse by police departments and prosecutors, who typically get to keep a portion of the proceeds of forfeited property.

Now it feels a little odd for the government to be listing property as a defendant in a case. But the purpose of a civil forfeiture action is to seize the named property because it is an instrument used in or the proceeds of a criminal act or enterprise. The jurisdictional advantage of a civil forfeiture proceeding is that the government need not have personal jurisdiction over the criminal(s); rather, they need have only jurisdiction over the property being seized. Generally, physical location of the property is necessary and sufficient to establish in rem jurisdiction, though in some cases laws or treaties will place constructive possession of the property within the jurisdiction of the state or federal government bringing the civil forfeiture action. So, when faced with companies like the Big Three who are located overseas, the government often finds it more convenient to simply pursue civil forfeiture actions against their property located within the United States. In the present case, this would include primarily the Big Three's domain names and cash they keep in United States bank accounts. Some foreign defendants facing civil forfeiture actions choose not to contest the forfeiture, as doing so may require highly placed individuals in the organization to travel to the United States for depositions and court proceedings—placing them at risk for arrest for criminal charges for which they might otherwise be able to fight extradition if they remain overseas.

The important takeaway from the civil forfeiture complaint is that the DOJ could dismiss or even lose the criminal indictment, yet still prevail on the civil forfeiture proceeding. The reason for this superficially illogical situation is that the government in the civil forfeiture proceeding needs to prove the allegations of criminal conduct only by a preponderance of the evidence ("more likely than not") rather than by a "beyond a reasonable doubt" criminal court standard. Further, rules of evidence and procedure are less rigid in civil court, and civil cases permit discovery that might be precluded in criminal proceedings. In other words, the Big Three might well beat the rap in criminal court, yet wind up billions of dollars poorer after the criminal forfeiture proceedings are concluded.

Quasi-criminal Jurisdiction

Closely related to in rem civil forfeiture proceedings are what I'll refer to as quasi-criminal legal proceedings. These actions are brought in civil court—much like a claim for breach of contract, negligence, family law dispute, etc.—but actually have a purpose of regulating allegedly illegal conduct much like a criminal proceeding. Classic examples of quasi-criminal actions include proceedings for injunctions and damages for violations of consumer protection, consumer fraud, and civil racketeering (RICO) statutes.

As discussed previously, issues of personal jurisdiction often arise in the context of attorneys general attempting to enforce a civil remedy, such as an injunction pursuant to consumer protection statute. For example, the Minnesota courts have affirmed a finding of personal jurisdiction against a Nevada online sports betting company (based out of Belize) when the state attorney general sought an injunction barring the company from soliciting business from Minnesota residents through ads which deceptively claimed that such wagering was legal in Minnesota:
Appellants [Granite Gate Resorts, et. al], through their Internet advertising, have demonstrated a clear intent to solicit business from markets that include Minnesota and, as a result, have had multiple contacts with Minnesota residents, including at least one successful solicitation. The cause of action here arises from the same advertisements that constitute appellants' contacts with the state and implicates Minnesota's strong interest in maintaining the enforceability of its consumer protection laws. Appellants have not demonstrated that submission to personal jurisdiction in Minnesota would subject them to any undue inconvenience. For these reasons, we hold that appellants are subject to personal jurisdiction in Minnesota because, through their Internet activities, they purposefully availed themselves of the privilege of doing business in Minnesota to the extent that the maintenance of an action based on consumer protection statutes does not offend traditional notions of fair play and substantial justice.

State of Minnesota v. Granite Gate Resorts, Inc., 568 N.W.2d 715 (Minn. Ct. App. 1997).

In other words, because these quasi-criminal proceedings are brought in civil court, civil law principles of personal jurisdiction apply. Thus, for quasi-criminal proceedings, the courts will look at whether the accused individual or business "purposely availed" itself of the state or country at issue. Generally speaking, actively soliciting business and engaging in commerce with residents of the state or country will be sufficient to establish personal jurisdiction. Online poker sites likely meet that test with ease.

With respect to subject matter jurisdiction in a quasi-criminal proceeding, the courts will generally look at whether the alleged conduct has an effect within the state that violates state law, regardless of where the offender might physically be located:
Respondents argue that the Court lacks subject matter jurisdiction, and that Internet gambling falls outside the scope of New York state gambling prohibitions, because the gambling occurs outside of New York state. However, under New York Penal Law, if the person engaged in gambling is located in New York, then New York is the location where the gambling occurred [See, Penal Law § 225.00(2)]. Here, some or all of those funds in an Antiguan bank account are staked every time the New York user enters betting information into the computer. It is irrelevant that Internet gambling is legal in Antigua. The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within the New York state.

Wide range implications would arise if this Court adopted respondents’ argument that activities or transactions which may be targeted at New York residents are beyond the state’s jurisdiction. Not only would such an approach severely undermine this state’s deep-rooted policy against unauthorized gambling, it also would immunize from liability anyone who engages in any activity over the Internet which is otherwise illegal in this state. A computer server cannot be permitted to function as a shield against liability, particularly in this case where respondents actively targeted New York as the location where they conducted many of their allegedly illegal activities. Even though gambling is legal where the bet was accepted, the activity was transmitted from New York. Contrary to respondents’ unsupported allegation of an Antiguan management company managing GCC, the evidence also indicates that the individuals who gave the computer commands operated from WIGC’s New York office. The respondents enticed Internet users, including New York residents, to play in their casino.


The evidence demonstrates that respondents have violated New York Penal Law which states that “a person is guilty of promoting gambling ... when he knowingly advances or profits from unlawful gambling activity” (Penal Law § 225.05). By having established the gambling enterprise, and advertised and solicited investors to buy its stock and to gamble through its on-line casino, respondents have “engage[d] in conduct which materially aids ... gambling activity”, in violation of New York law (Penal Law § 225.00(4) [which states “conduct includes but is not limited to conduct directed toward the creation or establishment of the particular game, contest, scheme, device ... [or] toward the solicitation or inducement of persons to participate therein”]). Moreover, this Court rejects respondents’ argument that it unknowingly accepted bets from New York residents. New York users can easily circumvent the casino software in order to play by the simple expedient of entering an out-of-state address. Respondents’ violation of the Penal Law is that they persisted in continuous illegal conduct directed toward the creation, establishment, and advancement of unauthorized gambling. The violation had occurred long before a New York resident ever staked a bet. Because all of respondents’ activities illegally advanced gambling, this Court finds that they have knowingly violated Penal Law § 225.05.

People ex rel. Vacco v. World Interactive Gaming Corp., 714 N.Y.S.2d 844 (N.Y. Sup. Ct. 1999) (emphasis added).

The Vacco case also is important in that it interprets New York Penal Law § 225.05, which is one of the statutes underpinning the current DOJ indictment of the Big Three. According to the Vacco court (whose decision is not necessarily a binding interpretation of New York law), an online gaming company based in another country can nonetheless violate New York anti-gaming laws by soliciting and accepting wagers from New York residents. If the federal courts adopt a similar interpretation of New York law, the Big Three will face an uphill battle in fighting the charges that are predicated on a finding that accepting online poker wagers is illegal under New York law.

In the current government actions against the Big Three, there are (as now) no quasi-criminal actions pending apart from the in rem forfeiture proceedings discussed above. Because an in rem action establishes jurisdiction based on the property in question, whether there is personal jurisdiction over the companies owning the property is irrelevant. However, these types of quasi-criminal actions are quite common in modern law enforcement [1], and now that the smell of blood—well, money—is in the water, it wouldn't surprise me to see one or more state attorneys general pile on with a state civil forfeiture and civil injunction lawsuit.

Criminal jurisdiction

Now we come to the central jurisdictional issue—Do the U.S. federal or state governments have criminal jurisdiction over online poker sites based and licensed to do business in foreign countries where online poker is perfectly legal?

To answer this question, we need to look at the nature of criminal jurisdiction. In civil law, the courts are concerned with personal and subject matter jurisdiction—i.e., whether they have authority to enter rulings binding a particular person or company with respect to a particular legal claim. In criminal law, the focus shifts to a different question—whether the state or federal government has the authority to regulate the conduct or activity at issue.

Historically, criminal jurisdiction was co-extensive with geographical jurisdiction; a state or country could only regulate conduct occurring within its boundaries. This bright line rule is easily applied to garden variety crimes such as murder or theft. But for some crimes—in particular inchoate crimes such as solicitation and conspiracy—a person could commit a crime directed at a resident or business in a state without ever setting foot inside that state's geographical domain. Also, as our country modernized, and interstate travel and commerce become commonplace, states found it more difficult to regulate conduct that occurred in whole or in part outside their geographical boundaries, yet had a definite impact within the state.

Enter the United States Supreme Court. In 1911, the Court was confronted with a question of criminal jurisdiction which arose when the defendant was charged with bribery and false pretenses (fraud) arising out of the sale of equipment to the State of Michigan. The trouble was, most if not all of the defendant's illegal actions occurred while the defendant was in Illinois. The Court held:
If a jury should believe the evidence, and find that Daily did the acts that led Armstrong to betray his trust, deceived the board of control, and induced by fraud the payment by the state, the usage of the civilized world would warrant Michigan in punishing him, although he never had set foot in the state until after the fraud was complete. Acts done outside a jurisdiction, but intended to produce and producing detrimental effects within it, justify a state in punishing the cause of the harm as if he had been present at the effect, if the state should succeed in getting him within its power. We may assume, therefore, that Daily is a criminal under the laws of Michigan.

Of course, we must admit that it does not follow that Daily is a fugitive from justice. On the other hand, however, we think it plain that the criminal need not do within the state every act necessary to complete the crime. If he does there an overt act which is and is intended to be a material step toward accomplishing the crime, and then absents himself from the state and does the rest elsewhere, he becomes a fugitive from justice when the crime is complete, if not before. For all that is necessary to convert a criminal under the laws of a state into a fugitive from justice is that he should have left the state after having incurred guilt there, and his overt act becomes retrospectively guilty when the contemplated result ensues. Thus, in this case, offering the bid and receiving the acceptance were material steps in the scheme, they were taken in Michigan, and they were established in their character of guilty acts when the plot was carried to the end, even if the intent with which those steps were taken did not make Daily guilty before.

Strassheim v. Daily, 221 U.S. 280, 284-85 (1911) (citations omitted) (emphasis added).

Since Strassheim, states have had the ability to regulate and criminalize conduct occurring outside the state's geographical boundaries, but which was intended to produce or actually produced detrimental effects within the state. Although a different test than the personal jurisdiction "purposeful availment" analysis, the two tests have similar underlying principles. In short, if a person or business intentionally engages in some kind of interaction with people or businesses within a state, that interaction may subject the person or business to civil or criminal liability in that state.[2]

Recent applications of this kind of extraterritorial criminal jurisdiction to internet-based crimes ("cybercrime") have most notably arisen in the context of sexual solicitation of minors or online harassment ("cyberstalking") when the offender resided in a different state from the victim.[3] Similarly, extraterritorial jurisdiction issues have arisen in the context of out of state professional practice by doctors and pharmacists working for online pharmacy sites.[4] But what about online gaming? Is online gaming somehow different than other extraterritorial internet activities, rendering it immune from criminal jurisdiction by the states merely because they are based in and licensed by foreign countries?

One court—and a New York federal court, to boot—has answered that question with a resounding "No". In looking at New York law in the context of a federal Wire Act prosecution (not at issue in the present indictment against the Big Three), the Second Circuit Court of Appeals held that New York state law unquestionably makes the placement of wagers illegal. United States v. Cohen, 260 F.3d 68 (2d Cir. 2001). The Cohen court first found that placing of bets via phone or the internet was illegal per se under New York law. The court then turned to Cohen's argument that merely placing a bet from New York was not illegal gambling. The court found that it was in fact illegal gambling:
Cohen appeals the district court’s instructions to the jury regarding what constitutes a bet per se. Cohen argues that under WSE’s account-wagering system, the transmissions between WSE and its customers contained only information that enabled WSE itself to place bets entirely from customer accounts located in Antigua. He argues that this fact was precluded by the district court’s instructions. We find no error in those instructions.

Judge Griesa repeatedly charged the jury as follows:

"If there was a telephone call or an internet transmission between New York and [WSE] in Antigua, and if a person in New York said or signaled that he or she wanted to place a specified bet, and if a person on an internet device or a telephone said or signaled that the bet was accepted, this was the transmission of a bet within the meaning of Section 1084. Congress clearly did not intend to have this statute be made inapplicable because the party in a foreign gambling business deemed or construed the transmission as only starting with an employee or an internet mechanism located on the premises in the foreign country."

Jury instructions are not improper simply because they resemble the conduct alleged to have occurred in a given case; nor were they improper in this case. It was the Government’s burden in this case to prove that someone in New York signaled an offer to place a particular bet and that someone at WSE signaled an acceptance of that offer. The jury concluded that the Government had carried that burden.

United States v. Cohen, 260 F.3d 68 (2d Cir. 2001).

In other words, the court found that merely placing a bet from New York was a violation of New York's anti-gambling laws, even though making those kinds of wagers was entirely legal where the company was located (Antigua). If this interpretation of New York law is applied to the Big Three in the context of online poker (and there may be subtle distinctions between poker wagers and sports wagers that could affect the analysis), then it seems probable the Big Three have in fact been violating New York law regardless of whether online poker is legal in the countries where they are located and licensed.[5]

In another federal case related to online poker and gaming, the Third Circuit Court of Appeals rejected a challenge to the UIGEA brought by iGaming industry advocacy group iMega. Interactive Media Entertainment & Gaming Ass'n, Inc. v. Attorney General, 580 F.3d 113 (3rd Cir. 2009). Now the primary focus of the decision was on iMega's claims that the UIGEA was unconstitutionally vague and a violation of due process and First Amendment rights. However, the court did touch on jurisdictional issues in a footnote in its decision:
Relatedly, Interactive notes that some of its members operate gambling websites from outside the United States and contends that the Act is ambiguous as to whether such members could face criminal sanctions under the Act if they engaged in financial transactions with a gambler who placed a bet from a state that prohibited such gambling. However, the Act unambiguously prohibits such transactions and we note that it "has long been settled law that a country can regulate conduct occurring outside its territory which causes harmful results within its territory." Lake Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 922 (D.C. Cir. 1984).

Interactive Media Entertainment & Gaming Ass'n, Inc. v. Attorney General, 580 F.3d 113, n. 5 (3rd Cir. 2009) (emphasis added).

This footnote from the iMega decision is likely not the final word on the territorial implications of the UIGEA, as the court did not engage in any extensive analysis of the issue, and neither the parties nor the court seemed to consider the jurisdictional issue central to the issues resolved on appeal. However, the court's rather perfunctory rejection of the claim that offshore internet gaming sites are beyond the jurisdiction of the United States hardly bodes well for the Big Three in their attempts to fight the recent DOJ indictment.[6]

Taking a step back from gambling, the concept that merely being located outside the United States is insufficient to grant immunity from federal and state laws in the United States actually makes a lot of sense. Think about criminal activities such as drug distribution, sexual exploitation of minors, securities or bank fraud, bribery, computer hacking, etc. that might be legal in some countries, but clearly illegal within the United States. Shouldn't the United States' federal and state governments be able to enforce their criminal laws when people from outside the country try to solicit, conspire, or actually engage in such conduct within the United States?

Obviously these criminal jurisdictional issues are highly complex, and will require significant legal briefing and argument by the DOJ and the Big Three. Also, there may be additional legal authorities such as treaties that come into play. But the important takeaway is that the mere fact the Big Three are located and licensed in countries where online poker or gambling is legal may not be a "get out of jail free card" for the Big Three with respect to their offering online poker to U.S. residents.


[1] For example, in a federal prosecution of former internet sports wagering site BetOnSports.com, the DOJ sought and was granted a permanent injunction barring the website from operating in the United States (along with other civil penalties). United States v. BetOnSports.com, No. 4:06CV01064 CEJ, 2006 WL 3257797 (Nov. 9, 2006). The founder of the site eventually plead guilty to violating federal gambling laws (despite being based in Costa Rica), and was sentenced to 41-51 months in federal prison along with a fine of nearly $44 million.

[2] As an example of a modern criminal jurisdiction statute, look at Ohio Revised Code section 2901.11, in particular subsections A(3)-(7) and (C). The statute specifically addresses crimes committed outside the state where part of the crime involves computer data transmitted into the state.

[3] For example, Arizona and Pennsylvania courts have found that sexual solicitation of minors was a crime within their state, where the victim was within the state but the perpetrator committed all of his criminal acts outside the state. The cases from other states relied upon by these courts indicates this finding of jurisdiction in extraterritorial internet crimes is probably the widely held majority rule among the states. Similarly, this article has a good overview of the criminal jurisdiction issues related to cyber-harassment.

[4] These articles (HERE and HERE) discuss online pharmacy law jurisdictional issues.

[5] It should be noted that the Cohen court specifically held that "[Cohen's] beliefs regarding the legality of betting in New York are immaterial." In other words, even if the Big Three have an honest belief—backed by legal opinions (as they have repeatedly claimed)—that they are not violating any laws in accepting U.S. wagers, their beliefs in the legality of their actions are likely not a valid defense to the pending criminal charges if they have in fact violated U.S. federal or state gambling laws.

[6] This section related to the iMega decision was added after initial publication (on 23 April 2010) when I discovered the footnote in the decision while reading the case for other reasons.