Internet Poker Gets Lucky Break

written by I. Nelson Rose
2017

2006 – #10 © Copyright 2006, all rights reserved worldwide. Gambling and the Law® is a registered trademark of Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA

Peter Dicks probably does not play poker.

Imagine taking this bet: You know that David Carruthers, the chief executive of a rival company, BetOnSports, was arrested in mid-July in Dallas, while changing planes from England to Costa Rica.

You know that the company itself was also charged, with the government demanding fines of $4.5 billion.

You know the feds also sought a temporary restraining order (“TRO”) to get BetOnSports to stop taking bets from the U.S. and return all American patrons’ deposits.

So, if you are Dicks, the chief executive of another Internet gaming company, would you come to the U.S. in September?

Did he think the feds were bluffing?

What are the pot odds? If he’s right, he gets to do whatever business it is that brought him to America. If wrong, he could be charged with major felonies that could take all his assets and put him in prison for many, many years.

Dicks took the bet and was arrested at JFK.

I asked his lawyer why in the world he would visit the U.S. at this time. He said Dicks comes here all the time. And he thought the arrest of Carruthers was limited to problems BetOnSports had with the federal government.

That might have been an excuse, if Dicks’ company operated only online poker rooms. But his company’s name was Sportingbet.

One man’s mistake created a whole new world of danger for the operators — and players — of Internet poker. Dicks was not charged with federal crimes. He was arrested under an arrest warrant issued by the state of Louisiana.

The federal Department of Justice has taken the position that the Wire Act covers all forms of gambling. But courts have ruled that this federal statute is limited to wagers on sports events and races. The result is that U.S. prosecutors have threatened nearly everyone associated with online gaming with arrest. But they have only filed charges against sports betting.

But, the Louisiana statute was designed to go after Internet poker. The new crime, enacted in 1997, is called “gambling by computer.” The punishment is a fine up to $20,000 and, this being the South, five years in prison, “with or without hard labor.”

British multi-millionaires on chain gangs — not a pretty picture.

Half a dozen states have statutes on the books that clearly cover online poker. These laws do have problems. For example, there is a strong presumption that a statute does not cover activities occurring outside the state’s borders unless it expressly says so, and most of these statutes do not.

But if the states, with or without the help of the federal government, are going to arrest poker operators, they would probably also ask for TROs to close down the sites.

What then happens to the players? As this is being written. American patrons who had hundreds or thousands of dollars in accounts with BetOnSports have not gotten their money back. And the federal government wants to seize all those accounts.

Fortunately for online poker, Sportingbet got Dicks to resign. Even if a foreign company can be served with a TRO in the U.S. by serving its chief executive, and that is probably not the law, Dicks is now merely a former chief executive. So, the government cannot get a court order closing down Sportingbet by merely serving papers on Dicks.

The lesson for poker players is never leave your money with an online poker site, unless it is run by executives who know when to gamble and when to stay pat.

END
© Copyright 2006. Professor I Nelson Rose is recognized as one of the world’s leading experts on gambling law. His latest books, Gaming Law: Cases and Materials and Internet Gaming Law, are available through his website, www.GamblingAndTheLaw.com.

I. Nelson Rose

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