© 2011 Hospitality Upgrade Gaming By Bill Geoghegan No reproduction or distribution without permission. and then there isPoker POKER wo of the most respected names in the WSOP name in 2004, the event had been by almost 30 percent. gaming world, Caesars Entertainment held in downtown Las Vegas, with up to To enforce the financial prohibitions of T(formerly Harrah’s) and Wynn Resorts, a few hundred players anteing up for the UIGEA, the banking industry was prohibited recently announced joint ventures with the tournament. Harrah’s sold the hotel/ from taking any transactions from companies Internet poker companies in efforts to bring casino, but kept the Horseshoe and WSOP with an industry code associated with gambling. both legitimacy and recognition to the online tournament names. Not to be discouraged by the UIGEA, companies game. Internet poker was given a huge found a way to accept deposits from U.S. Caesars, the rights holder to the famous boost in 2003 when Chris Moneymaker, citizens, sometimes by processing through World Series of Poker (WSOP) franchise, an accountant by trade, earned his $10,000 non-U.S. banks. One legal and acceptable joined with the 888 Holdings PLC subsidiary, seat by qualifying for the Main Event through method (although slow and labor intensive) is Dragonfish, who would provide the technology an online poker site with an investment of to get a cash advance from a credit card that behind a Caesars labeled Internet poker site. $40. He was one of 839 entrants and won is processed by the gaming company on behalf After a two hour hearing, the Nevada Gaming a $2.5 million first prize. The resulting rise of the player. More often, the prohibition was Commission voted unanimously to approve in the popularity circumvented by processing payments through the relationship. On Friday, of online poker non-gaming related companies. By purchasing Wynn had entered into a strategic April 15, 2011, has been known as a “product” through a third party, a player partnership with PokerStars, the largest Internet poker the Moneymaker could fund an online account. By returning that online poker cardroom in the world, wherein websites were Effect. The number “product” the player could have his or her credit they would work together to create federal seized by the of entrants in the or debit accounts receive a credit for returned legislation that would conclusively define U.S. Federal WSOP quadrupled merchandise. In some instances, small banks what is considered illegal Internet gambling Government, in 2004, and looked the other way and permitted the financial and provide law enforcement authorities and 17 bank eventually peaked transactions to process. with tools to help stop such activities and at over 8,700 Eventually, the stigma lessened, and by 2010 accounts in protect customers through regulation. The entrants in 2006, there were over 7,300 WSOP Main Event entrants, partnership would also set up a method for 14 countries many having earned with a winner’s share of over $8.9 million. the assessment and collection of taxes. Once were frozen. their way into the The WSOP has added additional tournaments federal legislation is passed and licenses are tournament through throughout the world, with Norwegian Internet provided, the companies would run the U.S.- online sites. That 2006 tournament holds Poker sensation Annette Obrestad winning the only PokerStarsWynn.com poker site. the record with a $12 million first prize. first prize of the 2007 inaugural WSOP London The WSOP started in 1970 when Benny In October 2006, President Bush event one day before her 19th birthday. Binion, owner of the Horseshoe Casino in signed the Safe Port Act, which was aimed It seemed that online poker had gained downtown Las Vegas, invited six of the best- at enhancing security at U.S. ports, but both the popularity and legitimacy that would known poker players to a single tournament. to which an attachment had been added allow continued growth. Then, on Friday, April The ultimate winner, Johnny Moss, was known as the Unlawful Internet Gambling 15, 2011, the websites of PokerStars (based selected by a secret ballot by his peers, and Enforcement Act (UIGEA). According to on the Isle of Man), Ireland’s Full Tilt Poker received a silver cup as his prize. In 1971, the the UIGEA, “unlawful internet gambling” and Absolute Poker of Costa Rica, along with tournament began in earnest, and the yearly means to place, receive or otherwise Ulitmatebet.com and UB.com, were seized by the $10,000 buy-in Main Event grew slowly, with knowingly transmit a bet or wager by U.S. Federal Government, and 17 bank accounts 52 participants in 1982. Famous names such means of the Internet where such bet in 14 countries were frozen. The companies as “Amarillo Slim” Preston, Doyle Brunson, is unlawful under any law in the state and their executives were charged with fraud Bobby Baldwin (currently a top MGM Resorts in which the bet is initiated, received or (remember the third party “products” and executive) and Stu Ungar have held the otherwise made. Additionally, the UIGEA the banks that looked the other way), money winning hand at the final table. prohibits online gambling sites from laundering and running illegal casino operations In the early ‘80s, casinos began running performing transactions with American in the U.S. Their websites were replaced with satellite tournaments, where 11 or 12 players financial institutions. As a result, many of a U.S. Department of Justice Seal and notice would put up $1,000 each, with the winner of the sites serving the U.S. market, including that their domain name had been seized by the that small tournament receiving the $10,000 888 Poker and Party Poker left the U.S. F.B.I. and the warning “Conducting, financing, entry fee for the Main Event. Before Harrah’s market, and the number of entrants managing, supervising, directing, or owning purchase of Binion’s Horseshoe and the earning their way into the tournament fell all or part of an illegal gambling business is a 58 Hospitality Upgrade | Summer 2011 www.hospitalityupgrade.com Gaming federal crime…”, and “For persons engaged in the business of Many will argue that poker is not a game of chance, but betting or wagering, it is also a federal crime to knowingly accept, rather a game of skill. If it were not, then the famous names that in connection with the participation of another person in unlawful we see winning tournaments would not rise to the top regularly, Internet gambling, credit, electronic funds transfers, or checks.” and if poker is a game of skill, then it would not be considered The ripples were felt immediately. Wynn announced that its gambling. The definition of a game of skill is left to each individual relationship with PokerStars was terminated. Caesars commented state. that the company had “never offered any real online gaming in the On the other hand, fantasy sports could be a form of United States.” Walt Disney Company’s ESPN announced that it gambling, where participants pay a subscription fee to play, would no longer carry Internet poker sponsored events, although chance is certainly involved, and prizes are awarded to the winners it will carry the 2011 WSOP, but has lost millions in advertising of a league. What about commodities trading, where whenever a dollars from the online cardrooms. Many online site sponsored contract changes hands, there is always a winner and a loser? events, both live and satellites for other tournaments, have been Wouldn’t things like political unrest, natural disasters or changes cancelled. in the weather constitute chance? Why would insurance not be The ripples looked more like a tsunami. Millions of online considered gambling, where the insurance company is wagering a players were denied access to their own money. While the prize (the payout of a policy) on the chance that the insured may Department of Justice has come to an agreement with some of the have an accident or die, for consideration (the premium). offending companies allowing them to reopen their sites for the The definition of what constitutes illegal gambling is left purpose of allowing players access to accounts, many thousands up to each individual state, but many legislatures and governors of players who considered online poker as their vocation were are looking for U.S. Congress to end the confusion. Just a week immediately out of work and income. The Poker Players Alliance, before what the poker industry refers to as Black Friday, the which claims well over a million members, has mobilized its efforts Washington, D.C., city council approved a budget allowing the to overturn the law and convince lawmakers that a licensed and district’s lottery to operate a poker website available only within regulated industry is a much better environment that one that is run the city’s boundaries. With state budgets crumbling, many look to by individuals and companies outside of the law. taxing legalized poker play as a method of gaining revenue. This The questions begin with what is gambling? According to story is not over. noted gaming law professor, Nelson Rose, gambling is defined as, “any analysis started with examining whether all three elements of BILL GEOGHEGAN is a consultant in Las Vegas. He can gambling are present: prize, chance and consideration.” be reached for comment at [email protected]. 4."35DIFDLJOmGSPNOPXPOPíFSBNPSFQFSTPOBMJ[FE FYQFSJFODFCZUIFNPQUJOHJOUP*//4*%&53"$, _4NBSU %JHJUBM 4JHOTGPS$VTUPNFS *OUFSBDUJWF&YQFSJFODFXJUI4NBSU4FOTPST r"ETUIBU3&"$5UP:PVS$VTUPNFST &íFDUJWF"EWFSUJTJOHm'JOBMMZ 4NBSU4JHOT 1MFBTFWJTJUJNNFSTJPOUFDIOPMPHZ BU)*5&$ #PPUIBOE MFBSONPSFBCPVU*//4*%&53"$, BOEPVSIPTQJUBMJUZUFDIOPMPHZ TPMVUJPOTBOETFSWJDFPíFSJOHT 0VSQSPNJTFJTUPCSJOHZPVBíPSEBCMFDVUUJOHFEHFUFDIOPMPHZBOE OBUJPOBMTFSWJDFUFDIOJDJBOTUPTVQQPSUZPVSDPOUJOVFETVDDFTT "TLVTUPEBZIPXZPVDBONBLFZPVSIPUFM4."35GPSUPNPSSPX 60 Hospitality Upgrade | Summer 2011 www.hospitalityupgrade.com.