Black Friday

Will Black Friday Turn out to be a Good Thing?

black fridayThe actions of Preet Bharara and the Us Department of Justice (DoJ) on April the 15th 2011 will live in infamy in the online poker world. PokerStars, Full Tilt Poker and the Cereus Network were all impacted by legal actions against the site owners for crimes including money laundering, offering illegal online gambling and breaching the UIGEA (Unlawful Internet Gambling Enforcement Act). The short term impacts on  players were massive, with people losing multiple million dollar balances as well as losing their occupation. Some of these people have moved out of the US to continue to player poker for a living, and some of the players with money on Full Tilt Poker in April 2011 are still waiting for their refunds. People with money on the Cereus Network are probably never going to get their money back, so the short and medium term effects of Black Friday were pretty nasty, and are still making some people’s lives a misery today. What I want to talk about in this article are the long term issues, and decide, will Black Friday turn out to be a good thing?

Now, before anyone claims I’m insensitive to the pain of the players who had their entire lives blown apart by the fallout of Black Friday, I can honestly say this isn’t the case. I have close friends who’s lives were nearly destroyed by the actions of the DoJ, and I did my best to help them out. What this article is going to look at is the long term impact to the online poker industry, and if the resultant changes have had a positive effect on the business.

Before the 15th of April 2011, online poker in the United States of America was very much a grey market. A few states, led by Washington, had actually gone the whole way and banned online gambling, but for the majority of the country people were still able to log into the poker client of their choice and play anything from a single $0.01/$0.02 cash table all the way through to a $5,000 Heads Up Hyper Sit & Go. Players could also satellite into the World Series of Poker on one of a plethora of poker sites, some offering up to an extra $1,000,000 if you managed to win the WSOP Main Event after satelliting in with them.

Pre Black Friday “Regulation” was handled either by small European based Gambling organisations or a shady North American “Gaming Commissions” with dubious legal rights to regulate anything. Under this system, the massive Ultimate Bet super user scandals broke, where players were effectively conned out of many thousands of dollars when a so called “security function” of the client was used to read players cards while they were in a hand against the super user. The fine that was issued to UB following this cheating scandal was just $1.5 million, which was a drop in the bucket of their yearly profits.

To top it all, Ultimate Bet’s “regulators” have not been seen to do very much at all to try and get players back their money.

Following Black Friday, Full Tilt’s regulators took some actions that made a lot of us think that they were going to show a backbone  and actually protect the players. I was personally at the hearing held to discuss the situation, and it was nothing more than a pseudo legal show, where Full Tilt’s legal team baffled and confused everyone, before everyone in the public gallery was ejected to protect Full Tilt’s commercial interests. Considering this was a “Public” Hearing, and the public were barred from the rest of the hearing entirely, it seemed like a whitewash. Based on the total lack of legal action that followed against persons who appeared to have committed fraud and false accounting, that appearance seems to have held up in the intervening 3 years.

Black Friday effectively showed us that the protections promised to players under the old system of regulation were meaningless. With Players still significantly out of pocket from Cereus, and with funds from Full Tilt Poker still being returned to players, a new system of regulation needed to be put in place.

If you ask any “expert” on Online Poker, they’ll tell you that the preferred option in the US is for a federally regulated poker market, but they’ll also tell you that the chances of that happening in my lifetime are somewhere close to flopping a Royal Flush.

What is currently happening in the US is a state by state system of regulation, creating a patchwork of regulations and rules that don’t quite match up in every circumstance.

But Black Friday didn’t just effect the US. Europe, which does regulate most of the global poker sites anyway, has seen changes in the regulatory framework surrounding the industry. Again, there is no central authority from the EU, but individual countries are putting regulatory bodies in place to protect the customer. The UK for example has new regulations in place that created the UK Gambling Commission with the key goals of:

  • Ensuring there is no link between gambling and crime
  • Ensure that the gambling is conducted fairly, and in an open manner
  • Protecting vulnerable people, including children, from harm or exploitation

The Gambling Commission is part of the UK Government, and as such has powers to levy fines and revoke licences. The commission is also responsible for investigating and prosecuting any issues related to illegal gambling.

The UK probably has one of the most pervasive online gambling markets in the world. In 2009/2010 4% of the Adult UK Population had gambled online. That number has exploded in the last 4 years and a small survey had the numbers at 11.2% in March 2011 and the market has grown even more since then. Given the UK adult population is over 50 million, this isn’t a small market, so how the UK treats the industry could, and probably will, influence other emerging markets around the world.

While there had been rumblings about the need to update the legal status of gambling on the internet, not much had really been done about it. Yes, some European countries, such as France, had regulated their own markets. But as most poker players will tell you, the French regulations were, and are, a protectionist money grab by the government. These regulations seemed to make offering legal online gambling in France a loss making enterprise. Back in 2011, I heard it was an open secret that even the mighty PokerStars was unable to turn a profit on their French client. The French regulator was also caught out by the Full Tilt Poker insolvency, and was unable to protect the French players from losing out until the PokerStars White Knight deal in November 2012.

Preet Bharara

Preet Bharara

So, the fall out from Black Friday is still a two edged sword. There are displaced poker players from the US who have had to leave their home country to pursue their career, all over the world. Players are still out of pocket to the tune of millions of dollars. The player funds that were held by Ultimate Bet are probably never going to be recovered, and while the funds that are still to be paid to Full Tilt’s players are on their way, the intervening time has made life very difficult for a lot of people.

But that’s not all that’s happened. Both in America, and internationally, small banking safe havens have started to lose their grip on the regulation of online gambling. New Jersey, Nevada and Delaware are leading the charge in the US, while the UK and others in Europe are also regulating their online gambling markets and insuring that the regulatory bodies actually have both teeth and a spine.

I honestly feel that this will be the lasting legacy of the actions led by Preet Bharara on the 15th of April 2011. The move to stronger regulation can only be a good thing for player protections. Regulation does need to be handled in a sensible way, and even the UK setup has flaws (The 15% flat tax on gross income for example), but while a second Black Friday is still possible, as time passes and better regulatory rules and bodies are put in place, a day will come where Black Friday MkII is drawing dead.

COMMENTS

Leave a Comment

*

LATEST NEWS

filter by

Haley Hintze

23rd August 2019 // Industry, Misc, News, Online Poker Action

PokerTracker Site Hacked, Credit-Card Details Possibly Stolen

An unusual case of site hacking may have affected some recent purchasers and users of PokerTracker 4, the...

Haley Hintze

23rd August 2019 // Misc, News

Vegas Police ID Slain Laughlin Casino Robber

The Las Vegas Metro Police Department has identified the man who was shot and killed by a Metro SWAT team following the...

Haley Hintze

21st August 2019 // Legal News, Misc, News

Phil Ivey-Borgata Update: WSOP Event 58 Winnings Confirmed Garnished

Flushdraw has confirmed via court records that New Jersey’s Marina District Development Co., LLC, the parent...

Haley Hintze

21st August 2019 // Industry, News, Online Poker Action

PokerStars Slashes Cash-Game Table Cap

In a move made without advance notice, industry-leading online poker site PokerStars has dramatically slashed its table...

Haley Hintze

20th August 2019 // Industry, Legal News, Misc, News

Unibet Fined €470,000 For Targeting Dutch Online Gamblers

An increasing crackdown by the Netherlands Gambling Authority against operators illicitly targeting the country’s...

Haley Hintze

18th August 2019 // Industry, Legal News, Misc, News

DOJ to Appeal Wire Act Loss

The US Department of Justice has confirmed its previously announced plans to appeal the early June decision by the US...