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Online Poker And Fraud: What Is The Problem?

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Online Poker And Fraud: What Is The Problem?


When three of the biggest companies in any particular industry find themselves indicted on charges of fraud as well as other financial misdemeanors it should rightfully give some cause for concern. The online poker industry is massive. Tens of millions of Dollars is gambled on a daily basis with companies raking in huge profits. However, executives and owners of websites such as Full Tilt Poker, PokerStars, and Absolute Poker, non-US companies, find themselves being investigated by the authorities with regards to a number of issues including using tactics to circumvent Federal laws to prevent their business from being restricted.


The problems originate more from the 2006 Unlawful Internet Gambling Enforcement Act rather than the earlier Illegal Gambling Act of 1955 as the 2006 version is clearly the more up to date and incorporates issues such as online payment processing. How big is the problem? Considering at the initial indictment $3 billion in civil penalties was being sought it does indicate both how big the industry is with just these three companies.


The reason as to why this is such an issue is that this 2006 Act specifically looks at what is known as restricted transactions with them being banned when conducted via the Internet. Of course this does then mean that you are unable to process payments as part of a bet or wager making it illegal to play games such as poker online due to Federal and State laws. The companies involved in this case do appear to have believed that they could play the system, perhaps due to them being based outside the United States, and indeed beat it while managing to keep hold of all of their profits.


In total, 11 people were indicted, more than 75 bank accounts had limitations placed upon them, and domain names were also affected. It is clear that these charges were the result of a lot of work by the authorities prior to them laying charges against those at the top of these three companies. It may also be worthwhile to point out that the charges laid against these three companies are the same as those laid against the payment processing companies in an earlier case. Not every company is involved in this as others such as party poker room have paid fines to stop them being prosecuted and the fact they are paying $105 million shows how big the industry is.



So what are the concerns at least from a legal perspective?


The main problem, as was mentioned earlier, is in the way that these companies are trying to beat these gambling acts although closer inspection on the indictments does show that the problem is bigger than initially thought. Instead, it does appear that people within banks are also guilty of what could be classed as accessory to commit fraud and the potential ramifications are clear for all to see.


What has been said about these companies is that they are guilty of tricking banks, although sometimes with what appears to be insider help, into processing payments by lying about their business. This is startling especially when you add in that it is believed they bribed people in order to allow their profits to continually flow through their bank accounts. Basically, what they have done is they have used banks in the United States to effectively launder money that was gained illegally thanks to the 2006 Act and have done so on a huge scale. The fact that they were able to find banks that would simply ignore the law and work alongside them for a fee does mean that we have to not only consider corruption in the poker industry, but the banking industry as well.


By doing this, the companies involved managed to keep their vast profits even though they knew they were breaking a number of laws. It comes across as them believing that they were perhaps too big to shut down or that they would simply get a slap on the wrist and a fine that would be dwarfed by their profits. However, this is clearly not the case as can be seen by the actions taken by the authorities.


What happens now with the industry? People such as party poker room now have to look at how they deal with people in the United States due to this legislation although clearly the industry believes that this is going against their ability to operate as a company.  These companies are desperate to get Congress to change the laws as they know that they are missing out on a huge market thanks to the popularity of the game in the United States. Companies have to be careful in how they attract people from the United States or they face the same general charges as the 11 defendants initially caught up in the original case.

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