The story reported that the NBA paid McGuirewoods Consulting $280,000 for the second half of 2007 bringing the total paid to the Congressional lobbyist for the year to $330,000.
Specifically McGuirewoods lobbied Congress on behalf of the NBA to uphold UIGEA and prohibit online gamblers from collecting their winnings.
UIGEA, which was passed in October 2006, makes it illegal for financial institutions to process deposits to online gambling sites, including online poker rooms.
Ironically a number of the NBA's most well-known stars have hosted charity poker events in the past. Shawn Marion, Michael Jordan and more have attended or hosted poker events.
In the past members from all the major sports leagues in North America including the NFL, NBA, NHL and MLB have stood firmly behind UIGEA stating that legalizing and regulating online gambling would hurt the integrity of their respective sports.
In addition those organizations have opposed non-sports gambling online as well, believing it would complicate the implementation of UIGEA.
Detractors have called the major sports leagues hypocrites for allowing bets on fantasy sports. Some analysts have estimated that 13 million people play fantasy football with a total of $1 billion spent. Domestically it is also legal to gamble on fantasy sports, horse racing and lotteries.
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The Poker Boom Part 4: U.S. lowers the boom
As we have examined in the first three parts of this series, online poker was a major catalyst for the growth of poker's popularity around the world from 2002 onward. Several online gaming companies went public on the London Stock Exchange thanks to the boom, and their futures appeared bright.
In 2006, however, several developments in the United States would change that situation.
U.S. arrests foreign nationals
Online gaming has stood on shaky ground in the United States for several reasons. The U.S. Department of Justice has always held Internet gambling in any form is illegal, basing its opinion on the Wire Act, a law from the 1960s banning sports betting over state lines.
However, the DOJ opinion has never been tested and no federal law specifically addressing the legalities of online gambling has ever been passed. Adding to the confusion, even if an activity isn't illegal under U.S. federal law, the Constitution grants individual states the right to make their own laws.
So while there is no federal law banning online poker, the state of Washington, for instance, has a law that makes playing online poker a Class C felony (the same legal category as crimes like rape, child molestation, and animal cruelty).
This patchwork legal system led to the arrests of several figures from online gambling companies in 2006.
In July 2006, the FBI detained British citizen and BetOnSports CEO David Carruthers in Dallas, Texas, as he was changing aircraft on the way to Costa Rica. The DOJ held Carruthers on 22 charges of conspiracy, racketeering and fraud.
Then in September 2006, federal agents apprehended British citizen and Sportingbet PLC chairman Peter Dicks at Kennedy International Airport in New York. The feds were acting on a warrant issued by the state of Louisiana, charging Dicks with violating state laws prohibiting operating an online casino, bookmaking or poker operation.
The DOJ claimed it was simply enforcing the law, but many were convinced that the U.S. government had begun a witch hunt.
Unlawful Internet Gambling Enforcement Act
Ever since the Internet became readily accessible to the average American in the mid-1990s, anti-gambling organizations in the United States have sought to have Congress ban online gambling.
Those groups enlisted a handful of congressmen, but they were never able to gather enough support to enact a ban. Then in 2006, the Unlawful Internet Gambling Enforcement Act was passed.
The UIGEA didn't expressly outlaw any forms of Internet gambling. Instead it banned the transfer of money from U.S. financial institutions to online gambling sites.
Previous attempts to ban online gambling
Online gambling opponents had previously tried to influence legislation by supporting three men in Washington who were sympathetic to their cause: Rep. Jim Leach (D-Iowa), Rep. Robert Goodlatte (R-Va.) and Sen. Jon Kyl (R-Ariz.).
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In 1997, Kyl introduced the Internet Gambling Prohibition Act (IGPA) before the Senate. Goodlatte soon followed suit by introducing similar legislation in the House of Representatives. Neither bill passed.
In 1999, Goodlatte sponsored a new version of the IGPA in the House that called for a ban on all Internet gambling, with exceptions for horse racing and jai-alai interests. (Interestingly, Goodlatte had accepted substantial campaign donations from the Virginia horse racing industry.)
The 1999 version of the IGPA never passed the House thanks to Rep. Tom DeLay (R-Texas). DeLay used a procedural move known as the "suspension calendar" to require that the bill meet a 2/3 majority for passage, a total it was unable to muster.
Revised versions of the IGPA never gathered enough support to pass the House either.
Playing by different rules
Playing by the normal rules of procedure in Washington hadn't produced results for anti-gambling advocates, so they changed their strategy. In 2006 they found a powerful friend in Senate Majority Leader Bill Frist (R-Tenn.).
Working with Kyl, Frist attached the language now known as the UIGEA to the SAFE Port Act, a measure intended to strengthen port security against terrorist threats. The SAFE Port ACT had passed through the House by a vote of 421-2 and the Senate by a vote of 98-0, showing the final bill coming out of conference would pass easily.
The SAFE Port Act was the opening anti-gambling advocates had been looking for.
At midnight on the day Congress adjourned for the 2006 elections, without any debate, the Senate passed the SAFE Port Act with the UIGEA language included. The act banned financial transactions involving online gambling sites, with exemptions for fantasy sports, horse racing and state lotteries.
Exodus
The UIGEA and the arrests of foreign nationals created a chilling atmosphere for online gaming in America.
Online poker was particularly affected as the bulk of the industry's profits at the time came from virtual card rooms. It wasn't long before the "new rules" also had an effect on U.S. poker players.
Poker sites abandon the U.S. market
Passage of the UIGEA created a tough situation for a number of international, publicly traded companies that had profited from the online poker boom.
Despite their status as legal, regulated entities in other countries, companies based their net worth on their value as perceived by the stock market. Regardless of whether the U.S. law was justified, or even enforceable, violating it would be viewed in a negative light by stockholders.
PartyGaming, parent company of market leader PartyPoker, quickly issued a statement after passage of the UIGEA:
"After taking extensive legal advice, the Board of PartyGaming Plc. has concluded that the new legislation, if signed into law, will make it practically impossible to provide U.S. residents with access to its real-money poker and other real-money gaming sites.
"As a result of this development, the Board of PartyGaming has determined that if the President signs the Act into law, the Company will suspend all real-money gaming business with U.S. residents, and such suspension will continue indefinitely, subject to clarification of the interpretation and enforcement of US law and the impact on financial institutions of this and other related legislation."
This announcement was followed by similar statements from 888 (owner of Pacific Poker), Sportingbet (owner of Paradise Poker) and Cryptologic (owner of the Cryptologic network of poker rooms). Privately-owned rooms such as PokerStars, Full Tilt Poker, and Bodog Poker, meanwhile, vowed to stay in the U.S. market.
Overnight, the majority of the online poker rooms had abandoned the U.S. market, despite the fact that America had been the source of the majority of their income.
Payment processors follow suit
Several smaller payment processors announced shortly after passage of the UIGEA that they would cease business with U.S. customers. While these companies impacted the options available to U.S. poker players, the future of online poker in America hinged on what Neteller would do.
Throughout the first wave of the poker boom, the payment processor of choice had been Neteller. However, Neteller was particularly vulnerable to the UIGEA because the law was directed toward payment processors.
On Oct. 19, 2006, six days after the UIGEA was signed into law, Neteller announced that it would cease accepting funds transfers from U.S. customers to gambling Web sites "within 270 days" - the same period given to the Treasury and the Federal Reserve Board to create regulations for enforcement.
The U.S. government forced Neteller's hand in January 2007 when, it arrested the company's Canadian founders, Stephen Lawrence and John David Lefebvre. Neither man currently worked for Neteller, but that didn't stop Neteller from quickly announcing a full withdrawal from the U.S. market.
The company also turned over "not more than $55 million" in Neteller customer funds to the U.S. Attorney's Office.
According to Neteller's statement, these funds were "largely in the process of being transferred from the Group to its U.S. customers or vice versa." The money would eventually be returned to Neteller's customers.
Conclusion
The online poker boom created vast wealth for a number of companies around the world, based mostly on the strength of the game's appeal to Americans. The tactics of a small group of American lawmakers, however, forced those companies to shift their business strategies if they wished to stay profitable.
In Part Five of this series we will look at how that shift affected online poker and the major tournament series it had fueled for the previous four years.
Related Articles:
- The Poker Boom Part 3: Live Tourneys Benefit
- The Poker Boom Part 2: Online Poker Grows
- The Poker Boom Part 1: Where it all began
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#341 – “Michael Craig is Giving it Away” – The Contenders
Before choosing Theresa (TedForrestFan) and Sal (sammymorb), as well as Andrew (Julius_Goat) as my runner-up, I narrowed down the 120+ entries to 10. I’d like to share with you the entries that came close. I hope to be able to...
The show, set for a seven week run on the different regional networks of the Fox Sports cable system, made its debut with the first episode showing three times during the evening, at 9PM, 11PM and 12:30AM (all Eastern time).
The three different times help accommodate the contractual agreements regional networks have with local college and professional athletic teams that require them to cover their games. With three different times, regional network should be able to bring to poker fans at least one offering of the show on Mondays.
The show itself has some promise, if only for the combative atmosphere at the tables and between the hosts themselves.
#img: annie-duke_12583.jpg: left: Not afraid to Duke it out at the tables.#
Thirty-six players, including Godsmack's Sully Erna, Anthrax's Scott Ian, blackjack champion "Hollywood" Dave Stann and model and Absolute Poker spokesperson Serinda Swan, battle it out at the Pechanga Resort and Casino in California, while Duke and Hellmuth sit back and eliminate players not by chip count but by how good their play is.
By the midpoint of the run of the show, the two professionals will choose teams that will compete for a seat at the 2008 World Series of Poker Championship Event.
With a lack of new poker programming on the air at this time, Duke and Hellmuth's Best Damn Poker Show should be a way to pass the time until the latest season of the World Poker Tour hits the airwaves in the next couple of months.
Check your local listings to see when next Monday's episode of the Best Damn Poker Show will appear. For further insight into the show, visit Earl's blog.
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FTOPS VII: Clements' event goes to ilikeaces86
This was the 12th event of the Full Tilt Poker series, and it saw 1,361 players ante up the $300+$22 buy-in. That boosted the $1 million guaranteed prize pool up to $1,287,300, giving ilikeaces86 a $257,460 first-place payout.
Scott Clements did try to replicate Erick Lindgren's feat of winning his own event. He put on a good show, making it to 171st place to just barely make it into the money, which began at 174th place.
Mike Matusow also showed what the pros are made of in this event. He cashed in 369th place in Event 9, and improved to 150th in Wednesday's No-Limit Hold'em six-max with re-buys.
Of the pros that cashed, it was Lindgren making the strongest showing once again. He finished in 38th place.
The top 10 players in the tournament were:
| Place | Name | Prize |
| 1st | ilikeaces86 | $257,460 |
| 2nd | THE_D_RY | $169,923.60 |
| 3rd | DDBeast | $118,689.06 |
| 4th | BKiCe | $90,111 |
| 5th | potroast | $62,434.05 |
| 6th | SirWatts | $42,480.90 |
| 7th | Jaral | $26,389.65 |
| 8th | rkruok | $26,389.65 |
| 9th | U_2Good4_Me | $17,378.55 |
| 10th | nowa1 | $17,378.55 |
Today Full Tilt Poker will be showing the love for its players with two more FTOPS VII events. First up is the $200+$16 H.A. (Pot-Limit Hold'em and Pot-Limit Omaha) hosted by Rino Mathis. The event began at 2 p.m. (EST) and has a $100,000 guaranteed prize pool.
Event 15 will kick off at 9 p.m. (EST) today as Huckleberry Seed hosts the $300+$22 Razz tournament. The event has a $150,000 guaranteed prize pool.
Related Articles:
- FTOPS VII Event 11 Goes to Pycb
- FTOPS VII: Edler's Event Goes to gautchos
- Erick Lindgren Wins FTOPS VII Event
- Four More Winners at FTOPS VII
- Pros Picking Up the Pace at FTOPS VII
- FTOPS VII Off and Running
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