Black Friday: $100 Million To $500 Million Might Be Involved

The head of a poker advocacy group said Tuesday players have had mixed results in getting money refunded from online gaming companies shut down last month in a federal crackdown. His best guess was that $100 million to $500 million might be involved.

“It’s difficult to estimate. There are people like myself who had $56 on account,” John Pappas, executive director of the Washington, D.C.,-based Poker Players Alliance, said during a media teleconference.

“But there’s also … an estimated 100,000 professional players who have tens of thousands of dollars … (a) select few may have even a couple million dollars on account.

“It would be easy to say that tens of millions, if not hundreds of millions of dollars, have kind of been held up in limbo here because of the DOJ (Department of Justice) action. It’s impossible to put an exact number on it. I would estimate at least $100 million if not as much as $500 million.”

On April 15, the U.S. Attorney’s office in Manhattan indicted 11 founders and executives of the three largest Internet poker companies doing business in the United States: PokerStars, Full Tilt Poker and Absolute Poker. Charges included bank fraud, money laundering and illegal gambling.

Restraining orders were issued against about 75 bank accounts allegedly used by the companies and their payment processors. Five Internet domain names used by the companies were seized.

On April 20, Preet Bharara, the U.S. attorney for the Southern District of New York, announced that the government had entered into agreements with PokerStars and Full Tilt Poker to allow them to use Internet domain names to “facilitate the return of money so that players can register their refund requests directly” with the firms.

In a press release, the prosecutors said the same agreement was open to Absolute Poker “if it so chooses.”

“We understand that players on PokerStars have been receiving payouts already,” said Pappas. “Full Tilt Poker is in the process of providing those payouts to players. I don’t believe it’s happened in any substantive form yet, although I think they’re just working through some internal issues to get the money back to players.

“Absolute Poker remains a big question mark.”

Pappas said that unlike Full Tilt and PokerStars, “who have a huge international presence,” Absolute Poker’s primary focus was the U.S. market.

“So losing the U.S. market was probably a bigger hit to them than for these other companies,” said Pappas. “They are rumored to be going into bankruptcy. And it’s unclear when or how players are going to be able to get their money back.”

The PPA advocates licensing, regulation and taxation of online poker. Pappas said his group had been hopeful the administration of President Obama would pursue such a course.

“One of the stunning things for the poker community is that this is taking place on kind of Obama’s and (Attorney General Eric) Holder’s watch,” said Pappas. ” … Obama came into office with a lot of promise from our perspective. We had viewed the previous administration to be very hostile.”

Toby Moffett, a former Democratic member of the U.S. House of Representatives and a PPA consultant, echoed those sentiments.

“Why isn’t the Obama administration, a guy who likes to call himself the poker player in chief, why aren’t they on board and pushing this for the revenue, for the common sense approach?” said Moffett. “And from a progressive point of view, for those who want Barack to get re-elected, why would you throw overboard 10 million people-plus who are voters, college educated and who are not your voters? These are not progressive Democrats for the most part.”

The PPA estimates about 10 million Americans were playing online poker before the crackdown. Other online sites, excluding the three whose executives were indicted, remain in business in the USA. Pappas said his group is urging caution to anybody using those sites because of the “risks involved.”