Full Tilt Poker, PokerStars and Absolute Poker closed down by FBI

Full Tilt Poker, PokerStars and Absolute Poker, the three largest online poker websites in the United States  have been closed down by the US Federal authorities, charging them with bank fraud and illegal gambling and accusing them of manipulating banks to process billions of dollars in illegal revenue.

Manhattan Prosecutors said they had issued restraining orders against more than 75 bank accounts in 14 countries used by the poker companies, interrupting the illegal flow of billions of dollars. The indictment is seeking $3 billion in forfeiture from the defendants and in money laundering penalties.

Preet Bharara, a U.S. Attorney, said the defendants "concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits."

The indictment said the companies had broken the Unlawful Internet Gambling Enforcement Act (UIGEA) which was brought in in the U.S. in October 2006. It says that the defendants used fraudulent methods to trick financial institutions into processing payments on their behalf after the law was passed. UIGEA makes it a crime for gambling businesses to knowingly accept most forms of payment in connection with the participation of another person in unlawful Internet gambling.

Authorities said Absolute Poker responded at the time by saying in a release after the new law was enacted that it would continue its U.S. operations because "the U.S. Congress has no control over" the company's payment transactions.

This morning, Saturday, PokerStars had posted a statement to its players through Twitter and its own player messaging service . The company said it has had to suspend real money play to customers based in the United States.

"Please be assured player balances are safe. There is no cause for concern," the company said. "For all customers outside the U.S. it is business as usual."

The PokerStars.com website now has  a message from the FBI saying the domain name had been seized as part of a criminal probe. In all, authorities said they had seized five Internet domain names used by the poker companies to operate illegally in the U.S.

Full Tilt Poker released a statement late Friday defending its executives named in the indictment, including Nelson Burtnick and its CEO, Raymond Bitar.

"I am surprised and disappointed by the government's decision to bring these charges," Bitar said in a statement. "I look forward to Mr. Burtnick's and my exoneration."

Bitar is accused of arranging for money received from American gamblers to be disguised as payments to online merchants that didn't exist. The company said it has suspended play for real money on its site in the United States but would continue offering gambling on poker in other countries, including the UK.

The authorities claim that the sites sometimes arranged for money from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewellry and golf balls. There are also claims that the poker sites bought their own bank to process the payments.

Prosecutors said about a third or more of the billions of dollars in payment transactions that the poker companies tricked U.S. banks into processing went directly to the poker companies as revenue.

Meanwhile, the US land-based casino companies that had started partnering with these poker companies have already started running scared and have backed away.

Wynn Resorts Limited and Fertitta Interactive had deals in place with PokerStars and Full Tilt Poker, respectively, in the hopes of partnering on online poker if it were made legal in the United States.

Michael Weaver, a spokesman for Wynn Resorts, a major casino company run by billionaire Steve Wynn, announced on Friday that it had terminated its alliance with PokerStars as a result of the criminal indictment.

Caren Bell, a spokeswoman for Fertitta Interactive, owned by brothers who own Station Casinos Inc., said the deal between Full Tilt Poker and Fertitta Interactive was contingent upon the passage of federal legislation legalizing Internet poker, along with its internal due diligence and a finding of suitability for gaming licensure.

None of this news effects any legal online bingo, poker, casino or sports betting in the UK but it is major news for the online industry as a whole. If you want to find a new bingo site to play at please click here.

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