Over the weekend, FBI agents working with U.S. Attorneys for the Southern District of New York raided the nation’s three largest online poker sites. Eleven indictments against executives with the sites were also unsealed. The raids and indictments are truly awful public policy for at least three reasons.
First, the charges—money laundering—are absurd by any standard. The companies said they operated online poker rooms and they… operated online poker rooms. The FBI doesn’t even allege that they cheated their customers (in fact, their terms are far more generous than the perfectly legal poker rooms all over the country.) The legal theory that this is somehow money laundering doesn’t pass even a laugh test.
Second, the major losers appear to be players who broke no law by any account. As a result of the raids, they can’t access money they’ve deposited or earned playing online poker. Nobody knows how long this all-purpose freeze will last. The major poker rooms operate largely offshore and follow the laws of the countries where they exist. The United States has no law that prohibits engaging in online gambling and, while there are some very burdensome banking regulations intended to discourage companies interest in providing online casino gaming, the only federal laws about gambling per se apply only to sports betting.
Finally, one really wonders if spending time on this makes sense as a government priority. Almost no criminal charges have been brought as a result of the massive 2008 financial collapse, Osama Bin Laden remains at large, and, to say the least, there’s plenty of other behavior (speeding and jaywalking among other things) that does a lot more social damage than online poker.
Quite simply, last Friday’s raids make no sense. The FBI and U.S. Attorneys need to reconsider their actions.