Web's Poker Winners Face Delays in Collecting

Opening a new front in the government’s battle against Internet gambling, federal prosecutors have asked four American banks to freeze tens of millions of dollars in payments owed to people who play poker online.

The frozen payments of at least $33 million are owed to 27,000 players at four offshore poker sites, including PokerStars.com and FullTiltPoker.com, according to John Pappas, the executive director of the Poker Players Alliance, an advocacy group for online poker players.

Mr. Pappas said prosecutors in the last two weeks have asked Citibank , Wells Fargo and two smaller banks to freeze funds in accounts belonging to two companies, Allied Systems and Account Services, that process payouts on behalf of the poker sites.

The government action came to light over the weekend after checks issued to poker players by the two companies began bouncing, Mr. Pappas said. He said that the online casinos had assured him that they planned to pay players what they were owed.

Yusill Scribner, a spokeswoman for the office of the United States attorney for the Southern District of New York, which is bringing the legal action, declined to comment.

Stephen Cohen, a spokesman at Citibank, a unit of Citigroup, confirmed that the bank had received a request from prosecutors. He said that as a matter of policy Citibank complies with such requests.

Wells Fargo, which received a court order to freeze the money, said it had a policy to comply with “valid instructions to seize funds” but declined further comment. It is not clear whether the other banks received court orders or simply requests.

I. Nelson Rose, a professor of law at Whittier Law School in Costa Mesa, Calif., and a specialist on gambling law, called the government’s move a surprising and significant new effort to police wagering on the Internet.

“It’s very aggressive, and I think it’s a gamble on the part of the prosecutors,” Mr. Rose said. He added that it was not clear what law would cover the seizure of money belonging to poker players, as opposed to the money of the companies involved.

Past government efforts have focused on sports betting on the Internet, not on poker playing, Mr. Rose said. He noted that he and other legal authorities, and some courts, have considered poker to be different from sports betting because poker involves a transaction between people, not a bettor and the casino.

Mr. Rose said it was not illegal in New York, where the legal action was brought, for a person to place a bet. But other states do outlaw such activity, he said.

In a letter to one of the smaller banks involved, Alliance Bank of Arizona, prosecutors said the funds in question “constitute property involved in money laundering transactions and illegal gambling offenses.”

MORE FROM NYTIMES.COM

Current DateTime: 11:32:17 09 Feb 2012
LinksList Documentid: 22528754

• Business
• DealBook Blog
• Small Business News

United States authorities have had trouble policing Internet gambling because of the borderless nature of online transactions. The casinos and poker houses are based overseas, beyond the reach of prosecutors, who have sought to attack the businesses indirectly by going after American businesses that process transactions for offshore casinos or that advertise on their behalf.

Poker sites involved in this latest crackdown make money by taking a small part of each poker pot.

A. Jeff Ifrah, a lawyer representing Account Services, which has offices in San Diego and Canada, said that his client charged a small fee to issue checks to poker players.

Mr. Ifrah said that, to his knowledge, the government “has never seized an account that belongs to players who are engaged in what I would contend is a lawful act of playing peer-to-peer poker online.”

This story originally appeared in The New York Times