Politically Motivated Prosecutors

tip of the month:

Written by John Wenzel

At a time when the Bush Administration was busy packing its bags and trying to get out of Washington one step ahead of an angry mob, its officials still took the time to do one thing – slap poker players in the face. Most notably, they put into force UIGEA regulations designed to prevent transactions with online gaming sites just a day before leaving town, and they extorted $300 million from one of the founders of Party Poker (British citizen Anurag Dikshit) in return for cooperation and a two-year delay in sentencing (see item on page 19).
     This continued a recent Department of Justice pattern of using the threat of prosecution to force gaming site owners (and NETeller) to settle for huge sums to avoid the possibility of jail, however improbable. Note that the real threat was only that of “prosecution,” as the 1961 Wire Act – the only remotely applicable law prohibiting any kind of electronic wagering – has been held by the courts to only apply to sports betting. Party did not handle sports bets, and immediately and famously left the American market after the UIGEA was passed in 2006, even though the law’s enforcing regulations were not yet formulated or in effect.
     And though the World Trade Organization – of which the U.S. is a founding and powerful member – has ruled time after time against the U.S. for discriminating against offshore gaming websites, the feds have gone out of their way to hunt down site owners. Some were even grabbed while changing planes in an airport.
     Professor Joseph Weiler, who directs the Jean Monnet Centre for International and European Economic Law and Justice at NYU School of Law, commented, “In this area, the U.S. has lost all its cases and appeals before the WTO’s highest judicial authorities. And yet in what can only be described as puzzling and haughty contempt for the rule of law, it is acting as if it won those cases. The U.S. is pursuing European nationals and corporations and threatening them with lengthy jail time and punitive fines based on U.S. laws, which have already been unequivocally held to be in violation of American WTO obligations. This is without precedent. It deals a blow to the multilateral trade system at the worst possible moment for the world economy and to Western economies, which rely increasingly on services for our prosperity. It serves no discernable American national interest and this is a bad day for the reputation of the U.S. in the area of international law.”
     Regarding the guilty plea in the Party Poker case, Lode Van Den Hende of the Remote Gambling Association’s law firm explains, “What people need to understand here is that pleading guilty does not necessarily mean guilty. It is more than possible for the plea-bargaining system to act as an asymmetrical weapon in the hands of the prosecutors and one has to question whether that is happening here. If one looks at the fact that no court has yet applied the Wire Act to Internet gambling beyond sports betting and that the activity ceased when the UIGEA was passed, one has to wonder whether this is the right way for the U.S. to go about making law. According to opinion surveys among European companies from all sectors, one of the principal risks of doing business in the U.S. is that politically motivated prosecutors can use criminal investigations as a form of regulation. These events demonstrate that this risk may be a very real one.”
    Curiously, PartyGaming is not an obvious target for federal harassment. The company is listed on the London Stock Exchange, is fully licensed in a European Union jurisdiction, was among the first to stop accepting U.S. customers when the UIGEA was passed, has never offered sports betting (to avoid violating U.S. law) and has cooperated fully with authorities. The site has been closely involved in a whole range of industry initiatives that have improved the reputation and accountability of the sector as a whole, and was recently voted the “responsible operator of the year.”
     Besides Poker Pro, I also oversee three magazines in Europe. I talk to people across the Atlantic every day, and I can tell you our standing in the world has diminished more than you can imagine in the last eight years. We have gone from a position of respect and being viewed as a nation that has the moral high ground to a position that often borders on contempt. You don’t read this in American media too much, but many people abroad – friend and foe alike – now view us as self-serving, arrogant, hypocritical, even as the “bad guy.” Poker may not be the world’s most important issue, but the 11th-hour slap is indicative of the Bush attitude that has hurt us both at home and abroad: We will do what we want whether you like it or not. Apparently, these people never realized that public opinion is more important to getting things done in the world than high-tech weapons.
     We can only hope that the new administration will be more enlightened and inclusive and have more common sense. It makes no sense to be fighting for “freedom” in Iraq while adult Americans can’t even play a hand of poker on their computers. It’s a no-brainer: License, regulate and tax online poker, allow sites on American soil, and keep the money here at home. Lord knows we can use it.

John “Johnny Quads” Wenzel
Editor-in-Chief

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Last Updated on Sunday, 17 May 2009 17:40

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