Online Poker Faces Assault From the Feds
Chris Parker and Tim Elfrink March 1, 2012 4:00AM
"This isn't something I wanted to do my entire life," he says, "but the money was out there, and it made more sense than any entry-level job just because of the potential to win such huge amounts of money."
Players weren't the only ones thrown out of work. The feds blew up an entire industry. In 2003, Michael Minkoff started a business that handled the shipping of poker books and videos sold on websites. His Las Vegas company also did freelance video production. It was a modest affair, employing three people and a passel of part-time help.
Then came Frist and Kyl's stealth attack in 2006. Sites began closing and paring costs, hurling little guys like Minkoff to the side of the road. Black Friday nearly finished him. At the height of his success, he was moving more than a thousand books a month. Nowadays, he sells fewer than 50, hardly enough to employ himself part-time.
Though the government wiped out the major American sites, a few remain, most notably Bovada and Merge Gaming Network.
The volume is much lower, and it's difficult to get paid. All sites have severe restrictions on how much and how often players can withdraw money from their accounts. Merge allows players to take out only up to $2,500 once every six to eight weeks. And many players find it difficult to add money to their accounts because credit card companies often reject the transactions.
After Black Friday, players such as Walter Wright began gambling on Merge just to salve nerves made raw by an empty wallet and a squealing baby. Wright had been an online-poker superstar, winning more than $100,000 a year at his peak. When Black Friday hit, he was stuck in North Carolina, out of a job, living with his in-laws, and with no way to provide for a family of four.
He and his wife went to Florida for a live World Poker Tour event, but he didn't play well. When they returned to North Carolina, they didn't even have enough money to get their dogs out of the kennel.
With their marriage stretched to its breaking point, Wright went to Costa Rica just before Thanksgiving. A friend agreed to front him a roll of cash, pay his airfare, and cover his rent for a few months.
Costa Rica has become a magnet for Americans. Wright lives in an apartment complex with other online players. The country's tourist-friendly economy makes it a logical landing spot for those like Wright. Since Black Friday, companies such as Poker Refugees have sprung up to help players obtain visas, bank accounts, and apartments in Costa Rica.
But a larger question remains: Why are the feds chasing honest, taxpaying citizens out of the country?
Congressman Frank denounced the crackdown as an "incredible waste of resources," wondering why the feds felt compelled to protect "the public from the scourge of inside straights."
After all, for most of the nation's estimated 2 million online players, poker is little more than leisure recreation. And those who made their living from it seemed to personify the American spirit, providing for families by creating livelihoods from their wits.
There's also the question of why conservatives such as Frist and Kyl would push a law so lush with the dreaded nanny-state overtones. Frist declined to comment about his motives. Kyl didn't respond to repeated interview requests.
Most players cynically dismiss the senators' move as a strong-arm play. The feds want their protection money — i.e., taxes — and won't let the ride continue until someone pays up. But because government moves in slow motion, it has left a multibillion-dollar industry to rot from atrophy. Any remedy will likely take years.
"It's really frustrating to me," LaTour says. "It just seems they weren't seeing any of that money that was going out there so they want to set it up so they can tax it. But the longer this takes, the more there will be people like me who just give up on it and move on with our lives to find another way of making a living. I've pretty much stopped waiting around."
A solution seems rather simple. Because everything is handled electronically, internet poker offers the possibility of instant taxation of winnings. And the feds could easily force sites operating in the U.S. to pay American taxes for the privilege of doing business here.
Yet the average poker enthusiast doesn't employ a battery of lobbyists on Capitol Hill. And even if he did, he'd still be confronted by the moralists who believe any form of gambling is a sin.
"We're a pretty small minority," Wright says. "We don't have a big voice. We need to be louder. But we're talking American politics. We know it's going to take longer than it should, they're going to find a way to screw people, and they're probably going to make the taxing situation really complicated."
Chris Parker and Tim Elfrink
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