The Impact of Black Friday on Today’s Online Gambling Community

Estimates of online gamblers in the United States are anywhere from 1.3 million to 15 million. Regardless of the actual number of U.S. online players, Black Friday caused a significant decrease in revenue for U.S. companies involved in online poker and other gambling games. Now that U.S. online gambling sites have been shaken, American players have gone from strategizing their bets to wondering if there will be a future for online gambling in the United States. Varying degrees of dismay and optimism circulate the online gambling community.

Black Friday is the most significant blow to the online gambling community since the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006. Both the UIGEA and the outcome of Black Friday (officially known as the United States v. Scheinberg) caused major online gambling companies to leave the U.S. market. This has had a significant economic impact.


Economic Impact of Black Friday

Many U.S. citizens played online poker to produce the majority of their income. Actions put forth by the Department of Justice therefore took away the livelihoods of many players. In addition, before the events of Black Friday, the indicted companies produced significant advertising and marketing revenue in the United States. Many televised events, poker shows, and other media opportunities were cancelled.

The three online gambling companies—PokerStars, Full Tilt Poker, and Absolute Poker—produced an estimated $200 million in advertising and marketing revenue in the U.S., which discontinued after indictment of the companies and shutdown of the company sites in the U.S. Time magazine wrote that opposition to legal online gambling has been significantly diminishing the potential for tax revenues.

Brick-and-mortar casinos and gambling clubs have experienced slight increases in players. However, those that found the most success after Black Friday included larger online gambling companies that pulled out of the U.S. before legal issues began.


Impact of Black Friday Persists into the New Year

The legal case between the United States and major online gambling companies continues into 2012. The industry is still in a state of turmoil and uncertainty. After the boom in online gambling just a few years ago, U.S. players have had to approach their craft in new ways. However, studies show that the rate of increase in online players is still about 20 percent annually. The difference is that most of this growth is occurring outside of the U.S. The fraction of U.S players vs. players outside of the states is increasing every month. This is primarily because governments in other areas of the world, such as Europe and Canada, make online gambling unambiguously legal. The same is far from true in the United States.


Where Do U.S. Players Gamble Online These Days?

With many of the major online poker rooms suspended for U.S. players, where can U.S. citizens still enjoy online gambling? Fortunately, U.S. law does not have jurisdiction on companies in other countries. U.S. players can, therefore, legally gamble online as long as a legitimate non-U.S. site is used. There are some sites that will accept U.S. citizens as long as transactions are placed through non-credit card methods such as Western Union. However, it is up to each individual player to use their discretion in finding trustworthy sites. Many players have flocked to Carbon Poker or the new Bovada Poker (formerly Bodog).

The Unlawful Internet Gambling Enforcement Act and actions taken after Black Friday, for example, have led to overseas online gambling sites specifically targeting U.S. players. Internet gambling forums also assist U.S. players in finding reputable online gambling sites.


More Information About Legal Online Gambling

Internet gambling is still in a gray area as far as the legalities of playing and running sites are concerned. For this reason, it is important to err on the side of caution when it comes to online gambling these days. That said, it can be comforting for U.S. players to know that there has not yet been a single documented case where a U.S. citizen has been prosecuted for participating in online poker. While there are antiquated gambling laws in various states, cities, and towns, none have been enforced.

To be safe, make sure that you pay the full amount of taxes not only for traditional forms of income, but also for profits made from gambling. “Forgetting” to pay these taxes does not hold water with the U.S. government and will certainly raise a red flag on your gambling endeavors.

Since U.S. citizens are still able to find ways to gamble online, what’s the big deal about all of these laws supposedly restricting Internet gambling? As far as players are concerned, these restrictive bills have made it increasingly challenging for U.S. players to fund their gambling accounts. Fortunately, gambling sites based in other countries often offer funding methods that allow U.S citizens to participate safely.

In general, online sites that are certified by their home governments and that fulfill random number generator testing agency requirements are considered legal. Of course, under the current sentiments of many U.S. legislators, there isn’t a single online gambling site that will be looked highly upon. However, this doesn’t mean that they are illegal, but simply that players will need to take greater care in assuring the legitimacy of sites and on the methods they use to gamble online.


Status of the Three Big Online Gambling Sites Directly Affected by Black Friday

Whatever happened to the three large online poker companies that were indicted in the United States v. Scheinberg case? PokerStars, Full Tilt Poker, and Cereus (Absolute Poker) were given back their respective domain names on April 20, 2011. According to the U.S. Attorney’s office, this was allowed “to facilitate the withdrawal of U.S. player’ funds held in account with the companies.”

Poker Stars Domain Siezed

Poker Stars Domain Siezed

PokerStars provides access to non-U.S. players interested in gambling with real money. The company offers an explanation to U.S. citizens on their homepage that states, “On 15 April 2011, PokerStars ceased providing real-money poker to residents of the United States and related territories. Real money play and deposits by US residents are strictly prohibited. An agreement has been reached with the US Department of Justice to allow United States PokerStars customers to cashout their funds. PokerStars will work diligently to expedite those withdrawals. All PokerStars player deposits are completely safe. Players from the United States can continue to play on our site for play money only.”

Full Tilt Poker currently only maintains its domain name in order to “facilitate players’ withdrawals of funds.” Otherwise, the site states that, “This domain name has been seized by the Federal Bureau of Investigation pursuant to an Arrest Warrant in Rem issued by the United States District Court for the Southern District of New York.”

After indictment, Cerues (Absolute Poker), stated, “Absolute Poker believes that the US Attorney shares the view that refunds to US players are an immediate and pressing concern, and Absolute Poker wishes to make clear that it wants to work cooperatively with the US Attorney to safely and efficiently return its players’ funds. To that end, Absolute Poker’s counsel has initiated communications with the US Attorney’s office and plans to continue proactively advancing those discussions.” While losing the majority of its players due to Black Friday, the company still successfully operates with players around the world with hopes that U.S. online gambling laws will change in the near future.

Read ahead to learn more about the potential future of online poker and Internet gambling.

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Posted by on Jan 16 2012. Filed under Poker Legal News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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