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PR and gambling

There have been a number of things in the last week that have, shall we say, raised an eyebrow – some more high profile than others.

I was amused, for example, by the juxtaposition of Michel Platini saying that football, ‘like most sporting disciplines’ is ‘in mortal danger’ from match-fixing, and the lead item on Newsnight last night about the alleged sale of boxing gold medals to Azerbaijan.

Platini, of course, was talking about the dangers of betting: one of the key objectives of sport at the moment is to establish a ‘right to bet’ for which the betting companies must pay, so that an ‘integrity body’ of some sort can be set up. The old implication is that it’s a betting problem, so betting should pay to fix it; coupled, of course, with that well-known mantra (much mentioned by the oddly-named  Sports Rights’ Owners’ Coalition and frequently repeated by sports representatives on the Parry panel looking at issues of betting integrity) that it doesn’t matter how frequent it is, because just one bad story can damage sport forever. Unless it leads Newsnight and Five Live all the following morning, it would seem. Amazingly, the notion that sport needs to get its own house in order before it starts to point the finger at other people has still not come close to a position of ascendancy, despite six months of almost non-stop FIFA stories and now the accusation that even that pinnacle of sport, an Olympic gold medal, can be bought.

What can ultimately be labeled gambling’s failure in the PR stakes is hardly its fault, though, when you consider how easily its name can be dragged through the mud. Take Full Tilt Poker, for example, which has this week been accused of being a ‘Ponzi scheme’, and where conventional wisdom now appears to be that its owners were laundering money and are nothing more than a bunch of crooks.

Full Tilt, if you didn’t know, were taking poker bets out of the United States. Many lawyers will tell you that this is clearly illegal under the Wire Act, although equally, it is fair to say that plenty of other lawyers will tell you that it is not. Whatever your view, Full Tilt were offering it; and, with Pokerstars, gained a position of market dominance after the addition of the Unlawful Internet Gaming Enforcement Act (UIGEA) to the Safe Ports Act 2006 scared all the other operators who had taken a more liberal view of the Wire Act off. UIGEA didn’t actually offer any clarification as to what was legal under the Wire Act and what wasn’t, but it did enough to frighten people away, and to make the banks think that it was too much like hard work to establish what was allowed and what wasn’t, such that they just stopped accepting money for gambling transactions, and getting funds into an account required a whole load of jiggery-pokery which most people felt was simply too much like hard work.

So much, everyone understands. Full Tilt Poker, among a small number of others, decided that there’s no such thing as too much hard work if you can make lots of money out of it, and set about seeking that circuitous route. Effectively, they misdescribed the nature of the financial transaction that you (were you an online poker player in the US) were making, so that although you were depositing money into your poker account, it appeared on your credit card bill as your having bought golf balls, or chocolates, or something legal and harmless. It’s like hotels listing that you watched Four Weddings and a Funeral when actually you were watching something completely different. Or so I’m told.

I’ve never met the guys at Full Tilt Poker, or many other of the more recent poker companies for that matter (although I know a lot at those who took business out of the US prior to 2006, and find most of them perfectly normal – just with a different view of the relevance  of an outdated law). But whatever your moral position on someone’s decision to take business in this way, the question is who suffers from this terrible piece of false description, and the answer is anyone’s guess. Presumably you, the consumer, welcome it: you are, after all, trying to get money into your poker account. The bank, too, is presumably delighted: they see financial flows, from you, their customer, to a trader. The trader is pleased: he sells whatever he is selling. All three parties are happy.

But the charge is a bank fraud, because it says you were buying golf balls, and you weren’t. It was a fraud which defrauded none of the three parties involved, two of which were mutually consenting organisations and the third of which made money in the same way as it always does; but a fraud it is.

The money, therefore, becomes the proceeds of crime; which means that shifting it from one account to another, such that it goes from being fraudulent (i.e. criminal) funds to being the legitimate money paid out to customers in winnings or the profits paid to a company means that it is being laundered. So, Full Tilt is allegedly laundering money.

Except that to me, and I suspect to you, hearing that money is being laundered suggests that drugs or arms are being traded, or terrorist plots are being hatched and paid for, or something else terribly sinister. When actually, poker is being played online by people who want to play poker, in a country where playing poker is almost a national pastime but it remains illegal, for daft reasons, to do it online.

The demise of Full Tilt has not, of course, stopped people playing poker online in the US, just as the demise (in the US) of Party Gaming didn’t back in 2006. The business just moved. I gather, from people who know about this stuff, that it has mainly moved to Cake Poker and Merge Poker, which I suspect will now make vast amounts of money until either one of them gets done for it and a new operation emerges, or the US finally regulates the industry and lets people offer it in a safe environment where consumers don’t suddenly discover that they can no longer get hold of their funds.

The sad thing is that until I thought about this last week, when I was in Vienna speaking at a gaming conference, I had found myself sucked into the conventional wisdom that Full Tilt had gone seriously off the rails and were doing something really, really bad; when in fact, it isn’t even clear (or agreed) that they have broken the Wire Act.

But who cares about the detail? Most of the world has seen it: gamblers, money launderers. Same sentence. Bang to rights. The whole industry. Bunch of crooks.

That’s PR.


Posted in Betting industry, My articles, United States.

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2 Responses

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  1. benf says

    I think all sane people realise that US law can be ridiculous especially poker and gaming.
    The issue with Full Tilt is that the owners were “allegedly” embezzling funds. The DOJ has now amended the documentation against the owners, Messr’s Lederer, Ferguson and Bittar and accused them of taking over $300 million in player funds. In my book, this is money laundering, theft, or some other heinous crime.

    And whilst I completely agree that Merge and Cake are “at it”, I doubt that the owners of those companies would be as crazy as stepping foot on US soil ever again, let alone live there like some of the FTP founders.

    It is a huge shame that crooks like FTP cast a massive shadow on the rest of the industry…

  2. USGamer says

    Eventually the US will catch up with the rest of the world and see they simply can’t ignore the desires of their people or the tax benefits of having well-regulated online gaming. Of course it all starts with poker, and that’s coming soon enough with South Point Casino’s new inter-state online poker licensing.

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