The Feds have struck back and struck back hard! This story has everything – domain names seized, executives arrested, and billions of dollars in fines agains the three largest online poker companies. Keep in mind these companies operate completely legally in most of the world and are even publicly traded. This is almost the equivalent of Saudi Arabia arresting the executives of the American movie studios because their movies are on the internet and accessible to citizens of that country who are legally prohibited from viewing them. Things are going to get ugly folks…

via the LA Times

The founders of the three largest online poker sites were indicted by the FBI on Friday in what could serve as a death blow to the thriving industry.

Eleven executives at PokerStars, Full Tilt Poker and Absolute Poker were charged with bank fraud and money laundering in an indictment unsealed in a Manhattan court. Two of the executives were arrested on Friday morning in Utah and Nevada. Federal agents are searching for the others.

Prosecutors are seeking to immediately shut down the sites and to eventually send the executives to jail and to recover $3 billion from the companies. By Friday afternoon Full Tilt Poker’s site displayed a message explaining that “this domain name has been seized by the F.B.I. pursuant to an Arrest Warrant.”

The online gambling industry has taken off over the last decade, drawing an estimated 15 million Americans to bet online.

In 2006 Congress passed a law prohibiting online gambling. Most of the leading sites found ways to work around the law using foreign banks, but prosecutors allege that in doing so they broke the law.

“These defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” Preet Bharara, the U.S. attorney in Manhattan, said in a statement.

Read more…

Maybe there are some teeth in the push for legalization and sensible federal regulation of the Internet gambling industry after all.

Sponsored by Rep. Barney Frank (D-Mass.) — chairman of the House Financial Services Committee — HR 2267 is a bill designed to establish federal oversight of an online gambling industry that currently resides in murky legal waters for U.S. players.

It passed overwhelmingly 41-22 via committee vote last week, advancing the legislation to the House floor, where it hopefully will be voted on before the end of the 2010 session. If it gets that far, it will be the deepest penetration of online gaming law at the federal level in history.

“The good news is this is significant progress,” said Michael Waxman of the Safe and Secure Internet Gambling Initiative. “Last week’s vote showed the bi-partisan support is there.”

HR 2267 has the potential to open an enormous revenue stream in an era where cash is badly needed at all levels of government.

One analysis completed by the Congressional Joint Committee of Taxations concluded that regulated online gambling could generate $42 billion in revenue over the first 10 years of HR 2267 implementation at the federal level.

At the state level, a 6 percent deposit fee could generate an additional $30 billion.

“Those figures assume you are starting with an industry where millions of players are already engaged,” Waxman said. “And with regulation, there is an expectation that many more will take up and enjoy this form of recreation. There is a strong possibility that this bill would be included in a larger legislative package as a way to offset the cost of other programs.”

If HR 2267 is signed into law, sites will have to apply for federal licensing. There’s no language about a cap on the licenses, but in a regulated environment, safeguards against such things as identity theft, compulsive gambling behavior and underage gambling would have to be in place in order to secure one.

Sites able to comply and secure licensing will strike oil. Those that cannot will fade away.

Hope everyone is enjoying March Madness – it’s been a while since our last post. Here is a quick rundown of today’s most interesting sports betting stories that you may want to check out:

• Mike Herndon from the Alabama Press Register authors an incredibly well thought out editorial on the future of gambling. A small excerpt:

  Caught up in Gov. Bob Riley’s end-of-term crusade against electronic bingo, Mobile County District Attorney John Tyson danced around the subject last week when asked if office pools are legal. The head of Riley’s task force on gambling, Tyson said he could offer no opinion on whether such pools are legal, but warned would-be bracket-fillers to “seek the advice of their lawyer, and do it immediately.”

  Want to hear something even sillier? According to the Mississippi attorney general’s office, office pools could potentially break two laws in the land of the Beau Rivage — a general statute about sports gambling and another provision about gambling outside casinos.

  You can blow a mortgage payment playing Texas Hold ’Em, apparently, but don’t dare drop $10 on an office pool.

  It’s been estimated that between one-fourth and one-half of the working American public enters a March Madness office pool.

  And I dare say just about all of us gamble in one form or another. We buy a lottery ticket when we go to Florida or Louisiana. We wager small favors on the outcomes of petty disagreements, like the couple in the Chase credit card commercial who bet a massage on whether an actual person will answer their customer service call. We settle trivial debates by agreeing that the loser will buy lunch.

• I don’t really understand how this can be legal (it would be great if someone with a legal background could explain) : Entrepreneur Touts Loophole That Allows Online Betting On Sports.

  The Cambridge, Massachusetts, native’s startup, StarStreet Inc., is treating pro sports like a stock market. Gamers place bets with real cash by buying shares in a team or an individual player. If the team or player does well, those share prices may go up, and the gamer wins.

  Levine swears it’s legal. He has the online game in a private beta test at StarStreetSports.com with about 150 users betting cash on teams in this year’s NCAA Men’s Basketball Tournament. He hopes to have the site ready for public unveiling in time for the 2010 professional football season.

  “The real simple reason it’s legal is because it’s a game of skill, not chance, that doesn’t depend on the outcome of any single event,” he said.

• Malaysia to legalize sports betting ahead of the World Cup. Malaysia is a pretty repressive country and even they are allowing their citizens to bet on sports. The United States Congress should take note.

See a clip of the documentary here:

In other news:

• Delaware will take sports betting challenge to the U.S. Supreme Court – L.A. Times
• Rhode Island Senate committed considering joining the fight against the Federal ban on sports betting. More details at RecentPoker.com.
• The state of New Jersey has introduced the first intrastate gambling bill in the US, potentially leading the way to the opening of the US egaming market on a state-by-state basis. Read more at EGRMagazine.com.

Can this man legalize online gambling?

Let the games begin! Tomorrow morning at 10 a.m EDT, the U.S. House Congressional Services committee will debate the white hot issue of how best to regulate internet gambling. Watch it live and read the prepared testimony here:

http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_112409.shtml

Reading through the pre-hearing documents prepared by Harvard Professor Malcolm Sparrow, it looks like the anti-gambling proponents are going to have their hands full defending the status quo. Sparrow lays out the heart of the issue plainly and simply:

At a minimum, legalization and regulation of online gambling would give Americans much more protection than does the current prohibitionist regulatory framework. Although the kind of regulation that would accompany legalization would not be failsafe, it would be a significant improvement over the current regulatory and enforcement structure. We believe that safeguards could be implemented that would, on balance, substantially improve protections against the identified risks. These safeguards would also provide protection equal to or greater than that provided within the U.S.-based bricks-and-mortar gambling industry. We recognize that no set of technical or regulatory controls could ever eliminate these risks entirely. But even if the new fence had a few holes, it would be an improvement over having no fence at all.

The view that online gambling, in contrast to its bricks-and-mortar casino counterpart, is impossible to regulate reflects an old-fashioned perception of cyber jurisdictional authority. Many offshore commercial entities that operate online are subject to U.S. legal jurisdiction under existing long-arm statutes and authority. When coupled with governmental licensing authority, the ability to police online activities is even more powerful. Legalization with regulation would provide U.S. authorities with the power to grant or deny licenses and to impose significant sanctions on noncompliant licensees. Those licenses would be highly valuable to site operators. Compliance with any regulatory requirements and strict licensing conditions that Congress chooses to impose in return for the privilege of the license would therefore become a cost of doing business.

Watch this debate, email your Congressman, and continue to visit iBet.pro to keep up on the latest developments surrounding this fascinating clash between the world’s most powerful players.

Sports betting history was made today as sports bettors in Delaware placed the first legal bets under the new state-sponsored sports betting system. The AP covered this remarkable milestone, outlining some of the contentious history surrounding this issue:

DOVER, Del. — Sports betting in Delaware officially got under way Thursday after surviving a contentious legal battle with professional sports leagues and the NCAA.

Bill Mele, a cemetery supervisor from Dover, was so eager to get started he tried to place his wager a minute or two before the official 10 a.m. kickoff. The computer at the new, high-tech sports book at Dover Downs casino wouldn’t accept his initial bet, so he had to wait a couple of minutes and try again.

“I wanted to get my sports bet in, and when I realized they were having a Thursday night game, I got pretty excited,” said Mele, who celebrated his 57th birthday by becoming the first person to place a sports bet at Dover Downs.

Delaware is now the only state east of the Rocky Mountains to offer legal sports wagering.

The casinos at Delaware Park near Wilmington and at Harrington Raceway and Casino in southern Delaware also began taking bets in advance of Thursday night’s NFL regular season opener between the Pittsburgh Steelers and Tennessee Titans.

Under a federal appeals court ruling in a lawsuit brought by professional sports leagues and the NCAA, Delaware’s sports betting is restricted to parlay, or multiple wagers on at least three NFL games. A bettor must pick all the games correctly to win.

Delaware officials were hoping to offer bets on single games and sports other than professional football, but the court said that went beyond what was allowed under the state’s exemption to the 1992 federal ban on sports betting. Delaware was exempted from the ban because it had previously conducted an NFL sports lottery in 1976.

This video above is from the DelawareOnline.tv and it gives you a first-hand look at the front lines of this raging battle.

On a related note, the NFL season starts today. If you are an American customer looking for an online sportsbook, we recommend you check out Canbet.com. They offer $400 free for new customers right now, and they have a rock solid reputation in the industry. Full disclosure: the link provided is part of an affilate program, but the recommendation is 100% genuine and unbiased. Thanks for your continued support and good luck to you in the upcoming NFL season!

An epic battle is brewing. The two opposing sides are readying themselves for the fray; recruiting foot soldiers, forging alliances, stockpiling ammunition. In recent weeks, powerful interests have thrown down the gauntlet, setting the stage for what promises to be one of the most riveting political and economic rumbles of all time. The issue at the heart of the conflict is the legalization of sports betting and the field of battle is the United States of America.

Some of the most interesting recent developments include:

• Bipartisan coalition unites to legalize online gambling – and tax it: Barney Frank picks up some Republican support for his bill to repeal the UIGEA. Ron Paul (R-Tex.) as usual shows himself to be a leading conservative voice for individual rights.
• NJ Gov. Corzine joins the fight to overturn the Federal ban on sports betting: The New Jersey Governor sees the Constitutional problems with permitting only four states to allow sports betting. A gubernatorial candidate from Massachusetts agrees.
• DoJ Tries to Block New Jersey Governor From Sports Betting Suit: The little lawsuit started by a state lawmaker in NJ has picked up steam, causing the Justice Department to desperately look for obscure legal reasons to prevent it from seeing a trial. Amazing in-depth coverage of this story at MajorWager.com
• GOP Senators come out against States rights on sports betting issue: Sen. Orrin G. Hatch (R-Utah) and Sen. Jon Kyl (R-Ariz.) are taking the lead in the fight against sports betting, challenging Delaware and New Jersey’s attempts to regulate and tax sports betting. Many of their questionable arguments are skillfully rebutted by Delaware politician Peter Schwartzkopf here.
• NFL seeks to stop sports betting in Delaware: The No Fun League joins in on the fun, seeking an injunction to prevent the Delaware sports betting program from going into effect. The other major sports leagues and the NCAA also throw their weight behind the effort.

This is merely the first round in what promises to be a heavy weight fight that goes the distance. In the end, let’s hope the Constitution and the liberty of he American people get the unanimous decision.

It’s not just the temperature on the thermometer that is heating up as we enter into the summer months here in the U.S.; the war over the legality of sports betting has been growing hotter in recent weeks, setting the stage for explosive conflicts between powerful entrenched forces on both sides of the volatile issue.

Some of the incredible stories coming out in recent days:

• Federal prosecutors have seized $30 million of winnings from online poker players. Appealing directly to the banks used by the payment processing companies, the Feds have seized not the funds made by the poker sites, but the legitimate payouts won by U.S. based players. This should be a real wake up call for anyone who cares about their freedom and constitutional rights.
• The Governor of NJ has joined the fight to legalize sports betting in his state. What started as the David and Goliath story of a single state legislator against the U.S. Federal Government is quickly becoming an increasingly fair fight as various heavyweight lobbying groups and political players such as Governor Corzine enter the fray. Is it just a matter of time before other states take up the cause?
• The NCAA threatened to bar tournament games in the state of Montana due to its state-run fantasy sports league. Montana has responded with a rather weak attempt to appease the NCAA bullies.
• The WTO once again rules against the Unites States in a worldwide dispute over the online gambling ban in the United States. Unfortunately these rulings are consistently ignored by our government.
• The NFL is fighting tooth and nail to stop legalized sports betting in Delaware. The truth is that the NFL should be grateful for sports betting according to industry insiders. Meanwhile NFL owners just voted to allow NFL logos to appear on state lottery tickets.
• A guy got his hand chopped off for a gambling debt in NJ. Needless to say this kind of stuff doesn’t happen in the online gambling world where deposits are made up front.
• Finally, the state of Minnesota backs down on its ridiculous demand that the biggest Internet Service Providers block access for Minnesota citizens to certain gambling sites. This is the kind of thing they are doing in China my friends. Credit to iMEGA and the PPA for this small victory.

It’s an interesting time to be following the issue of online sports betting. The landscape could be very different by the start of the football season – though I wouldn’t bet on it.