Gambling911.com gets it wrong--again

Christopher Costigan at gambling911.com is a strange bird. He sometimes has his hands on stories and/or details unavailable anywhere else. Yet just as often, he's so far off the mark of what's real that you have to wonder whether he needs his psychotropic medication doses adjusted. (See, for example, my critique of his reporting on the iMEGA case here.)

Today he posted another example of the latter, here. I'm pasting below the entire text of the story as it reads, just in case he or somebody else goes in later and revises it.

DuplicatePoker.com Operating Online Poker Room from US?

Submitted by C Costigan on Mon, 09/15/2008 - 11:25.

It is illegal to operate an online poker room in the United States
under the Unlawful Internet Gaming Enforcement Act. Some companies, like
PokerStars, tread around this law by operating their business outside the US
though they still allow customers from within the States to play for "real
cash".

DuplicatePoker.com has
taken this one step further. They physically run their online poker room from -
where else?....New York City, at least that‘s what their latest press release
claims.

Duplicate Poker.com is a U.S. corporation operating a legal U.S.
poker room with headquarters in NYC, and offices in Tel Aviv, Israel. Visit the
next big thing in skill-based gaming at: www.duplicatepoker.com.

The company goes further to imply they are doing absolutely wrong in
the face of the US Government.

"Duplicate Poker has the potential to be as popular as Texas Hold'Em, Omaha
or 7-Card Stud," says Romik. "Yet unlike these games that have uncertain
origins, we have patented the Duplicate Poker process and it has the potential
to be marketed, licensed and monetized globally. Our legal status in the U.S.
also offers a competitive advantage."

Is this arrogance or something we don't know about?

In the past, US and state law enforcement has actively pursued any
online gambling operator they deemed to physically running all or part of their
business from within the States.

Betcha.com owner, Nick Jenkins, was ultimately arrested for running an
online gambling site within Washington State last year. He claimed the site was
perfectly legal since his peer-to-peer business model never accepted a bet
directly. Authorities saw things differently.

The site was run out of Seattle, Washington where online betting is a
Class C felony. Washington officials shut down Jenkins' site within weeks of it
opening to the public.

Over the last year, the US Government has aggressively set its sites on
payment processors operating within the United States. Most recently,
authorities seized millions of dollars from ZIP Payments, which had been
conducting most of its business with BodogLife.com.

DuplicatePoker may be asking for trouble if indeed they are operating
from within New York City. Long before the passage of the UIGEA in 1998, 21
online gambling operators were indicted. Partners in SBD Global (a separate
operation from what is now SBG Global out of Costa Rica), including Internet
gambling pioneer and author, Steve Budin, were among those indicted. SBD
operated a marketing office on Wall Street at the time, much to the industry's
surprise.

Law enforcement within the New York City area - both on the federal and
local level - have been especially aggressive in pursuing parties involved in
taking bets from US citizens. Until now the focus has been primarily on
interstate sports betting mostly through the Queens DA's office and the Suffolk
County DA's office.

And to be clear, DuplicatePoker.com admits to being a "real cash" online
poker room. The company also gives clear instructions on how to deposit funds,
which is clearly prohibited under the UIGEA.

"How does Duplicate Poker work? Players sitting at the same position at
different tables are dealt the same cards. As a result, Duplicate Poker
eliminates the luck of the draw and pits players' true poker skills against each
other. DuplicatePoker.com offers both free play money and real money games. Real
money players can deposit funds using Visa, MasterCard and PayPal."

Christopher Costigan, Gambling911.com Publisher

(Bolded paragraph as in the original.)

Now let's go through and try to count the errors.


Online poker illegal?

We don't have to go far to find the first factual misstatement--the very first sentence carries a whopper: "It is illegal to operate an online poker room in the United States under the Unlawful Internet Gaming Enforcement Act."

I cannot understand how a person who makes his living following gaming news can be so clueless about the pertinent laws.

The 2006 UIGEA, by its own explicit terms, did not make illegal the placing or accepting of any wager that was not already illegal under state or federal law. The statute (which you can read here) states: "No provision of this subchapter shall be construed as altering, limiting, or extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling within the United States." In other words, if offering online poker was legal before the UIGEA, it remained legal after passage of the UIGEA. (See Nelson Rose's article here for perhaps the most thorough non-technical analysis of what the UIGEA does and does not do.)

So for Mr. Costigan to be right in his statement, online poker would have to have been already illegal under pre-2006 federal law. (See here for general information on the handful of state criminal provisions related to online gambling.)

But, as I detailed in this post, prior federal law prohibited only the acceptance (not even the placing of) bets on sporting events. Neither playing nor hosting online poker, for free or for real money, has ever been illegal under federal law. It wasn't illegal before the UIGEA, and it isn't illegal after the UIGEA. The UIGEA is all about funding and money transfers, not about the actual placing or accepting of bets, or the playing or hosting of games.


Careless writing

This sentence appears wrong: "The company goes further to imply they are doing absolutely wrong in the face of the US Government." I'm guessing, from context, that Mr. Costigan meant to write, "...they are doing absolutely nothing wrong...." Kind of a significant omission there.

There is apparently another word missing here: "...actively pursued any online gambling operator they deemed to physically running...." I assume that he meant to write "...deemed to be physically running...." It doesn't make sense otherwise.

Next we have this sentence: "Over the last year, the US Government has aggressively set its sites on payment processors operating within the United States." Sites? Seriously, Mr. Costigan, you do not know the difference between a site and a sight? Here's a clue for you: http://dictionary.reference.com/. You might want to bookmark that one.

Is there no room in the gambling911.com budget for a proofreader?


What year?

Mr. Costigan writes, "Long before the passage of the UIGEA in 1998...." Huh? It was, of course, 2006, not 1998. It's possible that this is just a problem of a missing comma. That is, the "1998" might be referring to what follows in the sentence--the prosecutions--rather than what precedes it, "the UIGEA." But as it stands, it sure looks like a boneheaded blunder of dates.


A distinction with a difference

Mr. Costigan points to the case of Steve Budin to illustrate that the feds prosecute online gambling sites aggressively, when they are within U.S. jurisdiction. But as another article found on Mr. Costigan's own site makes clear, Budin's business was all about sports bets.

Similarly, Mr. Costigan points to the recent legal and financial troubles of Bodog. But he doesn't point out the obvious relevant fact that distinguishes Bodog from PokerStars, Full Tilt Poker, UltimateBet, AbsolutePoker, DoylesRoom, and other online poker sites: Bodog also accepts sports bets. The others do not, and--surprise, surprise--are not under threat of prosecution.

Being in the business of accepting online sports bets is pretty clearly illegal under the federal Wire Act. Neither Budin nor Bodog got in trouble for online poker.

I can't tell whether Mr. Costigan genuinely fails to grasp this critical distinction, or is deliberately omitting it in order to make a false point. In other words, I can't tell if he is abysmally ignorant of the law, or intentionally obscuring/distorting the facts. Either way, he's a horribly unreliable source.


"Clearly prohibited"

Mr. Costigan says of DuplicatePoker, "The company also gives clear instructions on how to deposit funds, which is clearly prohibited under the UIGEA."

Not so fast, sir. First, we have the argument above about how pre-2006 federal law prohibited only online sports betting. I think it's pretty clear that sites, even within the U.S., that offer poker and other casino games, but not sports betting, could not successfully be prosecuted under the Wire Act or other pre-2006 federal law.

But additionally, it appears that DuplicatePoker is attempting to navigate around this UIGEA language:

§ 5362. Definitions
In this subchapter:
(1 ) BET OR WAGER.
The term 'bet or wager'—
(A) means the staking or risking by any person of something of value upon
the outcome of a contest of others, a sporting event, or a game subject to
chance, upon an agreement or understanding that the person or another person
will receive something of value in the event of a certain outcome....

The key words there are "a game subject to chance." Now, I don't really think that this can be understood to expand the scope of the 1961 Wire Act, because of the provision, previously quoted, requiring courts not to use the UIGEA to alter what bets are legal or illegal. I think DuplicatePoker is simply trying to add an extra layer of legal protection. They don't offer blackjack or roulette or other traditional casino games that are unquestionably "subject to chance."

Poker is, of course, "subject to chance." But DuplicatePoker's unusual game structure reduces the chance factor further, because each player, as I understand it (caveat: I've never explored the site, so I'm just going by what I've read in their ads and in articles I've read), each player gets dealt the same cards at different times, as was done in the man-versus-machine poker competitions in 2007 and 2008. While this doesn't exactly make poker no longer "subject to chance," it at least makes every player subject to the same chance. Nobody will get more pocket aces or cold-deck situations than anybody else, if I understand correctly how it works.

My admittedly amateurish reading of the relevant laws tells me that this precaution is neither necessary (because even regular poker is not illegal under any existing federal law) nor sufficient (because the feds could easily still argue that they are offering a "game subject to chance" in spite of the unusual game structure). But the point is that, at the very least, there are complex and non-obvious legal questions to be resolved, which Mr. Costigan blithely dismisses or ignores when he says that what DuplicatePoker is doing is "clearly prohibited." Their actions are, under what I think is the best understanding of the law, not prohibited at all, let alone being "clearly prohibited," as Mr. Costigan asserts, and his claim is made without any sort of detailed explanation as to how he interprets the relevant laws so as to arrive at this conclusion.


Conclusion

Gambling911.com's Costigan sometimes gets a scoop that the rest of the world misses. For that reason, it's a useful site to check on once in a while. But he is so careless with facts, so slipshod in his writing, and occasionally so bizarre in his interpretation and analysis of what's going on that he is, sadly, a terribly unreliable source. Today's story shows that in, uh, spades.