Feds Ask Banks to Freeze $33 Mil Owed to Online Poker Players

Federal prosecutors asked four American banks to freeze $33 million owed to 27,000 players at four offshore poker sites, including PokerStars and Full Tilt Poker.

According to John Pappas, executive director of the Poker Players Alliance, prosecutors asked Citibank, Wells Fargo and two smaller banks to freeze funds in accounts belonging to two companies, Allied Systems and Account Services, which process payouts on behalf of the poker sites.

The government’s action came to light when checks issued to poker players by the two companies began bouncing. Pappas said that the online casinos had assured him that they planned to pay players what they were owed.

Yusill Scribner, a spokeswoman for the office of the United States attorney for the Southern District of New York, which is bringing the legal action, declined to comment.

Stephen Cohen, a spokesman at Citibank confirmed that the bank received a request from prosecutors. He said that as a matter of policy Citibank complies with such requests. Wells Fargo, which received a court order to freeze the money, said it had a policy to comply with “valid instructions to seize funds” but declined further comment. It is not clear whether the other banks received court orders or simply requests.

Poker Player Newspaper’s own I. Nelson Rose, a professor of law at Whittier Law School in Costa Mesa, CA and specialist on gambling law, called the government’s move a surprising and significant new effort to police wagering on the Internet.

“It’s very aggressive, and I think it’s a gamble on the part of the prosecutors,” Rose said, adding that it was not clear what law would cover the seizure of money belonging to poker players, as opposed to the money of the companies involved.

Past government efforts have focused on sports betting on the Internet, not on poker playing, Rose said, noting that he and other legal authorities, and some courts, have considered poker to be different from sports betting because poker involves a transaction between people, not a bettor and the casino.

Rose said it was not illegal in New York, where the legal action was brought, for a person to place a bet, though other states do outlaw such activity.

In a letter to one of the smaller banks involved, Alliance Bank of Arizona, prosecutors said the funds in question “constitute property involved in money laundering transactions and illegal gambling offenses.”