by Richard Morrison
June 10, 2009

Washington, D.C., June 10, 2009—Just when it seemed that those in power had begun to think about Internet poker in a positive light, the Department of Justice throws us back into the digital dark ages by seizing $34 million in funds rightfully owned by around 27,000 online poker players. The government is alleging that the funds are associated with illegal online gambling and money laundering.

In a letter sent to Alliance Bank, the prosecutor said accounts held by payment processor Allied Systems Inc. are subject to seizure and forfeiture “because they constitute property involved in money laundering transactions and illegal gambling offenses.” The letter was signed by Arlo Devlin-Brown, assistant U.S. attorney for the Southern District of New York. 

This shocking behavior is game-changing, but typical of the stance the Justice Department has taken over the years. Throughout the rise of Internet gambling, they have insisted that all online wagering was federally prohibited by the 1961 Wire Act and sought to prosecute and prohibit such activities. All this despite the fact that the courts have repeatedly smacked down any attempt to apply the federal Wire Act (the law that would make Internet gambling federally prohibited if it applied) to non-sport related Internet gambling. 

“Just when it seemed that regulators had finally begun to think about internet gambling as a legitimate activity that citizens have the right to engage in, the Department of Justice tries to throw us back into the regulatory dark ages where gamblers are forced to play in dank cellars and burned at the stake” says Competitive Enterprise Institute Policy Analyst Michelle Minton. 

This move comes just as Internet gambling legislation sponsored by Rep. Barney Frank (D-MA) seems likely to pass and states known for anti-gambling positions, such as Utah, have begun to come around to the idea of legal, regulated, Internet gambling. 

“The seizure is outrageous and potentially unlawful itself,” continued Minton. “The actions of those involved should be condemned, and the law enforcement officials themselves punished if probable cause was not definitively established. The Department of Justice should be defending Americans from real crimes not committing injustices against them.” 

CEI is a non-profit, non-partisan public policy group dedicated to the principles of free enterprise and limited government.  For more information about CEI, please visit our website at www.cei.org.