Reason – After Congress passed the Unlawful Internet Gambling Enforcement Act in 2006, experts disagreed about the extent to which it affected the legal risks facing businesses that dared to let Americans place bets online. The law created a new federal crime, punishable by up to five years in prison: accepting money in connection with “unlawful Internet gambling” while “engaged in a gambling business.” But it left the definition of unlawful Internet gambling as fuzzy as ever. Of particular relevance for the protagonists of Straight Flush, Ben Mezrich’s gripping, fast-paced account of Absolute Poker’s rise and fall, the Unlawful Internet Gambling Enforcement Act did not make it clear whether the online poker business in which they had invested so much time, effort, and money was now to be treated as a criminal enterprise.
Federal law does not explicitly say whether poker, a game in which skill is more important than luck, qualifies as gambling, let alone illegal gambling. For years the U.S. Justice Department implausibly argued that online poker was illegal under the Wire Act of 1961, which prohibits using “a wire communication facility” to accept bets “on any sporting event or contest.” In a September 2011 memo, the Justice Department finally admitted that “the Wire Act prohibits only the transmission of communications related to bets or wagers on sporting events or contests.” The following year, in the first decision by a federal court to address the issue, U.S. District Judge Jack Weinstein ruled that poker is not covered by another federal statute, the Illegal Gambling Business Act of 1970, because it is “predominately a game of skill.” Weinstein therefore threw out the conviction of Lawrence DiCristina, the operator of a Staten Island poker room.
So how did Scott Tom and his stepbrother Brent Beckley, two of the college buddies behind Absolute Poker, end up named in a federal indictment? A clue can be found in what ultimately happened to DiCristina. In August 2013 the U.S. Court of Appeals for the 2nd Circuit overturned Weinstein’s decision, concluding that criminal liability under the Illegal Gambling Business Act hinges on state definitions of illegal gambling. Since running a poker game for profit is illegal in New York, the 2nd Circuit said, DiCristina had violated federal law as well.
