Feds Up the Ante on Online Poker With Full Tilt Investigation

A federal grand jury is investigating online poker site Full Tilt Poker on suspicion of money laundering.
A federal grand jury is investigating online poker site Full Tilt Poker on suspicion of money laundering.

Full Tilt Poker, the world's second-largest online poker site, is under investigation by a federal grand jury. High-profile poker players and founding representatives Howard Lederer and Chris "Jesus" Ferguson were both named as quarries in the case.

"FBI agents or prosecutors have spoken to at least two people involved in disputes with Full Tilt, paying special attention to the possibility of money-laundering violations," reports theFinancial Times of London.

Although the charge sounds vague, that may be by design. Feds can use suspicion of laundering to win valuable cooperation from otherwise unobliging foreign governments in countries where sites base their operations.

"When you hear money laundering, you associate it with fraud and crime," says Lawrence G. Walters, an attorney whose clients include online gambling entities (but not Full Tilt). "However, by definition, it can be as simple as generating so-called illegal transactions through Internet poker."

A $4.8 Billion Market

Walters describes the investigation as "a shot across the bow" of the online poker industry and expresses surprise that the FBI is spending resources on something that the U.S. Congress, as well Florida and California, are considering legalizing.

But Full Tilt and PokerStars, the two largest online poker sites, get an estimated 70% of the their business from the U.S. And it's a significant business. Gambling research and consulting firm H2 Gambling Capital estimates the size of the online global poker market at $4.8 billion.

Indeed, even beyond the elephantine revenues, online poker is hardly an under-the-radar industry. FullTilt.net, the play-money site associated with FullTilt.com, where poker is played for real money, has sponsored and produced poker-related content for network television.

Hardly Under the Radar

Additionally, the company airs a raft of excellent commercials shot by the acclaimed documentary director Errol Morris. Officially, these TV ads are for the free-play FullTilt.net site, but they surely also generate business for FullTilt.com.

Even though an argument can be made that the U.S. government is missing out on much-needed tax revenue by fighting an ultimately futile battle against online poker sites, careful readers of The New Yorker can't be completely shocked by the federal move on Full Tilt, Lederer and Ferguson.

Last year, when writer Alec Wilkinson was working on a profile of Ferguson, a Department of Justice spokesperson told him the department views online poker as illegal under federal law. When Wilkinson inquired as to why there hadn't been heat on site-affiliated players such as Ferguson, the spokesperson answered: "Just because somebody hasn't been prosecuted yet doesn't mean that they won't be."