Major online poker sites accused over money laundering

British gamblers may lose thousands of pounds as accounts arefrozen by US investigators

Hundreds of British gamblers stand to lose tens of thousands ofpounds after a crackdown on online gambling firms with links toBritain by the US authorities, a leading gambling expert warned. TheUS Justice Department froze gambling accounts linked to three of thebiggest online poker sites after accusing those running them ofmoney laundering and fraud.

Prosecutors claimed the operators of Pokerstars, Full Tilt Pokerand Absolute Poker - three of the most popular online poker sites -tricked US banks into processing billions of dollars from customers.US banks are prohibited from accepting payments from illegalgambling websites.

The US authorities also seized the internet addresses, one ofwhich is run from the Isle of Man, another from Dublin and the thirdfrom a Commonwealth Caribbean country, where online gambling islegal. The move, seen as a serious escalation in an struggle betweenthe US authorities and the online gambling industry which generatesbillions, caused outrage among British and international gamblers.Last month, Pokerstars' flagship event attracted nearly 60,000players competing for prize money of $11.8m (7.2m).

Pokerstars' owner Isai Scheinberg and the company's director PaulTate, both Isle of Man residents, were accused of "deceiving UnitedStates banks" according to a US Justice Department spokesman. In astatement, prosecutors claimed this was done by "among other things,arranging for the money received from gamblers to be disguised aspayments for hundreds of non-existent online merchants and other non-gambling businesses".

A spokesman for the US Attorney's Office said yesterday it wasworking with "foreign law enforcement" in the hope of extraditingdefendants located abroad and seizing their assets.

Legal experts said the case would test US gambling laws. Criticssay the law prohibits sports' betting but opinions are divided onwhether it covers online games such as poker and blackjack.

UK gambling expert Simon Holliday, director of H2 GamblingCapital, warned the online gambling industry could face a massiveconfidence crisis. He said: "These sites are like banks. Players putdown a deposit to play, and they have to be able to trust thesesites. What happened with Northern Rock could happen here, becausethese sites have had their balances frozen by the US authorities.

"You have to bear in mind that 20 per cent of the players on thesites are money-making - it's their main source of income, like acareer. There are some big deposits in there. You'll get lots ofsmall-time gamers who have about 100 stuck in there at the moment.But then there are the big players, who could have tens of thousandsin there.

"When these site owners have to pay money back, or if they'refined hefty amounts, they'll see if they can pay out of corporatefunds. They probably won't be able to, and they'll think nothing ofusing their players' funds, just like the banks did. So just likewhat happened with banks, the players will probably only get aproportion of what they're owed.

"I would speculate that 500 to 1,000 players in the UK could loseanywhere in the region of 2,000, all the way up to 30,000. Therewill be even larger, high-end losses than that. Worldwide I wouldestimate about 10,000 professional players could lose verysignificant amounts of money. It takes about 24 hours to cash inmoney, but people can't get their money off these sites now. Even ifplayers miraculously do receive the last of their poker cheques inthe post, the question is, will they be able to cash them in?"

Ishuez123, a player from London, wrote on an online pokerwebsite: "I have a feeling that the suicide rate in the poker worldis about to climb. Well played FBI." Another, Rhinodash, fromBirmingham, wrote: "This day could forever be known as Black Fridayfor online poker. If their funds are frozen, how the hell are theygoing to process all these cashouts?"