A state lawmaker and former U.S. attorney in Nevada called for federal and state investigations into the political activities of PokerStars, one of three Internet gaming companies whose American operations were shut down and seized Friday by the U.S. Department of Justice.
State Sen. Greg Brower, R-Reno, questioned PokerStars' presence in Nevada in light of the company's use of a political action committee to dole out campaign contributions last fall.
PokerStars, whose founder is among 11 individuals charged with bank fraud, money laundering and operating illegal gambling businesses in a nine-count federal indictment unsealed Friday in New York, is the primary backer of Assembly Bill 258, which seeks to legalize Internet poker in Nevada.
Two members of the Assembly, including the bill's primary author, traveled to England last year to see the online gambling company's facilities.
According to a filing with the Secretary of State's office, PokerStars' political action committee made $272,000 in contributions to 68 legislative candidates, constitutional officers, political party PACs and legislative caucuses. The contributions, made between Sept. 23 and Oct. 18, ranged from $1,000 to $10,000.
Brower, who was U.S. attorney for the District of Nevada between 2007 and 2009, said federal law prohibits foreign contributions to federal, state and local campaigns, but Nevada law is unclear.
"The fact that a foreign company, which has been charged with operating a criminal enterprise, could play such a large role in Nevada campaigns is troubling," Brower said. "I will be discussing this matter with both the U.S. Department of Justice and the Nevada enforcement authorities to determine whether federal and state investigations into PokerStars' activities in Nevada are warranted."
A FOREIGN CORPORATION
PokerStars, which is based in the Isle of Man, a British dependency, is said to control more than 50 percent of the online poker market.
The company hired Richard Perkins, former speaker of the Nevada Assembly, to lobby for passage of AB258. In addition to Perkins, the company hired former Nevada gaming regulators Randall Sayre and Scott Scherer, public relations experts and financial experts to help gain support for the bill.
Perkins said Saturday the activities of PokerStars' political action committee took place "before my company became involved with the client."
Through Reel PAC, PokerStars gave $10,000 contributions on Sept. 29 to Republican Gov. Brian Sandoval and his Democratic opponent, Rory Reid.
Mike Slanker, who worked for the Sandoval campaign, said Saturday the donation was returned last week after an internal investigation showed the PAC had one contributor "who was not an American citizen."
Also receiving $10,000 contributions from PokerStars were the campaigns for Assembly Speaker John Oceguera, D-Las Vegas, and Senate Majority Leader Steven Horsford, D-Las Vegas. PokerStars gave $10,000 to A Better Nevada PAC, the Assembly Democratic Caucus, Leadership 2010 PAC, the Assembly Republican Caucus and the Senate Republican Caucus.
Assemblyman William Horne, D-Las Vegas, who introduced AB258, received a $7,500 contribution from the PAC on Sept. 29. Horne and Assemblyman Kelvin Atkinson, D-North Las Vegas, traveled to England last year on a trip arranged by Perkins. Atkinson received a $5,000 contribution from Reel PAC.
Brower, who was appointed to the state Senate in February, said he might introduce legislation to close any loopholes in state law concerning foreign campaign contributions.
SUSPENDED IN THE UNITED STATES
An agreement between PokerStars and Wynn Resorts Ltd. to seek the federal legalization of online poker and to operate a for-money gambling website was terminated by the casino operator after the indictment was announced Friday.
PokerStars and FullTilt Poker, which was also shut down by the Justice Department, told American gamblers late Friday that any money they had on account with the websites overseas was secure.
"Please be assured player balances are safe," PokerStars said in a brief statement posted on the company's free-to-play website. "There is no cause for concern. For all customers outside the U.S. it is business as usual."
PokerStars told customers it was suspending its American online poker activities due to "legal developments."
In a statement issued late Friday, FullTilt Poker CEO Raymond Bitar, one of the 11 individuals indicted by federal prosecutors, said he would be "exonerated."
"Unfortunately, as a result of this action, FullTilt Poker has decided that it must suspend 'real money' play in the United States until this case is resolved," according to the company's statement.
The companies' free-play websites, designated by the .net URL, were still available Saturday morning.
The nine counts in the 51-page indictment charged the 11 individuals with violating the 2006 Unlawful Internet Gambling Act, which prohibits banks and financial companies from processing Internet gambling transactions. Violations can bring up to 30 years in prison and hundreds of thousands of dollars in fines. The U.S. government also filed a civil lawsuit seeking $3 billion in money laundering penalties from the website operators.
"I am surprised and disappointed by the government's decision to bring these charges," Bitar said in a statement.
Bitar called online poker "a game of skill enjoyed by tens of millions of people in the United States and across the world."
He said FullTilt believes online poker is legal, "a position also taken by some of the best legal minds in the United States."
FALLOUT IN POKER COMMUNITY
PokerStars sponsors more than 100 professional players and Internet poker prodigies. The last two World Series of Poker Main Event champions -- Joe Cada and Jonathan Duhamel -- are sponsored by PokerStars. Celebrity players, such as actor Jason Alexander and former Major League Baseball pitcher Orel Hershiser, are on the website's team.
FullTilt's roster includes poker professionals Howard Lederer, Phil Ivey, Chris Ferguson and Jennifer Harman.
Many of the players were relatively silent about the indictments on what quickly became known as "Black Friday" in the poker community.
Brian Balsbaugh, who operates Poker Royalty, a Las Vegas-based agency representing players, said via Twitter that he advised clients sponsored by FullTilt and PokerStars to decline comment on the indictments.
That didn't stop some opinions from surfacing.
Poker standout Daniel Negreanu, who is sponsored by PokerStars, posed a question on his Twitter page Friday night: "Anyone know if Aria has good vegan options on the room service menu? Strangely, I kinda feel like playing live poker this week."
Poker legend Doyle Brunson, a 10-time World Series of Poker individual event champion, wrote on his Twitter page, "Now maybe we will see if these online 'superstars' can play real poker. Ante up suckers!"
Brunson's for-pay poker website, doylesroom.com, which is licensed in Nicosia, Cyprus, was still operating Saturday.
Poker professional Jennifer Harman, who is sponsored by FullTilt, tweeted on Saturday, "Don't know what to do with my time today. Usually on @FullTiltPoker right now."
A few minutes later, Harman tweeted, "Yep. I'm too scared."
Contact reporter Howard Stutz at email@example.com or 702-477-3871.