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America’s Cardroom poker site operates in gray area

On April 11, some of the biggest celebrities in the world played an online poker tournament for charity.

Actors Ben Affleck and Matt Damon and Tampa Bay Buccaneers quarterback Tom Brady were among the high-profile names who helped raise a reported $1.75 million for Feeding America, which runs a nationwide network of food banks.

Coverage of the tournament was featured in national publications, including Newsweek and People, serving as a “feel good” story amid the coronavirus pandemic.

But the event raised some eyebrows in the poker world. The tournament was held on America’s Cardroom, an online poker site based in Costa Rica that is operating in a gray area in the U.S.

Online poker is fully legal and regulated in only four states — Nevada, Delaware, New Jersey and Pennsylvania — and is ostensibly illegal in the rest of the U.S. But poker players tend to find a way to play poker, and the lack of federal legislation in the U.S. has allowed some sites to build large customer bases by serving Americans across most of the country.

America’s Cardroom is part of the company Winning Poker Network. Its CEO, Phil Nagy, declined to be interviewed for this story. A representative for the company offered this statement: “There’s no federal law that expressly prohibits online poker. There are federal laws that prohibit conduct of illegal gambling under state laws. So you have to look state by state.”

After Black Friday

Nagy appeared on a podcast in April 2019 and offered an assessment of his company’s legality, referring to “Black Friday,” the day in 2011 when several major online poker sites stopped serving Americans after indictments from the U.S. Department of Justice. That crackdown came five years after the passage of the Unlawful Internet Gambling Enforcement Act of 2006, which prohibited some financial transactions involving internet gambling.

“At Black Friday, there were no new laws that changed,” Nagy said on the Poker Life podcast. “There’s not been a law changed about online poker aside from Nevada, New Jersey and now Pennsylvania. The only thing was, they got their URLs taken because they were banking in Utah. You’ll never get a check from me from the States, ever.”

The America’s Cardroom website touts its increased use of cryptocurrency in transactions with players.

The host of that podcast, Joey Ingram, pointed out in an interview with the Review-Journal that America’s Cardroom is not the only site offering a platform for U.S. players.

“It’s just that they do the most marketing,” he said.

Ingram called the highly publicized celebrity tournament “one of the most brazen things I’ve seen” for a business operating on the fringes of the law.

No ‘whining’

WSOP.com, the major legal online poker operator in Nevada, competes at a disadvantage against sites such as America’s Cardroom. Since WSOP.com draws players from only three states — the site does not have a deal with Pennsylvania — its tournament prize pools are smaller and it runs fewer cash games than unregulated sites that serve most of the U.S., leading some players who aren’t concerned with strict legality to go where the action is more plentiful.

Ty Stewart, senior vice president of Caesars Interactive Entertainment, which owns WSOP.com, said in a statement that the further legalization of online poker was the answer to gray area sites.

“Instead of whining about how much market share we lose to the bad actors, or how egregious their promotion, our focus needs to remain on getting regulated online gaming live in more territories,” he said. “Until we do, there will always be entities eager to fill that void and willing to take the risks.”

Contact Jim Barnes at jbarnes@reviewjournal.com or 702-383-0277. Follow @JimBarnesLV on Twitter.

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