A number of the most popular commercial poker sites in the U.S. lost their most valuable domain names today. As MarketWatch reports, federal authorities have charged the founders of a number of online poker sites, including PokerStars, Full Tilt Poker and Absolute Poker with “bank fraud, money laundering, and illegal gambling offenses.” In total, the government seized five domain names and eleven people were charged with violating gambling laws by, says Reuters, “tricking regulators and banks into processing billions of dollars of illegal Internet gambling proceeds.”
For quite a while now, online gambling sites have been skirting the law by offering both .com and .net addresses. While the .net sites only offer legal games where no real money is every exchanged, the .com sites – which are always hosted off-shore – host poker games for money, which under U.S. law are illegal.
The 2006 Unlawful Internet Gambling Enforcement Act also made it illegal for online gambling businesses to accept money “in connection with the participation of another person in unlawful Internet gambling.” Because of this, U.S. banks and credit card processors can’t legally work with these .com sites and U.S. gamblers can’t – in theory at least – play these games.
Getting Around U.S. Law – For a While
The poker sites, however, quickly found ways around these rules. In its indictment (PDF), the government alleges that these sites “arranged for the money received from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants purporting to sell merchandise such as jewelry and golf balls.” The government also alleges that a number of “highly compensated” payment processors worked with the poker sites and “lied to banks about the nature of the financial transactions they were processing, and covered up those lies, by, among other things, creating phony corporations and websites to disguise payments to the Poker Companies.“
Some of the seized domain names are still online as it takes a while for the DNS changed to propagate through the system. The .net versions of these sites are still operating normally and the DNS records, as far as we can see, haven’t been changed.
Even though the sites are hosted on offshore servers, .com domain names fall under U.S. law and while these sites are legal in many countries, the seizure of their domain names means they are unavailable from anywhere in the world.