So, quite a while ago, the FBI decided to go after online poker. Or more accurately, online poker profits. The online poker industry has been making obscene amounts of money and not paying taxes on it, and the US government is in the awkward position of wanting a cut of that money, but having accidentally banned online poker in a bill regarding security in at our ports (yeah, it doesn’t make sense). How to try and get that money without repealing the bill and taxing the companies? Sue them for something else!
The FBI took down the three largest online poker websites recently, and indicted their founders with counts like money laundering and fraud. Global online poker traffic dropped by 22% (a surprisingly small drop, actually), and millions of players in the US have money locked up in those sites that they can’t access. It was, all things considered, a pretty rude move by the FBI.
The backstory is much more interesting: Apparently, the poker companies have been lobbying Congress pretty hard for years, funneling more than $1.6 million to lobbying efforts last year. But yeah, when you are making upwards of $5 billion, you can’t buy your way out with only $2 million in lobbying. Even MORE interesting: The FBI probably didn’t have enough evidence to get the poker sites on money laundering (apparently unable to use Congress’s 2005 bill to go after the sites) until they arrested the kid who invented most of the money infrastructure for those online poker sites, and then offered him a plea deal which obviously involved him telling the FBI all the intricacies of the infrastructure, so that they could properly indict the founders. EVEN MORE interesting: The only reason the FBI picked him up in the first place (He is an australian citizen who was picked up in Vegas… idiot), was because he has been arguing with the poker companies over how much of a cut he was getting, and winning a lawsuit they filed against him, so the poker companies tipped off the FBI when he showed up in the US (according to some sources, but it sounds plausible, right?). Hilarious! By the way, Washington D.C. just legalized online poker, so the fortunes of online poker have really changed in less than 2 weeks.
To me, this is a pretty embarrassing representation of our capitalist democracy. We ban something, decide it’s too profitable but would be embarrassed to tax it, so we indict the founders and ask them to pay fines. The whole thing is about money, but its a horribly inefficient way to go about it: Speaking from a strictly economic perspective, we are levying an indirect tax on the industry, but shutting it down in the process, and losing all the revenue that would have been made in the meantime. Obviously there is a moral dimension, but if we were really concerned about gambling as a country, we probably wouldn’t have casinos in 28 states (not including purely “card rooms”), lotteries in 31, and a stock market that probably ought to look MORE like poker. So let’s be honest, we are okay with people playing poker, and they are gonna gamble even without these sites. We couldn’t find a way to just tax them? Isn’t that what we are good at?
danielmarkmiller.net 
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