Over the past twenty years, there hasn’t been a shortage of big headlines about online poker. Whether it’s new tech or government regulations clashing with online poker. Or even scandals draining the pockets of countless players, the stories have been diverse.
More often than not, it seems as if the government is at the heart of the matter, perhaps holding onto grudges from bygone days. And concerning the infamous Black Friday of Online Poker, where government intervention and the stubbornness of certain individuals collided, the aftermath wasn’t what you would smile at.
No doubt there’s a lot of conflicting information floating around about this story, leaving you wondering what truly went down. But if you’re itching for the diligently researched full story, it’s just a scroll or two away. Keep going, and you’ll get all the juicy details.
The whole online poker thing began happening as far back as the 1990s. 1994, specifically because it was the year the first poker game between people started on the IRC (Internet Relay Chat) system. It was kind of the Facebook or WhatsApp of its time.
Players use a special computer program to run the games and handle all the dealings. Then, they simply typed in commands directly into their IRC chat window to make their moves. They could only play with fake money, but it was still a blast. It was a groundbreaking way for people from all over the world to connect, play, and learn the game.
So, the first online card room to offer real money games was Planet Poker in 1998. And it was that same year the epic movie Rounders, which praised the hell out of poker, hit the theatres. What a happy year that must have been, those two goodness in it.
The goodness didn’t stop in 1998. From the late ’90s to the early 2000s, a wave of new companies entered the market. From Paradise Poker and PartyPoker to PokerStars and Absolute Bet, the competition was fierce. Each one was vying to bring something fresh to the table for players.
PartyPoker dominated the online poker space from 2002 onwards until… 2006 came around. That’s when the ugly UIGEA (Unlawful Internet Gambling Enforcement Act) reared its head in the United States. It forced PartyPoker and many others to shut their doors to US customers. However, PokerStars and a few others refused to back down, which ultimately helped them grab a bigger slice of the market share pie.
PokerStars was riding high on its dominance, raking in big bucks while others were just maybe scraping by. They’d almost forgotten about the UIGEA, thinking it was behind them. But then, out of nowhere... The United States Department of Justice (DOJ) dropped a bombshell on April 15, 2011 — Black Friday, what the poker community named it.
It was as if a spotlight was shone on all the shady dealings that had been happening behind closed doors for years. No one knew why the DOJ had been laying low since the UIGEA crackdown, but the online poker industry felt the heat that day.
PokerStars, Full Tilt Poker, and the Cereus Network (Absolute Poker + Ultimate Bet) were the main targets. They were hit with a laundry list of violations. First off, their operations were deemed illegal in the particular market. But it didn’t stop there. They also messed with one of the key provisions of the act. They tampered with the payment processing restrictions for online gambling companies. Even though most payment processors were hesitant to work with them, some still did. They used sneaky tactics such as bank fraud, i.e. coding transactions to resemble non-gambling purchases, e.g. jewelry or hockey sticks. Money laundering was also used.
Over $3 billion in assets from these companies were frozen on Black Friday. A whopping 76 bank accounts in 14 countries got locked down, including who knows how much of players’ funds. And to top it all off, about 11 interested parties got arrested, and the DOJ seized the domains of the three main companies. The players who got caught in the crossfire were left stranded, not knowing what to do next.
It was from one legal proceeding to the other after the overnight tragic happening. Federal prosecutors were gunning for billions in penalties and pushing hard for the 11 folks involved to get some serious jail time. Haha, but weren’t they just trying to offer services to players who knew the rules were there but decided to ignore them anyway? Honestly, both the companies and the players are at fault here.
To the part you have been looking carefully for, yes, many players got their money back. MANY. NOT ALL. The real deal was that after the Black Friday and subsequent back and forth, in July 2012, PokerStars decided to make the big brother move. It reached a settlement with the DOJ. The company agreed to pay $731 million of which a big chunk was used to refund players.
Wait, not done yet. As part of the deal, PokerStars also took over Full Tilt Poker’s assets and made sure lots of its players got their money back. This move helped PokerStars strengthen its position even more in the online poker market. At the end of the whole deal thing, PokerStars, surprisingly, didn’t admit to any wrongdoing.
As for players on the Cereus Network, well, they had to play the wait and wait until 2017 before seeing a dime of their money again. Tough break.
The Black Friday debacle marked another dark chapter for online poker following the blow dealt by the UIGEA in 2006. It ate up into the core. The industry never remained the same. Trust in the system took a nosedive, which caused the number of players to drop.
The loss of the American market was a significant challenge, especially for sites that focused solely on poker. Zooming ahead to over 12 years later, and while things have evolved, the ripple effects are still felt worldwide. The US government used the chaos of Black Friday as a yardstick to push for even stricter regulations. This has made it increasingly difficult for states to legalize online gambling.
Despite this, there’s still a cloud of uncertainty hanging over the industry. Yet, there’s a promising sign on the horizon. Today, the Department of Justice Office of Legal Counsel’s opinion has opened doors for states to legalize online gambling within their borders. As a result, a minimum of 25 US states have taken steps to legalize and regulate online gambling in some capacity.
A whole lot happened. Hopefully, this post, or story if you prefer, provided the clarity and answers you’ve been looking for. And hey, stay out of trouble, okay?
