Poker Payment Processors Settle with US Government

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Two former payment processors for PokerStars reached an agreement with the United States government on August 17^th, ending a legal battle over funds that the US had seized about a year ago.

The funds, approximately $13.3 million, were seized from the Goldwater Bank accounts of Ahmad Khawaja and his firms, Allied Wallet and Allied Systems. The civil forfeiture complaint claimed that the money was traced to payments the companies had processed for PokerStars from January, 2009 until May, 2009.

In a move that one blogger referred to as “a government negotiated extortion plan”, the processors were left with two unappealing decisions. The blogger pointed out that the companies could suffer through a long legal battle and face possible jail time, or forfeit the $13.3 million to avoid further charges. In the end, the companies chose the latter.

For its part, PokerStars is not affected by the decision. The company continues to operate in the US based on strong legal advice that it is not violating any laws. The company issued a statement about the settlement, saying, “PokerStars does not condone efforts by processors to conceal the nature or purpose of funds used to play online poker. PokerStars has taken steps to ensure that processors properly disclose the nature of their business to their relevant financial institutions.”

Although tensions have been running high since the implementation of the Unlawful Internet Gambling Enforcement Act on July 1^st, no new charges have been brought against any payment processors. Nathan Vardi points out in a Forbes blog that, “prosecutors have not moved directly against the online operators, [suggesting] to some that the government’s position is weak.

While the US government has moved against several processors in the past, many analysts do not see them attempting to move against poker rooms like PokerStars or Full Tilt Poker. The likelihood of such efforts is diminishing, as Congress works to enact legislation to legalize online poker.