Jon Kyl's Attack on Online Poker and Livelihoods

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On that Black Friday, the Justice Department killed a $2.5 billion industry.

Four summers ago, Maxwell Fritz was making minimum wage serving cotton candy and curly fries at a Portland amusement park. He'd just finished his first year at Princeton, where he was studying to become a math teacher.

Fritz had played online casually with friends in high school. He'd managed to turn a few hundred dollars' profit, and that planted the seed for whatever job he'd have to get the following summer.

He made $10,000 after school let out, so he continued during the school year. Over an 18-month period, while still attending Princeton and working his teaching internship, Fritz managed to take home $100,000. Over the next six months, he would grab another $200,000.

Then Black Friday hit. Suddenly, Fritz not only had lost his income, but $65,000 was seized from his Full Tilt account.

He was among the fortunate who recovered quickly. A fellow player provided a reference that allowed him to move from one kind of gambling to another: Wall Street.

"I figured if gambling online is illegal, I might as well go to legalized gambling, in the form of the stock market," Fritz says, laughing. A friend had gone to a Wall Street firm and "just blew the doors off, and he said what he learned in poker really helped him. They were like, 'Well, we need to hire more poker players.'"

For Michael LaTour, the game was a way out of unemployment. The Syracuse man landed a job out of college selling mortgages and personal loans for American General Financial. But a year later, spectacularly inept bets by American's parent company, AIG, slapped him down.

"There weren't many jobs out there, and I'd been on unemployment for a while," LaTour says. "I saw some people being successful at poker, and I decided if I was ever going to seriously take a shot at it, now would be the time to do so."

He played for two years, earning $50,000 in 2010. He was doing much better last year, averaging $10,000 a month for 2011 until the feds came calling. Suddenly, the $35,000 in his PokerStars account was seized.

"The days after, it was really a panic," he says. "Nobody knew what was going on. It's been draining emotionally."

If he and his girlfriend hadn't bought a house, LaTour might have gone to Canada. Instead, he's taken the Syracuse police officer exam, but the academy doesn't offer classes until April. Two years after pulling himself off unemployment by his wits, he's back to searching for a job.

"This isn't something I wanted to do my entire life," he says, "but the money was out there, and it made more sense than any entry-level job just because of the potential to win such huge amounts of money."

Players weren't the only ones thrown out of work. The feds blew up an entire industry. In 2003, Michael Minkoff started a business that handled the shipping of poker books and videos sold on websites. His Las Vegas company also did freelance video production. It was a modest affair, employing three people and a passel of part-time help.

Then came the stealth attack by Kyl and Frist in 2006. Sites began closing and paring costs, hurling little guys like Minkoff to the side of the road. Black Friday nearly finished him. At his height, he was moving more than 1,000 books a month. Nowadays, he's selling fewer than 50, hardly enough to employ himself part-time.

The feds launched an even bigger hit on the television industry. The list of canceled shows since April is long. Poker After Dark, the late-night show on NBC, was canceled abruptly after four years when the feds called its sponsor, Full Tilt, a "Ponzi scheme." High Stakes Poker ended a six-year run on the Game Show Network in December. The National Heads-Up Poker Championship, also on NBC, collapsed in October after seven years. In April Fox, Fox pulled PokerStars Big Game and PokerStars Million Dollar Challenge before their second seasons.

According to Kantar Media, Full Tilt and PokerStars spent $26 million in TV advertising last year; PokerStars spent another $8.3 million on web and magazine ads. In one fell swoop, the feds made it disappear.

Though they wiped out the major American sites, a few remain, most notably Bovada and Merge Gaming Network.

The volume is much lower, and it's difficult to get paid. All have severe restrictions on how much and how often you can withdraw from your account. Merge allows players to withdraw up to $2,500 only once every six to eight weeks. And many are finding it difficult to add money to their accounts, because credit-card companies often will reject the transaction.

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Chris Parker
Contact: Chris Parker