Longform

Jon Kyl's Attack on Online Poker and Livelihoods

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After Black Friday, Walter Wright started playing on Merge just to salve nerves made raw by an empty wallet and a squealing baby. He and his wife went to Florida for a live World Poker Tour event, but he didn't play well. When they returned to North Carolina, they didn't even have enough money to get their dogs out of the kennel.

With their marriage stretched to its breaking point, Wright went to Costa Rica just before Thanksgiving. A friend agreed to front him a roll, pay his airfare, and cover his rent for a few months.

Costa Rica has become a magnet for Americans. Wright lives in an apartment complex with other online players. The country's tourist-friendly economy makes it a logical landing spot for those like Wright, who has a DUI conviction and, therefore, isn't allowed into Canada. Since Black Friday, companies such as Poker Refugees have sprung up to help players get visas, bank accounts, and apartments in Costa Rica.

But there remains a larger question: Why are the feds chasing honest, taxpaying citizens out of the country? Especially for something as benign as playing cards, an act committed by millions of Americans?

Congressman Frank denounced the crackdown as an "incredible waste of resources," wondering why the feds felt compelled to protect "the public from the scourge of inside straights."

After all, for most of the country's estimated 2 million online players, poker is little more than leisure recreation. And those who made their living from it seemed to personify the American spirit, providing for families by creating livelihoods from the wits.

There's also the question of why conservatives like Kyl and Frist would push a law so lush with the dreaded nanny-state overtones. "I believe in a smaller, more conservative role for government than telling me which card games I can play on my computer," says Fritz.

Frist declined to comment on his motives. Kyl didn't respond to repeated interview requests.

Most players cynically dismiss the senators' move as a strong-arm play. The feds want their protection money — i.e., taxes — and won't let the ride continue until someone pays up. But since government moves in slow motion, it's left a multibillion-dollar industry to rot from atrophy. Any remedy likely will take years.

"It's really frustrating to me," says LaTour. "It just seems they weren't seeing any of that money that was going out there so they want to set it up so they can tax it. But the longer this takes, the more there will be people like me who just give up on it and move on with our lives to find another way of making a living. I've pretty much stopped waiting around."

A solution seems rather simple. Since everything's handled electronically, Internet poker offers the possibility of instant taxation of winnings. And the feds easily could force sites operating in the United States to pay American taxes for the privilege of doing business here.

Yet mom-and-pop poker enthusiasts don't employ a battery of lobbyists on Capitol Hill. And even if they did, they'd still be confronted by the moralists who believe any form of gambling is a sin.

"We're a pretty small minority," says Wright. "We don't have a big voice. We need to be louder. But we're talking American politics. One, we know it's going to take longer than it should, they're going to find a way to screw people, and they're probably going to make the taxing situation really complicated."

Brian Mogelefsky grew up on Long Island and joined his dad's mortgage business, Discount Funding Associates, out of high school in the early '90s. It remained a small concern until the 2000s, when they took the business online, hiring 600 people at their peak.

But the mortgage industry was about to implode. By 2006, the Mogelefskys had closed shop.

Until then, poker had been little more than a hobby. Mogelefsky started playing after seeing the Matt Damon-Ed Norton film Rounders and began showing up at house games on Long Island.

But when his company collapsed, Mogelefsky decided to play poker online in earnest for a month, a test to see if it could provide a living. He ended up making $7,000. A new career was born.

His new job offered geographical flexibility. He and his wife began making lists of where they'd like to raise their two kids. They settled on a neighborhood in South Charlotte, North Carolina, where they could halve their cost of living and build their dream home.

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Chris Parker
Contact: Chris Parker