In the 12 years I’ve written about the gambling industry, I made many contacts at various levels of government including a former DoJ agent from the Clinton administration. The agent has been quite vocal about the methods of the DoJ and knew long before the UIGEA was passed that the legislation was imminent.

“On the list of issues that are important to the Department of Justice, gambling is way down the list,” the DoJ agent told me.

The agent informed me that terrorism, drug trafficking and money laundering are the prime issues of concern for the DoJ and while gambling could be a part of money laundering if it involves organized crime, generally speaking that’s not the case. So when the DoJ arrested David Carruthers, then Peter Dicks and issued the warrants against Gary Kaplan and others in 2006 the former DoJ agent actually wrote to me months before and said “expect some major legislation to come down regarding online gambling in the near future.” Sure enough not long after those arrests the failed vote to stop online gambling and the inevitable passing of the same law by attaching it to the Safe Port Act occurred. The Agent was clear that when sweeps are made by the DoJ it’s almost always at the beckoning of the government and in preparation for a major vote on legislation.

Arrest warrants died down considerably after the passing of the UIGEA but on Black Friday the DoJ were in full force again and shut down the sites of the three main U.S. facing poker sites. As soon as that happened the DoJ agent called me and said that some big legislation was coming our way. “These arrests against Stars and Tilt are obviously directed by government to clean the street before they legalize poker stateside,” the DoJ agent said. And sure enough not long after bills to introduce legalized online poker came forth – both federally and at the state level and shockingly even John Kyl was on board! In the end the legislation never passed but the message had been sent. The DoJ agent also believed it was a message by Eric Holder to the state of Nevada that they’d better not step on Big Brother’s heels (as many will recall numerous land based casinos set up partnerships with online poker companies), but the main motivation behind the actions was to clear the way of hurdles for legislation to be enacted by not having to deal with the online poker sites in competition. In other words, the government wanted all the money made to be kept in the U.S. if the poker legislation passed.

Since then little had happened in the way of arrests, warrants etc. until recently. As many will recall the government made a major sweep in Nevada that eventually saw Cantor Gaming boss Mike Colbert arrested and the eventual ties to Pinnacle Sports and most recently a major sweep has been made to shut down Internet sweepstake cafes across the U.S. For those unfamiliar with the cafes, the owners issue cards which are used to purchase time on the café’s computers. There people play gambling games (apparently for fun) although cash prizes are awarded to individuals who win the most money. It’s clearly a way to skirt the gambling laws although café owners equate it to McDonald’s Monopoly game or similar fast food games where people are given a chance to win major prizes in exchange for buying food items.

“These cafes are small potatoes,” the former DoJ agent recently informed me “so to go after them, Congress must have some major legislation coming forward when they return in 2013.” The fact that the arrests related to casino games (at the cafes) and sports betting seems to indicate that the pending legislation may involve all forms of gambling and not just poker. So Congress may be preparing to address the issues of New Jersey’s challenge of PASPA, and the Native Americans concerns over online casinos along with just poker with a major piece of legislation that will encompass all areas of online gambling and sports betting.

“These arrests don’t just happen for no reason,” the former DoJ agent stated “so something big is about to happen, I’m guessing in February or March.”

And given this agent’s past record I wouldn’t bet against it.

Contact Hartley via email at Hartley[at]osga[dot]com.

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