Poker company indictments further cloud legislative debate

By Jon Ralston

Sunday, April 17, 2011 | 2:01 a.m.

On March 10, two apparently unrelated events occurred thousands of miles apart.

In the Southern District of New York, a federal grand jury indicted three leading Web poker companies for laundering billions of dollars through sham companies meant to conceal their true purpose: to circumvent the Unlawful Internet Gambling Enforcement Act. The indictment against PokerStars, Full Tilt and Absolute was sealed.

That same day, in the Northern District of Nevada, Assembly Judiciary Chairman William Horne introduced a bill on behalf of PokerStars designed to circumvent the act by legalizing Web poker in the state. Horne carried the company’s agenda a few months after being hosted by PokerStars in London for two days.

Even in a capital where the sleaze so obviously oozes, where lobbyists and legislators look alike in that “Animal Farm” way, even Orwell would have had trouble conceiving of a story this slippery.

And now, with that indictment unsealed Friday and two major Nevada gaming companies having announced deals with the tarnished Web poker giants, this story has the potential to embarrass many people and darken the cloud over Nevada’s legislative process.

Perhaps the March 10 bill introduction was a coincidence, especially because the PokerStars folks, led by lobbyist and former Assembly Speaker Richard Perkins, were so dismissive of any federal problems, legal or legislative. Indeed, on March 24, in response to a question from freshman Assemblyman Ira Hansen, Perkins assured the committee that PokerStars boss Isai Scheinberg, who had been indicted two weeks earlier, was not wanted by authorities. Perkins told the panel he wanted to remove that “sort of potentially very damaging statement hanging out there,” and Horne closed the hearing by saying despite assertions Internet poker is illegal, nobody has been arrested by the Justice Department.

That statement, as they say, is no longer operative.

This is inescapable: Horne and his pal, Commerce Chairman Kelvin Atkinson, as well as state Senate Majority Leader Steven Horsford, went on trips sponsored by a company that was under federal investigation and has been and is again accused of operating illegally. Not to put too fine a point on it, but the government says the money used to buy plane tickets, meals and who knows what else for those lawmakers was the fruits of a massive, illegal conspiracy.

It would be easy to ridicule Horne and Perkins for saying Friday that the indictments don’t affect their legislation. But in this sense they are correct: The Nevada Resort Association so gutted their original bill that what could pass, unless the cloud of suspicion kills it, essentially does nothing.

How prescient Gov. Brian Sandoval looks now after releasing a letter essentially opposing Horne’s bill: “While there may be some disagreement about the scope of the ban, it is important that we not unintentionally expose the citizens of our state to civil and criminal liability.”

In a sense, Horne is fortunate the Resort Association eviscerated his bill for him because if it had passed in the form PokerStars wanted it, this would look even worse. Imagine that.

It also doesn’t look so hot for Wynn Resorts, coincidentally represented by Perkins, too, which signed a deal March 25 with the online poker behemoth. Or for Station Casinos, which partnered with Full Tilt less than a week later. Both, shockingly, ended those deals Friday.

Both deals were predicated on the federal government legalizing Web poker, which Senate Majority Leader Harry Reid has said should occur first. But the usual industry gymnastics — we hate other kinds of gaming until we think we can profit from them — ensnared both Nevada casino companies as they announced deals, surely unbeknown to them, after the indictments had occurred.

Remember, too, how much worse this looks because of those PokerStars junkets for the lawmakers Perkins arranged — trips Horne and Atkinson went out of their way not to disclose, claiming they had permission from legislative lawyers. How they could believe the public is not entitled to know companies paid for such trips is astonishing. But now that the companies are under indictment, imagine if we did not know what they had done.

Before you conclude I am one of those anti-Web poker zealots, the reverse is true: I used to play online before President George W. Bush signed the Internet Gambling Act, and I wish it were legal.

But this story has little to do with the merits of Internet poker. It is a story of good old-fashioned power politics undone first by greater power politics (the Resort Association, Reid and Sandoval) and now by a scathing indictment with a timeline that should embarrass legislators and gamers alike.

The neutered Horne/Perkins bill may yet pass the Legislature. But from the hosted trips to the bill introduction to the indictment, this does not pass the smell test.

(The indictment and a news release from the Manhattan U.S. attorney are on Ralston’s Flash on LasVegasSun.com.)