If you believe what you read on TwoPlusTwo and various other blogs (for example, Bill Rini's), it's been a good week for online poker with today's legislative hearing, and the boost to Ron Paul's candidacy. If only that were the case.

It's actually been another bad week for online poker. Here are the items that have been announced this week, and I'll explain why I think they're bad:

1. FBI Posts News Release that Online Gambling is Illegal;


2. Party Gaming in Negotiations with DOJ;


3. 888 in Negotiations with DOJ;


4. Legislation Reality;


5. Ron Paul Reality.

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Let's start with the FBI. On June 6th, the FBI released a press release titled, "Online Gambling: Don't Roll the Dice." Individuals on TwoPlusTwo dismissed the press release as "not true" and "out to scare everyone." Let's look at the release and note some key points missed on TwoPlusTwo.

Leslie Bryant, head of the Cyber Crime Fraud unit at the FBI, stated, "You can go to Vegas. You can go to Atlantic City. You can go to a racetrack. You can go to those places and gamble legally. But don’t do it online. It’s against the law." The press release stated, "That means: ...No placing cyber bets on sporting events or in virtual card games; ...No transferring money electronically for gambling; ...No wagers in offshore Internet casinos even if you live in the U.S."

Now, online sports betting is clearly illegal under the Wire Act. Like it or not, the FBI is completely justified in going after every sports betting operation. Online poker is a bit hazier as the Wire Act has been ruled by one Appeals Court to not apply. But the FBI could use other laws, such as the Travel Act and the UIGEA. Indeed, the release noted,

"FYI, here are the primary federal laws that govern online gambling:

• Unlawful Internet Gambling Enforcement Act of 2006
• Transmission of wagering, betting by use of a wire communication
• Broadcasting lottery information
• Fraud by wire
• Mail fraud: Attempt and Conspiracy"

The release also noted that, "We're going after the people making the money--the owners of these virtual casinos, gaming rooms, and off-track betting parlors...We currently have about a dozen of these cases in motion." Now, I'm aware of three cases in the court system. That means that there are roughly nine others in progress.

It may be a few weeks or months, but I expect the FBI to attack online poker.

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PartyGaming is in negotiations with the DOJ. There are a few nuggets in the Forbes article that you may have missed. "PartyGaming said it initiated the talks with the DOJ, because US law enforcement agencies had taken action on other online gambling firms who had accepted bets from American customers before the new bill, and it was now responding to a request for information." [emphasis added]

Let's make the reasonable assumption that the DOJ sent information requests to all of the major online poker sites, and that Party & 888 (see below) responded, and the other sites didn't. Who might the DOJ target? While negotiations are ongoing with Party & 888, I doubt they would be targeted.

And don't kid yourself--the DOJ can make life miserable for the other sites, and they can go after the payment transferring companies. Whether they choose to or not is another question, but assume that Party tells the DOJ all about companies such as EPassporte, and all of the check processing firms used by the industry. Might they not get a subpoena?

Sure, Party is doing this for their own interests. But I think one of their interests is to cause problems for the firms left in the U.S. and I think they can and will do this.

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888 Holdings PLC is also in talks with the DOJ. For the same reasons as with PartyGaming, this is not good news.

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Legislation Reality Check. I agree that it's good news that legislation has been introduced that would make online poker a skill game. However, anyone who really thinks this legislation has a chance this year in the House has his head in the sand. And it has no chance in the Senate. It will take years for online poker to be legalized (and I do think that will happen...in five to ten years). Anyone who thinks President Bush would sign legalization legislation should be ready to buy the bridge I have for sale.

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Ron Paul. Forget him. Yes, he's a friend of online poker, but he has no chance of being nominated and has already been cut from several polls. For a realistic look at who will be nominated by the GOP, take a look at the polls that don't include Paul. The GOP nominee will be Romney, Giuliani, or Fred Thompson (unless there's not a decided nominee by the convention, in which case someone like Huckabee might sneak in). McCain is done (and will probably quit the race by the end of summer). As for the Democrats, the nominee will be one of the big three: Edwards, Hilary, or Obama. I think Hilary will be the nominee (but Edwards wouldn't surprise me). For the GOP, I think Romney will get the nod.

As for the likely nominees, I doubt that any of them support online gambling. Certainly not Edwards or Hilary (they are both nanny-staters). On the GOP side, it's possible Giuliani might support online gambling. However, Fred Thompson is a southern Conservative (and that's not positive for online gambling), and I doubt Romney is an online gambling supporter given the tenants of his religion.

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So all-in-all it's been another bad week for online gambling. But at least the Cubs are winning...so maybe the curse of my watching them on television is over (Alfonso Soriano has just hit his second homer of the game, and the Cubs are up 3 - 0).