April 15, 2011: The Day Online Poker Came Crashing Down

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April 15, 2011: The Day Online Poker Came Crashing Down

April 15 marks the 10-year anniversary of what is known in poker circles as Black Friday. On that day, the U.S. Department of Justice unexpectedly — and suddenly — shut down the major online poker websites. Poker has never recovered. This three-part series chronicles the road to Black Friday and the aftermath.

Part 2: Black Friday

Regardless of where poker players were or what they were doing, for those who were active in the game 10 years ago, Black Friday is a shared painful experience. And they can recall it with crystal clarity. Nolan Dalla, poker public relations pro and author, was in Las Vegas driving to Caesars Palace. Avi Rubin, a Johns Hopkins University professor, was signing on to his computer to play poker in Israel.

John Pappas, executive director of the Poker Players Alliance, was celebrating his birthday on a golf course in Virginia, just making the turn after finishing the front nine. Andrew Brokos, an accomplished online and live player, had just gotten a new pair of eyeglasses and was preparing to play online poker that night. For them and the rest of poker, April 15, 2011, was a startling thunderclap.

RELATED: Part 1: Poker was flying high at 2006 WSOP; few saw trouble ahead

UIGEA Set the Stage

After the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, which put online poker in a legal gray area, mostly the poker world kept spinning seemingly undisturbed.

Certainly, there were changes, especially among publicly traded online companies that had to remove themselves from the U.S. marketplace. Attendance at the World Series of Poker Main Event dropped off a bit because Harrah’s/Caesars Entertainment had to distance itself from direct online entries.

However, privately held companies such as PokerStars poker and Full Tilt filled the vacuum left by Party Poker and 888poker, and continued to deal to American players. In the brick-and-mortar environment, the WSOP franchise was expanding domestically through its barnstorming Circuit Series (“12 rings in 12 days”) and even abroad.

Poker was a mainstay on TV, especially featuring the Full Tilt lineup of celebrity players. Plus, there was high-profile lobbying going on in Washington to get poker out of the so-called “gray” legal area with federal legislation championed by Massachusetts U.S. Rep. Barney Frank.

So, for the players, it really was business as usual.

Crossing the Online Payment Line

Unfortunately for the poker universe, Preet Bharara, U.S. attorney for the Southern District of New York, had other ideas. In many ways, UIGEA was a miserable failure, and certainly the efforts of the politicians who pushed for it have gone for naught. For one thing, offshore online sportsbooks — which are explicitly a black gambling market — continue to operate, even thrive, despite UIGEA.

And if those politicians who despised gambling — and they were on both the political left (Nancy Pelosi) and political right (Bill Frist) — thought they could stop the proliferation of online gaming through legislation, practical economics and the will of the people has exposed their folly. But UIGEA did have a certain, important effect that would propel Bharara’s investigation and eventual Black Friday prosecutions.

By requiring financial institutions to tighten the screws on the movement of money between customers and gambling websites, UIGEA forced online poker operators and their payment processing partners to cross a bright line of bank fraud and wire fraud in order to keep the cash flowing.

At Full Tilt, the financial stress created still another kind of violation — a betrayal of their customers’ trust — as that website mingled player accounts with operating funds. The secret financial shell game at Full Tilt that eventually came to light would be likened to a Ponzi scheme.

How Poker Players Found Out

But it was the moment of “finding out” that sticks with the poker community viscerally. The federal indictments were essentially announced in a very 21st century way. When players tried to log on to their favorite poker website, they were greeted with a Department of Justice seal and a stark explainer saying the domains had been seized. Closed down were PokerStars, Full Tilt Poker and Absolute Poker/UB. For the customers, the fate of hundreds of millions of dollars in their accounts was up in the air.

Dalla was on a short workday commute from his home in Las Vegas to Caesars Palace for a WSOP Circuit event when he got the call from WSOP communications colleague Seth Palansky, who filled him in. Players were already assembling in the casino’s poker room, and when Dalla set up his laptop, they were desperate for information.

“Everyone immediately knew this was really, really, really bad,” Dalla said. “People slammed their fist on tables and were saying, ‘Oh, f--k, I've got my whole $60,000 bankroll on Full Tilt right now. What am I going to do?’ Actually, some people had all their actual personal worth on those poker websites and they didn’t know how they would even pay the rent. ‘What am I supposed to do now? Where am I supposed to go?’ You heard that a lot.”

’It Seems Pretty Bad!’

Rubin is a computer science professor at Johns Hopkins University in Baltimore and now even teaches an extremely popular course on poker there. He’s such an aficionado of the game that he has a five-table poker room at home.

In 2011, he was on sabbatical at Tel Aviv University, and while away from friends, poker was his respite.

“I was very much affected by the poker shutdown personally. There weren't a lot of places to play poker in Israel and really nowhere to play legally, so I was playing online for hours every day. And so I was playing poker on Black Friday. I went to my Full Tilt account and I got that (DOJ) notice on the screen,” he said.

In Rubin’s case, he had less than a thousand dollars on Full Tilt, so the financial impact wasn’t severe. But for others, it was substantial.

Brokos, a University of Chicago graduate in philosophy, has been playing poker professionally and tutoring for years. He cashed in the WSOP Main Event five times between 2006 and 2011 and again in 2019.

“I had gone out that day to get glasses and I was typically playing poker in the evenings, that's when the games were best, and I was reading or resting up before I was going to play that evening,” Brokos said. “It was my girlfriend who was on Two-plus-Two (a peer-to-peer online poker forum) and something had come across on Twitter, so all the people were talking about this.

“I didn't fully appreciate the severity of what was happening at the time, I was sort of like, ‘Oh, okay, I'll look into that in a little bit.’ And she’s like — ‘Oh, no! It seems pretty bad!’ ”

Brokos had $60,000 to $80,000 on Full Tilt.

Problems at Full Tilt

The financial calamity at that online poker website was felt for years. While PokerStars repaid its customers within two weeks, the mess at Full Tilt, with the DOJ overseeing, dragged on for years even though PokerStars stepped in as a white knight and essentially bailed out the less dutiful websites.

RELATED: Once Flush With Poker Celebrities, Full Tilt Folds

With poker players unsure whether they’d even get back the millions and millions of dollars on deposit at Full Tilt, the website’s lineup of celebrity players went from being the toast of poker to being loathed overnight, especially Howard Lederer and Chris “Jesus” Ferguson, who were perceived to be among the most influential principals at Full Tilt.

Years later, Brokos confronted Ferguson at a WSOP poker table with Ferguson showing no remorse for the hardship Full Tilt had caused, Brokos said.

Getting Players’ Money Back

Pappas, of the Poker Players Alliance who’s now a prominent online gaming consultant, had been spending the previous years lobbying in Washington D.C., trying to advance the cause of legalizing poker at the federal level.

There was plenty of opposition fueled by moralistic zeal and the cash of online poker opponents, but whenever he brought the star poker players through the halls of the Capitol, congressmen and staffers would seek photos with the celebrities and get their autographs.

“The immediate reaction from our members was anger: ‘Doesn’t the government have enough to do without getting involved in this,’ ” Pappas said. His phone had exploded with the news while he was playing golf. “And then there was this fear that sank in of — ‘How do I get my money back?’

“Our organization made an immediate pivot. We went from lobbying for legalization to advocacy in getting players their money back. We became active in the reimbursement process."

Thereafter, Pappas and Rich Muny, the PPA’s vice president and later president who had thousands of dollars on Full Tilt himself, were active in the reimbursement of players. As mentioned, PokerStars players saw their money quickly, and even though it took years, Full Tilt and even Absolute Poker/UB customers also recovered most of their funds.

’It Really Was Black Friday’

Despite those reimbursements, many others within poker were damaged by Black Friday in ways that were not recoverable.

Todd Anderson, a TV producer who created the Heartland Poker Tour and later Poker Night in America, was sitting in his office in Moorhead on the western edge of Minnesota.

“We had we just signed a sponsorship deal (for the Heartland Poker Tour) with one of the online poker sites. It had taken months of negotiation and we had just finished it maybe a week prior. So we were pretty happy. I think that sponsorship was worth like a half a million dollars a year,” Anderson said.

“So that Friday while I was sitting in my office, the news started pouring in, somebody called me or I got an email. Everyone was like, ‘The world is on fire!’ At first, I didn’t really grasp the magnitude of what it meant. The (poker) sites were locked up and I thought, ‘Well, this is temporary.’ Honestly, immediately, I didn't really grasp the significance of the whole thing. But we lost our sponsorship shortly thereafter, obviously. And it really was Black Friday.”

Friday: Part 3, The Aftermath

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Bill Ordine

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