Families Face Dire Straits After Online Poker Shutdown

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Things had been looking up for Brian Mogelefsky in the weeks preceding “Black Friday.” The bursting of the real estate bubble, which almost overnight sank the mortgage company he ran with his dad, was two years behind him, and he, his wife and two children now felt firmly established in Charlotte, N.C. They had moved there in 2009 to escape the high living costs of Long Island, New York, where Mogelefsky had run his mortgage company.

But, best of all, his dream job was finally paying off -- two years earlier, after careful consultation with his wife, he had become a full-time online poker player.

Not only did his work allow him to spend as much time as he wanted with his two children, but he was now on pace to make $80,000 to $90,000 this year – almost twice as much as he brought home in 2010.

“It’s just like I was finally starting to see the fruits of my labor,” he said referring to years of study and practice.

What happened next has come to be known as "Black Friday" among poker players, and “it came at the worst possible time," Mogelefsky said.

On April 15, the government cracked down on online poker. To most, this simply marked the prohibition of an online pastime. But for a reported tens of thousands of Americans, the day the government indicted the three major U.S. poker Web site operators -- PokerStars, Full Tilt Poker, and Absolute Poker -- on charges of bank fraud and money laundering was indeed an exceedingly bleak one.

The crackdown stripped the players of their primary source of income. For players like Mogelefsky, a young father of two, it brought something still worse – the loss of his family's livelihood.

Mogelefsky says he follows "the same rules that anyone who files as self-employed would." He is part of a community of online poker breadwinners who have been left financially paralyzed in the wake of the shutdown, wondering how they will make ends meet for their loved ones, let alone sustain the lives of relative comfort they and their families have enjoyed until recently.

“If I was single and on my own it would be a lot easier to deal with, or if it was just like a hobby. But it’s my wife and my kids who depended on me – that’s why it really hurts,” Mogelefsky said.

The shutdown has deprived roughly 50,000 full-time online players of a major income source, according to John Pappas, executive director of the Poker Players Alliance, a 1.2 million-member organization that lobbies for a regulated online poker industry. Family providers like Mogelefsky make up a small minority of this group but probably number in the thousands, according to the alliance.

They have joined the ranks of the 13.9 million other Americans currently unemployed, according to the Bureau of Labor Statistics, many of whom owe their misfortune to the financial meltdown.

Players like Mogelefsky not only bemoan the loss of future revenue, they also agonize over whether they will ever receive the thousands of dollars they say are stored in their online poker accounts.

The government seized the website domain names of the three online poker operators and issued a restraining order on some of their bank accounts for allegedly violating the Unlawful Internet Gambling Enforcement Act passed in 2006, which prohibits illegal gambling operations from accepting deposits.

The Department of Justice alleges that the companies sought to avoid detection of transactions by laundering money through websites that sell merchandise like golf balls and even by bribing banks outright.

To the relief of many players, the government has reached deals with PokerStars, Full Tilt Poker and Absolute Poker since the shutdown to restore the companies’ domain names and give assurances to third-party payments processors working with the websites in order “to facilitate” withdrawals of funds, according to press releases from the United States Attorney of the Southern District of New York, which is bringing the charges against the website providers.

But Jamin Stokes, 29, from Grand Rapids, Mich., who supports his wife and three young children through online poker, still hasn’t received any of the money he has stored in his Full Tilt Poker and Absolute Poker accounts.

“There’s a big question mark: Am I ever going to get it back, and if I do, how long is it going to take?” he says.

Full Tilt Poker, which is reported to have liquidity issues, told FoxNews.com in an email “we underestimated the time it would take to work through these issues” and “will update our U.S. players as soon as we have more specific information to provide.” Absolute Poker, which has been marred by past cheating scandals said “the Company still faces several legal issues, which must be navigated before funds can be paid out to U.S. players.”

Stokes and Mogelefsky are aware of the high risks of their profession and know that some question whether the exposure to a livelihood of gambling is a good influence in their children.

“You pretty much know that’s what they’re saying behind your back,” Stokes said.

But Stokes and other players argue that skill, cultivated through years of careful study and low-stakes practice, nearly eliminates risk and point out that financial executives appear to have license to make much riskier gambles with much greater consequences.

Stokes and three poker buddies, recently met over dinner of stuffed mushrooms and and wine, to weigh a career move most players are mulling: relocating abroad. They traveled across the Michigan border to Canada, where online poker is still legal, to do some reconnaissance work.

For others, that is not an option.

“We found a community that we love. We like the school system. We like the people in the community,” says Mogelefsky, who plans to attend the World Series of Poker in Vegas to test his mettle in live games.

He regrets a possible transition to in-person poker: “It also sucks because I will be forced to be away from my wife and kids. I have never been away from them for longer than two days.”