April’s Dark Memory: How “Black Friday” Killed Online Poker in the U.S.
In April, we mark the 14th anniversary of a date etched in infamy in online poker history. Friday, April 15, 2011, is a day the industry recalls with dread. On that date, the founders and executives of PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet were indicted by the DOJ, and a thriving business generating a billion dollars in revenue was, for a time, wiped off the map.
Poker Boom and the “Moneymaker Effect”
Let’s rewind to the early 2000s. Televised poker events like the WSOP (World Series of Poker) fuel the rise of online platforms, ushering in the “poker boom” era in the U.S. WSOP attendance skyrockets (from 839 players in 2003 to 8,773 in 2006), and online poker transforms from a fledgling venture into a massive entertainment industry.
In 2003, Chris Moneymaker wins the WSOP, and his almost fairy-tale story sparks the phenomenon dubbed the “Moneymaker Effect.” Chris became a role model for amateur players, proving that in the internet age, the glass ceiling was gone, and poker was democratizing. This coincided with the golden era of online poker in the U.S.
Riding this wave of democratization, sites like PartyPoker, PokerStars, and Full Tilt Poker began dominating the market. Until 2006, online poker in the U.S. was largely unregulated at the federal level. The 1961 Interstate Wire Act, aimed at sports betting, wasn’t typically enforced against online poker. State laws varied widely, with most lacking specific internet gambling regulations. Online poker thrived in this legal gray zone, capitalizing on lawmakers’ sluggishness. However, the landscape started shifting in 2006.
Online Gambling in Lawmakers’ Crosshairs
On October 13, 2006, the U.S. Congress finally tackled online gambling by passing the Unlawful Internet Gambling Enforcement Act (UIGEA). This law barred gambling businesses from knowingly accepting payments for online gambling deemed illegal under federal or state law. The act primarily targeted payment processing.
Bill sponsor Senator Bill Frist saw it as a way to curb illegal online gambling and close legal loopholes, shrinking the gray zone. The UIGEA sailed through the House of Representatives with a commanding 317-93 vote.
Initially, it seemed to hit the mark, at least partially. Major online operators, including poker giant PartyPoker, opted to suspend U.S. operations. Not everyone complied, though. PokerStars and Full Tilt Poker argued poker was a game of skill, not chance, and thus shouldn’t fall under online gambling rules. Both platforms stayed in the U.S., continuing to offer players access to poker action.
Despite the UIGEA’s enactment, online poker kept booming, hitting its peak in 2010 with an estimated net revenue of $973.3 million. Active player numbers reached roughly 1.43 million.
PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet controlled 95% of this market, pouring hefty sums, up to $200 million annually, into marketing and advertising.
But this golden era was about to face a dramatic, high-profile, and decisive disruption.
The Black Friday
By late 2010, payment processes used by poker sites came under intense scrutiny from the Department of Justice (DOJ), particularly the U.S. Attorney’s Office for the Southern District of New York, led by Preet Bharara. While poker platforms insisted poker was a skill-based game, not gambling, the DOJ disagreed, viewing it as fully subject to UIGEA provisions.
In early 2011, the DOJ began compiling evidence targeting the country’s biggest online poker operators. These efforts culminated on April 15, 2011, a day forever known as “Black Friday.”
That day, the DOJ unsealed indictments against the founders and executives of the largest U.S. online poker sites: PokerStars, Full Tilt Poker, and Absolute Poker/Ultimate Bet. The charges went beyond UIGEA violations, including bank fraud and money laundering.
The domains PokerStars.com, FullTiltPoker.com, AbsolutePoker.com, and UltimateBet.com were seized, and roughly $500 million in player funds were frozen.
“It was a complete shock… It completely annihilated what was a flourishing industry in the United States,” recalled poker agent Brian Balsbaugh.
The sites immediately stopped offering real-money games to U.S. players. Tens of thousands lost access to platforms that, for many, were a primary income source. Overnight, 95% of the market vanished.
Balsbaugh added: “When PokerStars, Full Tilt, and Absolute Poker left the U.S. market, 95 percent of the market share for U.S. poker players absolutely disappeared, along with $200 million worth of marketing and advertising money.”
Big plans and investments evaporated instantly. Ad contracts were canceled, shows like Poker After Dark and The Big Game went off-air, ESPN scrapped the North American Poker Tour, cutting ties with PokerStars, and U.S. player turnout at WSOP plummeted.
For Absolute Poker and Ultimate Bet, the blow was fatal, both filed for bankruptcy within a month. From nearly a billion dollars in revenue, the industry’s income crashed to near zero. Online poker in the U.S. hit rock bottom.
11 Indicted Men
The companies dominating the U.S. market until April 15, 2011, shifted to “save what we can” mode. PokerStars struck a deal with the government, agreeing to pay $547 million. As part of the settlement, it acquired Full Tilt Poker’s assets, enabling the processing of player withdrawals and refunds for Full Tilt customers.
Further investigations revealed Full Tilt Poker owed $150 million to U.S. players alone, with global debts nearly double that. This was a major issue, as the company had just $60 million in cash. Ultimately, it was found that Full Tilt executives, including Raymond Bitar, Howard Lederer, Chris Ferguson, and Rafe Furst, misappropriated $443 million in player funds.
Civil charges against the companies were dropped, but indictments against 11 executives held firm. The case became known as United States v. Scheinberg.
Isai Scheinberg, PokerStars’ founder, surrendered to authorities in New York in January 2020. He pleaded guilty to one bank fraud charge, receiving a $30,000 fine. The court considered his post-Black Friday efforts with Full Tilt.
The court wasn’t as lenient with Brent Buckley, Absolute Poker’s owner, sentenced in 2012 to 14 months in prison for deceiving banks. John Campos, co-owner and vice president of SunFirst Bank, tied to Absolute Poker, got three months behind bars.
Ira Rubin, involved in poker platform payment processing, faced the harshest penalty. Arrested in Guatemala just 10 days after Black Friday, he pleaded guilty to three of nine charges and was sentenced to three years in prison.
Most of the 11 indicted faced industry ostracism. Yet, this didn’t stop Full Tilt’s Chris Ferguson from winning WSOP Player of the Year in 2017.
Online Poker’s Rescue Mission
The online poker space took a massive hit in 2011, with the industry gutted overnight. Fourteen years later, it’s clear online poker survived, though it’s far from its pre-Black Friday glory.
In 2011, the DOJ issued a legal opinion clarifying that the 1961 Wire Act applied only to sports betting, not other online gambling like poker or casino games. This opened the door for state-level regulation.
In 2013, Nevada, Delaware, and New Jersey became the first states to legalize online poker. A year later, Nevada and Delaware signed the Multi-State Internet Gaming Agreement (MSIGA) to pool players, offering a taste of the access players once had.
Four years later, Pennsylvania joined the legal online poker fold, followed by West Virginia in 2019, and Michigan and Connecticut in 2021. Rhode Island became the latest addition last year.
As for MSIGA’s growth, Pennsylvania joined New Jersey, Nevada, Delaware, West Virginia, and Michigan last week, a major step given the state’s potential. Still, player sentiment remains gloomy. With no progress on legalizing online poker in more states, the industry’s unlikely to reclaim its former shine soon.
Compared to the rapid growth of online sports betting, casinos, or products like prediction markets and sweepstakes casinos, poker’s potential is bigger than ever. The handful of states with legal online poker now generate about $389 million, roughly 40% of Black Friday’s peak. But there’s no spark, like the early-2000s Moneymaker Effect, to reignite an online poker boom.
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