Can Someone Explain Dikshit To Me?

We online poker players all read the news yesterday about PartyGaming co-founder Anurag Dikshit having agreed to some sort of plea bargain with the U.S. Department of Justice to the tune of $300 million.

As we all usually do when reading about Mr. Dikshit, we paused briefly over his last name, mentally mispronouncing it. (I believe it is pronounced “dix-it.”)

Then, if we were American, we probably moved on with our lives rather quickly, as none of us have played a hand on PartyPoker since October 2006. So what if Dikshit is pleading guilty to something or another? What does it have to do with us?

To be honest, I’m not sure. But perhaps quite a lot.

The plea bargain concerns PartyGaming’s having violated 1961 Interstate Wire Act, also sometimes referred to as the Federal Wire Act. That’s the law that makes it illegal for businesses to use “a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers.” The law specifically mentions sports betting, and indeed, when it was first passed, its prime purpose was to stop folks living outside of Nevada from calling in their bets to the Vegas sportsbooks.

Over the years, there have been a couple of hotly-contested debates over the reach of the Federal Wire Act. One debate concerns whether or not it covers non-sports betting types of gambling. The other debate concerns the internet and whether or not the Wire Act also applies to “bets or wagers” made online.

Neither of these debates has been resolved. Not really. There was a case earlier this decade in which the 5th Circuit Court of Appeals ruled the Federal Wire Act only covered gambling on sports. But that only applies to the part of the country covered by the 5th Circuit (just one of the 11 numbered circuits, plus the D.C. Circuit and the Federal one). There has been no federal or nationwide ruling to settle the matter.

In any event, whenever the issue has arisen, the U.S. Department of Justice has consistently maintained that it believes (a) the Wire Act includes all forms of gambling (not just sports betting), and (b) the Wire Act also applies to online gambling, i.e., the internet can be regarded as a “wire communication facility” (even if there ain’t no wires).

Whether or not poker is to be considered “gambling” is yet another issue -- also unresolved -- although I think it is safe to say the DOJ believes poker is covered here, too.

All of which brings us back to Mr. Dikshit, who pleaded guilty to having violated the Federal Wire Act and as a result is now paying that $300 million fine (in three installments). He also apparently still faces the possibility of prison time, although his sentencing date has been deferred. Meanwhile, as Haley Hintze reports over on PokerNews, Dikshit has “pledged to help U.S. authorities with other, ongoing investigations.” It appears that such cooperation will help Dikshit avoid any jail time.

Russ Fox, a tax expert and poker author, has opined that the news about Dikshit’s plea is perhaps quite grim, not just for PartyGaming, but for online poker, generally speaking.

On Monday, Fox wrote on his blog that “If he [Dikshit] says that offering poker is illegal under the Wire Act then this is horrible news.” Why? Because “The DOJ will then have a founder of an online poker site saying that he knew that offering online poker was illegal. It’s important to note that whether or not it really is illegal under the Wire Act is irrelevant -- it’s the perception that counts.”

Details of Dikshit’s plea bargain were released this morning, and it appears that yes, indeed, Dikshit specifically mentioned poker as part of his admission of guilt. According to an article over on the eGaming Review website this morning, Dikshit “pleaded guilty in New York yesterday to charges under the Wire Act and to operating an ‘internet gambling business which offered casino and poker games, among other games of chance, to customers’ in the US from around 1997 to October 2006 and to using communications ‘wires to transmit bets and wagering information in interstate commerce.’”

Could this plea bargain be part of a ploy on the Party’s part to drive other online poker sites out of the U.S. market (a development that would be quite positive, of course, for PartyGaming)? Might this story indeed be a prelude to PokerStars, Full Tilt Poker, and other sites being found in violation of the Federal Wire Act? In other words, are our favorite sites now the target of those “other, ongoing investigations”? Could it be that while we were all fretting over the Unlawful Internet Gambling Enforcement Act, it was that decades-old Wire Act that reared up and caught us unawares?

You tell me.