The Rise and Fall of Internet Sports Bookie and Poker Pro James Giordano

From Bluff magazine to court, James Giordano was wired for success until Queens prosecutors captured him in their web

The site had some interesting rules, steeped in the curious terminology of the betting world. PlayWithAl.com, for example, banned "syndicated gamblers, steam players, and wiseguys."

Martin Scorsese films have left little question about that last one. A syndicated gambler, on the other hand, is a professional bettor, who might have the resources to hire someone to hang around college campuses for inside information about the school's athletes. A "steam player" closely follows the syndicated gambler and bets as they do.

"These people are outright thieves," Giordano says. "They prey on bookmakers."

James Giordano's poker playing got him into Bluff magazine.
Bluff magazine
James Giordano's poker playing got him into Bluff magazine.
Al Goldstein: “I thought porn wasn’t going to last.”
Newscom
Al Goldstein: “I thought porn wasn’t going to last.”

At one point, Giordano says, he had to fend off a group of Russian computer hackers who made a practice of breaking into servers and holding them for ransom. Employing armies of zombie computers controlled without their owners' knowledge, the hackers would take over servers, change passwords, and lock out a company from its own computers. Then they'd transmit a ransom demand.

In Giordano's case, he says, the thieves got control of three servers before his techs were able to block them out. "It was a nightmare, but we caught them before they could take control," he says. "It never got to the point of a ransom demand."

In 2003, he left St. Maarten and returned to the U.S., settling with his wife in Pinecrest, Florida, in a million-dollar home surrounded by a cream-colored wall, a green patina gate, and 12-foot columns. The Internet gambling business had turned out to be very lucrative indeed.

The couple opened a small office in the town and hired college students to act as customer service and marketing representatives for PlayWithAl.com. The computer servers remained in St. Maarten.

Giordano had been playing poker for years, but now he began competing in big-money Texas Hold 'Em tournaments. Over the years, he has competed against some of the game's biggest names—Phil Hellmuth Jr., Johnny Chan, Mike Matusow, and Jennifer Harman.

Bluff magazine listed Giordano as having won $120,000 between 2005 and 2007. In August 2006, he won first place and $50,000 in a poker tournament at the Bellagio Hotel in Las Vegas.

"At first, I got beat time and time again," he says. "You need patience and timing. It's not the hands you win that make you the money. It's the hands you throw away. If you have a pair of Queens, or an Ace and a King, be prepared to throw them away. It's OK to throw that hand away and win with a pair of eights five hands later."

But as he competed in that tournament at the Bellagio, Giordano was being watched—and not just by poker enthusiasts.

By 2003, around the time that Giordano moved to Florida, Internet gambling had grown from its modest beginnings into a major source of revenue not just for offshore companies, but for the countries where they were located.

A confrontation between those countries and the U.S. was inevitable.

That year, Antigua, where Internet gambling had been legalized, complained that U.S. law was damaging its economy. While American prosecutors denounced online betting as a scourge, some other governments saw it as legitimate international commerce.

Antigua filed a voluminous complaint with the World Trade Organization, which governs international trade through a series of complex treaties.

In 2004, the WTO sided with Antigua, ruling that the U.S. ban violated international treaties, and recommended that the U.S. Congress amend the 1961 Wire Act to allow Internet gambling.

The U.S. appealed, but lost. Most notably, the WTO found that the U.S. could not "invoke a moral defense" to its violation of trade rules because it already allowed a form of electronic gambling: off-track betting on horse racing.

The WTO gave the U.S. a year to comply with its ruling. The U.S. Justice Department came back with an opinion that basically said, "We are in compliance."

In June 2006, Antigua sought a ruling from another WTO panel that the U.S. had not complied. In March 2007, the panel once again ruled against the U.S., which meant that Antigua could now impose trade sanctions against the U.S.

In May 2007, the U.S., on its own, opted to take Internet gambling off its list of services within WTO jurisdiction. In effect, critics said, the U.S. was applying a double standard. It was an unprecedented move.

Other countries jumped on the Antiguan bandwagon, including Macao, Japan, India, Canada, Australia, Costa Rica, and, most ominously, the European Union, which called the U.S. ban "discriminatory." The EU asserted that Internet gambling was worth $14 billion, with the U.S. market about $4 billion of that.

And so, later that year, the WTO ruled that the U.S. had violated international trade rules and was now obliged to pay fines to the aggrieved countries.

The U.S. reached confidential settlements with the EU, Japan, Australia, and Canada in late 2007. In January 2008, Antigua and Costa Rica filed for arbitration before the WTO, and there the dispute sits.

Antigua wanted damages worth $3.4 billion, but in the end, they got only $21 million.

"Basically, they won the battle, but lost the war," says Joe Kelly, a professor of business law at SUNY-Buffalo. "The question remains, though, that if the U.S. doesn't honor their WTO commitment, what would stop some other country from doing the same thing?"

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