Online Poker Kings Get Cashed Out

Killing livelihoods and a $2.5 billion industry, the feds attack Internet gambling

There's also the question of why conservatives like Frist and Kyl would push a law so lush with the dreaded nanny-state overtones. "I believe in a smaller, more conservative role for government than telling me which card games I can play on my computer," Fritz says.

Frist declined to comment on his motives. Kyl didn't respond to repeated interview requests.

Most players cynically dismiss the senators' move as a strong-arm play. The feds want their protection money—i.e., taxes—and won't let the ride continue until someone pays. But because the government moves in slow motion, it has left a multibillion-dollar industry to rot from atrophy. Any remedy will likely take years.

Before the government crackdown on online gambling, Maxwell Fritz made $100,000 over 18 months of playing—all while still attending Princeton.
Photograph by Will Rice
Before the government crackdown on online gambling, Maxwell Fritz made $100,000 over 18 months of playing—all while still attending Princeton.
Vanessa Peng moved to Canada to gamble online after it became illegal in the States.
Courtesy of Vanessa Peng
Vanessa Peng moved to Canada to gamble online after it became illegal in the States.

"It's really frustrating to me," LaTour says. "It just seems they weren't seeing any of that money that was going out there, so they want to set it up, so they can tax it. But the longer this takes, the more there will be people like me who just give up on it and move on with our lives to find another way of making a living. I've pretty much stopped waiting around."

A solution seems rather simple: Because everything is handled electronically, Internet poker offers the possibility of instant taxation of winnings. And the feds could easily force sites operating in the U.S. to pay American taxes for the privilege of doing business here.

Yet the mom-and-pop poker enthusiast doesn't employ a battery of lobbyists on Capitol Hill. And even if she did, she'd still be confronted by the moralists who believe any form of gambling is a sin.

"We're a pretty small minority," Wright says. "We don't have a big voice. We need to be louder. But we're talking American politics. One, we know it's going to take longer than it should, they're going to find a way to screw people, and they're probably going to make the taxing situation really complicated."

Brian Mogelefsky grew up on Long Island and joined his dad's mortgage business, Discount Funding Associates, out of high school in the early '90s. It remained a small concern until the 2000s, when they took the business online, hiring 600 people at their peak.

But the mortgage industry was about to implode. By 2006, the Mogelefskys had closed shop.

Until then, poker had been little more than a hobby. Mogelefsky started playing after seeing the Matt DamonEd Norton film Rounders and began showing up at house games on Long Island.

But when his company collapsed, Mogelefsky decided to play poker online for a month in earnest, a test to see if it could provide a living. He ended up making $7,000. A new career was born.

His new job offered geographical flexibility. He and his wife began making lists of where they'd like to raise their two kids. They settled on a perfect neighborhood in south Charlotte, North Carolina, where they could halve their cost of living and build their dream home.

"I want to be here when my kids grow up," Mogelefsky says. "For the things I wanted to accomplish, it was worth it to make the sacrifices. Even today, I don't really want to play poker for a living, but I sort of backed into it, and it allowed the lifestyle and things that were important to me. . . . It was going great until April 15."

Mogelefsky had the best week of his life just before Black Friday, earning more than $15,000. He generally never let his Full Tilt account rise above $10,000 before withdrawing the money. But by that time, the company was already experiencing financial problems.

Full Tilt refused a withdrawal at the beginning of April. By the time the feds seized its assets 15 days later, Mogelefsky had $28,000 in his account. It was now frozen.

"I know how to pick them," Mogelefsky says, laughing ruefully. "I went from the mortgage industry to the poker industry, the two biggest collapses of the last 10 years. . . . I was in shock. Not only am I not able to produce more money, but the money I basically earned the last three months is also gone."

The closest casino to his home is Harrah's Cherokee, three hours away in the middle of Great Smoky Mountains National Park. But it doesn't offer enough action to make a living. So Mogelefsky began flying to Florida, crashing at his in-laws' place in Fort Lauderdale, and playing the poker rooms at dog tracks and Indian casinos. The competition isn't particularly tough, but the pots are small, and he can't churn the hands that he could online.

Still, with a family of four to feed, he has no other choice but to gut it out.

"It's hard because my expenses are through the roof, just from traveling, and then I have to eat. All the gas, all the extra costs, and I'm not able to put in nearly as many hours, and now I'm away from my family all the time."

Like most players, Mogelefsky has no illusions about the government riding to the rescue. The feds might have crushed a $2.5 billion industry, but they seem to have no idea how to resurrect it in a more palatable form. Nor do they seem to acknowledge all the families they've cast adrift.

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19 comments
leillin.travertski
leillin.travertski

Who knew that one could make poker online a steady full time job.  At least wright was able to use his skill and earn a decent living.  

-Ms.Leillin

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meruja owo

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Play online casino
Play online casino

One of my friends has made the $836 on just the two days that's why Online Poker is the booming game for them who are contributing for making money at there.

AA
AA

Payo Pow, You are a fool. There is a world of difference between probabilities and "fixes", and it's people like you that effectively pay out to those who understand it.

I suppose you could call that a fix, or alternatively a wealth transfer from the stupid to the clever.

Payo Pow
Payo Pow

Everyone know's that Poker it's a fix game. However, ppl should have the right to throw away the few pennies they might have in their bank account even if its through gambling.

Uu
Uu

Stop the insanity. Let people and businesses transact business. And online gambling is a business.

twolaneflash
twolaneflash

Gambling is not a business, it's a drug, just as deadly as meth to some people. There's a good reason its called "Lost Wages", NV - they didn't build those gambling palaces on winners! Online gambling is just main-lining the drug directly to the brain, eliminating the competition for the addicts' money from the travel industry, hotel and restaurant businesses, and tourism-related benefactors of people seeking their fix, often at the expense of family and others. I'm glad Congress made a stand. Want your drug? Go to the desert.

missing_poker
missing_poker

Online poker is an entertainment option for many just as going to the movies. Whether someone chooses to blow $20 at @ the cineplex or online (with the chance of winning or breaking even) should be person preference. 90% of online players were casual player at .05-.10 or lower stakes.

This is very much a personal liberty issue.

Twiz1986
Twiz1986

This is a terrific article that highlights the rise and fall of online poker in America. The truth is this is just another example of what a joke it is to call America "the land of the free". We pretend to live in the worlds greatest democracy but ever since Sept. 11, 2001 we've allowed our government to seize more and more control of our rights and freedoms.It's happened slowly over time so most of us don't even bat an eye when we are violated at an airport or our television shows are censured. When you look at why our economy has struggled over the last decade and we don't have the spirit and drive we use to because we are now being controlled by the wealthy few who have the power, money and influence to mold our country in a way that benefits only their agenda. Until we as citizens stand up and demand that our freedom and liberty be returned to us we shouldn't be surprised that stories like these will continue to occur in the so called land of the free! Until we wake up with our eyes wide open there will continue to be an assault on the truths that we use to associate with being an American. Finally to Gospace's comments below, you are absolutely right that this article doesn't highlight the millions of dollars lost and the families effected by online poker but couldn't you say the same about casino gaming, drug addiction, criminals?? How can take away the freedoms of all to protect those who can't control themselves. If the people you speak of can't handle their gaming addiction shouldn't they take responsibility for their own actions? Is online gaming responsible for their losses? Were they forced to play? Where do we draw the line? If you are old enough to be sent to foreign lands to fight for this country then you should be old enough to decide if you want to participate in online gaming and old enough to know when to stop.

Gospace
Gospace

Great job of showing the gambling success stories. But-and this is a big but- unlike retailing, trading, producing, farming, where value is added and wealth is produced, gambling is a zero-sum game- and less. For teh casino/online-poker/whoever operator skims a profit off the top. Money does indeed exchange hands, but no value is added, nothing is produced.

Where's the article showing all the people who have lost heir houses, their jobs, their wives and kids because they lost all their money to easy access gambling? That;s the flip side of the story.

BustyVeronica213
BustyVeronica213

my roomate's sister brought home $19257 last week. she is making an income on the computer and got a $313300 house. All she did was get lucky and put into use the advice reported on this site www.CashMany. com

Marine52
Marine52

Disgusting that even the Commies in northern Korea and mainland China could gamble online while former soldiers like me have to shepherd bigasses in gated communities.

Mormovies
Mormovies

Our country sucks!! More freedom, not less!! Vote all the bastards out of office now!!!

Sheryl J
Sheryl J

Thanks for this informative article about online poker and what the government did to it. An entire industry was destroyed last year. This is the first article that really illustrates the situation. We need federal legislation that licenses and regulates online poker in the U.S. and brings back an industry.

mysue20
mysue20

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http://cashhuge.com

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Davidseawa
Davidseawa

It's poker, moron. You don't play against the house, you play against other people.

David
David

The people that are complaining are the people jealous !!! I understand you envy us...We are in our PJ's with no boss in front of our computers playing Poker and making more money then you . I understand ... I'm home more with my wife and kids.Your out working 40 + a week and probably working weekends. I'm sorry your mad about ONLINE POKER ! It's a skilled game, remember that ! Stop crying and let it be. There's more and bigger things in the world to worry about .

 
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