Online Poker Black Friday: The 2011 Federal Case Explained

Online poker’s “Black Friday” was the April 15, 2011 announcement by federal prosecutors in Manhattan that they had charged eleven people connected to the three largest online poker companies serving U.S. players, filed a civil forfeiture and money laundering complaint, restrained more than 75 bank accounts and seized five domain names. The charges rested on existing federal statutes, chiefly the Unlawful Internet Gambling Enforcement Act and the Illegal Gambling Business Act, together with bank fraud and money laundering. They were allegations when announced, and the companies later resolved the civil case through settlements that were not admissions of wrongdoing.

This article explains what the government alleged, which laws were involved, how the cases ended as of October 2026, and what the episode did and did not change. It describes a historical legal event in general terms. It is not a guide to what any person may lawfully do today, which depends on state law and is the subject of other USGamingLaw articles.

The Federal Laws Behind the Charges

Two statutes sat at the center of the case. The Unlawful Internet Gambling Enforcement Act, enacted on October 13, 2006, made it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling,” according to the prosecutors’ April 2011 press release. The statute is explained in what the Unlawful Internet Gambling Enforcement Act does.

The second was the Illegal Gambling Business Act, codified at 18 U.S.C. § 1955. It reaches a gambling business that violates the law of the state in which it operates, involves five or more people who run or finance it, and has operated for more than thirty days or has gross revenue of $2,000 in a single day. The state-law link matters: the federal offense depends on a violation of state law, so it does not by itself declare any form of gambling illegal nationwide.

The same section also allows property used in violation of the statute to be seized and forfeited to the United States. That forfeiture power explains why the case combined a criminal indictment with a civil action against bank accounts, domain names and assets. The Wire Act, a different federal statute, was not the headline of the 2011 charges, though its scope is a separate and long-running question covered in what the Wire Act covers.

What the Government Alleged on April 15, 2011

The Southern District of New York announced an indictment charging eleven defendants, including the founders of PokerStars, Full Tilt Poker and Absolute Poker, with bank fraud, money laundering and illegal gambling offenses. The United States also filed a civil complaint seeking forfeiture and money laundering penalties against the companies, their assets and the assets of several payment processors, and obtained restraining orders against more than 75 bank accounts.

The central allegation concerned payments. According to the indictment as described in the press release, the companies disguised money from U.S. players as payments to hundreds of non-existent online merchants selling items such as jewelry and golf balls, because U.S. banks were largely unwilling to process poker transactions. The release also alleged that, after banks shut down some of those accounts, the companies and their processors persuaded a few small banks facing financial difficulty to process poker payments in return for investments.

U.S. Attorney Preet Bharara framed the case in these words: “Foreign firms that choose to operate in the United States are not free to flout the laws they don’t like simply because they can’t bear to be parted from their profits.” Those were prosecutors’ allegations, announced at the start of the case and not findings by a court.

Later filings added a separate claim about Full Tilt. According to a 2013 Justice Department release describing the amended complaint, Full Tilt allegedly told the public that player funds were safe and available for withdrawal, when it did not hold enough money to repay all players and used player funds to finance more than $400 million in dividend payments to its owners. That fraud claim concerned Full Tilt specifically and was not made against the other two companies in the same way.

How the Cases Were Resolved

The civil case ended in settlements. On July 31, 2012, the Justice Department announced a $731 million settlement involving PokerStars and Full Tilt Poker, approved by Judge Leonard B. Sand. Full Tilt agreed to forfeit virtually all of its assets. PokerStars agreed to forfeit $547 million, to make available about $184 million owed by Full Tilt to non-U.S. players, and to acquire the forfeited Full Tilt assets from the government on payment of $225 million.

The release said the settlements did “not constitute admissions of any wrongdoing, culpability, liability, or guilt.” It also recorded a term that remains legally interesting: “PokerStars is prohibited from offering online poker in the U.S. for real money unless and until it is legal to do so under U.S. law.” Absolute Poker and Ultimate Bet reached a separate settlement under which they agreed to forfeit their assets, also without admitting wrongdoing.

For players, the outcomes differed. A 2012 release noted that PokerStars had earlier settled accounts with U.S. players under an April 20, 2011 domain-name use agreement. For Full Tilt’s U.S. players, the Justice Department announced in March 2013 that it had retained the Garden City Group as claims administrator to process petitions for remission paid from the forfeited PokerStars funds.

The criminal cases moved more slowly. Bloomberg reported that when Isai Scheinberg, the PokerStars founder, pleaded guilty in March 2020, the other defendants had already pleaded guilty and been sentenced. According to iGB, he was sentenced in September 2020 to time served and a $30,000 fine for running an illegal gambling business, with the bank fraud and money laundering charges dropped as part of his plea.

What Changed and What Remains Open

The most important point is what did not change: Congress passed no new statute because of the case, and the prosecutors relied on laws already in force. What changed was practical. Five domain names used by the companies were seized, and the Justice Department’s settlements barred PokerStars from offering real-money poker in the United States unless and until it became legal.

A separate development concerned the Wire Act. A Justice Department Office of Legal Counsel opinion dated September 20, 2011 concluded that interstate wire transmissions not relating to a “sporting event or contest” fall outside the Wire Act, in the context of state lottery proposals. How far that reading extends to other forms of online gambling has been contested in later years, as explained in the Wire Act article linked above.

A second open question concerns the underlying legality of online poker. Reports of the 2020 sentencing hearing from Inner City Press and PokerTube describe a prosecutor acknowledging that online poker was not explicitly illegal under federal law, while noting that it was illegal under the laws of several states, including New York. Because the Illegal Gambling Business Act depends on state law, the state-by-state picture drives the federal analysis. As of October 2026, how states license online poker is covered in is online poker legal in the US and in how the Multi-State Internet Gaming Agreement works.

Common Misconceptions About Black Friday

One misconception is that Black Friday made online poker illegal in the United States. The 2011 action enforced statutes that already existed, and the federal gambling business offense turns on state law, so it was not a new nationwide ban.

A second is that the three companies were accused of the same thing. The allegations differed by company: all three faced payment-processing and gambling charges, while the claim that player funds were used for owner dividends was directed at Full Tilt.

A third is that the settlements were confessions. The Justice Department release states that the settlements with PokerStars and Full Tilt, and the proposed Absolute Poker settlement, were not admissions of wrongdoing, so a settlement is not a court finding of liability.

A fourth is that every defendant went to prison. As reported, Scheinberg, the last of the eleven to resolve his case, received a sentence of time served and a fine, so outcomes varied among individual defendants, and this article does not describe each one.

What This Means for Readers

For readers trying to understand online poker law, the 2011 case is best read as history, with the current state licensing picture covered in separate articles. The primary sources are the Southern District of New York’s press releases and the court filings in United States v. PokerStars, which remain the most reliable account of what was alleged and agreed.

The current legal position of any form of online poker depends on the state, so the relevant statute and the state’s gaming regulator are the authoritative sources. Anyone with a question about their own situation should consult a licensed attorney in their state, because this article describes a historical federal case in general terms and does not apply it to any individual.

Related Laws and Next Reading

Readers who want the statutory background can start with what the Unlawful Internet Gambling Enforcement Act does, which explains the payment-processing rules at the heart of the case. The state licensing side of online poker is covered in the two online poker articles linked above, which pick up where the federal story leaves off. Together, they show how a federal enforcement action and state licensing developed side by side.

Sources & References

• U.S. Attorney’s Office, Southern District of New York — Charges against principals of three largest internet poker companies (April 15, 2011)
• U.S. Attorney’s Office, Southern District of New York — $731 million settlement with PokerStars and Full Tilt Poker (July 31, 2012)
• U.S. Attorney’s Office, Southern District of New York — Garden City Group appointed claims administrator (March 13, 2013)
• U.S. Attorney’s Office, Southern District of New York — United States v. PokerStars et al., Full Tilt Poker information
• U.S. District Court, S.D.N.Y. — Stipulation and Order of Settlement, Absolute Poker Group (via Justia)
• Cornell Legal Information Institute — 18 U.S.C. § 1955, Prohibition of illegal gambling businesses
• Department of Justice Office of Legal Counsel — Whether proposals by Illinois and New York to sell lottery tickets violate the Wire Act (September 20, 2011)
• Bloomberg — PokerStars founder pleads guilty to illegal online gambling (March 25, 2020)
• iGB — Isai Scheinberg escapes with fine for illegal gambling (September 24, 2020)
• Inner City Press — Isai Scheinberg gets time served and $30,000 fine (September 23, 2020)
• PokerTube — Isai Scheinberg sentenced to time served in Black Friday judgment (September 25, 2020)