Bitcoin bust: Poker site prompts raid, investigation by Nevada gaming authorities

Courtesy Bryan Micon via Twitter

On Feb. 11, Nevada gaming officials did something they’ve apparently never done before.

The Gaming Control Board has investigated many unlicensed gambling operations in the past, but the poker website it targeted that day was different. For one thing, board officials believe it’s the first time they’ve raided a potentially illegal website (as opposed to a bookmaking scheme, for example).

This particular site, Seals with Clubs, was also unusual because its players gambled with Bitcoin, an alternative currency. Bitcoin is an open-source, digital form of money not backed by any central government that rapidly changes value.

Though regulators are now investigating whether it was operating in Nevada illegally, Seals with Clubs wasn’t some shady site hiding in a dark corner of the Internet. It was visible on social media, and professional poker player Bryan Micon was its public face, based in Las Vegas.

Micon maintains that he did nothing wrong. In fact, he says he’s the one who was wronged — by gun-wielding agents of the state who barged into his home and confiscated his personal property.

“I’m a victim of the unfortunate systemic police state that has taken over the United States,” Micon said in a recent Skype interview from Antigua, where his family had already planned an extended vacation. “I was charged with no crime, yet armed men broke down my door, pointed many guns at me — of course, traumatized my family — and then proceeded to steal all of my good electronics.”

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Micon’s ordeal began shortly before 8 a.m. Feb. 11, which is when he said he was awakened by a noise that sounded like an explosion. He later determined it was a sledgehammer used to break down his front door.

At one point after the raid began, Micon said he had to wait outside, handcuffed, while still in his underwear. The agents took laptops and other electronic equipment from his home, he said. He was afraid, partly of the guns he said were pointed at him, but also in large part for the welfare of his wife and 2-year-old daughter.

Micon was also confused, because he doesn’t see himself as someone who was avoiding the law. In fact, he’s always been very open about his involvement with Seals with Clubs, proudly donning the site logo during poker tournaments for the last few years.

Karl Bennison, chief of the board’s enforcement division, confirmed that the board “took part in law enforcement action” related to Seals with Clubs on Feb. 11, but said he couldn’t discuss details because the investigation is still ongoing.

The board was aware of Micon’s public presence.

“He doesn’t try to keep it secret,” Bennison said when asked how they knew about Micon’s affiliation with the site. “It was almost common knowledge, I would say.”

Deeply shaken by the raid, Micon said he couldn’t stay in his home because “it was constant nightmares” for his family afterward.

They didn’t remain long. Micon’s family was about to embark on a yearlong stay in Antigua — a plan they made “long before (their) door was kicked down,” he said — so they left for that trip shortly after the raid.

In Antigua, a Carribbean island with a reputation for friendliness toward online gaming, Micon has been involved with creating a new version of Seals with Clubs. Called SwC Poker, Micon worked with a team of others from various places to get it up and running last week.

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Nevada gaming law is clear: If you want to provide gambling in the state, regulators need to grant you a license.

In general, possible violations are investigated by the gaming board’s enforcement division, sometimes in tandem with other law enforcement agencies, according to board chairman A.G. Burnett. The local district attorney’s office can choose to prosecute them as criminal cases once the evidence has been gathered, he said.

Seals with Clubs did not get a license. From Micon’s perspective, however, it wasn’t up to him to decide whether the site pursued one.

Micon was referred to as the chairman, but he said he wasn’t the one calling the shots. He said the site was run by a handful of people who chose to remain anonymous, and that the site was started before he became involved with it.

He described his role as a “marketing guy” whose responsibilities did not include managing the site’s operations. The site and its servers weren’t based in Nevada, he said.

Still, the raid on his Las Vegas home was significant enough that Seals with Clubs shut down at about the same time Micon clashed with the gaming board. A message on the site dated Feb. 20 explains that around Feb. 11, “several events occurred related to operational security” leading the site administration to consider Seals with Clubs “in a perpetual state of jeopardy.”

Bitcoin’s defining trait — that it’s not issued by a central bank — doesn’t make it exempt from the law. David Gzesh, a Las Vegas attorney with expertise in Bitcoin and online gaming, said that broadly speaking, a Bitcoin site is subject to the the same laws as any other business.

“Using Bitcoin technology does not generally make any activity more or less legal than it would be otherwise,” he said. Bitcoin isn’t a “get-out-of-jail free card” or a “cloak of invisibility,” Gzesh said, noting that if a site is operating without a required license, it’s doing so illegally, “whether you’ve used Bitcoin or not.”

That said, Gzesh sees a lot of potential for Bitcoin in the gaming industry, and he thinks Nevada regulators will have to consider incorporating the technology at some point. Two downtown casinos agreed to accept Bitcoin last year, but not for gambling.

For now, regulators don’t seem eager to change the status quo. Burnett said Bitcoin proponents have told the board in the past that it could be useful technology, but “it’s just not a currency that we’re going to accept for gaming at this time.”

He doesn’t foresee that changing anytime soon.

In the meantime, Micon said he’s searching for a friendly jurisdiction that might support the new SwC Poker site. Ideally, he said, he’d like to find a “Bitcoin Silicon Valley” that welcomes Bitcoin-based business — perhaps in Antigua, or perhaps somewhere else.

But definitely not in Nevada.