If you’ve ever considered trying online poker, you might have found yourself confused over its exact legal status in the US. There has long been a degree of ambiguity surrounding the game, not helped by the fact that gambling laws differ from state to state – as does the definition of what constitutes as ‘gambling’. Online poker in the US can best be described as existing in a state of limbo right now – however a brief history which brings us up to speed with ongoing legal debate should help clarify matters somewhat.
The first ever real-money online poker room went by the name Planet Poker and launched as early as 1998. Despite the technical difficulties and unreliable connections that the age of dial-up Internet presented to players, the card room very quickly amassed a considerable following. The next five years saw online poker gain momentum, with several other online poker rooms opening up elsewhere. However it wasn’t until 2003 that the so-called ‘poker boom’ really took the US by storm. This was the year an amateur player named Chris Moneymaker entered into a PokerStars online tournament which subsequently saw him win an entry to the annual World Series of Poker (WSOP) tournament in Vegas. Unlike online poker at the time, the WSOP was a well-established and decades-old live tournament for high-stake players. Moneymaker made it to the very end, winning the championship and $2.5 million dollars along with the title. His story became the subject of sensationalized headlines that extended beyond the poker community and into mainstream media. Suddenly, everyone wanted to play online poker.
Business was booming, and the online poker industry grew more lucrative with each day. By 2005, the industry revenue was valued at $2.4 billion. Despite its profitability, the Bush administration passed the Unlawful Internet Gambling Enforcement Act (UIGEA) which criminalized all forms of online gambling. Some poker operators, such as PartyPoker, left the US as a result. Others, including today’s predominant operator PokerStars, stayed in the US market under the pretense that the UIGEA’s criminalization of online gambling did not apply to online poker as poker was a game of skill and not luck.
On the 15th of April 2011 – a day that has since become known as ‘Black Friday’ – the US Supreme Court launched a case against the three major poker room operators at the time; PokerStars, FullTiltPoker and Cereus. In United States vs Scheinberg, these operators were indicted with having violated the UIGEA, as well as accused of money laundering and fraud. The Department of Justice suspended the operators’ sites and seized several of their bank accounts. It was a sudden and brutal end to the online poker boom in the US, and sent a clear message that the UIGEA was to be strictly enforced going forward. PokerStars and FullTiltPoker relocated elsewhere, whilst Cereus and many other operators went bust.
Black Friday changed everything – it was a huge hit to the online poker industry from which many operators are still recovering. As of now, most major online poker rooms are licensed in countries such as Gibraltar, Malta and the Isle of Man. Other countries have legalized online poker rooms providing the operator is located within the country and not offshore, however many licenses also permit operators to operate their poker rooms overseas. Typically, individual players are not prosecuted for playing online poker (with the exception of Cyprus, Poland, North Korea, United Arab Emirates, Singapore, Brunei and Cambodia), as most governments instead focus on going after the illegal and rogue operators. Gambling laws are become increasingly lenient all over the world, however, with Russia and even some Asian states appearing to be on the verge of legalizing online poker. Just six years after Black Friday, the US is currently undergoing similar shifts in legislation.
As of 2013, a handful of legal and regulated online poker rooms are permitted to operate within the states Delaware, Nevada and New Jersey. The last couple of years have seen Pennsylvania and California look to pass bills that would legalize online poker in their states, too. It is worth noting, however, that the Californian bill would see mega brand PokerStars banned from operating in the US in what one might describe as a punishment for its unlawful presence in the US for five years following the UIGEA. The implications of legalization in California are particularly significant, as the state’s large population and political influence means the financial and cultural effects of legalisation will be more impactful than that of the effects thus far observed in Delaware, Nevada and New Jersey. California’s legalisation of online poker could consequently have a far-spanning influence on the rest of the US, with other state legislators feeling more compelled to act. The main group now focused on congressional lobbying for the rights of online poker players is known as the Poker Player Alliance. They advocate the economic benefits of legalizing poker, and point to the existing statistic-based evidence that suggests poker is a game of skill more so than of luck. They also highlight the cultural value poker has played throughout US history, arguing that people should have a right to choose for themselves on the matter of online gambling.
So what would legalized online poker mean for the US? Firstly, it would capitalize on a market that is clearly lucrative. Despite being illegal in all but three states, an estimated 40 million Americans play online poker regularly. It is estimated that one in every four dollars gambled is done so through online poker. Regulating and taxing the industry could also make it easier for authorities to protect players against fraud, scams and addiction. Most definitely the legalisation will attract more players as operators are able to move to, and market more freely on, US soil. Who knows – maybe a second poker boom is just around the corner?