Is Online Poker Legal in the US?

Got questions about online poker? You’re not the only one. Ever since the Unlawful Internet Gambling Enforcement Act of 2006, the practise of playing poker online has shifted into something of a grey area in legal terms – not helped by the fact that different laws apply in different states. This is a brief guide covering not just the pros and cons of legalizing online poker, but also quickly delving into its history. Hopefully we’ll answer some of the basic questions you might have regarding the online version of America’s favourite card game, its history and current legal status.

Is online poker legal?

Yes and no – depending on the state in which you reside. Online poker is forbidden unless you live in New Jersey, Nevada or Delaware (and even then, only certain poker sites are legal).

Has online poker ever been legal in the US?

Yes. The first online poker site was launched in 1998, and then the industry started to boom around 2003 following the so-called ‘Moneymaker effect’. Online poker was a multi-billion dollar business; immensely popular with people from all over the states. Chris Moneymaker, champion of the 2003 World Series of Poker event, won his buy-in to the WSOP tournament through an online PokerStars satellite. Americans looked at Chris Moneymaker, the young amateur player with a $2.5 million win, and thought to themselves “why not me?”. In other words, online poker exploded in popularity and numerous online poker sites operated from within the states at this time.

The Federal Wire Act of 1961 was a law pertaining to gambling and which prohibited some forms of betting in the US. It was ruled, however, that online poker was permitted under this law. It wasn’t until 2006 that the Bush administration introduced the Unlawful Internet Gambling Enforcement Act (UIGEA), effectively criminalizing all forms of online gambling – including poker. The act required online gambling companies in the US to take their business elsewhere and to seize operation in the US. These companies were also required to comply with the measures listed in the Act for preventing Americans from unlawfully playing online.

Many of the main online gambling companies did indeed comply – going abroad and giving up their American market (resulting, of course, in huge revenue losses). Other companies, such as PokerStars, remained operational in the states, claiming that the Act did not apply to them as poker was not a real form of gambling.

As such, the US District Court launched a federal case against PokerStars and two other big poker sites that remained operational following the UIGEA. The case is known as United States vs Scheinberg. Not only were the founders of these companies accused of breaking this particular law – they were also charged with bank fraud and money laundering. The day the founders were indicted has since become known in the poker world as ‘Black Friday’.

Between 2011 and 2013, the states of New Jersey, Delaware and Nevada decriminalized online poker thanks to state-level lobbying. The matter of online poker remains a state issue.

What is the punishment for unlawful online gambling?

Providing individual players are not depositing on poker sites with aid of illegal acts such as identify theft or fraud, then they are not typically sought out by law enforcement. Those found to be illegally playing poker online may face a fine. The attention, however, is usually on targeting the online poker operators. Running an unlawful online poker room is a serious crime with serious punishment.

Will online poker become legal in the near future?

There are already talks of legalizing online poker in California and New York. Though there is some strong advocacy for legalizing the game, and many proposed bills waiting to be processed, the past couple of years has seen a lot of stalling. Overall, progress is slow, but poker fans remain hopeful that the online game will become legal in both states very soon.

Many predict this will have an effect on other states’ legislation too, as it could trigger a wave of legalization bills across the US. Right now, it’s too early to say whether that will be the case.

What makes online poker different from other forms of online gambling?

You might be wondering why talks of legalizing online poker does not also extend to other forms of online betting. Poker is unique in the gambling world because of its focus on skill over luck. Though an element of chance plays a strong role in any poker game’s outcome, strategy, odds calculation and psychology are more important when it comes to playing professionally. This is clearly evident when looking at professional players who win consistently, as well as through the fact that artificial intelligence can be programmed to beat humans at the game. The fact that poker can be seen as a ‘skill game’ rather than merely a game of luck is one of the key arguments from those advocating the game’s legalization.

What are the benefits of legalizing online poker?

The most obvious benefit is an economic one. Though online poker is no longer the immensely popular game it was a decade ago, the industry still makes millions of dollars that states could be capitalizing on. Government-imposed taxes and licensing fees for online poker companies would give a boost to the economy.

Secondly, legalizing online poker will allow state or federal governments to better regulate the industry. This will make online poker safer for players, as there will be stronger scam prevention, as well as government verified (ie trusted) sites to choose between. Another possible benefit is the fact that decriminalizing online poker might make some gambling addicts feel more comfortable in seeking help for their problem.

What are the downsides of legalizing online poker?

Many are concerned about online poker addiction, arguing that some people who may never have been interested in playing online poker could start to play following decriminalization, only to develop a serious addiction. Like many forms of gambling, poker can attract undisciplined thrill-seekers who spend too much money on bets. Others may advocate against legalizing online poker simply from a moral standpoint, as gambling is not regarded as something which benefits society. One could argue that money spent on gambling could be put to much better use elsewhere. Indeed, many religions teach us that gambling is an activity fueled by financial greed and self-indulgence.

The USA’s history with online poker is complex – to say the least. Though it is likely that laws surrounding online poker will relax over the next few years, it’s difficult to say exactly what the future holds when it comes to this particular form of internet betting. Clearly, there are both pros and cons of legalizing the game, resulting in divisive standpoints and heated debate amongst lawmakers on both ends.