Online Poker Legislation in the US
There is a significant amount of confusion about whether online poker in the US is legal or not. This confusion has not been helped by some sites referring to offshore poker sites as “illegal”, when in fact they are regulated and licensed – only not by authorities in the USA.
This article aims to clear up the myths about online poker legislation in the United States and provide an accurate view of the current rules and regulations. As some of these rules and regulations vary according to individual jurisdictions, we have also included a series of state-by-state guides which we aim to keep updated as changes occur.
Is it Legal to Play Poker Online in the United States?
There is no federal law that prohibits players from playing poker for real money online in the US. Many people believe that the Wire Act of 1961 or the Unlawful Internet Gaming Enforcement Act of 2006 (UIGEA) made it illegal to play poker online in the US, but that is inaccurate.
In September 2011, the US Department of Justice released a formal legal opinion that the Wire Act only related to sports betting (which is also banned by the Professional and Amateur Sports Protection Act 1992), while UIGEA made certain methods of payment processing illegal.
However, each state has its own set of laws when it comes to gambling. This makes it very difficult for individuals to figure out if they are breaking the law by playing poker online. There has also been one significant event (“Black Friday”) that sculpted the current landscape for online poker in the United States.
States that have Regulated Online Poker
Following the release of the Department of Justice´s opinion, three states introduced legislation for the regulation of online poker – Nevada, Delaware and New Jersey. By the end of summer 2019, Pennsylvania joined as the group as the fourth state to legalize online poker. Several other states are in the process of debating the pros and cons of regulated online poker, and it is anticipated that a second wave of regulating states will soon follow.
The good news for players in the US is that many experts are predicting a domino effect when states that are currently sitting on the fence realize the tax revenues that can be generated from online poker. Hopefully, this will result in the majority of states providing some form of regulatory structure in the near future.
On the flip side of the coin, there have been several attempts to regulate Internet poker at federal level, and also to ban it. Nothing has materialized from any form of lobbying on Capitol Hill and this is likely to remain the case – as states opposed to Internet poker will demand an opt-out, while those in favor of Internet poker oppose a blanket ban on the grounds that it affects their constitutional rights under the tenth amendment.
The Effects of UIGEA on Internet Poker
The passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) made it illegal for US banks and other US-based payment processors to transfer funds to or from an Internet poker site. This has made it increasingly difficult for online poker players to deposit funds into their accounts, but it definitely has not made playing Internet poker for real money in the US illegal.
States that have regulated Internet poker have taken advantage of a carve-out in UIGEA that allows intrastate financial transactions for horse racing and fantasy sports betting to overcome payment issues. In the other forty-seven states, a selection of poker deposit methods exists to enable players to fund their accounts (and withdraw their winnings), so effectively UIGEA was just an annoying distraction.
What the passage of UIGEA did achieve was the withdrawal of several major poker sites from the US – including the industry leader at the time, PartyPoker. The void was filled by PokerStars and Full Tilt Poker, who respectively became the biggest online poker sites in the world until Black Friday in April 2011.
The Effects of Black Friday on Online Poker
On April 15 2011, the US Department of Justice unsealed indictments against PokerStars, Full Tilt Poker and another major operator in the US market – Absolute Poker. It was alleged in the indictments that the three online poker providers had illegally circumnavigated UIGEA by laundering profits through small banks and offshore payment processors.
The seizure of the poker sites´ domain names resulted in their closure – PokerStars later going back online in the US so that players could withdraw their funds. PokerStars went on to buy out Full Tilt Poker two years later, and made a settlement with the Department of Justice that included the repayment of former US Full Tilt Poker players.
Following the closure of the three sites, players in the US sought out other sites to play at. This led to the emergence of Americas Cardroom and Black Chip Poker as major players in the US market – and, more recently, Bovada and Ignition Poker. Although these sites have never been able to command the sort of traffic that was witnessed prior to Black Friday, they still provide a viable – and legal – alternative to not playing online poker at all!