For years now, people have looked to the federal government for direction as to whether online poker is legal or not in the United States. This would seem to make sense, when we’re talking about whether it’s legal to play online poker in a certain country, then looking at the countries’ laws would seem like a good place to start.
Federal law does govern these sort of things generally in other countries, but gambling laws in the United States are a little different. It is a union of states, literally, and the U.S. constitution divided up legislative powers pretty specifically, giving individual states domain over certain things.
One of these things is intrastate commerce. Commercial activities, like gambling, that occurs entirely within the boundaries of a state is governed by that individual state. On the other hand, interstate commerce, which crosses the boundaries of states, including international commerce, is the domain of the federal government. Along with our resource, we work with a more comprehensive resource at PokerLaws.org if you’re looking for more detailed explanations in online poker laws.
Individual State Poker Laws
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington DC
Interstate Poker Guidelines
Once state lines are crossed, individual states do not completely control things, and in particular, conflicts of laws may emerge between different states involved, so it makes sense to give this over to the feds, which is a big reason why this is the case.
Gambling was once exclusively done in a single physical location, as in a gambling hall or c
asino. If this were still the case then the entire responsibility of governing gambling would fall to the individual states. However, once the technology emerged, it became possible to transmit bets by wire transmission, which eventually led to the Wire Act.
The Interstate Wire Act of 1961
In an effort to try to control the taking of bets by organized crime, in 1961 Congress passed the Wire Act, which imposed criminal penalties on those transmitting bets or betting information across state lines or internationally.
There are a couple of things that we need to note here. First of all the Wire Act is aimed at those providing betting services and not the general public. The second is that this law is only applicable to those under the domain of U.S. law. This second condition is particularly noteworthy since this law has been attempted to be used against foreign entities, which is nothing short of ridiculous.
When the Wire Act was enacted, the only form of betting that was transmitted by wire was sports betting. This was the target of the legislation pretty clearly since it wasn’t even possible to be applicable to other forms of betting such as poker or casino since at the time where wasn’t the technology to do this.
Once this became the case though, federal authorities tried to maintain that the Wire Act prohibited the transmission of these other forms of betting as well. The matter ended up going to court and upon appeal it was ultimately decided that the Wire Act was limited to sports betting only and did not apply to these other forms.
The Feds Ignore The Ruling Of Their Own Federal Courts
The courts are the ultimate decider of law in the United States and in other countries as well. Legislators create laws and the courts interpret them and apply them. When the sides disagree, it is not a matter of who is right, the courts are always right.
This is the venue after all where all matters are put forth in front of so if there was a belief that a certain law applies and the courts have said that it does not, the matter is closed unless the case is appealed to a higher court. In this case the matter could have been taken to the Supreme Court of the United States but this was not done. A new law could have been passed which may have dealt with the matter more specifically and tailored to the wishes of the government but this was not done either.
So this was all decided decisively back in 2002 but the U.S. Department of Justice decided to ignore the ruling, and insisted that the Wire Act did apply to these other forms of betting. This view would not hold up in court of course, but it didn’t matter to them as it served their objective of looking to distort public opinion through their strategy of promoting false information.
So their opinion that online poker and online casino gambling being illegal and specifically contrary to the Wire Act become spread like the gospel. Offshore companies were not deterred in any way by this and continued to take the action of Americans, at least until the UIGEA was enacted.
The UIGEA: Smoke And Mirrors On A Foundation Of Sand
In late 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, or UIGEA. This prohibited financial transactions related to illegal online gambling. Contrary to what a lot of people thought, it did not even speak on whether a certain form was illegal or not.
So this is all conditional on the gambling in question being found to be illegal or not. They of course held that the Wire Act rendered online poker and casino gambling illegal, a fact that simply was not tenable.
While the UIGEA applies to any finding of illegality, whether that be at the federal or state level, and a few states either clearly made it illegal or there was at least some doubt it might be there, the applicability of the UIGEA was primarily derived from the Wire Act being in force.
The legitimacy of these claims only matters if the matter is taken to court though, and other than that the government is free to make whatever proclamations they wish, whether these opinions be factually and legally correct or not.
So the UIGEA became essentially an exercise in propaganda, where a great many Americans believed that it made online poker and casino gaming illegal. This was reinforced by the exit of most offshore gambling companies from the U.S. market, from their fear of intimidation essentially, since they are not subject to U.S. law regardless.
The Empire Fights Back
Not all poker rooms withdrew from the U.S. market with the passing of the UIGEA though, and in particular a couple of very large operations, Poker Stars and Full Tilt Poker, continued to allow play from Americans. This ended up propelling them to the top 2 poker rooms in the world in terms of traffic.
I’m sure that both these poker rooms got an abundance of legal opinion surrounding this, leading to the decision to continue on. It didn’t take any form of legal genius though or any great deal of analysis to decide that the UIGEA really didn’t apply to them since the law allegedly making online poker illegal in the U.S., the Wire Act, didn’t even apply to poker at all.
When you add in the fact that neither of these companies were subject to U.S. law in the first place, which is clearly the case, then the whole matter even becomes quite silly. However, not everything is decided by the courts, at least at the level of prosecution, and the U.S. Department of Justice was eager for a fight.
The risk here was having accounts frozen, which the poker rooms realized, accounts that were well within the reach of the Department of Justice, since they were located in the United States. These were necessary to maintain in order to process financial transactions with their American players, so the poker rooms had to concoct an elaborate scheme of payment processing to look to minimize the risk of seizure.
While it may seem improper for the government to freeze accounts and seize monies without a valid legal justification ultimately, finding a lower level judge who may have been confused about the law here to give them the power to take such actions didn’t prove that difficult, and this was accomplished in a couple of instances.
One of these instances involved a pretty massive operation during what has become known as Black Friday. They even obtained indictments against the principles in these poker operations. This all caused Tilt to ultimately become insolvent, spelled the death of UB and Absolute Poker, and caused king of the hill Poker Stars to finally agree to exit the U.S. Market.
The Situation Today
So as we can see, there’s more to it than just what the law may say on something. There still isn’t any federal law in the United States making online poker illegal, and in fact since then the Department of Justice has finally changed its position and now states that the Wire Act does not apply to other forms of online gambling, as the courts have found.
There are still offshore poker operations that welcome Americans, although the exit of Poker Stars and Full Tilt and the bad taste that this all left in a lot of players’ mouths has caused the market to shrink drastically. It does seem to be making a comeback of sorts lately, but the progress has been very slow.
In spite of the retraction of the Department of Justice concerning their position on the Wire Act, they have continued to at least try to harass some of the remaining players, but they are much more diligent in looking to protect themselves in the past and have managed to evade it without a problem. There hasn’t been any attempt at all lately to curtail this business and the battle may finally be over.
Contrary to what some people think, these poker rooms are quite respectful of U.S. law where it actually exists, even in spite of being located in other countries and not subject to U.S. law. In instances where there are laws prohibiting online poker, which is the case in a few states now, players residing in these states are no longer accepted
So these companies are far from outlaws, and in fact have always been on the right side of the law as it actually exists. Strangely enough it’s the U.S. government who hasn’t been, using their tremendous muscle to look to push these poker companies around in spite of not even having a legal leg to stand on. This has at least stopped so things actually look pretty good now.