The influence of the United States in the growth of online poker can never be overstated. In fact, the industry would not have been where it is without the country’s innovations. The first real money poker card room was launched in the US in 1998, with legendary American poker star Mike Caro serving as the platform’s face. Over time, other sites began to pop up, and in barely a decade, over 100 online poker card rooms were available to players across the globe.
However, despite the massive success of online poker in the US, the industry has been plagued with many challenges, most of them falling on the legal side. This article will explore the impact of government regulations on online poker in the US and every legal detail you need to know before playing at US online poker sites. If you want to explore more poker laws and regulations, check out PokerLaws.org for the latest and updated info.
Online Poker Laws in the US
The legality of online poker in the US has been a bone of contention for over two decades. Many have argued that poker is a game of skill and should not be classified under other forms of online gambling, while others believe that since there’s an element of luck required, it should. Before we go into the impact of regulation on online poker in the US, let’s look at the major poker laws in the country.
- Federal Wire Act
The Federal Wire Act is one of the oldest gaming laws in the US, and despite being introduced decades before the emergence of the internet, it has played a massive role in deciding the legality of online gaming. Signed in 1961 by John Fitzgerald Kennedy, the Federal Wire Act outrightly prohibits the wiring (or transmission) of payments and information relating to wagers and bets placed on any sporting event or contest.
Different legislators and experts interpreted the act differently. Many argued that it was meant for sports betting and didn’t cover other forms of gambling like online lottery and poker. But differing opinions have been due to the fact that only the first clause of the act mentions sports betting; the remaining parts used ‘all bets and wagers,’ and this meant the illegality of online poker.
There have been no clear answers yet, but a 2011 re-interpretation of the act allowed online poker more room to operate. Plus, several court rulings like the New Hampshire Lottery Commission v. Barr have gone in online poker’s favor setting a precedent that poker is excluded from the Wire Act.
- UIGEA
Chris Moneymaker 2003 World Series win led to an increased interest in online gaming in the US, and since the Federal Wire Act couldn’t explicitly curb the growing trend, talks of a new anti-gambling bill began. In 2006, eight years after the first real money poker site was launched, President George Bush signed the Unlawful Internet Gaming Enforcement Act (UIGEA) into law. This act prevented American financial institutions from processing transactions at any online gambling site.
The UIGEA served as backing for the April 15th, 2011, a crackdown on online poker sites in the US. A day now referred to as Black Friday in the gambling space saw the US DOJ seize the domain of:
- PokerStars
- Absolute Poker, and
- Full Tilt Poker.
These sites accounted for 95% of the online poker traffic in the US and effectively put an end to the online poker boom. While some states have legalized online poker in their jurisdictions, the game is still illegal in most parts of the US. States that have legalized online poker in the US include:
- West Virginia
- Delaware
- New Jersey
- Michigan
- Nevada
- Pennsylvania.
Impact of These Regulations on Online Poker in the US
Online poker was born in the US and found massive success there too. According to Christiansen Capital Advisors, the industry generated $82.7 million in revenue in 2001, 3 years after its launch. This figure grew to a whopping $2.4 billion in 2005, making online poker one of the fastest-growing industries in the world.
The regulations have heavily impacted the industry and have reduced the number of US players, most of whom now rely on offshore poker cardrooms. Furthermore, there are also economic impacts of the regulations. This was argued when California considered legalizing online poker in 2016. Legislators argued that using a sin-tax type model on poker sites could see massive revenue growth in the state and also create jobs.
The Bottom Line
Online poker has been an integral part of the online gaming world for many decades, and the US has been at the forefront of it all. However, several regulations have impeded the industry’s growth in the nation, and while it might take years for these federal laws to be changed, state regulators can take matters into their own hands and legalize online poker. This has been the case in six states, with others expected to follow suit in the coming years.
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