When Texas Holdem was first popularized by its inclusion in the World Series of Poker throughout the 1970’s and 1980’s, anyone who wanted to play could do so without much threat of legal recourse. As the years went by and real money poker games became more prevalent, especially through the invention of the internet, government officials, both on state and federal levels, started to take more notice.
OnlinePokerRealMoney.co.uk tries to dispel some legal confusions stemming from passage of George Bush's UIGEA of 2006 . Federal status seems to depend on interpretation of the wire act and other laws which were crafted many years ago and which remained high level in nature. The United Kingdom has much clearer laws including their own real money gambling commission .
Online sports betting was the first real money wagering opportunity to hit the world wide web, introduced globally by Intertops 1996. The company quickly expanded into online casino gambling with its sister site, Intercasino, just months after. Then in 1998, Planet Poker dealt the very first hand of real money Texas Holdem in cyberspace. The industry has exploded since then, as have the legalities of playing online poker in the United States.
The first mention of online gambling being illegal was brought up that same year, 1998, when US businessman Jay Cohen moved to Antigua to launch the World Sports Exchange (WSEX). He was arrested and convicted of illegal gambling in violation of the Wire Act, sentenced to 21 months in federal prison. Illegal online gambling cases have been historically difficult to convert due to the ambiguous language of the law, but this particular ruling was easy to come by since the Wire Act specifically prohibits sports betting via telecommunications across state lines where such activity is illegal.
In 1999, the US Department of Justice (DoJ) sent a letter to Senator Patrick Leahy [D-Vermont] in which the department admitted that “the Internet has allowed for new types of electronic gambling, including interactive games such as poker and blackjack, that may not clearly be included within the types of gambling currently made illegal by [the Wire Act].”
There it was – the government’s very first admission that the Wire Act did not apply to online poker and casino games, but it didn’t last long. On September 23, 2002, the DoJ contradicted itself in a second letter, this time to the Nevada Gaming Control Board. In that letter, the department declared that the Wire Act effectively outlawed internet gambling in all forms. Thus began the roller coaster effect of real money Texas Holdem legalities in the US.
A case was brought up in the United States Circuit Court that was decided two months after the DoJ declared its new stance against online gambling. It involved two plaintiffs (Larry Thompson and Lawrence Bradley) who filed suit against their credit card companies and banks for allowing them to deposit, wager (and lose most of) over $15,000 between them at various online gaming websites. The case went to the US Court of Appeals, where the online gamblers argued that the defendants had violated the Racketeer Influenced and Corrupt Organizations Act (RICO).
While illegal gambling activity was involved, the RICO Act also requires some misrepresentation of the odds in order to apply. The plaintiffs did not show or even argue that the gambling was rigged in any way. That left them with very little leverage, but they still maintained that an online gambling enterprise was illegal via the Wire Act of 1961. They alleged that the credit card companies that allowed them to use their cards to purchase thousands of dollars’ worth of credits were at fault for their part in contributing to a “worldwide gambling enterprise”, and for facilitating illegal gambling transactions. On November 20, 2002, a panel of circuit judges ruled in favor of the defendants, and the two online gamblers were ordered to pay their respective credit card bills.
For the next few years, the DoJ reiterated its stance, despite the fact that the Wire Act explicitly outlaws the use of a “wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest”. Legal experts continually argued that, in its then-current form, the Wire Act failed to outlaw any form of gambling outside of sports/contest betting. Taking the advisement of their high-paid attorneys, offshore online poker operators ignored the US government and continued to proffer uninterrupted service of real money Texas Holdem games to Americans.
In a renewed effort to put a stop to illegal online gambling, the US government attempted to change the legal climate once more with the covert passage of the Unlawful Internet Gambling Enforcement Act of 2006. As an ‘Enforcement Act’, it failed to integrate any new laws, rather emphasizing the enforcement of the same antiquated Wire Act of 1961. The only palpable change came by way of financial institutions being held responsible for detecting and prohibiting online gambling transactions. Again, legal experts declared that online poker operators, nor players, could be held accountable based on the verbiage of the legislation. Some operators did heed the warnings, withdrawing from the US market by the end of 2006, but for the most part, Americans continued to find bountiful access to real money Texas Holdem.
At this time, some US jurisdictions began taking the matter into their own hands. The State of Washington, for example, amended RCW 9.46.240 in 2006 to “affirmatively state that Internet gambling is illegal in Washington State”. Seeing such measures as a definitive threat to their operations, some online poker sites took heed of these warnings, withdrawing their services from Washington, as well as similarly legislative jurisdictions like Kentucky, Louisiana, Maryland, Missouri, New York and the District of Columbia (Washington D.C.).
Black Friday struck on April 15, 2011, when the DoJ unsealed 11 indictments against the three largest US-facing online poker operators in the world (PokerStars, Full Tilt Poker and Absolute Poker), as well as directors of those operations and associated payment processing firms. It was the first major action the US had taken against offshore online gambling operators, the impact of which lingers to this day. Absolute Poker shut down completely, as did Full Tilt Poker until PokerStars’ parent company, Rational Group, paid off its considerable 9-figure debt in their settlement, claiming rights to the domain. PokerStars and FTP were reopened, but American players are off the menu.
Real money Texas Holdem games aren’t just being criminalized by way of the internet. Even home games are subject to penalty if conducted in such a manner that the host and/or promoters stand to make a profit for facilitating the game. In September of 2011, a Missouri man pled guilty in federal court to charges of “conspiracy to conduct an illegal gambling business by operating poker games in his home”.
A much more famous case was tried in August of 2012, United States of America vs. Lawrence DiCristina. The defendant was charged with “operating an illegal gambling business involving poker games in violation of the Illegal Gambling Business Act (IGBA), 18 U.S.C. § 1955”. The game being played was Texas Holdem. In DiCristina’s defense, his attorney moved for dismissal on the grounds that “poker is predominately a game of skill rather than chance”, thus does not fall under the definitions of illegal gambling as defined by the IGBA. The jury convicted DiCristina, but the judge overruled, acquitting him on grounds that Texas Holdem is, in fact, a game of skill. However, in August of 2013, a Court of Appeals Circuit Judge overturned the acquittal, stating that the IGBA does include Texas Holdem, thus the defendant must be found guilty. Lawrence DiCristina was sentence to one year unsupervised probation.
Taking a small step back to the previous year, a historic motion was made by the DoJ when the opinion of the Wire Act was again reversed. Published on December 23, 2011, the DoJ scribed, “Interstate transmissions of wire communications that do not relate to a “sporting event or contest” fall outside the reach of the Wire Act”. As for why the DoJ would make such a move, Illinois and New York wanted to sell state lottery tickets online, and under the previous definition of the Wire Act, that would not be permitted. The global online poker community was shocked by the overture as individual states were suddenly handed the right to legalize and regulate online poker and casino games at their own discretion.
So far, the states of Nevada, Delaware and New Jersey have all passed legislation to regulate online poker. As of 2013, players physically located in these states may log onto authorized iGaming websites and play Texas Holdem for real money. As for poker enthusiasts in other US jurisdictions, there are still a few online destinations accepting their memberships and deposits to play internet poker. Bovada and BetOnline are the only two reputably licensed offshore poker sites known to admit players from all 50 states.
It should be noted that the past actions of offshore iGaming operators had a profound effect on their current relationship with the United States. Companies like PokerStars and Full Tilt Poker, which chose to remain operational in the US after passage of the UIGEA, have been blocked out of the nascent online poker market in Nevada, Delaware and New Jersey. Nevada and Delaware scripted a ‘bad actors’ clause in their regulatory framework that prohibits companies that violated the UIGEA after January 1, 2007. New Jersey has no such clause, but suspended PokerStars licensure eligibility for two year based on its involvement with its founder and former CEO, Isai Scheinberg, who was indicted on Black Friday and is still on the run from the US government.
For online poker operators that withdrew from the US market before 2007 – companies like 888, Betfair and bwin.party – they have been permitted to apply for a jurisdictional licenses. 888 is the most dominant at present, currently operating in all regulated three states by powering WSOP.com in Nevada, both WSOP.com and 888Poker in New Jersey, as well as networking all three of the iGaming sites authorized in Delaware.