Gambling And Poker Legislation In America

Gambling And Poker Legislation In America

Anytime there is a product, event, movement or group that creates a division of acceptance in American society we can be assured that there will be much public debate and legal consideration.

Poker play specifically and gambling in general has been no different throughout its storied history in America. U.S. poker players have experienced both tremendous booms in opportunities to seek their fortunes as well as devastating hits to their futures as laws have come, gone and changed in dramatic fashion over poker's tenure in our country.

While current poker players point to and lament the actions and fallout of the Unlawful Internet Gambling Enforcement Act (UIGEA) and Black Friday, poker's and gambling's legality and accepted standing in America began to be questioned centuries ago.

Historical Poker Law

The Early Years
Gambling (and poker) began to generate distrust and legal attention almost as soon as it began to be recognized as part of society. Poker is generally accepted to have its roots in the French game "Poque" which was introduced in the early 1800s in New Orleans and quickly spread up the Mississippi aboard the mighty river's many riverboats.

In 1811 poker and gambling in general was made illegal for the entire region of the Louisiana Purchase. The law's enforcement was weak, most likely due to the broad area, and casinos and gambling began to spread throughout the area.

The westward expansion took gambling to the small western towns that began springing up across America's Wild West. The California Gold Rush drew prospectors and gamblers further west to seek their fortunes in the mines and at the tables and soon spread poker and gambling literally from coast to coast.

By the mid-1800s citizens of the Old West started to associate all manner of crime and moral corruption with the gamblers who took up residence in the saloons and dancehalls. Gambling itself began to be legally targeted on a town-by-town basis. These early laws focused on the individual "professional gambler" much more than the gaming itself. Early laws made some gambling illegal and put limits on other forms.

The Laws Mature

The early western laws were largely ineffective as they were difficult to enforce and gambling dens tended to create variants to illegal games to skirt the law entirely or move their operation to a type with lighter penalties. As the debate raged in town halls and statehouses over the legality of poker and gambling, it didn't take long before town and state officials began to realize the potential that recognizing and regulating these establishments held.

By the end of the nineteenth century the precedent began to be set for acknowledging and taxing gambling dens to raise money to aid the state and community where the gambling was taking place.

At the dawn of the twentieth century the laws began to change again with the developing country. Early cases like that of Eliza Ross in Nebraska drew national attention as she filed a federal suit in 1902 against the Jacksonian Club of Omaha, a famous political organization for maintaining an illegal poker joint. Nevada bent to anti-gambling pressure and made poker and table games illegal in 1909.

The influx of workers and money brought in by the start of construction on the Hoover Dam led Nevada to decide that recognized and regulated gambling was in the state's best interest, and in 1932 gambling was made legal again and casinos began to pop up across the state turning Nevada into the gambling Mecca it has been since. The laws regarding poker and gambling remained largely unchanged for the next 70-plus years with each state setting occasional laws and limits individually.

The Internet Age

Anytime technology changes it can bring about new and unforeseen changes in our social interaction. This can be the ease of information transference, shrinking of the world through email, social media and other forms of electronic communication, and it can mean the opportunity to take a physical game and turn it into a seemingly limitless digital phenomenon.

Whether it was the growing popularity in poker spurred by the increased media attention of the WSOP or the explosion brought on during the Unregulated Era of online poker play, there is no denying that the 20 years leading up to the UIGEA were years of great freedom, exposure and growth in the poker and gaming worlds.

Most of the states had expanded their acceptance of legal gaming including lotteries and regulated card or table games. The country experienced a boom in opening both authorized and tribal casinos to say nothing of the massive popularity of online gaming.

UIGEA And The End Of The Unregulated Era

In late 2006 the landscape of online gaming changed forever. Shoehorned into the largely unrelated Safe Ports Act, the federal government passed the Unlawful Internet Gambling Enforcement Act (UIGEA).

The Safe Ports Act, which was designed to protect the country by limiting the ability of terrorist groups from moving funds in and out of the country, wound up being a vehicle that conservatives used to attack the online gaming industry.

While the act did not make online poker play illegal, it did make it illegal for Americans to own and operate a poker site as well as making it illegal for financial institutions to transfer funds used in placing bets in a gambling situation.

The fallout of the UIGEA was that a number of sites folded or at least closed their doors to American players. There was a rush as players sought to pull their money out of their accounts for fear of losing their funds.

Even though the UIGEA seemed to be a devastating blow to online poker, the reeling major sites gave way to privately owned sites and continued to operate for American players under the auspice that poker was a game of skill and therefore did not fall under the definition of a "gambling" game as defined by the UIGEA.

Despite being enacted in 2006, U.S. players didn't truly feel the impact until 2009 when the federal government moved to seize the funds of over 27,000 online poker player accounts. This move signified the beginning of the end as U.S. players were officially denied the ability to choose how to spend their privately earned money.

With only a couple offshore sites still hanging on for U.S. players, many serious players and professionals left the States and moved to countries that allowed online play in an effort to preserve their revenue stream. But the worst was yet to come.

Black Friday

Two more years of limbo followed the 2009 attack on U.S. players before the hammer fell in early 2011. The courts of New York, combined with the U.S. Government decided that it was time to truly enforce the UIGEA. This time, instead of going after the players they targeted the financial institutions and executives of the American-facing poker sites with serious indictments of money laundering and corruption.

The prevailing view of the April 14th Black Friday indictments was defined in a press release statement from U.S Attorney Preet Bharara: "As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to ensure the continued flow of billions in illegal gambling profits. Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud. Foreign firms that choose to operate in the United States are not free to flout the laws they donít like simply because they canít bear to be parted from their profits."

Bharara claimed that sites like Full Tilt Poker were nothing but Ponzi schemes as he explained the indictments against respected pros like Howard Lederer and Chris "Jesus" Ferguson along with bankers and site executives.

The fallout of Black Friday was staggering and far-reaching. Full Tilt Poker was shown to be virtually bankrupt and was found to be short tens of millions of dollars of players' accounts.

The company was soon absorbed by PokerStars. Sites like Absolute and UB went under completely. U.S. players found it difficult to cash out any funds they had left with the various poker rooms and many players lost their balances completely. Traffic on sites dropped exponentially. The legal hoops and hurdles to maneuver around emerging in the wake of these new developments left most U.S. players out in the cold.

Post-UIGEA Regulated Play

The years after Black Friday has been a period of push and pull as the sides try to keep a balance. It is important to note that Federal law does not actually make online poker illegal. It falls to the individual states to make that delineation. To date, only Washington State has passed a law making interactive poker for real money illegal.

A few states like Kentucky, Utah, New York, Missouri, Louisiana and Maryland have vague laws on the book that leave the legality of interactive poker in a grayish area. All other states have no specific laws that would potentially prohibit online gaming for real money.

On June 21, 2012 Nevada ushered in the new era of online poker play in America by issuing the first official licenses for live interactive poker play for real cash in the state. Delaware similarly made the move to regulated play just a few days later. The following February, with pressure from the Atlantic City casinos, gaming powerhouse New Jersey also approved licenses for online gaming within the state. Delaware has since expanded their reach by allowing the first interstate play format allowing players from Nevada to play in their online poker rooms. The results since these states have adopted regulated online play have been positive, though they do fall short of projected revenues both in overall play and in monies received by the states.

New Jersey Gambling

New Jersey started offering online gambling to residents in 2015 and earned a total of $100 million in revenue during the first eight months of the year. Pokerstars used the state to make its reentry into the US and the gambling market looks like it's just starting to heat up in the area. It's likely that gambling will expand in the state and New Jersey will serve as an example for other states that should help encourage more favorable legislation in the future.

The Future Of Online Play

Despite the fact that the overall numbers returned since the start of regulated interactive play have not been at the explosive levels expected, the future looks good for American poker players. Government attorneys have ruled that the old Wire Act cannot be used against states seeking to allow online poker play. Since this announcement there has been a flurry of activity as lobbyists have pushed for legal rulings on regulated play and poker rooms have been seeking licenses to operate in states seeking to approve regulation.

While California seemed like a shoe-in as one of the next states to legalize online gambling, that simply isn't the case any longer. There's too much disagreement between different legal parties in the state and it doesn't look like online gambling will be heading to the state anytime soon. Pennsylvania seems like one of the frontrunners for the next state to gain online gambling priveledges. It's likely the state will pass legislation that legalizes online gambling in the next few months, as the changes are currently up for debate. New York, though behind Pennsylvania also seems like a likely candidate. With its neighbor to the south planning on legalizing online gambling, the Empire State will likely spring into action and push some legislation through that legalizes gambling. Washington managed to get a poker legalization bill introduced in 2015, but still has a lot of work to do before it's likely such a bill will pass.

States like Mississippi and Massachusetts have been considering online gambling for years but legislation never gains traction in either of those locations.

The key to the future success of the industry is clearly in increasing the player pools at online poker rooms. Delaware took the first step in allowing Nevada players, but as states approve regulation, interstate play is essential for growth. To truly ensure growth and success it may be necessary to allow partnerships with international poker sites and the sharing of their player pools.

This may be a few years away, but the winds of change are blowing, and as American poker players, it's been a while since we've had good odds to bet on.