Federal Poker Laws

 The myriad alterations in the US government’s stance towards online poker throughout the last decade could confuse even the likes of Stephen Hawking. The government tried multiple ways to enforce a complete prohibition against online poker, but even after harvesting hundreds of millions of dollars in fines following the indictment of the world’s largest operators, it was apparent that putting a halt to the activity wasn’t feasible. Finally, after years of trying to prohibit the activity, the US decided to allow states to pursue online poker regulation on their own while members of congress debate the possibility of federal regulation.

That’s the short story of online poker laws in the United States, but there’s so much more to it than that. The following is a basic timeline of major events in the history of US online poker, followed by the current climate of federal regulation. For those who already know the past accounts, skip forward to Probability of Federal Online Poker Regulation.

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Passage of the UIGEA – September, 2006

Before the autumn of 2006, online poker activity was at an all-time high in the United States. Then came the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which effectively prohibited financial institutions from processing monetary transfers between Americans and offshore online gambling sites. The Department of Justice claimed that it outlawed online gambling, but due to the literature of the bill, which was covertly passed overnight as an attachment to an entirely unrelated Port Security Act, it only prohibited financial transactions, thus putting the banks at fault, not the players.

Black Friday of Online Poker – April, 2011

The US government continued to maintain that the UIGEA, and the Federal Wire Act of 1961, effectively outlawed online poker in the United States. On April 15, 2011 – the Black Friday of Online Poker – the Department of Justice enforced its opinion by unsealing 11 indictments against the heads of the three of the largest online poker operators in the industry, PokerStars, Full Tilt Poker and Absolute Poker, and a number of payment processing firms. The DOJ alleged that they had violated the UIGEA, engaging in money laundering and bank fraud to proffer illegal online gambling services to American citizens. While the act of playing online poker still wasn’t illegal, it incited enough of a scare to send most major internet poker networks scuttling outside the US borders.

DOJ Revises Opinion of Wire Act – December, 2011

Up until this point, the DOJ had staunchly maintained that the verbiage of the Federal Wire Act criminalized all ‘remote gambling’ activity, thus asserting that online poker was illegal. On December 23, 2011, the DOJ announced that it no longer believed the Wire Act applied to any gambling activity outside of sports betting. As such, individual states were automatically afforded the right legalize online poker and casino games, should they wish to do so. However, they would have to author their own regulatory framework, as the government did not want to take responsibility for federal regulation at that time. Nevada, Delaware and New Jersey all took to the drawing board, passing online poker laws, writing up regulatory guidelines, issuing licenses and launching iGaming networks in their respective jurisdictions in 2013. As of right now, many other states are debating the issue of regulation.

Federal Online Poker Bills: RAWA vs Freedom

The need for federal online poker laws has been heavily debated for the last few years. In 2012-13, the push for federal regulation was at its strongest, but advocates simply couldn’t garner enough support to produce movement. Then the tides began to shift in 2014 and beyond as the momentum is swinging more towards a federal bill to prohibit online poker in the US.

2012: Democratic Rep. Harry Reid initiated the movement towards US regulation with the first federal bill. The issue was all but moot at the time, thus his attempt fell far short of garnering support.

2013: Efforts to induce federal online poker legislation came on full force in 2013 with the introduction of two more bills, one from Rep. Peter King (R-NY) and another from Rep. Joe Barton (R-TX).

King sought to regulate online poker and casino gambling while giving individual states the option to “opt-out” of iGaming if they did not wish to participate. Barton’s bill, known as the Internet Poker Freedom Act, fashioned a carve-out to regulate online poker only, while presenting an equivalent opt-out opportunity for individual states. Again, both were unproductive.

2014: A new form of federal online poker legislation arose called the Restoration of America’s Wire Act (RAWA). Proposed on dual levels by Senator Lindsey Graham [R-S.C.] and House Rep. Jason Chaffetz [R-Utah], RAWA sought an opposite outcome, to invoke prohibition of online gambling throughout the US by restoring the former definition of the Wire Act.

RAWA’s potential is maximized by the support and virtually limitless funding of Las Vegas casino tycoon and notorious GOP donor, Sheldon Adelson. Fortunately, the bill narrowly failed when then-Senate Minority Leader Harry Reid shot it down in the lame duck session.

2015: Two measures have been reintroduced this year. Chaffetz and Presidential hopeful Graham brought RAWA back to the table, and Rep. Barton is once more trying to push the Internet Poker Freedom Act.

Sense and Probabilities

Ultimately, the most likely outcome is that nothing will come of either side of the debate, at least not for a few more years. Any federal online poker bill, whether to regulate or prohibit the activity, would need to garner a great deal more support than past and present efforts.

On the one hand, it doesn’t make much sense to wipe out the extensive efforts of three states to move forward with online gaming markets and obliterate the rights that have already been issued to individual states. On the other hand, from a political standpoint, why back such a controversial issue when it’s so much easier to leave well enough alone and let states decide for themselves whether to authorize and regulate online poker or any other form of internet gambling?

The deciding factor will be whose name is etched into the history books as the 45th President of the United States. If Sen. Lindsey Graham is successful in his run for office, the passage of RAWA is much more likely. On the opposite end of the spectrum, a Hillary Clinton Presidency would be more likely to support federal regulation, or at least continue allowing states to decide for themselves.