Is Online Poker Legal?

The legality on online poker can be considered a ‘grey area’. Various federal laws appear to have implications for online poker. However, they are aimed at the organizations, including banks and the poker sites themselves, rather than at individuals. Complicating the argument still further is the view that poker is a game of skill – and so not covered by any of the regulations at all.

This article will look at several aspects of the question is online poker legal? We start by covering the two main pieces of legislation involved – the ‘Wire Act of 1961’ and the ‘Unlawful Internet Gambling Enforcement Act of 2006’. Next we will look at the reactions of the poker sites themselves – discussing the ‘game of skill’ argument put forward by many sites. Finally we conclude by suggesting that the many hundreds of thousands of online poker players are not personally breaking any laws.

Implications of the 1961 Wire act were not felt in the online gaming sphere until some 39 years later – when Jay Cohen, who ran a sports-betting company based in the Caribbean island of Antigua, was jailed for 21 Months in the year 2000. Interpreting the wording of this act, which was introduced long before any form of internet gaming was even considered, quickly leads to the conclusion that Poker is not covered. The act is worded in such a way as to specify that the gambling is on a ‘Sporting Event’.

The case of Jay Cohen, while attracting considerable press interest in the poker industry at the time, did not have any immediate effect on online poker – at least from the player’s perspective. Online poker sites, safe in their offshore locations, carried on business as usual and banks continued to allow transactions to and from these sites.

All this was to change in the fall of 2006. The ‘Unlawful Internet Gambling Enforcement Act’ (UIGEA) was added to an unrelated bill and passed into law. This had an immediate and major effect on the poker industry – with many poker sites closing their doors to US citizens very quickly. The UIGEA does not explicitly criminalize playing online poker. Instead it made the processing of financial transactions for the purposes of internet gambling illegal.

Banks and financial institutions immediately protected themselves by blocking the direct transfer of money to internet gambling sites including sports-books, casinos and poker sites. While determined players are able to get around this by using 3rd parties (usually in the form of electronic wallets), a large number of ‘casual’ gamers disappeared from the tables.

The UIGEA legislation explicitly specifies that it is aimed at ‘gambling’ and ‘games of chance’. The counter-argument put forward by many online poker sites is that poker is not actually covered by this act at all – since it is a game of skill. Sites such as Poker Stars, Full Tilt and Bodog Poker have profited enormously in recent years by taking the player base from those sites who chose to pull out. Their line is that since you are playing other individuals, rather than gambling against the house, and that skill determines the long-term winners, poker is exempt from the UIGEA all together.

For the average citizen not familiar with the game of poker the view is that this game is ‘gambling’ in exactly the same way as roulette or blackjack. For the banking institutions the risk compared to the financial benefits did not add-up – all gaming transactions were banned as this was a safe and easy answer.

The ‘grey area’ of whether online poker is legal continues to this day. The key point is that both of the related pieces of legislation do not explicitly cover the individual who is actually playing the game, instead being aimed at the infrastructure which allows the transfer of money to and from gambling sites. So, even if the ‘game of skill’ argument eventually comes to nothing – the individual American playing poker is not considered to be breaking any laws.