Legality of Online Poker in the United States
Although there is an overlapping web of federal, state and tribal laws and regulations that governs the legality of gambling in the United States, very few laws deal explicitly with online poker. For example, the most well-known federal internet gambling law, the Unlawful Internet Gambling Enforcement Act of 2006 (31 U.S.C. §§5361–5367), does not criminalize or prohibit online poker in the United States. Rather it prohibits financial institutions from processing transactions to be used in “unlawful internet gambling”, a term defined by the law to mean placing a bet or wager over the internet where such bet is unlawful under any state or federal law.
The ambiguity comes from trying to determine what types of bets are unlawful under state or federal law. For many years the U.S. Department of Justice argued that the Interstate Wire Act of 1961 (18 U.S.C. §1084) prohibited interstate online poker because the Wire Act criminalizes transmitting betting information across state lines. However, the 5th Circuit Court of Appeals ruled against that interpretation in the 2002 case In re Mastercard. In 2011, the DOJ finally reversed its position and publicly released an internal legal opinion which agreed with the 5th Circuit interpretation that the Wire Act only applies to interstate sports betting.
The DOJ has also argued that the Illegal Gambling Business Act (18 U.S.C. § 1955), which criminalizes the operation of any gambling business in violation of state law, applies to companies that offer online poker inside the United States. That assertion has never been tested in an internet poker prosecution, although one federal court ruled in a 2012 case involving a brick-and-mortar underground poker room that IGBA might not apply to poker.
The lack of clarity in the law has not stopped the DOJ from using UIGEA, IGBA and other laws like the Travel Act of 1961 to initiate seizures against, and criminally indict, online poker companies. On April 15, 2011, the DOJ unsealed an indictment against PokerStars, Full Tilt Poker and UB under UIGEA and other federal statutes. As part of the indictment, the DOJ seized the domain names and froze assets of each site. The indictments have since been settled with respect to PokerStars and Full Tilt, with each site agreeing not to offer online poker in the United States until laws are passed that expressly permit it.
As of January 2013, three states had enacted legislation permitting intrastate online poker: Nevada, Delaware and New Jersey. It is believed that these states will look into forming multi-state compacts to pool each state’s poker players, as is currently done with some lottery games. None of the remaining 47 states have an explicit authorization of or prohibition against online poker except Washington, which made playing online poker a felony in 2006. That 2006 law survived a legal challenge in 2010.
The end result is that although offering online poker in the United States might be permissible under the current state of the law, almost all online poker companies have responded to the actions of the U.S. Congress and the DOJ by pulling up their tent stakes and shutting down their operations until the state of the law is clarified.