Poker News / Short-Stacked Shamus / 19 November 2010 / Leave a Comment

On its website, the Poker Players Alliance provides a number of statistics and findings about online poker. One 2007 study cited by the PPA reports that 23 million Americans play online poker. That's about 10% of the country's adult population, and, according to the same study, more than half of the total number of online poker players worldwide.

Of that group, a large percentage -- more than a third -- reportedly play online poker for real money. While such figures are necessarily estimates, it's safe to say that millions of Americans are playing real-money poker games on the internet, despite the murky legal situation that continues to surround the game we love.

Here's a brief snapshot of the legal situation at present for U.S. online poker players, sort of a layman's view of what we're observing at both the federal and state levels. I've also concluded with a couple of additional thoughts about what's to come, here prefaced with the disclaimer that when it comes to the U.S. and online poker, being able to predict future legislation is about as easy as guessing what card will fall on the river.

Federal

There is no current federal law prohibiting U.S. residents from playing online poker. Some have cited the 1961 Wire Act, a law forbidding the placing of sports bets via telephone across state lines, as supporting the argument that other forms of online gambling, including poker, are illegal. But that argument has thus far failed when challenged in the courts.

That said, online poker players in the U.S. continue to face restrictions thanks to that other federal law, the Unlawful Internet Gambling Enforcement Act of 2006. After four years of fuss, the UIGEA was finally fully implemented in July of this year. While the law does not prohibit Americans from gambling online, it does restrict banks and other financial transaction providers from allowing customers to send money to online gambling sites, even those located outside the U.S.

Since it was first signed into law in 2006, the UIGEA has caused many online poker sites (including Betfair) to decide not to accept U.S. customers. And since its implementation this summer, some online poker players have experienced additional difficulties when it comes to moving money onto sites that do still allow Americans to play.

So what is happening on the federal level with regard to the UIGEA and the prospects for online gambling in the U.S.? Various bills have been proposed to introduce a licensing and regulation scheme for online gambling, the most significant being the Internet Gambling Regulation, Consumer Protection, and Enforcement Act (H.R. 2267) first introduced by Rep. Barney Frank in May 2009. That bill was passed by Frank's House Financial Services Committee, but has yet to be considered by the entire House of Representatives or the Senate.

Here in mid-November, we in the U.S. find ourselves amid what is called a "lame duck" session, legislatively speaking. Our elections took place earlier this month, which means on both the state and federal level we have a host of new legislators (i.e., representatives and senators) who have been elected and are readying themselves to take office in January. That means we also have a number of legislators who are now serving the final weeks of their terms. Thus on the federal level we have a "lame duck" Congress, the designation meant to indicate the current group of legislators' relative lack of potency going forward.

This last round of elections in the U.S. also saw a shift in power among the parties. While the Democrats held the majority in both the House and Senate for the last two years, the Republicans won enough seats to secure the majority in the House starting in 2011, while also gaining enough seats in the Senate to make balance between the two parties closer to even next year.

It is possible that outgoing Democrats might use their final weeks in office to push through certain legislation that might not otherwise be passed in the new Congress. That possibility inspired some pre-election speculation that a "lame duck" session might prove a fertile political ground to allow Frank's H.R. 2267 to receive additional consideration, perhaps even becoming law. But most observers now believe such prospects are especially dim.

All of which means if there is going to be any sort of licensing and regulating of online poker in the U.S., a new bill will need to be proposed in the new Congress. And that the UIGEA probably ain't going anywhere. Not for a good while, anyway.

State

At present, about half of the states in the U.S. have some sort of law on the books outlining certain circumstances that make it illegal to place a bet on the internet. Of those, about a dozen of those states explicitly prohibit gambling online, although in practice these laws have not been enforced.

Among these states there is one -- Washington -- which in June 2006 enacted a law that actually made it a felony to gamble online. As would happen on the federal level with the UIGEA a few months later, there was little debate at the time among Washington's legislators prior to the passage of this law. Again, while the law has existed for quite some time, in the four-plus years since its enactment it has not been used to charge any Washington state residents with a crime for playing online poker or gambling on the internet.

A resident of Washington, an attorney named Lee Rousso who likes to play online poker, decided to challenge the law as unconstitutional, focusing primarily on how (in his view) it violated the Commerce Clause of the U.S. Constitution. It took a few years, but eventually the case of Rousso v. the State of Washington ended up being appealed all of the way up to the Washington State Supreme Court, which in September of this year ruled against Rousso and upheld the law.

While the law still isn't being enforced, the ruling from the Washington State Supreme Court has nonetheless caused the two biggest U.S.-facing online poker sites -- PokerStars and Full Tilt Poker -- to prohibit Washington state residents from playing real-money games on their sites.

Interestingly, there were marked differences in the two sites' response to the state's Supreme Court ruling. PokerStars pulled out of Washington immediately, placing severe restrictions on WA residents' play (e.g., they cannot even play from another state if registered with the site with a WA address). Meanwhile, Full Tilt waited until last week to make the move, and is relatively less restrictive about the prohibition against WA residents' play (e.g., they can play if located in other states).

Incidentally, if want to learn more about the situation in Washington, Gary Wise has written about both the political context for the law and the difficulties currently faced by online poker players in Washington. His interesting feature article appears on the ESPN site -- "A decision between career and home."

Meanwhile, other U.S.-facing online poker sites (Bodog, Cake, UB, Absolute Poker, etc.) continue to allow Washington state residents to play real-money games. This varied response to the situation is indicative of the high level of ambiguity and confusion in the U.S. right now regarding online poker's legal status.

While some may speak authoritatively about the situation, forcefully declaring how things stand on either the federal level or in an individual state, no one really knows with utter precision what the score is in this game in which the rules seem constantly to change while we play.

What's to Come?

Not knowing exactly where things stand at present makes it all the more difficult to predict what the future holds.

On the state level, some fear, quite reasonably, that as happened in Washington, events in other states could lead to U.S.-facing sites deciding to block other states' residents from access as well. Thus do other state-level battles -- such as the ongoing domain-seizure case in Kentucky -- add to the sense of unease going forward.

On the federal level, the existence of the UIGEA will continue to complicate life for U.S. online poker players, and to an even greater extent should banks begin complying in greater numbers by blocking players' transactions. Many have noted that the UIGEA as it is written likely could not withstand a court challenge, and thus it could happen that we may see such occur in the not-too-distant future. Of course, even there, as the failed challenge to the Washington state law proves, nothing is guaranteed.

Other than a few more years of uncertainty, that is.

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