The purpose of this article is twofold. First, we attempt to summarize the current legal status of online poker in the United States. You may be surprised to learn that, despite a confusing legal landscape, it is generally accepted that playing online poker is currently legal in the U.S., at least at the federal level. For this reason we feel a better way of approaching the issue is to look at when online poker will be regulated on a state by state basis. This constitutes the second part of the article.
The Federal Poker Situation
There are two federal acts that dominate the discussion of the legality of online poker in the U.S. The first, the Interstate Wire Act, dates back to 1961. The preamble summarizes its scope and intent:
Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.
You don’t need to be a legal scholar to recognize immediately that something is problematic here. In 1961 there was no internet. Thus the first ambiguity in applying the Wire Act to online poker surrounds whether “a wire communication facility” includes internet transmission. Opponents of online poker naturally claim it does. The counter arguments are varied, but include the observation that the Wire Act cannot (or should not) be applied to a technology invented decades after its passage into law. Perhaps more compelling is the fact that, as quoted above, the Act specifically references wagers placed on sporting events or contests. From this perspective, what is being prohibited is someone in Ohio phoning a bookie in Vegas to get down a bet on Davante Adams having the most receiving yards this year. Open-raising 3x from the button in an online 25c/50c game is not, according to this interpretation, a violation of the Act. This interpretation was upheld by the United States Court of Appeals for the Fifth Circuit in 2002, which ruled that the Wire Act applied to sports betting by telecommunication across state lines, but “in plain language does not prohibit Internet gambling on a game of chance.”
We’ll return to the current status of the Wire Act shortly, but before doing so we need to describe a piece of equally controversial legislation. Whatever position one takes on internet gaming and gambling, it’s difficult to avoid the conclusion that the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 has a particularly scummy history. It was passed by the Senate during the last session before elections, having been tacked on to a much larger bill concerning port security. Mind-bogglingly, it has been widely reported that this act was passed without any senators other than those who had drafted it having seen the final language of the document. As to its specific provision, the act
…prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet and that is unlawful under any federal or state law.
The Act specifically excludes certain fantasy sports and, of great interest to poker players, “skill games.” At first sight, one might assume this was the clause that would allow online poker to slip out from under the UIGEA jackboot. The problem is that the precise language of the Act includes under its vast umbrella any game “subject to chance.” If you’re banging your head against your keyboard at this point, we don’t blame you, but equally it is hard to refute the idea that poker is to some extent subject to chance.
Note, however, that nowhere does the UIGEA make it a federal crime to play online poker. Criminality is restricted to accepting and processing payments to online poker sites. Those of you who continued to play online poker immediately after the passage of UIGEA will likely recall laughable consequences, such as financing an online poker account and being informed by your payment processor that you had just purchased a large number of golf balls.
While the UIGEA was being challenged in institutions from the U.S. Congress to the World Trade Organization, a new chink of hope for online poker appeared in the form of an opinion from the US Department of Justice (DoJ). In 2011 this opinion concluded:
…interstate transmissions of wire communications that do not relate to a ‘sporting event or contest’ fall outside the reach of the Wire Act.
While poker players and the fledgling state online poker sites were delighted by this development, nobody was particularly surprised given that the original wording of the Wire Act seemed perfectly transparent on the matter. It therefore came as something of a shock towards the end of 2018 when the DoJ reversed its own opinion. The new opinion concluded that the provisions of the Wire Act are “not uniformly limited to gambling on sporting events or contests.”
At the time of updating this article, the current pendulum seems to be swinging back in favor of the 2011 opinion. Specifically, on June 3rd 2019, ruling on action brought by the New Hampshire state lottery (yes, this really is all absurd), U.S. District Court Judge Paul Barbadoro issued a summary judgment that the Wire Act “is limited to sports gambling.” The DoJ is reported to be contemplating a challenge to this ruling.
Online Poker: State By State
Against this background of chicanery and chaos, we also have state legislation (or a complete absence thereof) concerning online poker. The leader in regulated online poker was, predictably, Nevada. Buoyed by the 2011 DoJ opinion, Nevada arranged with Delaware and New Jersey to combine player pools. The 2018 reversal has the potential to quash this arrangement, but for the sake of completeness we should point out something even more alarming.
Recall that the Wire Act refers to the transmission of communications across state lines. At first sight, intrastate poker would appear to be immune from such provisions, until one recognizes that the internet doesn’t work like that. It’s perfectly possible for a player in Nevada to “transmit” their intention to raise to $3.50 and have that transmission wander into California before getting to the WSOP.com servers back in Nevada.
Whether these limited interstate pools survive is currently unclear. However, if one’s goal is to see federal regulation of online poker, many have pinned their hopes on legalization in individual states producing the required pressure for such action to take place.
Note too that we are potentially dealing with a classic case of state versus federal rights; an area that students of history will recognize as something of a hot potato for the last couple of centuries. For example, the broadest possible interpretation of UIGEA would hold that federally, the current state-based regulated online poker sites are in breach of the law when they accept deposits. The situation is paralleled by the ongoing question of marijuana legislation. In Nevada a licensed dispensary can sell marijuana and the purchaser can legally possess it, despite both aspects of this transaction being a federal crime.
For the remainder of this discussion we are necessarily wandering further into the realms of speculation. In this spirit, we suspect the most probable path to a healthy online poker scene in the U.S. involves: a) a clarification of the Wire Act stipulating that it does not apply to online poker, even though that is what the damn thing clearly states anyway; b) individual states regulating intrastate online poker and then seeking reciprocal arrangements with other states to pool players; c) a clarification of the UIGEA such that poker is recognized as a game of skill and thus exempt.
Below we give our best guess on where each state is in this process and how likely they are to pass legislation regulating online poker. Before doing so, however, we feel it is important to emphasize one central fact in this circus. No U.S.-based online poker player has ever been convicted for playing online poker. Even in states like Washington where simply having online poker software on your computer is a class C felony, nobody has even been charged with violating the law. This is important for a couple of reasons. First, the principle of deseutude means that laws like the one in Washington may now be impossible to enforce anyway. Second, while much of the silliness in the legal history described above has been advanced by those with deep pockets and vested interests, the fact that poker players themselves have not been subject to any criminal implications suggests there is no appetite for such a battle. U.S.-facing online poker sites report that they have customers from all fifty states. It would, in our opinion, take a seismic social or political shift for that to change.
And now to the state by state break down. Again we emphasize some of this is little better than guesswork, but we have incorporated as much information as possible, including state law regarding land-based gaming and gambling, as well as any recent history of legislation pertinent to online poker. We’ve lumped together states in one of four categories. “Regulated” is self explanatory. The “probable” category includes all states where we anticipate a better than 50% chance these states will pass legislation to regulate intrastate online poker within 3-5 years. Unfortunately, with so little clarity in many cases, this is essentially equivalent to the prediction that more than half these states will have regulated online poker within that time frame; precisely which states is fuzzier. That said, where specific information does exist we have briefly summarized it. The “possible” category includes those states where we assess that it is odds against regulated intrastate poker being on the statutes within 3-to-5 years. Finally the “forget about it” category includes those states with an historical antipathy to any form of gaming or gambling.
Please note that we’re dealing with an unpredictable landscape. If, for example, the issue of the scope of the Wire Act ends up in the Supreme Court, the outcome will have a profound effect on these estimates. If online poker is specifically excluded, it will encourage online poker providers to lobby more aggressively for regulatory legislation, since the additional promise of interstate poker makes the whole operation more financially viable. Similarly, the political make-up of state legislatures can change radically with each election, particularly in these turbulent political times.
Delaware, Nevada, New Jersey, Pennsylvania, West Virginia.
Regulated online poker is present, if not exactly thriving, in the first three states which also (currently) share player pools. Pennsylvanians were offered online gaming on July 15th 2019, but as yet no poker options are available. Part of the hold up appears to be a result of the confusion sewn by the ongoing nonsense with the DoJ. West Virginia passed the relevant legislation in March 2019, but most estimates see 2020 as the earliest regulated online poker will be available.
Arizona, Colorado, Illinois, Iowa, Maryland, Massachusetts, Michigan, Ohio, New York.
Most of these states either have existing land-based casinos, and/or have shown interest at the legislative level for the potential tax revenue online poker and other gaming might bring. New York would be a key state because of its population and wealth. Active supporters of online poker in the state Senate, along with regulated poker in neighboring states, give us hope.
California, Connecticut, Florida, Indiana, Kansas, Louisiana, Maine, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Virginia, Washington, Wisconsin, Wyoming.
The big prize here is California and we would love to place it in the “probable” category. Our pessimism stems from the fact that multiple attempts to pass legislation have been made, always running into seemingly insurmountable obstacles. Florida would also appear to offer some promise, but recent opinion polling has indicated little public support for online gaming. Washington may come as a surprise as not being entrenched in our final category, given its current penalties for online poker playing, but the state legislature has shown a degree of pragmatism when it comes to potential tax revenue.
Forget About It
Alabama, Alaska, Arkansas, Georgia, Hawaii, Idaho, Kentucky, Nebraska, South Carolina, Tennessee, Texas, Utah.
The common themes here are current stringent prohibition of any form of gaming/gambling, and/or an absence of legislative activity towards the regulation of online poker. One might hope pride in the most popular form of poker carrying the state’s name would move Texas into a higher category, but a combination of legislative hostility to gambling and apparent disinterest in online poker makes progress unlikely.