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Legality of Online Poker

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The first poker websites to accept real cash bets didn’t open until the end of the 90s – even back then, the legality of online poker was always a grey area for much of the US population. The first poker room to take a real cash wager was Poker Planet on January 1st, 1998. The increase in popularity of Texas Holdem, access to the Internet, and acceptance of online gambling led to the first big online poker boom around the year 2000, back when ESPN and other major TV broadcasters were regularly airing live poker tournaments and celebrity events.

Playing poker for real money is just entering its awkward adolescent stage – if it were a human, it would be studying for its driving test and working its first job. The industry has seen many changes over the fourteen or so years of its existence, from the early days of little regulation to recent actions by world governments to restrict or otherwise regulate online poker play. Let’s take a look at the state of real money poker on the Internet and what it all means going forward.

Black Friday and US Online Poker

The State of Real Money Poker on the Internet

The State of Real Money Poker on the Internet

On April 15th, 2011, the US Department of Justice seized five URLs used by three of the biggest online poker sites in the world: Pokerstars.com, Fulltiltpoker.com, Absolutepoker.com, Ultimatebet.com and UB.com. Known as “Black Friday,” that day saw the freezing of millions of player accounts and an end to easy-access American online poker play. The legal case against these poker sites, known as United States v. Scheinberg, was actually a federal criminal case against the founders of the world’s three biggest Internet poker companies: the founders of PokerStars, Full Tilt Poker and Cereus (also known as Absolute Poker or Ultimatebet) and some of their business associates faced federal criminal charges.

These sites were found to be breaking the Unlawful Internet Gambling Enforcement Act (UIGEA) passed in 2006, and that their founders were using fraud and money laundering to continue allowing American customers to make deposits and withdrawals. The immediate results was that PokerStars and Full Tilt were no longer allowed to let Americans play poker for real money. The founders of the poker sites in question didnt’ believe that the game of poker violated the specific terms of the UIGEA, their main defense against the federal charges they faced. Full Tilt and PokerStars were allowed to continue offering online poker to the rest of the world, though along the way, seventy-six bank accounts were frozen, including a big chunk of player account balances.

The most recent news on 2011’s Black Friday event is that the US government has finally dismissed all of their complaints against PokerStars and Full Tilt due to a settlement reached between the two parties. Basically, PokerStars has to buy out Full Tilt’s assets and the charges will be dropped. This means the end of = all litigation between the US Department of Justice and companies involved in Black Friday, however some individuals still face trial for specific criminal complaints made against them by the Department of Justice and the FBI.

The end-result for American poker players is that it is still really hard to find online poker games that accept bets from your country. Luckily, this situation could change in the very-near future. Read on for more about the future of the American online poker industry.

Online Poker Play Outside the United States

All of the Black Friday poker drama didn’t affect online poker outside the US at all, in fact, online poker is still as big in Europe, Asia, and other parts of the world as it ever was. The loss of the large US market meant lighter traffic at the world’s most popular sites, but markets outside of the US and some parts of Canada were totally unaffected by the legal troubles the world’s major poker sites faced in the United States.

The Re-Emergence of the US Online Poker Market

The Department of Justice gave online gamblers an early Christmas present in December of 2011: a re-interpretation of the 1961 Federal Wire Act which paved the way for state governments to decide whether or not they can offer online poker and other games of chance and skill to their own citizens. An appeal by several states to clarify the scope of the Wire Act, which states it is illegal to place a bet “by wire,” was originally a request on the part of some states to sell lottery tickets online.

The 1961 Federal Wire Act & USA Online Poker

The Department of Justice released a statement that the 1961 Federal Wire Act applies to sports wagers only, not games of skill like poker or luck-based games like lotteries and bingo. The immediate result of this was the sale of state lottery tickets over the Internet and at gaming kiosks around the country, but the more important development for the online poker player is the use of this re-clarification for the eventual state-based regulation of online poker in the USA.

Online poker will be big again in the United States, it’s just hard to say when or where it will happen. Several states legislative bodies are considering online poker legislation as of this writing. The DoJ’s clarification of the Wire Act allows state governments to tax and regulate their own online poker rooms and casinos, and may even allow interstate gambling sites, where states combine their player base into a larger and more profitable market.

The first state to tax and regulate online poker is Nevada – no surprise there, since gambling in almost every form has been legal in Nevada for a century. Other states that may soon open their own online poker rooms include New Jersey, Iowa, Pennsylvania, and New York.

That’s good news for real money poker fans who want to play their favorite game on the Internet. After Black Friday, most American poker players simply had to stop playing poker online; with state regulation, players will again be able to safely and legally play poker over the Internet.

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