Online poker in the United States received a boost this past week after the Department of Justice issued a issued a legal opinion stating that the 1961 Wire Act prohibited online betting only for sports events and contests, and not Internet games such as poker or lotteries.
The request for clarification of the Wire Act as well as its possible conflict with the Unlawful Internet Gambling Enforcement Act (UIEGA) came at the request of the states of New York and Illinois who are both seeking to use the internet for potential lottery sales.
The Federal Wire Act of 1961 which is one of the primary laws that prohibited any form of gambling by means of telecommunication methods that cross state lines or international borders. The UIGEA which was passed as part of the Safe Port act during President George W. Bush’s term, “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.” It does not outlaw online gaming, it merely prohibits the transactions for players to fund their accounts. Notable exceptions to the UIGEA’s reach are gambling events such as fantasy sports, inter-tribal and intra-state gaming.
Previously, the DOJ has aggressively enforced the prohibition on online poker using the Wire Act, creating the famous Black Friday and closing down three major online poker companies from operating in the United States: PokerStars, Full Tilt and Absolute Poker, stating that they had violated the act by servicing U.S. residents. Of those three companies, PokerStars is still the only one still in operation but only outside of the United States. Does this mean that the Black Friday ruling could be overturned?
Many governments are in desperate need of tax dollars but their citizens are not willing to accept tax hikes so therefore this leaves the governments looking to gambling as a source of new tax revenues. As we have seen in Canada, several State governments in the U.S. are seriously exploring the possibility of offering online gambling to its residents as a new source of revenue for their coffers. The states of California and Nevada and making progress to be allowed to offer internet poker some time in 2012. The Nevada Gaming Commission has approved some internet poker regulations on the 22nd of December and several companies are already seeking a license. Now what needs to be established is whether there will be a national framework where citizens of the entire United States can gamble against each other or whether it will be an intrastate framework where only citizens of a particular state can play against other citizens of that state. This will depend on the success of a Federal Bill in the upcoming year. It will be interesting to see where all of this leads in 2012.