Poker Law

Poker Law Issues

Internet Poker

We are currently in the midst of an historic evolution. The current onslaught of national laws being proposed, debated and passed by federal governments regarding Internet Gambling and/or Internet Poker is the first licensing, regulation and taxation of an Internet commerce industry. The precedents being set will have serious implications for the Internet far into the future. Some of the issues at hand are:

Individual freedom and choice.
Fair and free trade.
States rights.
Personal responsibility vs. government intervention.
Precedence of public health issues over free trade.

The laws being passed vary country to country. Some have outright bans, although such bans are largely ineffective in stopping the players and simply force the use of sites with no federal oversight. Some have adopted open access policies, such as the United Kingdom where all sites, both foreign and domestic, can obtain a license. Italy has adopted legislation wherein licensed sites must restrict access to only players within the country; France is in the process of adopting a similar scheme. And some countries, such as Portugal, Holland and Sweden, have laws that legalize only a state-run site, giving their federal government a monopoly on Internet gaming.

U.S. Poker Law

In the United States, the debate and proposed legislation is ongoing. Currently the status of the legality of Internet poker in the United States is in question. Although there is no federal law which makes Internet poker illegal, the Department of Justice has interpreted the Wire Act of 1961 to outlaw all Internet gambling, including poker, and has used this law and the Illegal Gambling Business Act to justify the seizure of funds being transferred from sites to players. The DOJ has stepped up these actions against poker, and online gambling in general, since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006.

The UIGEA does not define Unlawful Internet Gambling but rather relies on state laws to define what is unlawful. The only thing that the UIGEA prohibits is the acceptance of money transfers by sites for the purpose of "unlawful Internet gambling". The act mandates that the financial transaction providers (banks, payment processors, etc.) must monitor and enforce this ban by blocking prohibited transactions, and can be penalized for failing to do so. Since the UIGEA doesn't specify which Internet gambling is unlawful, and the related Treasury regulations do not provide a list of prohibited sites, the transaction providers are forced to "overblock", that is to block any transaction related to Internet gambling, including Internet poker, whether it is prohibited by the state where the player is located or not. Under the UIGEA, these institutions cannot be penalized or sued for such overblocking.

For more information, see The UIGEA FAQ.

The legality of Internet poker in the U.S. has yet to be decided definitively in any higher federal court, or by federal legislation. There are currently legislative bills before the U.S. Congress to license and regulate, and tax Internet poker and Internet gambling.

State Poker Law

Although a few states outlaw all forms of wagering or specifically name poker as a prohibited game (unless by a licensed facility), most state laws only prohibit gambling games which are games of chance. This leaves open the legal question of whether or not poker is a game of chance or a game of skill and thus is poker a gambling game under the state laws. To determine if a game is chance or skill, most states adopt the "predominance test": Is the outcome of the game predominantly determined by skill or by chance? This question is yet to be tested in the courts in most states, but some recent rulings Colorado, South Carolina and Pennsylvania have given support to the argument poker is a game of skill. These cases are still ongoing through the appeals process, so no final precedents have been set, except in South Carolina where the appeals court clearly ruled that poker is a game of skill and therefore not illegal gambling.

Thanks largely to the work of the Poker Players Alliance, the trend today is clearly towards establishing that legally poker is a game of skill, not a game of chance. This will make poker clearly legal in about 40 states. For more on specific state laws, visit Gambling-Law-US.com. Also visit our Florida Poker Law page.

Also at issue is whether or not state laws make Internet poker illegal. The language of most state laws that prohibit gambling do not address gambling on the Internet as the Internet did not exist when the laws were established. Most state legislatures have not addressed this issue but some state courts have set precedents that the laws apply to the Internet as well. It has become a clear court precedent that gambling takes place at the location of the person who initiates the bet. However, most state laws do not make the act of gambling by the bettor illegal but rather make the operation of a gambling business illegal. So the question becomes whether or not the Internet business has a physical presence in the state where the bettor initiates the bet on the Internet even though the business is located outside of the state.

Hopefully the courts will not establish such a precedent as this will wreak havoc on the whole of the internet. If sites become liable to the laws where the Internet user is located, nearly every Internet site will be violating some law somewhere in the world. For instance, a site which criticizes Chinese human rights policies may become liable under Chinese law. Freedom of speech as well as commerce on the Internet would be greatly hindered by such an interpretation of law.

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