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The Federal Laws of Poker in the United States.

In the United States, gambling is ingrained in society. Even during the Revolutionary War, the United States used lotteries and raffles to earn money. Not long after, New Orleans was known as the nation’s gambling capital, thanks in large part to early residents’ penchant for lotteries. States began legalizing bingo for charitable purposes only in the 1900s, and Nevada was the first to legalize gambling.

Here are the most important federal laws and planned legislation affecting US poker operations.

Implications of 2011 and 2018 Wire Act Decisions – Wire Act

The Federal Wire Act (sometimes called the Interstate Wire Act of 1961) was passed to prevent sports betting over state lines using wire connections. While originally intended as an anti-corruption measure against organized crime gangs, the law’s applicability to bets placed via wireless internet was called into question when online gambling emerged. As a result, the Wire Act was re-examined by the states of New York and Illinois, which intended to use the internet to sell lottery tickets via out-of-state payment processors.

A legal opinion issued by the US Department of Justice in 2011 changed the definition of “wired” under the Wire Act. It concluded that wire communications sent over state lines unrelated to a “sporting event or contest” are not covered by the Wire Act. This ruling amended the Wire Act to apply to athletic events, not lotteries or online poker. Aside from that, it allows each state to regulate and legalize online gambling as they see fit, except for sports betting.

The Trump Administration’s DOJ published a new memo in 2018 to modify the Wire Act’s application once more. Instead of making things clearer, the new interpretation just muddied the waters, making online gaming more difficult to understand. It threatened the future of the whole online gaming industry, including online lotteries, internet poker, and casino games.

In 2019, the New Hampshire Lottery Commission and NeoPollard, its online platform provider, sued the US Justice Department and US Attorney General William Barr to overturn the most recent Wire Act opinion. They were unsuccessful. An appeal by the Department of Justice and Attorney General Jeff Sessions to the First Circuit Court of Appeals began in 2020. According to legal experts, the case has the potential to go to the Supreme Court of the United States.

Is UIGEA a Good Idea?

The UIGEA was passed years before the DOJ ruling. Jim Leach and Robert Goodlatte, who wrote an identical bill, attached it to the 2006 SAFE Port Act. Bill Frist and Jon Kyl added anti-online gambling provisions to the Safe Port Act. President Bush signed the bill, emphasizing port security.

According to the UIGEA, online wagering cannot be used to accept or initiate “restricted transactions.” Gambling on “games of chance,” which included online poker and casino games, was now prohibited under the law. Financial institutions were subsequently compelled to prevent such transactions, and no legal action would be taken against the players.

Rather than outright banning online gambling, Congressman Barney Frank presented the Internet Gambling Regulation, Consumer Protection and Enforcement Act in 2009 as a countermeasure to the UIGEA. But the bill could not get the support it needed to be put to the vote.

The Disarray of Black Friday

Online poker sites such as PokerStars, Full Tilt, Absolute, and UltimateBet were all indicted under the Unlawful Internet Gambling Enforcement Act (UIGEA). Federal authorities brought indictments on these websites on April 15, 2011, after seizing their domain names and freezing their bank accounts. When some of the top US online poker companies were forced to leave the US market that day, it became known as “Black Friday.” Except for former PokerStars owner Isai Scheinberg, who has yet to turn himself in to US authorities to face prosecution, all companies’ executives were indicted. Subsequently, they reached plea agreements or brief prison sentences.

Except for PokerStars, no other online poker rooms remained open, denying players access to their money. When PokerStars immediately agreed to pay millions in fines, the different online poker operators were reimbursed for their losses.

A total of $114.5 million was distributed to the 45,180 former Full Tilt players over roughly three years, with the process wrapping up in 2016. A total of $37.5 million was paid out to former UB and AP players in 2017 alone, and by the end of November, almost 12,000 players had been approached for compensation.

Little US-friendly poker sites remain after Black Friday, leaving American players with few options. Only a handful of states have regulated online poker marketplaces; thus, offshore sites have gained and continue to gain popularity.

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