Online Poker: The Road to Legalization

2014-02-14

While many Americans participate in online poker game with millions of dollars circulated each year, many skeptics question the legality of online poker and this issue have been a constant debate. Up until recently, under federal and state laws, online poker is illegal.

A clear path to legal online poker

The United States’ Department of Justice has long relied on the federal Wire Act of 1961 to assert that online gambling regardless of its form is illegal. In 2011, the DOJ states that the federal Wire Act of 1961 applies only to sports betting.

“The Department’s Office of Legal Counsel (“OLC”) has analyzed the scope of the Wire Act, 18 U.S.c § 1084, and concluded that it is limited only to sports betting.” - U.S. Deputy Attorney General James Cole.

When prohibitions simply did not work

Late last year, the president and CEO of the American Gaming Association stood before Congress, and as he testified before them, he let loose his thoughts, encouraging them to repeal their 7-year-old ban on Internet gambling.

His thoughts were mainly based on the core issue where prohibitions that were put into place simply did not work out the way they wanted it to be. He cited the Unlawful Internet Gambling Enforcement Act of 2006 and the Wire Act, giving examples of how Americans simply did not heed the ban in the 20's. As for recent times, Americans blatantly ignored the law, choosing instead to spend their money (as much as $3 billion dollars!) on illegal offshore gambling sites. Not only are they losing more money every day, the funds that flow out of the country also increases year after year.

In comparison, the legalization of gambling all over the United States will staunch the flow of money to offshore sources, while generating as many as 22,000 online gaming-related jobs.

Nevada, the first of the many

In, April 30, 2013, Nevada rolled out regulations and systems for online poker operation and licensing to become the first state in the United States of America to allow anyone and everyone regardless of their citizenship to participate in online poker games for money. The only condition is that the individual meets the minimum age requirement of 21 years and the computer used to play must be physically located within the state of Nevada.

New laws, new tech

Today, the states which have legalized online poker completely are New Jersey, Nevada and Delaware with many online poker sites popping up.

The proponents of online poker legalization highlights the fact that millions of tax dollars could be collected. A recent study by Academicon and PokerScout found that the market in California alone could generate between $217 and $263 million in its first year of operation. An expert states that it's only a matter of time until online poker becomes legal in all states of the US.

How does one legally participate in online gaming like poker, blackjack and slots? For starters, you'll need a working cellphone and a debit or credit card. The latter, obviously, will fund your wagers online. Then, in order to "verify" that you're in a legal state to play and wager, your cellphone will somewhat "broadcast" your location and if you're within the borders of a legal gaming state, say, New Jersey, you are allowed to bet and play as you wish. Failure to turn on your phone or merely being too close to state borders may hinder your desires.

More recently, Senators Raymond J. Lesniak and Jim Whelan from New Jersey introduced a bill last week which would allow New Jersey to enter into agreement with other countries or states where online gambling is legal.

While current New Jersey state law requires that anyone playing poker online in New Jersey be physically located in the state, this bill if approved will allow people in these places to access the poker websites based in the state including popular companies like WSOP.com. Ultimate Poker and casinos like Caesars and the Golden Nugget.

Many financial institutions have been very reluctant to allow credit cards to fund online gambling accounts remembering the days the federal government relentlessly hunted down online gambling operators. The new bill however, will set requirements for licensing payment processors with casino industry service license in a bid to persuade financial institutions to allow the usage of credit card in online gambling without much hassle.

The objective of this bill is to grant what supporters of online gambling have always wanted, granting casinos access to the global online gambling market.

“This opens up the worldwide market to us, the $30 billion Big Kahuna,” Senator Lesniak said.

In 2013, online gambling generated $8.4 million in revenue and analysts expect that figure to boom as more players joining in the game with more advertisement deployed and mobile applications being expanded. The bill, if approved will bring in millions of new players to New Jerseys’ poker sites.