Online poker is illegal in the US!

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arrow 3 Online Poker is Illegal

There, I said it. The PPA is never going to say it. The online poker sites are never going to say it. And many players and industry people have repeated the “online poker is not illegal” mantra for so long that many people have begun to believe it.

But it’s not true.

Let’s just look at some of the arguments being made by those that claim that online poker is legal:

There are no federal laws prohibiting online poker

True. But there are plenty of state laws prohibiting gambling. Washington State is a perfect example because it explicitly defines online gaming as illegal. But other states have laws prohibiting ANY unlicensed gaming. For instance, Chuck Humphrey has pulled together relevant California gaming laws and it says pretty clearly:

Penal Code Sec. 337j

(a) It is unlawful for any person, as owner, lessee, or employee, whether for hire or not, either solely or in conjunction with others, to do any of the following without having first procured and thereafter maintained in effect all federal, state, and local licenses required by law:

(1) To deal, operate, carry on, conduct, maintain, or expose for play in this state any controlled game.

(2) To receive, directly or indirectly, any compensation or reward or any percentage or share of the revenue, for keeping, running, or carrying on any controlled game.

(3) To manufacture, distribute, or repair any gambling equipment within the boundaries of this state, or to receive, directly or indirectly, any compensation or reward for the manufacture, distribution, or repair of any gambling equipment within the boundaries of this state.

For clarification, poker is considered a controlled game

To my knowledge, no online poker site has even applied for a license to operate in California. So if you have to have a license to operate in California and you don’t have a license guess what that makes it? Illegal.

And there are enough states that have laws like this that it is absurd to say that online gambling is legal in the US. NY, CA, and many other states have laws prohibiting unlicensed gambling. If one were to recraft the sentence to make it factually correct it should be, “Online poker might not be illegal in a handful of states in the US.”

It’s not illegal for US players to play online poker

This is true in some cases but with all the caveats of the above point concerning state laws. In some states it is illegal to engage in any form of gambling. In other states the player is not breaking the law but the person providing the game is committing a crime. And in yet other states, there is some grey area.

So at best, you can say that some players are breaking the law, some aren’t but are playing in an illegal game (since it’s illegal for the card room to even offer it), and in other states they laws aren’t clearly defined enough to say who is breaking the law or if any law is being broken at all. That clearly doesn’t sound like a blanket “Poker is legal in the US” that many people use in their press releases and talking points.

But, if poker isn’t illegal at all as many people claim, perhaps they can explain all of these raids on home games:

Reno 911 (The home game)
$10k home game raided in Georgia
Police Raid Poker Game in Tenn
Fairfax County Police Raid Home Game
Police bust poker game in Utah
Poker Raid in North Carolina Not a Big Surprise

Clearly, state and local governments around the US don’t think that poker is legal. And if live poker is illegal then online poker would similarly be considered illegal. The only difference is that cops don’t have the resources to go into every home and bust players or shut down the online poker rooms.

Cops bust local games because they can. They usually receive a complaint from a disgruntled player who rats out the game to the cops and then serves it up to them with the time and date of the next game.

Admittedly, most of the cases get tossed before going to trial and/or people are given a slap on the wrist but the laws exist. I once received a speeding ticket for doing 22 in a 15 mph zone (an alley). The judge dismissed the case as soon as he read the complaint because he felt it was ridiculous. But the law existed and I did violate it. Getting off lightly or without any punishment does not negate the existence of a law.

PokerStars and Full Tilt are licensed and regulated gambling companies

So what? All that means is that they have licenses that are valid in the Isle of Man and Alderney and some countries have chosen to recognize those gaming licenses. The US hasn’t.

For instance, if MGM wants to set up a casino in downton Los Angeles they can’t just roll into town and set up a casino without applying for a California gaming license (and probably getting county and local approval as well). Their Nevada gaming license only gives them the right to operate in Nevada. They have no right to operate a casino in any other jurisdiction.

Same applies to Alderney, Isle of Man, Malta, Gibraltar, or any other gaming license. You have a license that gives you the right to offer gaming in that jurisdiction. It does not give you a right to offer gaming in any jurisdiction that does not recognize their gaming licenses.

Likewise when Harrah’s wants to open an online poker room in the UK it has to seek a relevant gaming license there. Just because it has gaming licenses in other countries doesn’t automagically give it a right to just open up a poker room and start dealing cards.

And to be perfectly blunt, these foreign gaming commissions don’t really have any bite. Look at the Ultimate Bet and Absolute cheating scandals. They’ve been allowed to keep their licenses despite lingering questions about who was involved in the cheating and not one single person has been prosecuted in any jurisdiction. I’m sorry, with all of the evidence against various individuals in those cases a reputable gaming commission would have yanked their licenses are taken extreme disciplinary action.

When I play poker on PokerStars I’m playing in the Isle of Man since that’s where they’re located

At best this is a weak argument. But I’ll defer, again, to Chuck Humphrey who has examined this defense on this website. Basically, it is generally accepted by US courts that in any transaction conducted over the internet that the transaction takes place in both places (assuming a two party transaction). In other words, if Amazon sells you a book then the transaction occurs both in the state where you live and placed the order and Washington State where Amazon is headquartered.

Here’s a fairly good look at the topic of online jurisdiction from FindLaw.com

Although no bright-line test exists, most courts have applied an “interactive-passive” distinction when determining personal jurisdiction over someone operating a Web Site. Generally, courts have conferred personal jurisdiction in cases where “interactive” uses of the Internet have taken place within the state. Interactive contact encompasses two-way online communication which fosters an ongoing business relationship, while “passive” contacts are those that simply make information available to interested viewers. A Web Site can be characterized as interactive if business transactions can be conducted over the Internet or if information can be exchanged with users for the purpose of soliciting business. In making an “interactive vs. passive” determination, the greater the commercial nature and level of interactivity associated with the Site, the more likely it is that the Web Site operator is “purposefully availing itself” of the forum state’s jurisdiction.

I think it would be next to impossible to argue that the online sites are not engaged in an interactive relationship if they’re offering poker and taking rake from a resident in that state.

And really, you want the law to be like this. If you live in California you want vendors that you do business with over the internet to obey California laws that protect you as a consumer. Otherwise all online companies would just set themselves up in a jurisdiction that had the least consumer protection laws and wouldn’t worry about it.

Conclusion

Through the posturing of the PPA and the online poker sites themselves a false impression has been created in the poker world. The “Poker is not a crime” or “Poker is not illegal” phrase has been thrown around so often that many people believe it. But it’s simply not true. In fact, leading people to believe that it’s not illegal has done the entire industry great harm due to the fact that players (i.e. voters) have been apathetic on the issue since they feel that it’s legal anyway.

While online poker may not be illegal for the player in some states that does not translate into a US-wide statement that poker players aren’t breaking any laws when they play. In some states they are breaking the law. And people as savvy as the PPA should know that and should not be making statements that deny that fact.

I know this post will make some people angry. And I think that’s good. But don’t be angry at me. I’m simply presenting facts. Get angry at the people preventing you from playing online poker legally.

Ship It Holla Ballas!

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About Author

Bill Rini has been working in the online poker industry since 2004. He was a product manager for poker at Full Tilt and was the poker room manager at PartyPoker. Currently, Bill is the Head of Online Poker for WSOP.

 

Bill has been blogging about online poker since 2003 and is considered one of the leading authorities on the online poker industry.

 

“I like What Bill Rini said in his blog” – Doyle Brunson

 

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(4) Readers Comments

  1. @Adam: Nice to see your comment. Thanks.

    I’m not really sure what risk they would be at. It’s not illegal to develop software that facilitates gambling. It’s illegal to offer gambling to US citizens (according to state laws). As long as they steer clear of allowing their platform to be used to allow gambling to US players I can’t see any legal problems for them.

    Or in another example, what if California legalized online gambling and the state hired a New York software development firm to build and promote the site? As long as they’re not breaking any New York laws why would anybody have a problem with that?

  2. Bill,

    One point that came up in my mind reading your post is regarding companies like Everest Poker, which operate out of the US but don’t offer games to anyone inside the US. I guess the argument would be that part of their operation (perhaps a key part, from a legal perspective) is not in the US. But it seems like it would be unwise regardless to have a major branch of the company located in the states if it might be interpreted that people there are involved in conducting online games. What do you think?

    -Adam

  3. @Ken – LOL.

  4. So, you are telling us that you aren’t a swinging ex-pat but a criminal hiding out because of your past sins?

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