Is online Poker legal?

The U.S. government has taken a stand against online poker and other forms of online gambling, based on an interpretation of the frequently cited "Wire Act" of 1961. This statute prohibits gambling over the telephone, and in the case of Jay Cohen, the Courts ruled that it does apply to online sports betting. Whether the Act applies to betting on a poker game, particularly when that game is operated from a foreign country, is still a matter of debate.

At the end of 2006, the Unlawful Internet Gambling Enforcement Act was rammed through Congress by the Republican leadership in the final minutes before the election period recess. According to Sen. Frank R. Lautenberg (D-NJ), no one on the Senate-House Conference Committee had even seen the final language of the bill. The new law does not apply to the players. The law addresses only the operators of online gambling businesses and financial institutions that transfer money into those businesses.

This law prohibits a business from receiving deposits for the purpose of unlawful online gambling. It also requires regulation of financial institutions. The Federal Reserve is directed to create new regulations within 270 days that will apply to financial institutions. The regulations will detail how financial institutions are to identify and block transactions from the US to unlawful online gambling businesses. Note that this does not include transactions to lawful online gambling businesses, nor does it include transcations in the other direction. Also, it specifically does not cover paper checks, due to practical difficulties in tracking them.

Key to this bill was the definitioin of what constitues a bet, which is risking something of value on the outcome of a game subject to chance. The many thousands of professionals who make their living playing poker will tell you that poker is a game of skill and not chance.

At a Wednesday hearing, the House of Representatives Judiciary Committee will debate the Internet Gambling Prohibition Act. An Internet gambling bill sponsored by Representative Jim Leach, an Iowa Republican, was approved by the House Financial Services Committee March 15. The third bill is sponsored by Senator Jon Kyl, an Arizona Republican.

Some sites have decided to leave the US market. Party Poker is the largest such site. If you live in the US, you will not be able to play at these sites any longer. All of the sites have said they intend to honor existing account balances. Poker Stars, the largest online poker site, continues to service the US market.

Testimony of Annie Dukeon behalf of The Poker Players AllianceHouse Committee on the Judiciary"Establishing Consistent Enforcement Policies in the Context of Internet Wagers"November 14, 2007