US Politics is Impacting the Future of Poker

Ask any American player what the most important date in online poker history is and you are bound to get one of three answers. “Old-timers” may say it was January 1, 1998. That was when the very first hand of real money poker was dealt on the Internet. It happened at PlanetPoker, ushering in a new era of online card play that would involve an estimated 15 million Americans by 2006.

Those who follow politics closely will tell you the critical day was Friday the 13th of October, 2006. That’s when U.S. President George W. Bush signed the “Unlawful Internet Gambling Enforcement Act” (UIGEA). The statute didn’t prohibit poker playing online, but it effectively banned American financial institutions from processing transactions with online gambling operators. That forced sites like the biggest one, PartyPoker, to stop taking wagers from American players.

More recently, players have been pointing to “Black Friday,” April 15, 2011, as the most infamous date. That’s when the U.S. Justice Department indicted PokerStars, Full Tilt Poker and Absolute Poker for violation of UIGEA. The deposit accounts of their U.S. customers were frozen and the entire world of Internet poker was tossed into chaos.

No Longer America’s Game

Oddly enough, players outside the United States might choose the same three dates, but for very different reasons. The 1998 date signaled the opening of a new market for poker room operators based far beyond America’s borders. Unwittingly, making it possible for U.S. poker players to wager online meant anyone anywhere could offer them a game. Sites quickly sprang up in Europe, Central America and the Caribbean, where laws were less restrictive while set-up costs, maintenance fees and taxes were low.

The 2006 date caused American players to flock to PokerStars and others that thumbed their noses at U.S. law. UIGEA essentially gave the entire market away to the rest of the world by removing the USA as a competitor in online poker. It also paved the way for the creation of virtual banks, e-wallets and other non-traditional financial institutions on the Internet—go-betweens that could operate offshore beyond UIGEA restrictions.

And Black Friday wasn’t dark at all for most non-U.S. poker players. In fact, it was cause for more than a few to celebrate. Freezing funds and banning “Yanks” took many major American pros from the tables, creating even more opportunities for skilled players elsewhere. And the caliber of play outside the U.S. has been steadily on the rise since American politicians started interfering with online play. One needs only glance at final table participants of WSOP events to see more and more German, Italian, Dutch, British, French, Bulgarian, Australian, Norwegian and other non-American players listed.

What’s Likely to Change?

So what does UIGEA enforcement mean for the future of poker? In the short term, for non-Americans, it will have little effect at all. The sport is still growing in Europe and South America. Prohibitive restrictions in China will likely remain in place. The poker world has adjusted to the loss of U.S. leadership, and in many ways it is not missed at all. Even as some countries follow the American model and restrict play online, most see it as good business, harming no one, and adding much-needed tax revenues to government coffers.

At the same time, nothing the United States has done politically has stopped Americans from playing poker online. Just like the abolition of alcohol in the 1920s made bootleggers rich, so UIGEA is lining the pockets of those willing to supply what the market demands. Sites like Lock Poker and Carbon Poker are happily reaping the benefit of accepting U.S. residents, much like PokerStars did when PartyPoker shut the door. Other sites have decided to move operations further from U.S. jurisdiction, such as Bodog’s relocation to Latvia and rebranding as Bovada in order to continue to welcome U.S. players.

As of this writing, there is no legislation pending in Washington that would ban poker rooms, real or virtual, on a national scale. Nor is there any movement to repeal the 1961 Wire Act or UIGEA and legalize online poker nationwide. The two Acts remains intact as the prevailing laws of the land. But individual states are not waiting for federal lawmakers to choose sides in a battle between freedom and prohibition. They are taking steps of their own to address the issue, some making poker play of any sort illegal and others taking steps to profit from a shunted market.

For example, on June 22, 2012, the Nevada Gaming Commission approved the first licenses for online poker rooms within state borders. The move was based upon an understanding that UIGEA rules do not apply locally, as confirmed in December 2011 by the U.S. Department of Justice. Meanwhile, Colorado, California, New Jersey and even the District of Columbia are considering similar action on a local level, perhaps leading to cross border agreements and eventual “regional zones” for legal Internet card play.

Lest anyone doubt that the world of poker is thriving in spite of U.S. political shenanigans, just look at the overflowing crowds at the 2012 WSOP events and the millions of “social” players newly taking up the game through Facebook. American politics is simply out of step with reality. There will always be tables open for anyone who wishes to play.