Is Online Poker Illegal in the United States?

We've been doing a fair amount of research here at Cruzino.com on this topic, and the answer is we still don't really know. We know that lots of people are doing it, but lots of people still wonder, and the courts don't seem to have really made a decision on this. In this article we'll show you some of the research we've found, and you can decide for yourself. Keep in mind that we are not legal experts, and this article is a collection of facts and opinions, not a legal analysis.

Overall, its very hard to tell if playing online is illegal. There is definitely a lot of information out there indicating that the US doesn't want you to gamble online. But, we haven't been able to find a specific ruling or law which says that it is illegal. I think this is a case where our laws haven't yet caught up with technology. The laws were written when the notion of playing in California at a casino located in Antigua was just not anticipated. Thus, while its definitely illegal to take bets here in the states, its not clear that its illegal to place a bet outside of the US while you are physically inside the US. I expect courts will rule on this soon.

All of the online gaming sites side-step the question by putting a legal disclaimer on their site and stating that it is your responsibility to understand your local gaming laws. I suppose that is true, but it sure seems like they should be helping us understand the law!

We did find some information on California gaming laws. California prohibits 11 specific games, including "21", and any "banking or percentage game." At the same time, California specifically allows licensed card clubs to take a non-percentage based rake from a pot. For example, if a pot is less than $10, the operator can take nothing. The operator can take $1 if its less than a $20 pot, $2 if its less than a $30 pot, and $3 if the pot is over $30. This is defined as not being a percentage game, and hence seems legal. Keep in mind that playing in a game is very different from running such a game. California Penal code states that it is illegal to "deal, operate, carry on, conduct, maintain, or expose for play in this state any controlled game." This applies to poker too.

One of the most referenced laws with regard to internet gambling is the Wire Act, which states, "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both." According to the Department of Justice, the Wire Act does indeed prohibit internet gambling. But according to Professor Nelson Rose, this law only applies to those in the business of betting or wagering. As such, it does not apply to the common player; only the "house" or business will be punished.

In February, 2001, there was a ruling by United States District Court Judge Stanwood Duval dismissed two cases against Mastercard and Visa and where he ruled that the Wire Act "does not prohibit Internet gambling on a game of chance." This ruling was further upheld on November 21, 2002 by the US Fifth Circuit of Federal Appleals Court. According to his ruling, the Wire act only applies to internet sports betting. (more information here and here)

Lastly, it is worth noting that some legislation has been attempted and failed in recent months. For example, in 1997 Senator Jon Kyl (Republican, AZ) introduced the Internet Gambling Prohibition Act (IGPA). The 1997 act died on the Senate floor. Senator Kyl revamped the Act and reintroduced it again in 1999. This bill passed through the senate, but failed passage through the House (07/17/2000).

Conclusion
I for one think its pretty silly that the US legal system doesn't have a clear answer on this. We know that sites like Party Poker have about 20,000 players online at any given point in time, most of which are from within the United States. Poker is popularized on TV and legal in several states. And yet, none of the people playing online can know for certain whether what they are doing is illegal. It seems legal, and there are even a few federal court rulings to back that up. But it also seems that at any point in time, an arbitrary decision by a more conservative judge could interpret the existing law in a totally different manner. I know that we all have a responsibility to understand the law. But in this case, the law is not clear in any way. Its unfortunate that as individuals we are left to interpret it as best we can, and yet we have to live with the fear that our interpretation could be overruled.

References

World Trade Organization paper on Cross-Border Supply of Gambling and Betting Services (Nov, 2004)
This paper was prompted by Antigua requesting that the WTO help resolve a dispute between Antigua and the United States where Antigua noted several US Federal and State statutes which made cross-border gambling illegal. Overall, there is no real conclusion from this paper. Antigua submits 14 conclusions about why it should be permitted, and the United States replies that "the recent growth in the remote supply of gambling raises serious regulatory concerns for the Government of the United States." The US also raises several concerns about internet gambling being linked to organized crime, money laundering, and other criminal activity. Overall, the WTO recommends that the US should drop prohibitions on Americans using online casinos.

New York court rules Net gambling illegal (July, 1999)
In this case, a New York based casino (WIGC) claimed that their casino was legal because it operated out of Antigua. The New York court ruled, "It is irrelevant that Internet gambling is legal in Antigua. The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York State."

c-net: Place a bet. Now go to jail (Feb, 2005)
In this article, the author discusses a number of questions that people have. But, like us, he doesn't have real answers.

Gambling and The Law
This site is run by professor Nelson Rose, a high profile researcher in the area of gambling law.

Internet Gambling
Very good analysis of the gaming industry and legal challenges by Nick Feldman.

The Internet Gambling Prohibition Act: An Analysis (May 1998)
UCLA Law analysis by Andrea Lessani.