Poker Law Opinions

Is Online Poker Illegal?

I read this article from Allyn Jaffrey Shulman (legal counsel for a large poker site) on the Poker legislation in America.

She says and I quote: "Misleading news stories abound both online and in print regarding the passage of the Unlawful Internet Gambling Enforcement Act. The completely incorrect interpretation states that the new bill essentially outlaws most forms of Internet gambling. The new bill absolutely does no such thing.

I have been analyzing legal issues for 25 years. I have gone to court thousands of times interpreting statutes and I have taught new lawyers the correct method by which a statute should be analyzed. For over 15 years I was part of a legal hotline where California attorneys would call me with a legal question. As this is my field of expertise, I am flabbergasted at the misinformation being perpetuated regarding the new bill."

She also says that, "The New Bill Does Not Make Online Poker Illega.l" - Ok we at Pokernex can see how that can be the case but this legislation went after the payment mechanisms around online gambling. Banks can not transact with Online poker rooms. It's pretty clear that this is going to be enforced.

I think this is what she is saying here, "The new bill attempts to make it more difficult to get money into a site by forbidding US financial Institutions from funding the type of online gambling that the law has previously made illegal. The new bill does not make online gaming illegal where it was not illegal before. Let me say that again. The new bill does not make online gaming illegal. The bill merely speaks to the mechanism by which an online account is funded. I am going to spend some time in this article explaining the accuracy of my reasoning."

So my question here is if it's not illegal then why would the biggest players in the industry leave.

Apparently the crux of this legislation is:

"Section 5363 begins by saying that “No person engaged in the business of betting or wagering may knowingly accept…” electronic transfers, credit cards, etc. where a person is engaged in “unlawful Internet gambling.” This new law applies, if and only if, the gambling is already illegal under current law.

This brings us directly to the issue of what has been deemed illegal in the last 10 years since the first online casino opened its virtual doors. In a nutshell, sports betting is made illegal by the 1961 Wire Act, but poker is not.

Remember please, that the Attorney General’s office has not brought one lawsuit in 10 years against a poker site, even though it takes the position that online poker is prohibited by the Wire Act. "

So basically you need to work on the presumption that it's not illegal because they haven't prosecuted anyone yet, am I right Allyn? That doesn't wash for me and that's it really. Is online poker illegal. Maybe maybe not? Silly question, ok but really what our legal friend is saying is that the law is untested and is thus open to speculation.

The main guy (Senator Frist) behind the legislation thinks this:

He said: “for me as majority leader, the bottom line is simple: Internet gambling is illegal.”

Allyn now argues that online poker is not illegal and offers up some evidence.

"Even though the Attorney General’s office has publicly taken the position that the 1961 Wire Act forbids online poker, in 10 years they have not put their money where their mouth is. Why? The judiciary (that is, the interpreting body) has already held that the 1961 Wire Act doesn’t speak to poker. It only applies to sports betting.

The case in point to which I refer is “In Re Mastercard International,” decided by District Court Judge Stanwood R. Duvall, Jr. in 2001. Among other issues, Judge Duval was faced with the question of whether the Wire Act applied to online gambling. The posture of the case was interesting because many deadbeat gamblers attempted to avoid online gambling debts they had incurred by alleging that the money they owed their credit card companies amounted to illegal gambling debts in violation of the Wire Act. As a matter of fact, there were so many similar suits filed by so many gamblers who did not want to pay their losses that the lower court consolidated 33 such similar charges.

Judge Duvall ruled that the Wire Act only prohibited wagering on sports events and he dismissed all 33 cases, noting that “Comparing the face of the Wire Act and the history surrounding its enactment with the recently proposed legislation, it becomes more certain that the Wire Act's prohibition of gambling activities is restricted to the types of events enumerated in the statute, sporting events or contests.” In other words, online poker was not within the reach of the Wire Act’s prohibition. The District Court of Appeal agreed with Duvall’s ruling that the 1961 Wire Act does not apply to online poker."

Ok so there is strike one against the legislators that believe that online poker is illegal. But other judges may dissagree with this ruling and to Allyn's credit she does mention this.

More evidence can be found according to Allyn with a representative Goodlatte, who authored one of the online gaming bills in the House, acknowledges the limitations of the Wire Act. “We need to modernize the Wire Act, which is 45 years old, and does not apply to all forms of gambling,” says Goodlatte, adding, “It clearly applies to sports betting.”

Ok so then why are companies pulling out of the US market? Basically it's hysteria according to Allyn but in my view it's the way these companies are constituted. They are publically listed entities in the UK primaily and they need to act inside the law emphatically. No chances will be taken by the exec's of these companies. These companies you can argue should never have been listed in the first place because of their volatile industry and lack of maturity because of this. Basically placing these companies in the public domain doomed them. The pioneers of the poker industry have failed because of their short term greed and success.

I guess in time we will see how the real winners are in this battle but what can be sure is that the current legislators are out to stop internet poker through what ever means that can muster.