A History of Online Poker in the United States
Online poker in the United States is a bit complicated, and that can lead to some confusion on the legality of playing and the ability to get in on the action in general. What we have here is a guide to how you can enjoy online poker if you’re a player from the United States, along with a history of how things have changed for the game in this particular country over time.
Depositing and Playing Online Poker for US Players
If you’re looking to play online poker from the United States, then we have three main options that we suggest. Carbon Poker, Americas Cardroom, and Poker Host are all excellent places to play, and we have great bonus offers here that will help you to jump start your bankroll and get the most from the promotional deals that are available.
Players who are looking to get in on the action generally want to know what deposit options they have. The main two options for US players at this time are pre-paid credit cards and cash transfer services. Both are really straight-forward to use, and we’re going to give you a quick guide to what you need to do to make it work out for you in most cases. No matter which method you decide on, make sure to contact the customer service team for your site of choice to see if there are any special instructions you should follow before depositing.
Pre-Paid Credit Cards
You probably see pre-paid Visa gift cards available in stores all over the place. There are a lot of them to choose from, and you’ll want to make sure that you’re picking the right one. Ask the support team at your sites of choice to give you any specific instructions before you go out and buy a card to be safe, but you’ll usually be in good shape if you just look for a pre-paid Visa that says it can be used for international payments.
Money Transfer Services
Money wires and money transfer services are available from a lot of places including gas stations, department stores and more. Your poker room will have specific instructions for you when it comes to using this particular method. Although it might seem like a minor hassle to go out somewhere, specifically to make a deposit to play online poker, it takes some of the guess work out of the equation if you would be looking for a pre-paid gift card instead.
A Brief History of US Online Poker
The history of online poker in the United States is particularly complicated because there have been so many twists and turns with the legal situation. The actual legal structure of the federal government having laws that are on top of state laws complicates the situation further, and a bit of misguided and misunderstood legislation along the way has added even more depth to the history of poker in the US. We’re going to briefly cover each of the major periods and major events for online poker in the United States here.
The First Online Poker Rooms
The first online poker rooms started showing up in 1998 with the now-defunct site Planet Poker. This included access for US players, and a number of other popular sites joined the scene. By the beginning of 2006, the most popular sites included PartyPoker, PokerStars, Prima (now the Microgaming Poker Network) and Full Tilt Poker.
Players from the United States had access to plenty of options for payments including Neteller, MoneyBookers (now Skrill) and plenty of others, and there were enough rooms that had plenty of bonuses. However, all of that was about to change in a major way.
The UIGEA Passes
On October 16, 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed into law. The way the UIGEA was passed through the Senate was shady at best thanks to then Majority Leader Bill Frist. It was also one of his last acts in the Senate since he was ousted in the elections that followed and it was pushed through on the last day of the session of Congress.
There’s a lot of confusion about what the UIGEA did specifically. There are two main actions that it made illegal: One was for the banks, and the other was for game operators. The first made it illegal for banks to process deposits that were to be used for illegal online gambling. The problem with the law is that it put the burden on the banks to decide which types of online gambling were legal and which were not. As a result, banks just decided to block all online gambling deposits as a practical measure because of the costs associated with potential fines that could come from letting the wrong transactions through.
The second part of the law made it illegal for companies to offer online gambling in the United States without a license. This was interesting, to put it mildly, because there were no licensing processes set up in the USA at the time. It was also interesting because foreign companies aren’t subject to US law because they aren’t in a US jurisdiction.
International Effects of the UIGEA
The online poker world was completely shaken by the passing of the UIGEA. Even though companies outside of the United States were not subject to the parts of the law that made it illegal to run unlicensed games, they were still affected in two ways. The first way is that fewer deposits were being made from US players which hurt the poker economy as a whole. But what happened next is something that no one involved with the UIGEA could have anticipated.
In the case of companies like PartyPoker that were publicly traded on stock exchanges, they have to abide by all of the laws in the places they offer their services to remain on the exchange. This meant that companies like PartyPoker had to pull out of the United States completely. Instead of just having fewer players depositing, they lost complete access to the US player pool. Considering the United States was one of the main markets for online poker at the time, this was devastating for the industry.
The Rise of PokerStars and Full Tilt Poker
The big four poker rooms at the time were PartyPoker, PokerStars, Full Tilt and Prima. Prima and PartyPoker were forced out of the United States because of reasons like the above, and that left the door open for PokerStars and Full Tilt to completely take over. Several months after the passing of the UIGEA, PokerStars became the top online poker room in the world, and Full Tilt was right behind them in second place. They competed very seriously over American players, and if you were a regular player from the United States from 2007 until 2011, then you played at one or both of these sites on a regular basis.
A few really important things were established during this period of about four years. First, the games were getting more difficult on a regular basis because of the lack of deposits and the lack of recreational players feeding the bottom levels of stakes. It’s common knowledge among professionals that if you could beat $1/2 no-limit hold’em in 2010 that you would have easily become a millionaire playing in 2003. Second, rakeback and rewards programs became much more important as PokerStars and Full Tilt competed with each other to get more players by offering more and more rewards. This is often pointed to as an example of why a monopoly on online poker isn’t good for the players.
On Friday, April 15, 2011, just as a lot of American poker players were making last-minute changes to their tax returns, an event happened that absolutely crushed the online poker industry for United States players. This event is known as Black Friday, and it was marked by an indictment of PokerStars, Full Tilt and other major rooms on charges of money laundering, bank fraud and violations of the UIGEA.
If you were to go to the PokerStars or Full Tilt Poker websites at the time, you saw a take-down notice posted by the United States government. The industry that was working hard to survive after the passing of the UIGEA had been all but completely stomped out by these indictments.
It eventually came to pass that PokerStars and Full Tilt Poker had the charges dropped on the condition that they pay a lot of money to the US government in a settlement and agree to no longer offer their services in the United States. However, things took a hard turn when Full Tilt Poker’s records were investigated.
The Full Tilt Poker Scandal
The gaming license that Full Tilt Poker had required that all player accounts be held separate from operating accounts. In fact, each player had to be assigned a specific bank account that held their specific funds. Interestingly enough, a lot of players needed tax forms with details for these accounts if they held over a certain amount each year. Most online poker rooms have this sort of rule, but Full Tilt Poker hadn’t been following it.
While there were a number of reasons for the difference in funds, two main reasons stood out. First, there were payment processing issues where some players could make large deposits which were never actually taken out of their bank accounts. They could cash out these funds without any problems which created obvious problems. Second, millions of dollars were paid out in an apparent Ponzi scheme that involved a number of high-ranking members of Full Tilt.
When all was said and done, PokerStars agreed to pay back the more than $300 million to the players in a deal that allowed the Rational Group, the owners of PokerStars, to add Full Tilt Poker to their portfolio. It’s worth noting that the Rational Group would be later purchased by the Amaya Gaming Group, which brought the center of the poker universe, and the top two sites in the world by far, to a company traded on the Toronto Stock Exchange. This is exceptionally ironic considering the TSE is located a short car ride away from the United States border and less than 60 miles from Buffalo, New York.
Online poker in the United States is currently in a tricky place. There are a few reputable rooms to choose from that are reliable with cash outs and that have reasonable deposit options that usually consist of different types of pre-paid credit cards. Despite the fact that the Department of Justice has made it very clear that playing online poker does not violate any US law, online poker is still in a difficult place because the main sites aren’t running here.
State-Regulated Online Poker
After Black Friday, Nevada was the first state to set up and license their own online poker games. This was later followed by New Jersey and Delaware. One of the main problems that these games ran into was that the player pools weren’t large enough to sustain the games. The ecology of poker player pools is very interesting, but one of the main things you need to sustain games around the clock is enough players to fill the tables.
One solution to this is for the states to share player pools and split up the revenues according to the players that are contributing to the rake. Nevada and Delaware signed an agreement to do this in the first ever intrastate online poker deal for games that are licensed inside of the United States. While these games are still struggling to some degree, they are growing with time, and they could definitely be the top options for online poker players in the future.
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