Legal FAQ - Poker / Regulation / Intrastate

The legal situation regarding online poker and gaming in the United States is complex. As we move forward with regulation on a state by state basis, and possibly a form of regulation on a nationwide basis, you can only expect things to become more confusing.

So it’s no surprise to us when we see emails from confused readers. They wonder what the laws are, if it’s legal to play online poker in their state and when they’ll get their money back from Full Tilt Poker. We receive so many of these (same) questions that we thought it best to create a catch all page where we answer them and provide links to more in-depth explanations. That’s what you’ll find below.

Most Common Questions Asked About Online Poker in America

What is the UIGEA?

This is a piece of legislation that was passed in 2006. The objective of the law is to prohibit banks and financial institutions from processing payments for online poker sites. In other words, when you punch in your numbers at Carbon Poker or Bovada and hit submit, your request is supposed to be declined.

The UIGEA does exclude fantasy sports and intrastate gambling.

Is online poker legal in America?

As a nation – not yet. However, legislation was introduced in July 2013 by New Jersey. The title of this bill is The Internet Poker Freedom Act of 2013. It would introduce a program to license online poker for states and Indiana tribes. [1]

The legality of online poker is based on a case-by-case basis. For example, in Nevada online poker is legal. In fact, they launched their first real money site in April 2013. On the other hand, it’s a felony to play online poker (for real money) in Washington State.

In what states is online poker banned?

Few states have legislation that explicitly state that online poker is illegal or ‘banned.’ Washington is one example of a state that does. Indiana is another.

However, many states make gambling as a whole illegal. This includes states like Utah, Montana, Wyoming, Oklahoma, Nebraska, Missouri, Louisiana, Mississippi and Tennessee.

Your best bet is to read up on your state’s gambling laws. The best site for this information is Gambling-Law-US.com. [2]

Can I get in trouble playing online poker?

Technically, yeah. In states like Washington where it’s a felony to play, you can serve jail time.

That said, to the best of our knowledge no one has been arrested for playing online poker. In fact, some states have laws in place where they cannot even track what their residents do online, thus making it near impossible to know if they’re playing online poker.

What is Black Friday?

Black Friday was an event in April 2011. The Department of Justice, after some time undercover, indicted poker sites PokerStars, Full Tilt Poker, Ultimate Bet and others. They charged them with fraud and money laundering for breaking the rules established in the UIGEA.

The result was these sites falling out, leaving the country and facing huge fines. The only site that walked away – albeit scathed – is PokerStars. They paid lots of money to the DOJ, not only as a byproduct of being indicted, but to also be able to continue in the US market when the opportunity arises.

Who owns Full Tilt Poker?

PokerStars. They made a deal with the DOJ in 2012 to buy Full Tilt and their assets. The deal required PokerStars to pay $537 million over 3 years to the US government. Part of those funds will be used to pay back US players. PokerStars will also need to reimburse non-US members. That totals out to $184 million, bringing the grand total to $731 million.

What is intrastate poker?

Intrastate poker is the term used for online poker played within state lines. It doesn’t apply to only one state though – it can apply to multiple states sharing traffic pools. For example, if California and Nevada decide to work together and share player pools, that’s still considered intrastate poker.

What state do I have to be in to play at Ultimate Poker?

For real money you need to be in Nevada. However, you can have an account from any state and play for fake money.

The poker sites in Nevada enforce this by having your phone number on file and by checking what cell towers you’re nearby when logged into their software.

In what states is online poker legal?

The following states have legalized online poker / gambling: Nevada, New Jersey and Delaware. Several states have introduced bills, or are considering it in the near future. This includes Massachusetts, California, Pennsylvania, Illinois and Hawaii. Many of them are having difficulties getting the bills passed, though. And with all things, it takes time to review the bills, edit them, pass/veto them, etc.

Will online poker ever be legal in Washington State?

That’s hard to say. There has been talks about making the punishment less severe, although that has been put on hold as of early 2013.

So it’s possible, but the state is a ways off (think years) from it happening.

How do I pay taxes on my winnings?

The same way as if you were running a business. You’ll need to fill out forms, write a check and send it all to the IRS. Gamblers in the states are required to fill out a W-2G and 1040 form, per the IRS’ gambling income and losses page. [3]

That said, each person will be different due to their own circumstances. So we recommend talking to an accountant for the best, up to date advice. Try to find one that deals with gambling income, if possible.

Can I own and operate an online poker site?

For a while that was not possible. However, now with online poker becoming legal in some states, it (probably) is possible for you to operate a poker site online. If you’re interested in obtaining a license in one of the legal states (Nevada, New Jersey, Delaware, etc), your best bet is to check out their gaming control website and/or office to find out what steps you need to take. [4]

Can I get in trouble if I’m caught cheating?

Cheating – in terms of chip dumping, collusion, super user, etc?

In terms of legal trouble, that’s unlikely to happen in terms of chip dumping and collusion. I’ve not heard of anyone being arrested for it. You will definitely become a mark in the poker community though.

That said, the rules for legal online poker are sure to be different than unregulated poker. According to Shouse Law it is illegal to cheat at any gambling game in any Nevada establishment that provides licensed gambling. This could very well apply to online poker, which means there could be severe penalties if caught and prosecuted – including jail time. [5]

What happens when a poker site steals from me? Can I sue?

The problem with the online poker landscape as it is now – and likely one of the many reasons why unregulated gaming is frowned upon in the states – is because there is very little recourse for customers that have been wronged by online poker sites. They’re in a different jurisdiction, which limits your options for pursuing justice. Even if you had / have the ability to sue, the costs of doing so (remember, this is in a different country) may not be worth what you’re owed.

Do poker sites have to be licensed?

Yes, most countries / territories require companies to be licensed and regulated. However, that doesn’t mean that all do – or that they’re safe.

The states that are running legal poker sites do require their operators to apply for and obtain licenses. In Nevada it’s very expensive -- $500,000 for the initial one-year license, and $250,000 to renew it each subsequent year. [6]

That cost is a drop in the bucket compared to what the poker sites stand to make though.

What is the minimum age to play online poker?

18 for most sites. According to Ultimate Poker (in Nevada) you need to be 21.

Can I run a home poker game in my state?

Similar to online poker laws, whether you can host or participate in a home poker game depends on what state you live in. I recommend reading up on your state laws (we link to a good website in our resources below), checking out our state law pages and/or asking your local law enforcement.

Why will PokerStars be allowed to operate in the United States?

They made a deal with the Department of Justice. Despite breaking the law, they paid millions in fines, not only for themselves, but for (and to buy) Full Tilt Poker too. On top of that they’ll be paying license fees, taxes, etc to the state(s) and government.

The bottom line – most likely for additional revenue.

What is the Internet Poker Freedom Act?

According to Forbes [1]:

The Internet Poker Freedom Act of 2013 is a piece of legislation that if passed in its current form would establish a program for the licensing of Internet poker by States and federally recognized Indian tribes.  The bill [H.R. 2666] [7] was introduced by Representative Joe Barton (R-Tex) in the U.S. House of Representatives last week and was referred to the Committee on Energy and Commerce and the Committee on Financial Services.  It has a long way to go prior to becoming law, but the 102-page bill is now an at least an issue that Congress will address.

Why do some states make online poker illegal, but others don’t?

That’s hard to answer. Much of that has to do with who is in office, their views / opinions and the laws that are already in place. From my research much of it has to do with the location too. Take the ‘bible belt,’ for example. Many of the states in this area frown on gambling in general, online or live. Utah is another good example, also due to their strong religious influence.

If it’s illegal to process my deposit, why do banks continue to do it?

Some banks don’t know. Money going in and out of their system from poker sites tend to be hidden using shell companies or 3rd parties. The banks think they’re processing payments for a store or restaurant, when the truth is that they’re processing payments for Joe Blows’ Fun Time Poker. Black Friday is a good example of this. According to FBI Assistant Director in Charge Janice K. Fedarcyk via Wikipedia:

These defendants, knowing full well that their business with U.S. customers and U.S. banks was illegal, tried to stack the deck. They lied to banks about the true nature of their business.

Others do it for a fee.

Then, some of the defendants found banks willing to flout the law for a fee. The defendants bet the house that they could continue their scheme, and they lost.

Who is licensed to operate poker rooms in Nevada?

Right now the only sites that are licensed and regulated are UltimatePoker.com, owned by Station’s Casinos. WSOP.com is the second one, and they’re owned by Caesars Interactive.

Who is licensed to operate poker rooms in New Jersey?

Right now there aren’t any operators in New Jersey. That is set to change towards the end of November.

What happened to Ray Bitar? What about Howard Lederer?

Ray Bitar made a deal with US prosecutors. He was charged with bank fraud, money laundering and other offences. As a result he was sentenced to 65 years. He was also ordered to give up his assets, which includes homes and possibly up to $40 million in cash. However, his time is considered ‘served,’ as he found out that he was in need of a heart transplant. If he doesn’t get one, it’s estimated that he only has months to live.

Howard Lederer also settled. He admitted to no wrongdoing and had to forfeit more than $1 million, as well as real estate properties and vehicles. This was a long ways from the $42.5 million the DOJ was initially going for.

Who can gamble in Nevada?

Anyone over the age of 21.

Why is poker a game of skill in some states, but a game of chance in others?

It’s up to the courts in each state to determine their stance on the skill vs. luck debate.

Is play money poker legal in the USA?

Yes. Most state laws mention risking something of value in their statutes. Since you’re not risking anything of value when you play for fake money, you’re not breaking any laws.

How can sites like Ivey Poker and Club WPT exist?

The same reason as mentioned above – states that have a problem with (online) gambling state that residents cannot wager anything of value. On top of that it’s illegal for banks to process payments to/from unregulated poker sites. So what these sites do instead is allow players to buy in for free and compete for prizes. Sometimes these prizes are points or physical items, while other times it’s cash or entries to live events.

Is it legal to play poker on Facebook?

Yes, because as of now any poker game available on Facebook is for play money only.

Will Full Tilt Poker players owed funds face consequences from the DOJ?

Not from what I’ve read or seen, no. Players may not get all of their funds back, which is consequence enough.

Are poker affiliates being paid funds owed by Full Tilt Poker?

Based on my research it doesn’t appear that affiliates will be paid back. That’s because part of the stipulation of filing for eligibility for funds is that you satisfy their criteria. Affiliates fail at the 3rd stipulation:

(3) The victim did not knowingly contribute to, participate in, benefit from, or act in a willfully blind manner towards the commission of the offense, or related offense, that was the underlying basis of the forfeiture;

What are ‘underground’ poker games? Can I get in trouble playing in one?

Underground games are not advertised and are often illegal to play in due to state/county/city laws. It is possible to get into trouble for playing in one.

Is it safe to play online poker in the USA?

Yes, assuming you choose a safe site to play at. Your best bet is to play at a regulated site, such as Ultimate Poker, because they have to abide by state / federal laws. You have recourse if they were to steal from you.

That’s not an option for everyone though. So if you intend to play on a standard poker site, I would stick to sites like Carbon Poker or Bovada. They have a track record of honesty, paying their players and treating them well. But there’s definitely more of a risk with playing at non-US regulated sites – just know that.

Will brick and mortar casinos offer real money games online?

Yes. Many brick and mortar casinos are partnering with software companies or existing online brands to bring their brand online.

Here are a couple of examples:

  • MGM received their online poker operators license in November 2012 from the Nevada Gaming Commission. [8]
  • Treasure Island got the ok early in 2013. They will be partnering with 888 Holdings. 888 is also working with Caesars. [9]
  • Wynn will be working with 888 in New Jersey via Caesars property in the state. [10]

Is it true that 888 will offer legal online poker?

Yes. See above. 888 will partner will casinos such as Treasure Island, Wynn and Caesars to bring online poker to Nevada and New Jersey.

How will online poker sites in Nevada verify I’m in the state?

Using your phone number the poker site’s software will check your location via the nearest cell tower. If you’re within state lines you can play for real money. Otherwise you’ll be limited to play money games.

Will Zynga offer real money poker to Americans?

Not for the time being. As of July 2013 Zynga has decided to suspend their efforts to offer real money poker in the US. You’ll find this mentioned on the last bullet point under the Business Highlights headline. [11]

I heard PokerStars will offer online poker in New Jersey. Is this true?

Yes. Although they haven’t gone without their fair share of ups and downs. Their initial partnership with ACC attempt fell through. [12] However, they found a new partner in Resorts. Together they will offer online poker in New Jersey. [13]

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