Listen up American poker enthusiasts, for the time is nigh. A bill legalizing online poker has finally found its way to the hopper. Entitled the “Internet Poker Freedom Act of 2013,” HR 2666 was introduced by Rep. Joe Barton (R-TX). In short, if passed, Barton’s bill would make it easier for states to establish their own online poker laws and regulations. It also officially categorizes poker as a game of skill, thereby exempting it from action under other online gaming laws.
Poker Is A Game Of Skill, And That Should Make All The Difference…
Since the Illegal Gambling Business Act only criminalizes “clear games of chance,” HR 2666 accomplishes the legalization of online poker by defining it as a game of skill. Using case law precedence to support the notion of poker’s inherent skill element, the Internet Poker Freedom Act of 2013 will be a hard law to knock down on legal grounds. (Social grounds are another issue.)
The Internet Poker Freedom Act Could Open A Whole New Job-Creating, Revenue-Generating Market Right Here In the U.S.
Proponents of the Internet Poker Freedom Act maintain that passing the bill could open up a new market benefiting the private sector, in addition to federal, state and tribal governments:
“United States consumers would benefit from a program of Internet poker regulation which recognizes the interstate nature of the Internet,” the bill says, “but nevertheless preserves the prerogatives of States and Federally recognized Indian tribes.”
OK, So What Types of Regulations Are Included In Internet Poker Freedom Act of 2013 Bill Proposal?
HR 2666 confers strict licensee operator regulations. Under the draft proposal:
- Licensee operators would have to put measures in place to keep minors from participating.
- Licensee operators would have to implement a system for identifying and handling problem gamblers.
- Licensee operators would have to ensure that players from non-participant states are prohibited from playing.
- Licensee operators must allow players to limit losses.
- Licensee operators must work to prevent money laundering.
Will This Online Poker Law Be The One To Finally Pass?
Barton is not a stranger to online poker legislating. In 2011, the Texas politician introduced HR2366, the Online Poker Act of 20i1. It didn’t pass. HR2666, however, may have better luck as people seem to be ready for an online gambling option. Plus, the revenue generating possibilities are attractive to reelection-seeking politicians looking to improve their communities’ economic situations.
The Internet Poker Freedom Act of 2013 includes provisions to help ensure honest business practices. It calls for an “Office of Internet Poker Oversight,” to be set up in the Department of Commerce. It also has a “fair and honest”clause to crackdown on rigged games.
All in all, HR2666 “The Internet Poker Freedom act of 2013″ is a comprehensive, long-considered online gaming bill. Now we just have to wait and see if our lawmakers bite. If they do, we may just see a whole new, revenue-friendly marketplace develop around online poker.
Online gambling restrictions are set to change in a drastic way with the introduction of the Internet Gambling Regulation, Enforcement, and Consumer Protection Act of 2013. The proposed bill calls for the formation of an Office of Internet Gambling Oversight to regulate legalized online gambling across the country.
The History of Online Gambling
Online gambling has been around since home Internet use became en vogue. Digital casinos cropped up in 1995, and million of people across the U.S. have started using online casinos to gamble for years.
Profits enjoyed by the online gambling industry quickly ballooned after the introduction of the first online casino. Annual profits soared to $1 billion by 1997 and increased to $10.9 billion by 2007.
The Unlawful Internet Gambling Enforcement Act of 2006 was passed to regulate the online gambling industry. The Act prohibits the sending of a bet or wager over the Internet. Companies that are caught receiving these types of payments from individuals are subject to legal action under the Act.
Current Online Gambling Laws
As noted above, the Unlawful Internet Gambling Enforcement Act of 2006 makes it illegal for a company to collect bets or wagers from a person through the Internet. Banks are also forbidden to allow online transfers of money for the purposes of gambling.
However, the Act does allow states to mandate whether gambling online is prohibited. Some states allow residents to participate in online gambling, but there are states in which it is a crime to place a bet online. Punishments for online gambling vary widely. For example, the state of Washington considers online gambling to be a felony.
Sports betting in particular has been banned in many states. This specific type of online gambling is prohibited under the Professional and Amateur Sports Protection Act.
Reasons For the Banning of Online Gambling
While lots of people feel politicians’ online gambling bans are merit-less, there are cited purposes for Internet wagering. Many of these reasons stem from the supposed need to protect Americans from the risk of identity theft.
- Most of the online gambling companies that are currently in business have offshore headquarters that are run by unknown entities. Legislators worry that Americans are sending their money and personal information to unknown companies that may inappropriately use this information.
- There is no way for the age of a gambler to be verified when online gambling is allowed. Although age verification may be required in order for a person to enter a website, children have the ability to enter false information or use an adult’s personal information to gain access to gambling websites.
- Online gambling may be too accessible for people who suffer from a gambling addiction. People who have an addiction could run up credit cards and run into long-term financial problems when bets and wagers can be made from the comfort of home.
Upcoming Changes in Online Gambling Law
New legislation has been introduced that would lift many of the bans on online gambling. The Internet Gambling Regulation, Enforcement, and Consumer Protection Act of 2013 would legalize online gambling and form regulations that aim to protect consumers and companies that are involved in Internet gambling. Casino games including roulette and poker would be allowed under the Act.
States can opt out, if desired. However, a limited window of opportunity lasting 120 days would be extended to states. Any state that fails to respond within this period of time would automatically opt in. Tribes are also given this option.
Licensing requirements outlined in the act would offer protection against identity theft and other negative consequences of online gambling. Any balance that a player holds in an online account with an online gambling company would be protected in case the company files for bankruptcy in the future.
Players could face consequences for cheating. Fines and jail time may be ordered for anyone who is caught cheating when gambling online.
Legal online gambling options have already started to pop up. One online gambling website currently offers legal online gambling options to residents of the state of Nevada and New Jersey.
Oh the Caribbean. Land of beautiful beaches, laissez faire banks, and laid-back residents. Right? Well, you may want to slow your assumption roll, because word on the street is that entrepreneurs in Antigua and Barbuda are ready to show the world some true West Indian chutzpah, in the form of geopolitical sanctions. And it all has to do with the current state of online gambling regulations.
“Absent a reversal of the U.S. government’s illegal blockade of legitimate commerce from our nation, Antigua is prepared to explore the right to exact sanctions on industries in the U.S.,” Lovell warned in a statement to The Associated Press, though, he didn’t provide any details.
At this year’s Online Gaming Conference at the Bellagio Hotel in Las Vegas, the Antiguan Minister of Finance, Harold Lovell, made it clear that he’s ready to play ball with U.S. officials. He spoke passionately about the 2007 World Trade Organization suit between Antigua and the United States, the result of which was supposed to mark the end of certain online payment processing restrictions in the U.S. “Antigua is prepared to explore the right to exact sanctions on industries in the U.S.”Yet, to date, nothing has changed. The United Kingdom, Lovell reminded, complied with the ruling, thereby allowing Antiguan businesses to operate poker and other online gambling sites, with oversight.
At the gathering, Lovell spoke effusively about the WTO ruling, which said the United States improperly bans banks and credit card companies from processing gambling payments to entities outside of the US. He also railed on the ostensible hypocrisy of the Wire Act – the statute officials site to defend their Antigua online gambling stance.
In other online gambling news, Delaware is now poised to become America’s online gambling haven. Since the federal online gambling bill, is currently in a holding pattern, Delaware was able to go ahead with their new pro-Internet gambling legislation.
If you run an online gambling website and need the consult of an Internet lawyer, contact Kelly / Warner Law today. We’re both lawyers and online business owners; we’ve worked with innovative companies from around the world; we know the difference between blackhat and whitehat; and perhaps most importantly, we know the international statutes — intimately — and can help you set up a perfectly legal online gambling company. Give us a call, we’ll chat, and then get to work on making your site happen.
With Congress heading into recess for the November election, the odds of an online poker legislation bill passing anytime soon are slim — despite the fact two options exist that could change the face of online gaming in the United States. A bill by Representative Joe Barton is still held up in committee, and a proposal by Senators Harry Reid and Jon Kyl hasn’t even made it to committee yet.
Barton’s bill and the Reid/Kyl proposal share the same name: Gambling Prohibition, Poker Protection and Strengthening of UIGEA Act of 2012. Currently, the Reid/Kyl proposal is getting the most attention. Sentiments are decidedly mixed. Some feel it will usher in a new era of regulated online poker in the U.S. Others are concerned it will hinder online gaming and reduce the odds of online poker becoming legal in any real sense of the word. Speculation is rampant, and has intensified as the end of the year draws near.
To many, the Reid/Kyl bill is nothing more than an effort to restrict online gaming in the U.S. The bill essentially prohibits all forms of Internet gambling with the exception of horse racing wagering and online poker. Stiff violation penalties are part of the proposal, including large fines and 10-year prison terms.
The Reid/Kyl bill will also penalize anyone who continued to engage in online gaming activities after 2006 enactment of The Unlawful Internet Gaming Enforcement Act, or UIGEA. In order to participate in any sort of regulated U.S. market in the future, individuals and companies will have to endure a five-year waiting period. This portion of the bill is ostensibly designed to even things out and to give smaller companies a chance to get in on the action, but it could spell doom for companies like Poker Stars.
The Reid/Kyl bill seeks to amend The Wire Act of 1961, the UIGEA and The Illegal Gambling Business Act, or IGBA, of 1970. The primary change is that these acts would more specifically apply to online activities, and the most significant changes would apply to older acts like The Wire Act.
If the Reid/Kyl bill is ultimately enacted, it would rescind the December 2011 decision by the Department of Justice that The Wire Act is only applicable to sports betting. It would also prompt the creation of an Office of Online Poker Oversight, or OOPO, whose duties would include administering a list of standards for online poker operators, issuing licenses and monitoring state and Indian gaming. In the case of violations, licenses could be revoked and fines of up to $750,000 could be levied.
Although online poker players are on pins and needles regarding future legislation, the chances of any laws passing this year are rapidly diminishing.
The recent conviction of Lawrence Dicristina – a New Yorker who ran a poker club – has been tossed out thanks to the ruling of Federal District Court Judge Jack Weinstein. The judge ruled that Poker is a game of skill and not a game of chance, which makes all the difference.
Dicristina is a businessman who advertised his Poker club by word of mouth and text messages.He was hit with the Illegal Gambling Business Act, which first appeared on the scene in the 1970s to help deal with organized crime.
In a 120 page opinion, Weinstein wrote, “In poker, increased proficiency boosts a player’s chance of winning and affects the outcome of individual hands as well as a series of hands. Expert poker players draw on an array of talents, including facility with numbers, knowledge of human psychology, and powers of observation and deception.”
Full of charts and other information, the opinion laid out that skills like bluffing could help players beat less experienced players. Additionally, since the players in this case were not betting against the house (which can manipulate the odds and chances of winning) but betting against each other, it couldn’t be considered gambling.
“We have patiently waited for the right opportunity to raise the issue in federal court,” said John Pappas, executive director of the Poker Players Alliance, according to NBC News.
The federal court ruling is a big “winning hand” for the millions of people who enjoy Internet gambling. While federal laws concerning online gambling have not changed, this ruling may pave the way for more modern laws.
It remains to be seen what will change when it comes to online poker for real money, but this may be an indication that the winds are changing and one of America’s favorite card games may become legal when played for money on the Internet.
Judge Weinstein also made sure to note that federal prosecutors could still use racketeering laws to go after poker games run by organized crime and certain Internet gambling operations. Additionally, he said states could still prohibit poker under state laws put in place. Still, it is a ruling that may point the way to a better future for those who enjoy playing poker for money online and other forms of Internet gambling.
Fantasy sports are a huge deal in the United States. It’s so popular that fantasy sports were the only form of gambling excluded from a 2006 law that made illegal nearly every other type of online gambling in the United States.
There are, however, some states whose residents are exempt from participating in national online fantasy sports games — Arizona is one of them. Which raises the question: Are fantasy sports illegal in the state of Arizona?
Fantasy Sports Overview
Since it hit the scene, fantasy sports have exploded in popularity. According to the most recent statistics, Americans spend over $1 billion a year on a game where we get to play a GM overlord. And the leagues love it, as it creates fantastic marketing and exposure opportunities for teams.
Fantasy sports were backed so fiercely by the various professional sports leagues that they lobbied aggressively to keep fantasy sports off the list of actionable items in the 2006 Unlawful Internet Gambling Enforcement Act of 2006.
Today, some of the largest media outlets sponsor and run their own Fantasy Sports Leagues – like CBS and ESPN. But many include the caveat: Residents of AZ, IA,LA,MD,MT,ND,TN,VT,WA can purchase and participate, but cannot win any of the prizes. So the question is: why is that? And does it mean that all fantasy sports activity in Arizona is illegal?
Arizona Gambling Laws
Section 13-3302 of the Arizona Revised Statutes outlines the state’s legal stance on Gambling. Suffice it to say, the laws are confusing and nuanced; which may be one of the reasons AZ is excluded from certain large-scale fantasy sports games, as the statue can be argued in various ways. In other words, better to be safe than sorry in the eyes of nation-wide leagues.
There are several different classifications of gambling in Arizona: regulated gambling, amusement gambling, and social gambling. Regulated gambling primarily refers to establishments that are protected under the Indian Gaming Regulatory Act of 1988. Amusement gambling and social gambling, however, are not as straightforward.
Arizona statues consider the following three points when deciphering between legal and illegal gambling. The law of the land considers something to be of a gambling nature if:
1) The act of risking or giving something of value is present; if no money or value item is required to participate, then it’s not gambling;
2) The event in question incorporates and opportunity to obtain a benefit; and
3) If a game or contest, of chance or skill, or a future contingent event is central to the event, it’s gambling.
Now, not ALL gambling is illegal in Arizona. There are certain activities which fall into “legal gambling” categories. The statutory exemptions (i.e., legal circumstances) include:
1) Gambling at state, county or district fairs that satisfy certain restrictions
2) Raffles conducted by qualifying non-profits
3) Official raffles conducted by state, county and local historical societies
4) Regulated gambling
5) Amusement gambling
6) Social gambling
Essentially, what Arizona gambling laws try to do is protect people from being “tricked” or “lured” into parting with their money. You could almost think of it like, “Hey, if you want to have a weekly poker game with your friends, fine; but we’re on the lookout for people trying to profit off of other’s gambling urges.”
The following parameters define “amusement gambling” in Arizona. Amusement gambling is permitted.
1) Player actively participates the game or contest or with a device.
2) “Outcome is not in the control, to any material degree, of any person other than the player or the players.” (i.e., there can’t be a profiting puppet master in the background who has the power to determine the outcome).
3) Prizes aren’t offered as “lure” to separate the player from their money.
4) The gambling is an athletic event and no other person, other than the player or players, derives a profit from the money paid to gamble by the players.
5) The gambling is an intellectual contest or event, the money paid to gamble is part of an established purchase price for product, no increment has been added to the price in connection with the gambling event and no drawing or lottery is held to determine the winner or winners.
6) The game must be played for “entertainment” purposes.
If you wanted to wrap up the parameters in a blanket statement, it’s fair to say that in AZ, if a “game” or “contest” is based largely on skill – not chance – there is a good chance it is likely legal. Basically, if a non-participant in the event in question receives a profit, or even a chance of profit, from the money paid to participate in the game, the activity is not amusement gambling.
“Social gambling” is very similar to “amusement gambling.” The distinction between the two boils down to the scale of the event. Social gambling, in general, refers to private gambling (i.e., weekly poker game, etc.)
The four golden rules of social gambling are:
1) No other player receives any benefit other than winnings
2) No non-player receives any benefit from the games
3) None of the players are younger than21
4) All of the players compete on equal terms with each other
Moreover, and perhaps obviously, it’s legal for people to operate a card game if the players are not required to wager anything of value for an opportunity to profit. For example, you can’t charge for a chair at the event.
Online Fantasy Sports Legalities In Arizona
So, this brings up to the question of whether or not fantasy sports are legal in Arizona. And the answer is, “they are and they aren’t.” It actually all depends on the venue in which the game was originated, and the way it’s carried out.
Situation One: No Money
If your fantasy sports league does not play for money or anything of significant value, it’s legal.
Situation Two: Of-Age Participants Only
Everyone in the league is over the age of 21, and no entity, outside of the contest, will benefit financially. But the winner can claim a prize.
Situation Three: Find A Legal Entity To Run The League Out Of
The fantasy league is conducted out of a regulated gambling establishment (i.e., Tribal Compact Casino).
The reason, however, why AZ residents cannot participate financially in nation-wide fantasy sports leagues is due to the “no other person, other than the player or players, derives a profit from the money paid to gamble” clause in the statues. After all, ESPN and CBS are undoubtedly taking a processing/administrative fee, thereby disqualifying the activity as an “amusement” or “social” gambling event in the letter of Arizona law.