A Very Short History of Online Poker Part 2

Black Friday

No doubt, all this unprecedented growth would eventually have to end. But few could have anticipated how soon that end would come. In 2006, just as the burgeoning online poker industry seemed unstoppable, the gravy train came to crashing halt when the U.S. government stepped in and made an indelible print on its operations.

For years, Republican congressmen had been trying to clamp down on the growth of online gambling as a way to appease the Christian Right, but were constantly met with opposition. Each session, they introduced a bill aimed at ending online gambling, and each session, it was shot down. However, just as the U.S. Democratic party was poised to take Congress, a few of the G.O.P.’s slyest operators managed to tack The Unlawful Internet Gambling Enforcement Act onto a port security bill. It was the perfect play since nobody on either side of the aisle was willing to oppose an anti-terrorism bill in the middle an election cycle. As a result, the bill became law, and U.S. banks were forbidden to fund or receive payments from gambling sites. By this time, several big-name poker firms had already gone public and, in order to protect the interests of their shareholders, were left with no choice but to restrict access to U.S. players.

Game of Skill?

Much of the debate in the U.S. government about the future of online poker stems from the issue of whether poker constitutes a “game of skill.” Although a federal definition has yet to reveal whether poker will fall under the general umbrella of “illegal online gambling,” many poker rooms haven’t dared resume their operations. Some firms outside U.S. jurisdiction have ignored the UIGEA’s possible reprisals, reasoning that the American government would be hard pressed to force this issue outside its national borders. However, court battles like Kentucky v. 141—which was spawned by brick-and-mortar partisans—have still managed to tie up operations for many international sites regardless.

Overturning the UIGEA seems like one possible escape from the stalemate now in place, and there have already been several attempts to do so—one being the introduction of a new bill entitled the Internet Gambling Regulation and Enforcement Act (HR 2046). IGREA is seen an effort to establish a comprehensive licensing and regulatory framework for online gambling in the United States. But the bill and others like it are currently languishing in congressional committees.

Added to the legal debacle are recent publicity scares, such as the security breach at Absolute Poker in which an employee used his inside knowledge to view the hole cards of everyone sitting at his table! Clearly this type of incident threatens the entire industry and has forced most of the major poker rooms to up their security to the enth.

So it’s difficult to say where online poker will be in 10 or even five years, especially now that very tough economic times are upon us. If one thing is certain, though, it’s that an entire generation has been turned on to the game and there will always be the desire to play poker for money in the comfort of your own home. Whether or not that will be easy to do is another matter altogether, but the future does look promising. Albeit U.S. lawmakers will have their hands full in 2009, the wave of public sentiment has broken in favor of online-gambling supporters in both Congress and the White House. Meanwhile, the old “vice survives recession” logic seems to be holding true for many online gambling firms, meaning their next five years could be even greater than their first.