DOJ Reverses Stance on Legality of Online Poker?

For online poker aficionados, April 15, 2011, the so-called “Black Friday” is a date that lives in infamy. For those who are unfamiliar with the event, on Black Friday the owners of the three largest poker sites in the United States (PokerStars, Absolute Poker, and Full Tilt Poker) were arrested and the sites were shut down due to allegations of money laundering and wire fraud used to circumvent U.S. gaming laws. The FBI used the provisions of the Unlawful Internet Gambling Enforcement Act (UIGEA) in order to charge these executives. Enacted in 2006, the UIGEA was enacted to prohibit institutions from accepting payments from any person engaged in the business of betting or wagering with a business in unlawful Internet gambling. Subject to a great deal of controversy, the UIGEA has been criticized by a number of Congressmen and a range of modifications have been suggested.

A major point of controversy with the UIGEA is the question of whether the Act applies to online gambling in the form of internet poker. Undoubtedly, the executives of the sites closed on Black Friday felt that the Act could not cover internet poker and thus continued with their business as usual. Now, these executives may have an ally in the form of the United States Department of Justice. While not specifically addressing the UIGEA, the DOJ memorandum released on December 23, 2011 revealed its position that interstate transmissions of wire communications that do not relate to a “sporting event or contest” fall outside the reach of the Wire Act of 1961, another Act previously used to outlaw online poker. Ellen Whittemore, attorney for Nevada web poker applicant International Game Technology, said that the legal opinion “cracks open the door” for the interstate offering of poker.

Because the DOJ opinion is so recent, its full effect is still unknown. Nonetheless, the opinion marks a dramatic shift that seems to be moving in the direction of online poker legality. Making the legalization more likely is the dismal state of the United States budget. In an era when increased focus is needed on addressing the growing debt, the country seems to be in need of additional revenue. Online poker could bring that revenue. Over 10 years, legal online gambling could generate $42 billion in tax revenue, according to the Congressional Committee on Taxation. Such a potential source of revenue may prove too large to be ignored and may further grease the wheels toward the return of online poker in the United States.

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