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Poker News | Gambling and the Law

Bill Frist Rivers Internet Gamblers

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"'Unlawful internet gambling' means to place, receive or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received or otherwise made"

Late on Friday, September 30, 2006, US Senate Majority Leader Bill Frist (R-TN) pushed through pet legislation banning internet gambling for citizens of the United States. This legislation, formerly known as the Internet Gambling Prohibition Act, was attached to a major bipartisan Port Security Act, almost guaranteeing passage in an election year.

This method of attaching laws with limited appeal to more popular legislation is very common, and had been attempted earlier in this Congressional session with this same bill. Frist had earlier attempted to attach the gambling bill to a major defense spending bill but that effort was blocked by other members of Congress. By attaching the gambling act to the port security bill, Frist limited the amount of debate and response time by opposing members of Congress, as Friday was the last day of this Congressional session, and Frist's last opportunity to get the bill passed this year.

The law, which includes specific carve outs for horse betting and fantasy sports betting, makes it illegal for anyone to make a bet via the Internet on anything not specifically designated as legal. Online lotteries are also specifically outlawed by the terms of this bill.

The definition of a bet according to this law is "the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome."

The language "subject to chance" is a revision from earlier legislation that listed games "predominantly" subject to chance, which had given poker players hope for a loophole. The "skill v. luck" loophole with reference to poker is closed in the approved legislation as it is indisputable that poker is, at least in some part, a game subject to chance.

Frist, in catering to his base of moral conservatives, has pushed through legislation that not only makes it a serious crime to play online poker, but also given financial institutions the right, without fear of redress, to seize any assets and freeze any transactions that "such person reasonably believes to be a restricted transaction."

This not only means that banks can freeze transactions from online poker sites, as well as refuse to cash checks or bank drafts from sites, but they can also freeze any other transaction they feel might be related to illegal activity, such as other transfers from sites and services typically used for online gambling, i.e. Neteller or Firepay.

The penalties for online gambling are severe, "any person who violates Section 5363 shall be fined under title 18, imprisoned for no more than 5 years, or both."

What is unclear at this time is who exactly is considered to be "engaged in the business of betting or wagering." This language is slightly vague, but seems to target the operators of online sites, not particularly players themselves. So for players the greatest risk is having their money seized, a great risk indeed for some internet professionals. For those who run the online sites, the possibility of heavy fines and jail time looms if convicted.

Section 5363 states that "no person engaged in the business of betting or wagering may knowingly accept, in connection with the participation of another person in unlawful internet gambling" credit (including merchant credit or from credit cards), electronic funds transfers (including funds transferred through services like Western Union), "any check, draft, or similar instrument which is drawn on or on behalf of such other person and is payable at or through any financial institution," or "the proceeds of any other form of financial transaction."

This legislation has been expected for some time, leading several online sports books and poker sites to refuse deposits from US customers, and close American accounts without notice, refunding those monies to players. William Hill, a member of the Cryptologic network, is the latest in a string of sites to stop accepting casino and poker bets from American customers.

It will take time for this measure to go into effect. The President first has to sign the bill into law, but there is no doubt that it will take place, since as of July of this year, President Bush was the first sitting president since Thomas Jefferson to veto not a single bill in more than five years in office. Once the bill is signed into law, there is a period of 270 days before the law goes into effect, giving government financial regulators time to assess how they will enforce the law and what methods they will use to investigate violations. Regardless, we are looking at a time in mid-2007 when internet poker will be against the law in the United States.

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