Online Poker History in the United States
The history of online poker in the U.S. is short in terms of absolute years, stretching back nearly two decades. But packed within that tiny time frame is one of the wildest, most riveting stories of the internet age. It’s the story of a new way of playing an old game (and the industry surrounding it) that captivated a country so absolutely the American government saw fit to intervene.
There are a number of ways to view the tale of poker in America. We’ve chosen to divide our take on the history of American online poker into four distinct eras: The Unregulated Era, the UIGEA Era, the Black Friday Era and the Regulated Era. Each of these eras marked a dramatic shift for poker players and the larger United States poker industry, and in this article, we’ll walk through the basic timeline, key events and lessons learned for each individual era of poker came to take over the online landscape in the US.
Following our exploration of those four eras of American poker online, we’ll take some more time to discuss the likely shape of the next era for gaming over the internet in the United States.
Let’s begin with the latest news from the current year, and then we’ll go back to the beginning with a timeline of events.
What’s New in State Law in 2020
Online poker grew in 2019 at a slow but encouraging rate of speed. With the additions of West Virginia and Michigan to the roster of states with legal online casino or poker games, lawmakers in other states can feel a bit more comfortable with the idea.
As 2020 got underway, Kentucky was at the top of the list for legislation efforts. Yes, that is the same Kentucky that seized more 141 online gambling domains in 2008 and sued PokerStars for $870 million. But starting in 2018, then-Attorney General Andy Beshear began pushing for several gambling expansion measures for his state, including poker.
Now Governor Beshear – a Democrat – teamed up with Republican State Representative Adam Koenig to push for a new bill. HB.137 is a comprehensive online gambling bill with provisions to legalize and regulate online sports betting, poker and fantasy sports contests. The duo has made public pushes for support, and they have a bill to pass this year.
One other state with a specific poker bill on the table in 2020 is New York, but most lawmakers admit that they will work hard for online sports betting before they lift a finger for poker.
Connecticut State Senator Cathy Osten also introduced an online gambling bill – with poker and casino games – as she has done in the past, but complications with MGM Resorts and a lawsuit may put it on hold yet again.
Nebraska entered the picture in 2020 with a bill to categorize poker as a game of skill. State Senator Justin Wayne wants to legalize online gambling, but his Games of Skill Act is having trouble finding much support from fellow legislators.
What’s New at a Federal Level in 2020?
There is another situation set to play out through 2020. It involves the 1961 Wire Act.
Technically, this started in 2011 when the US Department of Justice’s Office of Legal Counsel issued a memo regarding the Wire Act, stating that it pertained only to sports betting. The directive allowed states to proceed with legalizing and setting up online lottery ticket sales, as well as online casino and poker games.
It was under that directive that Nevada legalized online gaming, Delaware and New Jersey followed and added online casino games, and Pennsylvania, West Virginia, and Michigan did the same.
In November 2018, the Justice Department under the Trump Administration reversed the majority of that decision. When that memo became public in January 2019, the aforementioned states and all of the ones with profitable online lottery businesses took issue with the DOJ’s new stance. The New Hampshire Lottery Commission filed a federal lawsuit against the DOJ, and its online service provider NeoPollard Interactive joined the lawsuit.
In June 2019, US District Judge Paul Barbadoro ruled for the plaintiffs and against the US Department of Justice and Attorney General William Barr. The decision was important in many respects but can be summarized with this one statement from it: “The 2018 OLC Opinion is set aside.”
The DOJ and Barr ultimately filed an appeal in the First Circuit Court of Appeals, and the New Hampshire Lottery and NeoPollard filed their responses in February 2020. The next step is for the DOJ and Barr to file their response in March.
It is likely that the US Court of Appeals will hear arguments and/or rule on the case in 2020, and many experts – including Judge Barbadoro – have predicted the case will eventually be appealed to the US Supreme Court. This could become a landmark decision, but the online gaming and lottery communities may have to wait until 2021 or 2022 to find out what that decision will be.
The Unregulated Era of Online Poker in the United States
Timeframe – The Unregulated Era can be identified as the time between the primitive launch of online games with a financial incentive in or around 1997 and the introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA) in October 2006.
Key events of the Unregulated Era
- Launch of Planet Poker – While beta testing for the room occurred in 1997, it wasn’t until New Year’s Day 1998 that Planet Poker dealt what is generally considered the first hand of real-money poker in the United States. Planet continued as the leading site for a time, but was eventually displaced by competitors with more sophisticated software and superior marketing.
- The PartyPoker Million – In March 2002, PartyPoker hosted the inaugural PartyPoker Millions tournament. At the time, the thought of a site guaranteeing such a large prize pool for a live tournament was unheard of, and the concept of online satellites to live events was by and large unproven. Kathy Liebert claimed the top prize of the tournament, banking $1,000,000 for her win on March 17th, 2002. The tournament went on to become a staple of the live circuit and continued for well over a decade.
- Satellites to the World Series of Poker – 2003 was the first year that it was possible to take part in WSOP satellite at sites like PokerStars. Stars sent 37 players to the World Series of Poker that year, including a then-unknown player named Chris Moneymaker. Over the years that followed, various poker sites would collectively send thousands of entrants to the WSOP, a trend that continues to the present day.
- Chris Moneymaker wins the World Series of Poker – After parlaying a $39 satellite entry into a victory at the 2003 Main Event of World Series of Poker, Chris Moneymaker became inexorably linked with the story of American online poker. The wild growth of in the wake of his win is commonly referred to as the “Moneymaker Effect,” but many observers believe the online game would have exploded in the United States whether or not Moneymaker achieved his improbable championship. Regardless, Moneymaker’s win did happen, and his championship will likely continue to be identified, rightly or wrongly, as the tipping point fo the game’s popularity in America.
- Harrah’s purchases the WSOP – The originator of the WSOP, Binion’s fell on hard times in the 2000s and was forced to sell their casino and the World Series of Poker brand to Harrah’s Entertainment (which would eventually rebrand as Caesars). Under the watch of Caesars, the WSOP and online poker would enjoy a close relationship and parallel growth of astounding proportions – until the Black Friday Era rolled around and upended the relationships between American casinos and international poker operators. 
Characteristics of the Unregulated Era
The Unregulated Era can fairly be characterized as something of a “wild west” for online gambling. During this era, a staggering number of new online poker rooms opened – almost daily, it seemed at some points – and a similarly astounding number closed their doors with little notice or fanfare. Along with the surfeit of rooms came intense competition for players, a competition that spurred rooms to offer unsustainable promotions and bonuses in an attempt to attract a player base.
One unique characteristic of the Unregulated Era is the relatively small traffic disparity that existed between leading rooms. In the status quo, PokerStars has a massive lead, dwarfing the next-closest competition several times over. But in this era, the leading rooms were separated by far smaller gaps in terms of player numbers, and positions at the top of the online poker charts shifted with regularity.
Another important aspect of this era was a near-total lack of regulation or oversight. While independent regulators did spring up in some out-of-the-way jurisdictions, the amount of governmental influence over the regulators was minimal. While this allowed the industry to grow rapidly with little restraint, it also served as the breeding ground for some cheating scandals that continue to haunt the game to this day.
A final note of interest: During much of this era, you would have found a minimal amount of training tools or training sites. It wasn’t until close to the end of this era that poker players began to take note of new software tools and video-based training sites such as CardRunners. That segment would eventually explode but by and large remained a niche business during the Unregulated Era in the United States.
Lessons of the Unregulated Era
- Rakeback wars were not a sustainable business model, a lesson learned after rooms engaged in a battle for player share by offering always-escalating rakeback rates to players. The end result was a player base that demanded a level of promotions, bonuses and total value that simply wasn’t feasible for the majority of poker sites. Many skins, and even a few networks, closed as a result of the so-called “rakeback wars”.
- At least some governmental oversight is necessary to mitigate the inevitable threat of cheating, a point made clear by the horrific cheating scandals at Ultimate Bet Poker and Absolute Poker (which began, in part, prior to the UIGEA era but were not uncovered until after the passage of the UIGEA). While both sites were issued a license by a regulator, that regulator was subject to no additional oversight. Many believe that the presence of a strong government regulator would have stopped the scandals from ever happening in the first place or, at the very least, mitigated their ultimate financial impact.
The UIGEA Era
Timeframe – The UIGEA era in America can be loosely identified as the time spanning the introduction of the UIGEA in October of 2006 through the Black Friday indictments handed down in April of 2011.
Major Events in the UIGEA on US Poker History
- Exit of several international operators – Following the passage of the UIGEA in 2006, several poker sites (most publicly traded companies) exited the US market, including market leaders PartyPoker and 888Poker. Others, such as PokerStars, remained in the market. The result was a complete shake-up in the poker traffic rankings, one that catapulted PokerStars to the dominant position it still enjoys today.
- The Ultimate Bet / AP scandals – Word began to emerge in 2007 of a massive cheating scandal at Absolute Poker, and a separate but related scandal at UB was uncovered around the same time. The total amounts involved will never be known, but estimates from insiders suggest a number in the tens of millions of dollars. Many of poker’s top names were caught up in the scandal, either as participants, peripheral players or victims of the cheating. The silver lining to the scandals was the work done collectively by the community of poker players to uncover their existence in the first place. Paul Leggett, CEO of Tokwiro Enterprises released a statement to the press which acknowledged the cheating and served as an apology.
- Implementation of UIGEA regulations – While the UIGEA itself was passed in 2006, the implementation of the law didn’t happen until several years later. When the “final rule” of the UIGEA was implemented in January 2009, requiring compliance by December of that year, the American poker industry was forever altered. Processing delays caused by the UIGEA wouldn’t become apparent right away, but in the months and years following, the impact of the regulations on depositing and withdrawing at poker sites was acutely felt by US players.
- Significant push for federal regulation of online poker – In December of 2010, Senator Harry Reid (D – NV) made a push for federal regulation during the so-called “lame duck” session of Congress following the November elections. Despite intense speculation that Reid would use his powers as Senate Majority Leader to advance the bill, the session came and went without any breakthrough for American players.
Characteristics of the UIGEA Era
The UIGEA Era in America is a study in contrast. On one hand, poker appeared as healthy as it has ever been during the UIGEA Era. One indicator of its health was the astounding number of big-ticket poker tournament series hosted by sites like PokerStars and Full Tilt Poker – series that award not thousands, not millions, but tens of millions of dollars in prize money to players.
But on the other hand, a number of threats to the long-term viability were also emerging during the UIGEA Era – the UIGEA itself not the least among them. As the profile of the industry grew, so did questions about the inherent legality of the activity at the state level, UIGEA or no UIGEA. And, buoyed by their decision to stay the United States following the passage of the UIGEA, PokerStars and Full Tilt were dominating the global market in a way that was unthinkable during the relative parity of the Unregulated Era. While players were fond of both rooms, the overall decrease in competition was viewed by many as a troubling sign for the industry’s future.
At the same time, poker training sites were proliferating and poker analysis software was becoming increasingly more complex and more popular, creating a parallel threat to the health of online poker by exacerbating the skill gap between the regular players and the recreational and casual players.
What We Learned from the UIGEA Era
- The last-minute passage of the UIGEA taught online poker proponents that the political power of gambling opponents should not be underestimated. This truth was reasserted again during the 2012 lame duck session, a development we’ll discuss more in a later section.
- A related lesson: Just because you don’t agree with a law doesn’t mean it won’t impact you. American poker players were openly disdainful of the UIGEA and the process by which it passed, but they were ultimately forced to recognize that the law changed their game in an irrevocable way. Some believe that if the poker community had been more organized prior to the passage of the UIGEA, such legislation would have never come to pass.
- The nature of gambling law in the United States is so complex and so often contradictory that even well-established experts on the subject can disagree on the most fundamental issues. Both PokerStars and Full Tilt Poker were operating under legal opinions from some of the top names in the field asserting that the UIGEA did not apply to poker. But, as the Black Friday indictments proved, the United States government took a decidedly different stance on the issue.
The Black Friday Era of American Online Poker
Timeframe – Arguably the darkest of all periods for American online poker players, the Black Friday Era of online poker in the US, dates between the unsealing of indictments against major American-facing online poker sites in April of 2011 and in many ways continues to this day.
But we mark the formal end of the era at the point when Nevada issued its first interactive gaming license in June of 2012, accepting that there is a great deal of overlap between the two eras.
Major Occurrences in the Black Friday Era
- Black Friday indictments – On April 14th, 2011, the DoJ unsealed indictments  against the three largest US-facing poker sites and seized their domain names. This caught much of the poker community by surprise, although rumors of pending federal indictments had be circulating for several months prior.
- Full Tilt revealed as practically bankrupt – In or around June of 2011, the full extent of the problems at Full Tilt Poker became apparent, as reporters uncovered evidence  that the room was tens of millions of dollars short on player balances. This fact resulted in the eventual filing of additional charges against the company and its principals by the DoJ.
- Absolute and UB collapse – While both rooms remained technically open after Black Friday, the Cereus Network eventually ceased operations in the summer of 2011. Players had yet to receive any of the funds that were lost when the site ceased operations until news came in the spring of 2017, which will be explained in a later section.
- Full Tilt Poker taken over by PokerStars – In the summer of 2012, rumors flew that PokerStars was negotiating to take over Full Tilt Poker, just as Full Tilt was set to be purchased by Group Bernard Tapie. A deal between PokerStars and the DoJ was announced on July 31st, 2012  that both resolved the charges against PokerStars (the company, not the individuals involved) and required PokerStars to provide funds to cover the balances of Full Tilt’s American and international customers. PokerStars reopened FTP  for international play in November of 2012.
- Black Friday figures reach pleas / settlements with the DoJ – Throughout 2012 and into 2013, most of the biggest names mentioned in the Black Friday civil and criminal indictments settled their cases with the DoJ. Some – including Absolute Poker head Brent Beckley  and payment processor Chad Elie – served jail time. Others – including Howard Lederer and Chris Ferguson – agreed to hefty fines. Scott Tom finally came to the US in 2017, received a fine, and avoided prison. And PokerStars founder Isai Scheinberg still remains outside of the United States, leaving his issues with the U.S. government unresolved.
- Lock Poker leaves Merge and forms its own network (Revolution Gaming) – When Lock split from Merge  in May of 2012 and announced its takeover of the Cake Network, many thought the development was good news for U.S. poker players. But technical problems and payment delays plagued the new network from the start, causing Lock Poker to become somewhat emblematic of the problems involved in operating a US-facing poker site in the Black Friday Era.
- Nevada regulates online poker – In June of 2011, Nevada lawmakers passed a bill aimed at bringing regulation to the state. It would be six more months before regulations were issued by Nevada regulators and almost two years before the first hand of poker regulated under the law would be dealt.
Characteristics of the Black Friday Era
The Black Friday Era for American poker players was one with precious little silver lining. During this era, it became increasingly difficult for players to deposit and cash out. Traffic dropped across the board, causing an industry consolidation that saw multiple rooms and skins close their doors to players – often without allowing players to cash out their balances first. And what games did remain became increasingly tough to profit from, as payment processing hurdles dissuaded the recreational players from signing up and making badly-needed deposits.
Lessons from the Black Friday Era
- Governments will only tolerate unregulated gambling activity for so long. Earlier participation in the political process might have helped the companies targeted by Black Friday avoid those issues.
- Committed online poker players will find a way to play poker online, a point well-proven by the willingness of players to deal with the often-harsh realities of continuing to play on US-facing poker sites after Black Friday.
- International companies are not necessarily beyond the reach of United States authorities, especially if they rely on the internet to conduct their business.
The Regulated Era in America
Timeframe – The Regulated Era is the present state of online poker. You could legitimately place the start of this era in American poker at a few different points, but we chose the date on which Nevada issued its first interactive gaming license: June 21st, 2012.
We chose this date as opposed to, say, the date Nevada passed the law to regulate ]poker for a few reasons. First, it has a nice symbolic quality. Second, it marks a point at which many – but not all – of the loose ends of Black Friday had been tied up or are in the process of being tied up.
Regulated Era: Key events
- Nevada issues its first “interactive gaming” license – Our era begins in June of 2012, when Nevada issued the first interactive gaming licenses to Bally Technologies (not to be confused with casino property Bally’s) and International Gaming Technologies (IGT). Nearly two dozen other companies would also receive a variety of licenses before poker actually launched for real money in Nevada.
- Delaware regulates online gambling – Only days after Nevada issued its first licenses for online gambling, Delaware passed a bill allowing multiple types of online gambling to be offered under the regulation of the state lottery commission.
- Another lame duck federal push fails – Senators Harry Reid and Jon Kyl made a bipartisan push to regulate poker (while banning most other types of online gambling) during the 2012 lame duck session of Congress, but they ultimately came up short, and no bill was ever introduced.
- New Jersey regulates online gambling – In February of 2013, New Jersey Governor Chris Christie signed a bill to bring various forms of regulated online gambling to the Garden State.
- PokerStars attempts to purchase an Atlantic City casino – Negotiations began in late 2012, but it wasn’t until a few months into 2013 that the world learned of PokerStars’ ill-fated attempts to purchase the Atlantic Club Casino. The legal battle surrounding that attempted purchase continued for several years.
- Full Tilt funds are reimbursed to all qualifying players – The DoJ named the company that would handle the return of US Full Tilt player balances in March of 2013, picking remission specialist Garden City Group. Over the course of several years, the players were vetted and account balances verified, and eight rounds of remission payments were made to repay the majority of the victims. The funds came from the fines paid by PokerStars to the US government, and nearly $114 million was paid out to roughly 45,000 people around the world..
- Ray Bitar reaches deal with U.S. authorities – On the second anniversary of Black Friday, former Full Tilt CEO RayBitar, suffering from a potentially fatal heart complication, agrees to a plea deal with the US that allows him to avoid jail time and pursue a heart transplant.
- Ultimate Poker deals the first hand of regulated online poker – The era of regulated real money poker in the United States began in earnest when Ultimate Poker dealt its first hand on April 30th, 2013. The site ultimately closed in November of 2014, but WSOP had since launched its site in Nevada in 2013 and became the singular company to offer real-money poker games online in Nevada through 2017.
Characteristics of the Regulated Era
During the Regulated Era, we’ve seen more states than ever considering some form of online gambling regulation. While the number of states that have actually passed regulation into law remains relatively small, the concept of nationwide regulated poker (or something close to it) becomes far more plausible than at any point during the Black Friday Era.
But while there are reasons for optimism during the Regulated Era, there are also plenty of reasons for American poker players to be concerned – concerned about their bankrolls at unregulated sites, where cashing out is becoming almost impossible at some sites; concerned about the future of the games at unregulated sites, which are closing at an even greater rate than we saw during the Black Friday Era; and concerned about the timeline for the return of a viable American poker industry.
Lessons from the Regulated Era
- The pace of regulatory progress in the United States is likely to be plodding as various stakeholders with competing agendas quibble over the nature and details of regulation.
- Player expectations for the quality and quantity of games need to be adjusted, as a return to pre-Black Friday games appears to be at least several years down the road.
- Many American casinos are not willing to forgive and forget when it comes to their international counterparts – primarily PokerStars – who remained in the American market for poker post-UIGEA.
- The desire for regulated poker among Americans is very, very strong, as indicated both by the willingness of players to continue to play on unregulated sites in the face of mounting issues and the enthusiastic reaction to the new poker sites in Nevada and New Jersey.
What Lies Ahead for America?
Online poker in America appears to be on a slow but set path to regulation. There are a number of potential milestones along that path that will mark significant advancements for regulated poker in the United States.
Below, we take a look at some of the key eras still to come for American poker.
Steady Expansion of State-by-State Regulation
As of now, only three states in the U.S. have passed laws that will allow for regulated poker to be offered by licensed operators: New Jersey, Nevada and Delaware. Many more – including California, Illinois, Pennsylvania, Michigan, New York, and Massachusetts – are considering the idea, along with online casino games and lotteries.
But a greater number still have shown little or no interest in regulating the game. While it seems that there will be a majority of states offering regulated poker at some point in the future, it also seems as if the path to that point will be an extended – and, for poker players, a potentially very frustrating – one.
Evolution of Interstate / Tribal Compacts
Once more states and tribes are participating in regulated American poker, the next step will be the evolution of the agreements that allow those operators to share player pools across state lines.
Interstate compacts are a complicated affair. Nevada and Delaware did sign the Multi-State Internet Gaming Agreement (sometimes called the Multi-State Poker Network agreement) in February 2014. There was only one site in both states, and they joined in March 2015. New Jersey joined the group in October 2017, and again, the only site able to operate across state lines was WSOP/888poker. Those sites linked up on the last day of April in 2018.
Pennsylvania has yet to initiate talks – at least to the public’s knowledge – in 2020. Only one poker site – PokerStars – had launched in 2019 and continues to be the lone supplier in the Pennsylvania market as of March 2020. If more poker sites launch in the state, it may incentivize the Pennsylvania governor to sign the multi-state agreement.
West Virginia may not launch its sites until late 2020 or 2021, and it may join eventually. Michigan, on the other hand, is not permitted to share player pools across state lines. As a stipulation of garnering the governor’s support to pass the bill in December 2019, the bill had to prohibit interstate gambling agreements.
As for tribal compacts, this will be playing out in Michigan as 2020 progresses. PokerStars’ parent company, The Stars Group, was the first to sign an online gambling partnership with a tribe in Michigan and did so with the Little Traverse Bay Bands of Odawa Indians Gaming Authority (LTBB Odawa). Other partnerships are developing as well.
While disagreements between Native American tribes and cardroom operators in California – with PokerStars at the center of it – became the undoing of poker opportunities, Michigan may show how the various parties can work together to find success.
Integration of Live Poker and Online Poker
One of the most exciting events on the horizon for US poker players is the inevitable combination of live and online poker. With the absence of any major land-based US operators prior to poker’s Regulated Era, American poker players never got a chance to see how an integrated online and live poker experience would change the game and expand the market.
Nevada has shown how live and online poker can work together for success. The WSOP poker site offers satellites into the World Series of Poker in Las Vegas each year. In addition, the site has been offering an increasing number of WSOP gold bracelet events each summer, and it will offer 14 of those events in the summer of 2020. They will be open to players in Nevada and New Jersey.
New Jersey has uniquely proven how online gambling and poker sites work together to boost each other’s business and the casino industry as a whole. In 2019 alone, the internet gaming sector grew by 61.6% from the previous year and declared more than $482 million in revenue for the year. It helped boost a struggling Atlantic City casino market into successful territory with 19.5% revenue growth from 2018 to 2019.
A Return to International Player Pools
When New Jersey first launched its online casino and poker gaming sites, there was some hope that a return to international player pools was in the works. Now-former state lawmaker Ray Lesniak pushed the New Jersey Division of Gaming Enforcement to engage in discussions with the UK Gaming Commission regarding possibilities of sharing online liquidity. This, however, never materialized. Lesniak left the state legislature, and the subject disintegrated.
Until many more states in America legalize poker over the internet, or until the federal government considers legalizing the game on a national level, there is little indication that Americans will return to international player pools in the near future.
References and Resources
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-  FederalReserve.gov: Prohibition of Funding of Unlawful Internet Gambling
-  DailyFinance.com: Harry Reid Goes All In for Online Poker
-  WSJ.com: U.S. Alleges Poker Site Stacked Deck
-  Manhattan U.S. Attorney Announces $731 Million Settlement of Money Laundering and Forfeiture Complaint with PokerStars and Full Tilt Poker
-  PokerStars.com: Pokerstars Settles Dispute with U.S Department of Justice and Acquires Assets of Full Tilt Poker
-  ReviewJournal.com: Chad Elie, convicted in Internet poker scheme, sues lawyer
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-  WSJ.com: Internet Gambling Scores Its Biggest Win
-  LegalUSPokerSites.com: PokerStars Bid To Buy Into New Jersey Fails
-  LegalUSPokerSites.com: Full Tilt Remittance Still Not Coming Anytime Soon
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-  LegalUSPokerSites.com: Ultimate Poker to Go Live in Nevada