Gambler alert: Online poker becomes legal (sort of) again

Not long after the ink dried on a Nevada state law authorizing legal online poker last February, the Las Vegas-based Ultimate Poker has opened its virtual doors as the first legal real-money poker website in the United States.

But don’t break out your gambling visor quite yet—the site will only be available to residents of Nevada, 21and over.

Earlier this year, following a prolonged legislative battle, New Jersey passed a similar law authorizing legal online gambling within the state. The Garden State’s first virtual poker parlors are expected to launch sometime between June and November.

Seeing the huge potential for online gambling not only in New Jersey, but in the United States as a whole, Poker Stars, which is the world’s largest online poker site, is making a bid to purchase the faltering Atlantic Club casino in Atlantic City as a base for its U.S. operations.

Even the teeny-tiny state of Delaware recently authorized legal online gambling within its borders. Online gambling within Delaware is expected to open by September as the state considers bids from 14 companies looking to provide services in the state.

A murky history

Online poker in the United States has often straddled the fuzzy line of legitimacy. In the aughts, poker in general and online poker in particular enjoyed a cultural moment. However, that all changed in 2006, when Congress passed the Unlawful Internet Gambling Enforcement Act, which effectively put the kibosh on the burgeoning domestic online poker industry.

The law has since been subject to various levels of legal scrutiny and interpretation, the most revolutionary being in 2011 when the Department of Justice declared that it was revising its interpretation of the Wire act of 1961—the law that purportedly gave the feds the ability to regulate online gambling—to cover only sports gambling.

Will legal online poker be coming to tempt you in your state?

This sea change in interpretation not only allowed state lotteries to sell tickets online, but opened up other forms of online gambling to be regulated by the states as they saw fit.

When will online gambling be open to the rest of us?

Nevada’s interstate online poker industry—consisting of state residents and a small tourist industry betting in online poker parlors—is expected to bring in a modest $2 to $3 million annually for the state. On the other hande, the more densely populated New Jersey’s online gambling industry is expected to generate $180 million annually for that state’s coffers.

The question of whether cross-state online gambling will ever be allowed remains somewhat up in the air. There are only a handful of states that specifically ban their residents from online gambling in any form. So, in theory, when not specifically prohibited, there may be some room for interstate virtual gaming unless the federal government specifically steps in to stop it.

Online poker in the U.S. coul be worth upwards of $10 billion annually.

The whole issue gets even more cloudy when you consider that gambling laws are often written specifically towards “games of chance,” and a U.S. District Court judge in Brooklyn last year issued a ruling that defined poker as a game of skill rather than a game of chance.

Another possibility is that all the states that allow online gambling could form a compact that would allow residents to bet in each other’s virtual casinos.

However, a populous state like New Jersey may be hesitant to risk the potential money from its 8.8 million residents in return for the potential income from the relatively few 2.7 million residents of Nevada.

The true goal for online poker companies is surely to bring back legal real-money gambling across the entire Unites States, an estimated market of $4 to $10 billion. But that sort of outcome would depend on specific new interpretations of federal law in conjunction with reforming the patchwork of individual state laws. That is not an easy undertaking

While the path is unsure, the expectation is that online gambling will come back in some form. The combination of consumer demand, an increasingly libertarian-leaning electorate, and local governments looking to fill their recession-wracked coffers pretty much guarantees that virtual gambling will continue to expand.

That’s one outcome you can bet on.

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