A Short History of The Poker Boom, The UIGEA, and the Death of Online Poker Imposed by the Recent DoJ Actions

In 2003 an accountant named Chris Moneymaker won a $10,000 seat into the Main Event of the World Series of Poker by winning a $39 satellite on the online poker site PokerStars. As most of you know, Moneymaker went on to win the Main Event that year, parlaying his $39 in a $2.5 Million payday.

Moneymaker at the 2003 WSOP Main Event Final Table

Moneymaker's win, along with the introduction of hole card cameras, sparked a poker boom that was greater than anyone could have ever imagined.  The year Moneymaker won there were 839 entrants to the Main Event.  The next year there were 2,576.  The year after that there were 5,619, followed by an absolutely incredible 8,773.  Love him or hate him, The Moneymaker Effect (as it came to be affectionately called) was indisputable.

Poker, one of America's greatest pastimes, regained its place at the forefront of our culture. A position it has not relinquished...until now.

In 2006, on the last day Congress was in session before it adjourned, a very important port security act designed to keep Dubai from gaining control of a US port was brought up for discussion.  At 9:29 PM an amendment was added, The Unlawful Internet Gambling Enforcement Act, or UIGEA. The UIGEA did nothing to criminalize playing online poker, or offering online poker to be played.  The UIGEA simply made it illegal for banks to process transactions within gaming sites...no more deposits or withdrawals.

Because of the importance of the bill it was being added to, the "last day of school" fever Congress had, and the late hour, no one objected to the fact that reading of the bill was waived.  Practically no one in Congress knew what else they were voting for, and the important Port Security act passed by a vote of 421-2, bringing the UIGEA along with it.

 The immediate reaction to the UIGEA depended on the online poker company.  Some of the poker sites, such as Paradise Poker and the enormous Party Poker, were publicly traded companies on the London Stock Exchange.  Because of Exchange regulations, these companies pulled out of the US market immediately.  Party Gaming, the parent of Party Poker, saw their stock plummet 60% in 24 hours.  They were moved from the FTSE 100 to the FTSE 250 within 2 weeks.

The non-publicly traded poker sites saw little threat from the UIGEA and continued business as usual.  With fewer places to play in the US market, Full Tilt Poker, Absolute Poker, and especially PokerStars saw huge growth.  Transactions were a little bumpy for a short time based on a Department of Justice action against online transaction warehouse Neteller, but shortly resumed to normal.

All that came to a screeching halt on Friday.  The Department of Justice seized control of the websites of the three biggest remaining players in the US online poker market, Full Tilt, PokerStars, and Absolute.  The government also blocked the game to all US players.  The poker sites have, in turn, agreed to cease offering real money games to US players while the dispute is being resolved.

According to the DoJ press release on the matter, the sites are guilty of bank fraud, illegal gambling and money laundering.  Let me be clear, I believe the poker sites probably pushed the boundaries of what is legal to their full extent.  On the other hand, these are very serious charges, and the DoJ is returning fire by pushing the limits of the law in the charges it is pressing against the sites and their leaders.

While I think the DoJ is taking the laws to the extreme, my problem here is less with their actions than with the laws to begin with.  As I stated, there is no federal law against playing online poker.  There is no federal law against a foreign company offering online games to US players.  The only law is a banking transaction law that blocks players from engaging in a perfectly legal activity.  It is perfectly legal to go there, but they blew up the bridge.

Congressman Barney Frank and others have been involved in a highly bipartisan push to repeal the UIGEA, and regulate and license online poker sites.  It has never been more important than now to support this legislation.  The bills proposed to accomplish this are not perfect, but they are an important first step to protect one of America's greatest pastimes.  There is nothing wrong with an adult choosing  to play a game of poker in the comfort of their own home, and the laws should clearly reflect that.  Underhanded attempts to block a legal activity to take place, such as the UIGEA does, need to be stopped.

There is a million-member organization that is dedicated solely to the protection of poker players' rights.  The Poker Players Alliance.  Started after the implementation of the UIGEA, the PPA is fighting now to save online poker from its government enemies.  They have issued a press release on the matter.  Also, PPA Executive Director John Pappas has put up a video statement on the matter.

Now is the time to contact your senators, congressperson, and the Obama administration and let them know that you want the UIGEA repealed.  Tell them you want adults to have the right to choose to play a card game without government interference.  Let them know you are tired of government interference in online poker.  You can easily contact them through this link.  Thank you.