How Legalized Online Poker Went Off The Rails

Part 1 of a 2-Part Series on US Online Poker that examines the current landscape and how we got here. Part 2, look for it next month, will lay out a strategy to bring legal online poker to the US.

The dearth of legal online poker in the US is my biggest frustration. While I advocate for legal, regulated gambling of all stripes, poker is near and dear to my heart. I played the game semi-professionally and professionally from 1999-2006, and my first writing gigs were all poker-related.

I get fired up about this topic because the lack of legal online poker in the US makes no logical sense. As a peer-to-peer skill game that is a part of Americana, poker’s path to legalization should have been a cakewalk. Still, it has somehow turned into a quagmire, thanks to mistakes, machinations, and a series of unfortunate events.

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Antagonists, Unforced Errors, and Promises Unkept

The story of online poker legalization in the US truly begins in the aftermath of the passage of UIGEA. Pre-UIGEA, there was little need to lobby for legalization. Post-UIGEA, online poker operators found themselves on the outside looking in on the lucrative US market.

However, there was a difference in how publicly- and privately-owned poker companies dealt with UIGEA. Public companies exited the market. Private companies stayed, figuring they would wait out the storm.

But pretty much every poker operator was now very keen on legalization either to get back into the US or by coming to the realization that UIGEA was a first salvo and things would get even more difficult down the road.

How it should be legalized and structured was a point of contention.

The Federal Government

There were a lot of threads, but without getting too into the weeds on the various efforts, the consensus was the federal government was the place to make the case.

They found receptive ears and even a few champions (we see you, Barney Frank), but the only results their lobbying dollars produced were a few bills that went nowhere. A lot of money was spent, with little to show for it.

As Eric Hollreiser told me in 2021:

When I think about the efforts made to regulate online poker back in 2010-2011, mainly by PokerStars, the idea was a federal solution. And that would have been the cleanest, best, most logical solution.

I think there was reason to be optimistic. Barney Frank was behind it, and we were putting tons of money in, and Full Tilt was putting money in. The Poker Players Alliance (PPA) was active and had several members. It wasn’t just PokerStars.

Hollreiser added that with hindsight, the question is “whether you were dealing with the right people. Are you backing the right horses politically?”

As the Grail Knight told Indiana Jones after Walter Donovan took a big swig from a gold cup, “he chose poorly.”

Black Friday and the OLC Opinion

The federal option that began in 2007 was still on the table heading into 2011, and then all hell broke loose.

2011 is perhaps the most impactful year in the history of US online gambling.

First were the Black Friday indictments on April 15, 2011. If you’re unfamiliar with Black Friday or need a refresher, Martin Harris wrote a terrific retrospective in 2016.

The long and short of it is that Black Friday kneecapped the remaining US online poker operators that had thumbed their noses at UIGEA. But as the dust began to settle on Black Friday, an equally momentous event occurred, as an opinion from the Department of Justice Office of Legal Counsel concerning online lotteries would flip everything on its head again.