UIGEA / Black Friday and Online Poker

Without a doubt, the UIGEA and Black Friday mark two of the most significant points in the history of American online poker. But as important as both events were - and continue to be - in shaping online poker in the United States, several misunderstandings and misconceptions about the UIGEA and Black Friday persist.

Let's take a few minutes to detail and demystify two events that changed the lives of countless online poker players from America, starting with the UIGEA and then moving on to Black Friday.

Understanding the UIGEA

Here's a quick snapshot of the UIGEA that provides the critical things you need to know:

  1. Short for the Unlawful Internet Gambling Enforcement Act of 2006
  2. Purpose of the law is to prohibit companies from accepting or processing financial transactions connected to online gambling. Or, in the parlance of the law, "restricted transactions" associated with "unlawful internet gambling."
  3. Made law on October 13th, 2006
  4. While bill was passed in 2006, compliance with the UIGEA did not become required until December of 2009.
  5. The UIGEA does not specifically mention online poker, nor does it create any new law regarding gambling online as a player.

The impact of the UIGEA

The UIGEA had both an immediate and a long-term impact on the global online poker industry. After the bill was passed by the Congress and then signed by then-President Bush, a number of online poker sites immediately stopped accepting players from America and prepared plans to purge U.S. customers from their rooms. Party Poker was perhaps the most notable room to jettison the American market in the face of the UIGEA.

But not all rooms left; PokerStars and Full Tilt Poker remained in the U.S. and built massive poker sites on the back of an American interest in online poker that failed to wane post-UIGEA.

As for the long-term impact of the UIGEA: it's safe to say that passage of the law was the first step toward the events of Black Friday, an event that we'll dive into a few sections down.

Common misconceptions about the UIGEA

The UIGEA made playing online poker illegal. False. As noted above, the UIGEA does not mention online poker as a game covered by the law's scope. More importantly, the UIGEA does not criminalize gambling online by individuals.

Poker sites that stayed in the US after the UIGEA were breaking the law. Unclear. Many of the companies, like PokerStars, that remained in the United States after the UIGEA have mounted a powerful defense to charges that they operated in violation of U.S. law, buttressed by opinions from respected lawyers - including former officials from the DoJ itself.

THE UIGEA is preventing America from regulating online poker. False. The UIGEA requires that a state or federal law be broken to trigger a violation. Several states are already moving forward with regulating online poker in the United States, including Nevada, New Jersey and Delaware. The UIGEA is not an impediment to either state or federal regulation of online poker.

Online Poker's Black Friday

Black Friday had a number of meanings before April 14th, 2011. But after that date, the term - at least for poker players - became affixed to one of the most shocking days in the history of online poker.

A common misperception is that Black Friday somehow marks a day where the law regarding online poker in the United States changed. Nothing could be further from the truth. Like the UIGEA, the events of Black Friday did not in any way change the legality of playing poker online for Americans.

Black Friday: A Timeline

April (2011) - The domain names for several major US-facing poker sites, including PokerStars and Full Tilt, are seized by the U.S. Government. PokerStars and Full Tilt Poker stop accepting American players and reach agreements with the DoJ that result in the return of their domain names. PokerStars begins paying U.S. customer balances by the end of April.

May to June (2011) - While PokerStars manages a relatively orderly transition following Black Friday, it becomes increasingly obvious that Full Tilt Poker was facing serious issues prior to April 14th. Full Tilt stops operating in late June of 2011. The scope of the damage only becomes clear in the months following Black Friday, as evidence emerges suggesting Full Tilt was tens of millions of dollars in the hole.

June - January (2011) - The saga of Full Tilt Poker's Black Friday demise dominates talk in poker circles, as the once-popular online poker site struggles to find a buyer that will allow Full Tilt to meet all outstanding player obligations.

April (2012) - A long-discussed sale of Full Tilt Poker to Groupe Bernard Tapie falls through, and the first rumors of PokerStars as a potential suitor for Full Tilt emerge.

July (2012) - PokerStars reaches a settlement with the United States government over the charges connected to Black Friday. As part of the settlement, PokerStars agrees to acquire all of the assets of Full Tilt Poker.

November (2012) - PokerStars re-launches Full Tilt Poker. All non-US Full Tilt customers regain access to their full balances.

December (2012) - Former Full Tilt Poker executive Howard Lederer settles Black Friday-related charges with the DoJ.

February (2013) - Former FTP head Chris Ferguson reaches a similar deal, admitting no wrongdoing in relation to Black Friday. The US Government announces the selection of a company to oversee repayment of American Full Tilt Poker player balances - frozen since Black Friday.