Can Someone Deal Internet Poker a Good Hand?

Reform is still needed, but the Skilled Game Protection Act is flawed

Full study available in pdf 

Recent attempts to reform the legal environment for online gaming fall short.

The U.S. Department of Justice (DOJ) recently has gone after Internet poker businesses with a vengeance—even though it may not have the authority to do so—driving many of them overseas. Now the House of Representatives is considering legislation to tell the Justice Department toleave Internet poker businesses alone. So would that constitute a needed clarification of jurisdictional authority? Sadly, no. The same statutory ambiguities that the Justice Department is now using to drive Internet poker out of America are in the proposed bill.

The Skill Game Protection Act (SGPA, H.R. 2610), sponsored by Rep. Robert Wexker (D-Fla.), seeks to clarify that games of skill that are played on the Internet, like Internet poker, are both legal and regulated. The bill would amend two statutes—the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) and the 1961 Wire Act. These are the two principal federal statutes outlawing interstate betting and wagering over the telephone or the Internet, mainly by making it illegal for businesses to transfer gambling-related funds.

Neither statute clearly affects Internet-based games of skill—games in which players’ mental abilities, rather than pure luck, determine outcomes. Yet the Justice Department has investigated and shut down businesses involved with Internet-based games of skill based on a flawed interpretation of the statutes. The result has been a climate of confusion, in which possibly legal businesses leave the American market rather than face the Justice Department’s capricious enforcement of these laws.

Unfortunately, the Skill Game Protection Act is unlikely to solve this situation. It seeks to create certainty, but it is poorly drafted and leaves key terms undefined—something that could easily create even more confusion.