Can You Get Into Trouble Over Online Poker?

Online poker’s history in the United States has been full of ups and downs. Few expected the game, and other forms of online gambling, to take the world by storm when the first online poker rooms began appearing in 1998.

Since that time, many countries, including the almost all of Western Europe, have decided to regulate and tax online gambling sites and provide safeguards to players through the legal system. These countries never opted for prohibition when it came to online poker markets.

The US took a different approach, mostly taking an indifferent attitude toward online gambling. For much of the early history of online poker in the US, the industry was left alone. It wasn’t until the 2006 passage of the UIGEA [A] that the US government actively went after online poker and casino sites operating offshore.

Since that time, quite a bit has gone on in the country in terms of online gambling legislation and acceptance of the practice. There are now three states (Delaware, Nevada and New Jersey) where online poker is legal, and there are dozens of bills across the country that may legalize the game in other states at the intrastate level.

However, despite the liberalization of online poker in some states, the vast majority of players are living in states without a regulated market. Therefore, if they want to play online, they have to use foreign operators and non-state-licensed online poker rooms.

Playing online poker at these offshore rooms isn’t as simple as depositing and playing. Once you’ve found a reputable site, there are plenty of other concerns and factors that players should consider when playing online.

Legality

I’ll go over the basic points in this article because this is an issue that deters many players from playing online. It’s paramount that players understand the distinction between criminalizing online poker operators versus criminalizing citizens who play online poker.

The UIGEA criminalized online gambling sites that offered services to Americans, but it’s crucial to note that there is not a single sentence in the UIGEA relating to player penalties. Depositing into an offshore poker room and playing has never been a crime on the federal level and still isn’t one today.

That’s not the case on the state level. In fact, despite three states having legal, regulated online poker markets and the DOJ reversing course on the Wire Act [B] – in several states it is a crime for individuals to play online poker.

Florida, Utah, and Washington prohibit online poker. The activity is not only outlawed for operators, but there are also player penalties in these states. For example, in Washington State, online gambling, including online poker, is a Class C Felony, punishable by up to 5 years in prison and up to $10,000 in fines.

The law is preposterous and draconian, especially considering there are brick-and-mortar cardrooms all over the state, but the good news is these laws aren’t enforced. No citizen in any of the above prohibition states, including Washington, has ever been criminally charged with playing online poker or any other form of online gaming.

To cut a long story short, individual gamblers in the US have virtually no risk from law enforcement when they decide to play poker online. No one has ever been arrested for playing online poker in the US.

Many players who frequent brick-and-mortar poker rooms across the country simply aren’t aware that this is the case. At least half of them think the online game is illegal. This notion has become somewhat of an urban legend at live cardrooms, but it’s a total myth. Playing online poker is legal in the vast majority of jurisdictions and isn’t enforced where it is prohibited.

Despite online poker not being a crime, it’s still a good idea to keep up with news regarding online poker in your state and any national headlines relating to the game. They’re not busting down doors with SWAT teams for someone who is playing a few hands of poker online, but it’s certainly possible a state or local government may push for a harder line on the issue someday.

However, that seems less and less likely as the years progress. Several states have already legalized the game, and gambling talk as a whole in the country has been trending towards liberalization.

Taxes

US income tax law requires that gambling winnings be taxed [C]. It doesn’t matter where players won their gambling money, whether at a live cardroom, an online poker room or from a neighborhood bookie.

Gamblers in the United States get a raw deal compared with many other Western nations. For instance, gambling winnings aren’t taxable in the United Kingdom, Ireland, or in Canada [D].

Of course, it’s ultimately up to you to decide whether to report your gambling winnings to the IRS. Players suffer the same penalties from the agency for unreported gambling income as they would with any other type of unreported income.

Deposits and Withdrawals

Below I will provide some general tips for depositing and withdrawing at offshore rooms.

Look for cost-effective methods, both when depositing and withdrawing. Most sites won’t charge a fee for deposits via credit or debit card. Most will also reimburse transfer fees if players send via Western Union or MoneyGram, provided the transfer amount is more than $200–300.

The same goes for withdrawals. These can be quite costly and can amount to 10% of your winnings if you are paying a fee every time you withdraw. US-facing rooms will usually offer a free withdrawal per month via check and sometimes through other methods.

Although we suggest players cash out frequently due to the uncertainty at offshore gambling sites, if possible, players should look to take advantage of these promotions. Withdrawal fees can easily amount to several thousand dollars a year for those that are winning. Avoiding those fees should be a priority.

Bitcoin, a crypto-currency that is now available as a cashier option at several top online poker rooms, is free for both deposits and withdrawals, regardless of the amount requested. It’s an excellent method for cutting down on processing fees and can sold for dollars at favorable exchange rates.

Issues with Receiving Withdrawals

Just because online poker is legal doesn’t mean that banks will look the other way if they are aware that you’re receiving payments from offshore poker sites. In rare cases, this can result in the closure of your bank account. However, none of your funds will be taken, and there will be no criminal charges. Once again, though, this is rare.

A typical scenario for players that can potentially cause them trouble is depositing a check from an offshore poker room. All checks from offshore sites, these days are issued by foreign banks. It’s rare for bank tellers to deal with foreign checks, as most of their other customers are depositing domestic checks or are being paid via direct deposit.

Depositing checks via ATM or smartphone app is an excellent way to bypass this process, but it’s not always possible, depending on the size of the check and bank policies. When players deposit a check through the bank window, there’s a chance the bank teller will ask questions about the check.

It’s critical not to mention anything about online poker or online gambling when depositing. It’s best to say it relates to a job or freelance work. My favorite explanation is to tell bank tellers that I’m a consultant. Some players may still have issues, but in my experience, that has been enough for them to accept the check.

There have certainly been horror stories of players having two-week holds on their checks, but even in these situations, they were eventually credited with the funds after the check fully cleared.

High volumes of withdrawals through Western Union or MoneyGram may also disqualify you from using their services. Both companies can be held criminally liable for processing online gambling payments, so they will ban anyone who is using it for that reason.

Like cashing checks at a bank, it’s vital not to mention that your transfer is related to online gambling. Even if they have no suspicions of online gambling, high-volume transfers from foreign countries may eventually get your account closed.

This risk is certainly something to consider if you need to use Western Union or MoneyGram for your work, or you value keeping an active account with either service. Both are extremely quick in terms of payout speed (normally 1–2 days), but they come with larger fees compared to other methods.

Withdrawals back to Visa cards are now an option at many US-facing rooms. This is an excellent method because it’s processed in about one week’s time in most cases, which is faster or similar to check speeds. It also bypasses issues players may have when depositing checks into their accounts.

Not only that, but it’s more convenient for players as well. They aren’t forced to wait for the check, drive to the bank, and then wait for the funds to clear. Their withdrawal will automatically hit their debit card, and there’s zero hassle.

This option is often called Visa Fast Funds under the cashier option. For players in the US market,withdrawals using Visa and Bitcoin are my favorite options.

Safeguarding Your Personal Information

Online poker players and anyone who gives away their personal information online need to have at least some level of trust when dealing with a website or service. It’s smart to keep your personal information safeguarded in these days of electronic theft.

Offshore poker sites will generally ask players’ name and address when they sign up. Depending upon your deposit and withdrawal methods or the requirements to cash out, it’s likely that they will also have to share further information.

Handing over personal data to a foreign gambling site might not sit well with players. Their concerns are understandable, but there’s been very little fraud in the industry over the years when it comes to identity theft or bank or credit card fraud.

Some of the worst debacles in online poker history included failures related to mismanagement of player and company funds or outright crooked business practices. The only other cases have been insider cheating scandals, but as far as identity theft and the use of personal information, such cases are almost nonexistent.

Sure, your email might end up being passed around if a new site comes online, but there’s little reason to be worried about your personal information. Like other secure sites, such as online stores like Amazon.com, online poker rooms use encryption to keep the private data of their users exactly that, private. There’s little reason to fear this stuff getting into the wrong hands.

When it comes time to cash out, players may be required to verify their identity even further. Sites may ask them to send in one or two forms of identification, which usually includes scanning a driver’s license, credit card, bank statement, or utility bill.

Many players are caught off guard by this practice, but it’s standard procedure for almost all online gambling sites. Sites just want to be sure who they are dealing with to prevent multi-accounting and bonus abuse. The verification also helps players to be sure that their identity isn’t being used without their permission at an online poker room.

Compared to offshore sites, those using state-licensed rooms will have to give up more personal information when they sign up. In Nevada and New Jersey, players will need to provide their social security number before they can play.

Once again, this is for identity verification purposes and to keep track of winnings for taxation purposes. Your information is in even safer hands within states where the game is legal and regulated.

In Conclusion

So many of the legal issues surrounding playing online poker in the United States are myths. There’s no reason to fear legal action for playing online poker. It’s not a crime on the federal level, and the several states that have criminalized online gambling have never charged anyone for playing online poker.

For the most part, playing online poker is common sense. If you’re lucky enough to be in a regulated market like New Jersey, Delaware, or Nevada, you’ll have plenty of excellent regulated options. For those in the other 47 states, offshore sites will be your bread and butter.

Certainly, not every site is created equal, and there have been plenty of bad apples in the industry over the years, but for the most part, the vast majority of players haven’t had any issues. Their withdrawals have been processed in a timely fashion, and the integrity of the game hasn’t been compromised.

Like I mentioned above, it’s worth following industry news relating to online poker and state laws to keep informed, but there’s no reason to fear legal repercussions for playing online poker in the current climate.

Author: Joseph Falchetti
Copyright: OnlineBetting.com 2016

References and Citations

[A] – Unlawful Internet Gambling Enforcement Act

[B] – DOJ Flip-Flops on Internet Gambling

[C] – US Gambling Income and Losses

[D] – Gambling Winnings aren’t Taxable in Canada