What Happened to Online Poker?
The online poker landscape has changed a lot over the past decade. Just a few years ago it was booming and had reached a level of popularity that almost everyone was aware of it. It was in all the magazines, on TV, and even some celebrities were seen playing it. Then it all went wrong. On April 15, 2011, the biggest online poker sites in the world were shut down by the Department of Justice for violating federal laws including money laundering, bank wire fraud, and operating an unlicensed gambling site. This day is known as poker’s Black Friday and was a major blow to the industry.
At the time, Full Tilt Poker and Poker Stars had a combined market share of around 50%. Then you had the Cereus network with Absolute Poker and Ultimate Bet, which had a significant share of the market as well. These sites were all generating huge amounts of money, and for many players it was their bread and butter. Some were making more money than they could make working at a real job! This is why the Black Friday events were so devastating to the industry.
After the indictments came out, all three sites stopped accepting new US player deposits. A few months later Merge Poker, which had been the largest remaining US online poker room at the time, dropped their own bombshell when they announced that they would be shutting down all new U.S. player registrations as well. Merge Poker management cited the growing strain on their support and payment processing as their reason for the move, but this was not enough to quell the poker community’s outrage. Despite all of the negative press, Merge Poker did manage to return to the US poker market in October of 2011 with their brand name still intact.
A few months after the Merge launch, the poker landscape was completely rocked when the Department of Justice indicted three top ringmasters on charges of running unlicensed online gambling operations. This led to the removal of millions of dollars from player balances and a reshuffling of player sponsorship deals for those in the ringmasters’ leagues.
The DOJ indictments were based on a presumption that the federal Wire Act applied to internet poker payments. This was an overly broad interpretation of the law and a stretch to say the least, but it did effectively shut down the industry. Fortunately, the DOJ passed on taking this issue to the Supreme Court, which left state legislatures free to regulate and legalize the game on a state-by-state basis.
While the landscape for online poker has changed a lot since Black Friday, it remains a much smaller part of the overall casino/poker industry than it was just a few years ago. In fact, there are only four states where you can legally play online poker in the United States. The advent of legalized sports betting has somewhat warmed the waters for online poker and perhaps it will be a more mainstream thing to do in the future, but it certainly isn’t where it was back in the boom days of 2003-2011.