Please note: This isn't really an essay about poker. This is an essay about personal freedom. And how too much government regulation can stifle and even crush an entire industry.
Remember the poker craze? There was poker on television. Movies about poker. Everyone was playing home games with friends, and signing up for accounts online. Suddenly you could go online at any hour and find a game where you compete with people from a half dozen different countries. And you could play for real money!
So what happened?
The first online casino opened in 1994, but Planet Poker didn't open the first online poker room until 1998. Planet Poker used the simple method of taking a cut (called a 'rake') of the pot from each game to make money. The next year Paradise Poker started its poker room with slick graphics and a variety of games. To supply their accounts, players began to use fund transfer services like Neteller, which fueled the business of online banking.
Party Poker came along in 2003, the same year poker's popularity exploded due to a previously unknown player named Chris Moneymaker. Moneymaker paid $40.00 to get into a tournament on the Poker Stars site, which eventually led him to a spot in the World Series of Poker, where he won first place and $2.5 million USD.
People went crazy for poker. They went online to compete in the hopes of someday playing for big money. Sites like Party Poker and Ultimate Bet went public and began trading stocks on the London Stock Exchange. In 2004, Party Poker was making profits of $1 million USD per day!
And then the roof crashed down.
In 2006 the United States Congress passed the Unlawful Internet Gambling Enforcement Act, which made funding or accepting of funds for online gambling illegal. This meant that while the activity of playing poker online was not illegal, transferring money to an online account to do so was illegal.
This act of Congress choked the online poker industry. Players could not fund their accounts and could not use credit cards with the poker sites. And any bank that transferred funds in and out of these sites was suddenly liable. It effectively killed the game just as it was exploding in growth.
In Part 2, we'll examine how the online poker industry reacted to this legislation.