Online poker is a tricky area in regards to legality. Is online poker legal? While it is popular around the world there are less regulations for online poker than traditional poker as traditional poker rooms are subject to stringent laws. Online poker in the United States is subject to the vagaries of federal laws and state laws. In terms of federal laws online poker is not illegal. But this is due to the fact that internet laws and poker laws do not yet specifically address the issue. That being said the legality then falls upon the shoulders of the states. Each state has rules about the issue and thus far Washington is the only state where online poker is actually illegal.
The biggest issue is that the internet is global and different countries have different views around what is acceptable. For this reason, it's not a YES or NO answer as to whether it's legal. It depends where you are. If we look at the USA, the Dated Wire Act . This prevented companies or individuals from transmitting bets or gambling-related information over the phone. At the time, as everything was dial up, this also included the internet. This was the trigger that made president Bush sign off on the Unlawful Internet Gambling Enforcement Act in 2006. So with this did playing online poker become illegal in the US? The short answer...NO. What it did was make t illegal for financial institutions to transfer money to players accounts.
Of course there are loop holes galore. Firstly most online poker sites use IP tracking to determine a players country of origin and this is very easily hidden or changed. Secondly, there is no law stopping players from having funds transferred from another player outside of the US into their player account. Of course this method excludes US players from benefiting from any deposit bonuses but it gets round the main hurdle. Is it illegal to do this - again NO. It may be time to make some new friends.
An important topic is the legality of money earned and taxes that need to be paid. You should check for your country of residence as again, it changes from country to country. Here in the UK, income from gambling or poker winnings is seen as gambling and is not taxed. Winnings in the US are taxable and need to be accounted for in your returns - there is a good article on poker taxation in the US here.
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This is a question that is widely discussed and in truth no-one really knows the answer. It's no secret that the US government loses Billions of dollars every year that they would receive if online poker and gambling was properly regulated. In fact it is estimated that a regulated environment could earn the US taxman up to 8 Billion dollars! The main issue is they have found it difficult to prevent criminals from using gambling to their benefit (fraud and laundering money). There is hope at the end of the tunnel. More and more states are discussing the issue. On August 21, 2012, a federal judge in New York ruled that poker was not gambling because primarily it was a game of skill, not luck. Only time will tell..