THE START OF A BILLION-DOLLAR INDUSTRYOne of the most significant advances in the gaming industry came on the heels of the World Wide Web (Internet) being made available to the public in 1991. The first online casinos took a few years to go live, but it was clear from the beginning that it was a game-changer. Poker didn’t come on the scene until towards the end of the 1990s, and while it took a few years to gain momentum, the industry has since seen massive growth, which has only increased since COVID-19 enforced shutdowns.
THE EARLY YEARS OF ONLINE POKER
Long before online poker was the global juggernaut and technological marvel it is today, the first games were played exclusively through text-based chat programs. In 1988, programmer Jarkko Oikarinen invented the IRC (Internet Relay Chat), allowing anyone to create a server with their own chat rooms. Over time, extra features were added that allowed the sharing of files, and the ability to run scripts. This upgrade would see two men by the name of Todd Mummert and Greg Reynolds create a server and script that allowed IRC users to play poker games and tournaments online for the first time.
A computer program was used to deal, and all the money was virtual with no real-world value, but that didn't stop the game from attracting a devoted group of players. All the standard poker actions were available; players could bet, fold, or raise by pressing the corresponding letter on the keyboard. IRC poker offered poker variants such as traditional Texas Hold’em, Omaha Poker and tournaments, which could seat a maximum of 23 players at a table.
Each account was limited to 1000 chips per day; however, there were no restrictions on multi-accounting, so people would often create more than one account. These early poker games were strictly for fun, and due to the complexity and relatively new computer technology, the first games were hard to access and remained the domain of the very tech-savvy. Graphics and images were added later, but by today's standards, it was still very basic. It was still very popular though, and between 1995 and 2001, more than 10 million hands were played on the IRC servers.
When the first real-money online poker site went live in 1998, IRC quickly lost its appeal, and most of the servers went offline in 2001. To this day, it is still possible to play IRC poker and set up a personal server but finding players would most likely be more challenging than figuring out the old computer program and getting it to work.
ONLINE CASINOS CHANGE THE GAME
The first online casino went live in 1994 after the government of a small Caribbean nation, Antigua and Barbuda, implemented the Free Trade and Processing act allowing them to grant licenses to companies interested in establishing online gaming services. The first online casinos quickly followed, and soon dozens of websites popped up offering gaming services. It wasn't until 1998 that Planet Poker dealt the first virtual hand of Texas Hold’em in a paid game. Founded by engineer Randy Blumer, Planet Poker was the first real-money online poker room, but it failed to make an impact on the industry.
Paradise Poker, based out of Costa Rica, launched the next year and quickly established itself as the industry leader for online poker games. In addition to Texas Hold’em, they also offered Omaha Poker, Seven Card Stud and improved security and software features. At the same time, Planet Poker started suffering from security issues when their software was hacked. The security breach cost them dearly, and Planet Poker never really recovered. By the end of 1998, the fledgling online gaming industry had generated over $800 million in revenue despite slow servers, primitive network technology and connectivity issues.
The early 2000s saw considerable changes in online poker, the early success and money attracted a great deal of attention and saw more poker sites pop up. The field became extremely competitive, and the different companies were forced to develop new and innovative ways to attract payers to use their product and distinguish themselves from other operators.
Among the many new online poker rooms was Poker Spot, the first to offer online tournament play, unfortunately, they were also one of the first online poker horror stories. Only a year later they were shut down in a hail of controversy, with many players losing money and the operators unwilling or unable to cover the costs. Despite the troubles with Pokerspot, the idea of online tournaments stuck and quickly caught on in other card rooms.
THE POKER BOOM
From 2000 to 2003, online poker card rooms jostled for position, using advertising, player bonuses, and poker professionals' endorsements to gain the upper hand in the market. All the groundwork they were putting in would set the stage for the biggest poker boom in history.
The poker boom period occurred between 2003 and 2006, during which poker, specifically Texas Hold’em, became incredibly popular worldwide. The online player pool doubled in size every year during the boom, growing the industry exponentially. There has been a lot of speculation as to what fueled the early 2000s poker boom, but three main factors are thought to have had a huge role in drawing in more players.
1. ROUNDERS (1998 POKER FILM)Rounders tells the story of law student and gifted poker player Mike McDermott, played by Matt Damon, who dreams of winning the World Series of Poker. Through a series of unfortunate events, McDermott is forced to play high-stakes poker to pay off a large debt owed to a mobster. The film is one of the few that portrays realistic poker gameplay and introduced a broader audience to poker.
Rounders is believed to be the spark that would eventually ignite the poker boom. It inspired a whole new generation of players to try and make their fortune at the tables, and even a few well-known professionals have listed Rounders as the reason they started playing poker.
2. WORLD POKER TOUR BROADCASTSIn mid-2002, the World Poker Tour was founded and shortly after, started broadcasting poker to TVs around the world. Poker was presented as a glitz and glimmer world with big money on offer at tournaments watched by large audiences. For the first time, cameras were also placed in the tables, showing players' hole cards to viewers, providing an extra level of interactivity. The WPT is thought to be a massive influence on the Poker Boom.
3. CHRIS MONEYMAKERBefore 2003, Chris Moneymaker was an accountant, but his life changed forever when he won an online satellite tournament getting him a seat in the World Series of Poker. Very few expected him to do well, an amateur player who won his way into the $10,000 tournament, his chances were somewhere between slim to none.
However, in what would become one of the most significant events in poker history, he made the final table and won the whole tournament becoming the first amateur player to win the championship after gaining entry through an online satellite tournament. The broadcast went around the world, and interest in poker exploded not long after. Many new players joined online poker rooms hoping to emulate Moneymaker's success, a phenomenon the press called the "Moneymaker Effect".
ALTERNATE FACTORS FOR THE POKER BOOM
THE NHL LOCKOUTIn 2004-2005, the NHL lockout forced ESPN to air alternate programming such as poker games. Without regular sport to watch, new viewers were introduced to poker and gained interest in the game.
SPECULATIVE BUBBLEAnother view argues that because online poker game technology was so new, the explosion in popularity was due to the game existing in a speculative economic bubble. Similar to the dot-com bubble in the early 90s, or the Cryptocurrency boom of the last decade. Whether it was one, or all of these factors combined into a perfect poker storm will never truly be known.
DARK CLOUDS FORM ON THE HORIZON
At this stage, it seemed there is no limit to the online poker industry and what could be accomplished. However, dark clouds had started to form, and with billions of dollars being made, it was only a matter of time before governments would make their presence known. Largely ignored by politicians until the mid-2000s, online casinos and poker rooms were about to take a hit that would take many years to recover from.
ONLINE POKER HAS A NEAR-DEATH EXPERIENCEOnline poker enjoyed a few years of uninterrupted growth, but politicians worldwide started to look at ways to outlaw or collect tax from the industry. One of the most famous attempts was made in the U.S. Senate with the Internet Gambling Prohibition Act. If passed, it would have banned internet gambling and effectively cut off the entire American market, the bill failed, but it was only a reprieve.
In 2004, major internet search engines removed all online gambling advertising after the U.S. Justice Department argued that it could be considered aiding and abetting illegal gambling, which is a violation of the Wire Wager Act of 1961. At this stage, American players make up over fifty per cent of the $8.5 billion in revenue generated by online gambling. By 2005, it's estimated that more than 55 million Americans are playing online poker, with around 15 million of those sending real money. The same year, PartyGaming is listed on the London Stock exchange with a market value well into the billions.
Antigua Barbuda, the Caribbean island nation that helped start the online casino industry, filed an action to the World Trade Organization against the U.S. government. They held the view that anti-online gambling laws violate the WTO's General Agreement on Trade in Services. Eventually, the WTO ruled in favor of Antigua Barbuda. The industry dodged another bullet, but the good luck wouldn’t last.
UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT (UIEGA)The worst part about the Unlawful Internet Gambling Enforcement Act isn't the fact that it was brought into law, but rather the way it was done. A small group of senators had the UIEGA added to another bill designed to improve security at American Ports; this saw the act passed into law without any review or debate.
The UIEGA was created to stop large sums of money going to offshore companies that the U.S. government couldn't tax. Previous attempts to receive tax from individual companies had failed, so it was made illegal for financial institutions to process online gambling funds for U.S. residents. Many locally based online poker rooms were forced to shut down or close their product to American players.
There has been a lot of speculation around why the UIEGA was allowed to proceed despite the curious way it was brought into law. One of the senators involved had well-known ties to the live casino industry, which was firmly against online alternatives at the time. Another senator opposed all forms of gambling on moral grounds. Nobody can say with any certainty why, but since the UIEGA was brought into law, there have been no serious attempts to repeal it.
Despite the UIEGA, many poker rooms continued allowing U.S. players to sign up. At this time, several poker scandals and swindles became known as well, exposing specific sites as fake or unscrupulous. Regardless of the negative press, by 2010, 545 poker rooms were operating. The good fortune wasn't to last though, Americans still made up a large portion of the online poker players, and the U.S. government was ready to take another swing at the online gambling industry.
BLACK FRIDAYFriday, April 15, 2011, is a date that many in the poker community know as 'Black Friday', a day that still lives in infamy. The U.S Department of Justice (DOJ) seized the three biggest poker websites still accepting U.S players, freezing all assets and player bankrolls. Indictments were served against the businesses, along with their founders and key employees. They stood accused of money laundering and bribery, among other charges.
One poker room negotiated to withdraw from the U.S market and paid millions to ensure their player base would be repaid. The second went out of business, while the third was left bankrupt. When the dust settled, the poker market had changed drastically, and the U.S government had managed to secure over a billion dollars in fines.
The most interesting thing about this whole saga was that all the defendants involved were allegedly offered plea deals, meaning none of the cases went to trial, and there was no official judicial decision as to whether the defendants had broken the law. Later that same year, the Department of Justice reversed its stance. The Black Friday raids were conducted under the guise that online poker sites offering their services to Americans were violating the Wire Act of 1961 and the Unlawful Internet Gambling Enforcement Act. Only six months later the DoJ's new opinion was that the Wire Act only related to sports betting, leading many to question the legality of 'Black Friday' and everything that followed.
BLUE MONDAYOnly a few weeks after Black Friday, the U.S poker market took another hit from the authorities. Dubbed Blue Monday, ten more online poker sites were shut down by the Department of Homeland Security, citing illegal financial transactions. By this time, online poker for real money was virtually eradicated in the United States.
THE ONLINE POKER INDUSTRY REBOUNDSWith a massive chunk of the market lost overnight in the U.S, the online poker industry took a big hit that would take many years to recover from. Regulation and legalization have been slow processes, but as time goes on, more countries are starting to allow online poker to return, albeit with oversight and tax applied. Gambling remains legal under U.S federal law, but there are significant restrictions in place on interstate and online gambling.
As of 2020 state-regulated, real-money online poker has only become available in Delaware, New Jersey, Nevada, and Pennsylvania. Most of the other states have no laws specifically outlawing the practice, but many casinos still refuse to take US-based players for fear of reprisals from the U.S. government. Other offshore poker sites have continued to maintain their right to accept players from anywhere in the world, arguing that online casinos do not fall under any specific authority. Provided the gambling operation is legal in their host countries; some online casinos maintain that Global Free Trade Laws allow them to welcome players from all countries.
Bitcoin entered the game in 2014 and provided another fast and secure payment method without the major banks' oversight. Along with new technological advancements and mobile devices, online poker has slowly started to rebuild its player base. In 2015, the first $1,000 online World Series of Poker event was held. Only a few years later, in 2020, one of the largest online tournaments to ever take place saw an $18.6 million prize pool up for grabs. It was a lean few years for online poker, but it appears to be well and truly on the way back up.
THE FUTURE OF ONLINE POKERCOVID-19 restrictions made 2020 a challenging year for a lot of people, and many professionals and regular recreational players have taken refuge online due to the closure of live casinos. The industry has had an explosion in player numbers that hasn't been witnessed since the poker boom of the early 2000s. Whether this will stabilize or drop once COVID-19 restrictions are eased remains to be seen.
Even before the COVID, online casinos have consistently created new and exciting technology to draw in players. Restrictions and laws on online gambling are also starting to ease. By 2024, the whole online gambling sector is being predicted to be worth close to $100 billion. Barring another event like 'Black Friday' or a series crackdown, it's clear online poker has a very bright future ahead.
This is a reference article to the history of online poker in general. It is for information and entertainment only. It is not related to, nor a reflection of, Global Poker, its products, content, or its games.