The Interstate Poker Compact: What It Means for US Players
The Interstate Poker Compact’s official name is the Multi-State Internet Gaming Agreement. Its acronym is MSIGA, and it is arguably the most important key to bringing online poker back to the United States market in a substantial way.
MSIGA is an interstate poker compact, one that must be signed by the governors of participating states for its latest iteration to be effective. It is a legally-binding document that allows online poker operators to link their poker sites in participating states across their state lines.
That is online poker liquidity. And it is the key to US online poker’s success.
Liquidity in the Poker Boom
When Chris Moneymaker won his $2.5M and WSOP Main Event title in 2003, the world looked on as the Tennessee accountant turned an online satellite into life-changing money. The poker boom that followed involved people logging on to globally-available online poker sites in record numbers to play the famous card game online.
Liquidity was not a part of everyday poker lingo at that time, but poker operators did benefit from liquidity.
- Oxford Languages definition: “a high volume of activity in a market” and the “availability of liquid assets to a market or company.”
The online poker market was growing, and the market was as liquid as it could get. Players could log in from nearly anywhere in the world and play alongside people in most other countries. Poker sites, specifically those with heavy name recognition like PokerStars and partypoker, benefitted greatly from liquidity. They could offer larger tournament guarantees and a greater variety of game options because of the number of players in the same pool.
How US Online Poker Liquidity Died
The first United States law to pop the liquidity bubble was the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. It was a law that passed on the back of a must-pass port security bill, and it forbade banks from processing online poker transactions.
As this prompted some of the world’s top poker providers to leave the US market, liquidity dropped.
On April 15, 2011, the US government seized the domains of PokerStars, Full Tilt Poker, Absolute Poker, and UltimateBet. The Department of Justice indicted the heads of those companies and payment processors for violating the UIGEA.
With that, online poker in the US lost the majority of its liquidity. While there were some sites based offshore that risked allowing American players on their sites, the US market was largely obliterated, at least on the scale by which it had once been measured.
Beginning the Repair
The US government showed no indication that it would consider legalizing online poker for its citizens. Despite repeated lobbying efforts to show members of Congress that the skill factor outweighed luck in poker, and the separation of poker from other gambling because there was no house edge, few politicians were willing to even consider a legal online poker system in the US.
That left it to the states.
Nevada
Nevada legalized online poker in 2013, and several sites launched in the state, restricting players to being located there to play. This was done with geolocation technology, and aside from a few initial glitches, the system worked.
Delaware
Delaware had done the same months earlier. A much smaller market, Delaware politicians at least saw the benefit for its three land-based gambling operations (under one owner) to link to online casino and poker sites.
New Jersey
New Jersey was in the mix as well. It could have been the first state to legalize online poker, but it took a little convincing and negotiating for Governor Chris Christie to get fully on board. In 2013, he did.
All three states’ gambling regulators – and the sites that obtained licenses and began operations – knew that each market was limited in its potential for online poker. Poker sites required large numbers of players to be able to spread a variety of games and limits, to provide big tournament prize pools and guarantees, and to lure players from offshore sites. With that, they knew that they would need to obtain special permission – state approvals from the governors – to link the sites across state lines.
So, 888 Holdings, which provided the software for the poker sites in Delaware and the WSOP sites in Nevada and New Jersey, created the All American Poker Network. As the only company with a product in all three states, 888 arranged to put them together into the AAPN. However, those with eyes on the larger picture of online poker’s future in America knew that it needed to be an independent group that merged the sites.
Attorneys like Jeff Ifrah used the AAPN framework to create the Multi-State Internet Gaming Agreement (MSIGA).
MSIGA Details
The first MSIGA compact combined Nevada and Delaware in early 2015. The second involved Governor Chris Christie of New Jersey joining Delaware Governor John Carney and Nevada Governor Brian Sandoval in October 2017.
The full agreement contained 15 pages of text, including the signature page and exhibit of minimum standards for the online poker framework. It stated that the “Member States” would cooperate for the best interest of the states, their patrons, and their licensees to enhance customer experience and state commerce by optimizing revenue from online poker.
Details of MSIGA included commitments to regulations, security, public accountability, citizen welfare (responsible gambling), revenue, and competitiveness “by increasing liquidity.” The principles of the agreement were simple:
- Each licensure must promote public confidence and trust in the online gaming industry.
- They must conduct operations fairly, honestly, competitively, and in a well-regulated, secure, and publicly accountable system designed to create positive customer experiences.
- Gaming under the agreement must be conducted only in states where the state has legalized it and in a system that prohibits minors and those with gambling problems from participation.
Operator Requirements
Any licensee (online poker operator) to participate must meet the following requirements:
- Be of good character, honesty, and integrity and not post a threat to public interest or igaming regulations.
- Be adequately capitalized and competent to conduct igaming activities.
- Avoid the dangers of unsuitable, unfair, or illegal practices and methods.
- Be able to verify the identity, age, and physical location of all patrons.
- Require all patrons to agree to terms, conditions, and rules of igaming.
- Monitor deposits and withdrawals for safety and security.
- Provide tools for customers to limit their own wagering activities, and respect voluntary or involuntary exclusions from igaming accounts.
- Prohibit accounts from being transferred and third parties from transferring a patron’s funds.
- Advertise problem gambling assistance and tools.
As Ifrah wrote upon the conclusion of the three-state agreement, MSIGA was and will be a critical component in the establishment of a national online gaming regime. “The MSIGA provides for all issues necessary for a successful national gaming program. … In the future, as states develop legal frameworks for online gaming, it can be expected that such states will immediately join the MSIGA to ensure the success of their gaming program.”
Some States Pass on MSIGA
It took years for other states to approve online poker and regulate the game for state oversight.
Pennsylvania
Pennsylvania did so in 2017, but the first poker site (PokerStars) didn’t launch until the end of 2019. As of the end of 2023, it still has not signed MSIGA to allow its licensees to join with their counterparts in other states for reasons that remain unclear.
West Virginia (UPDATED)
West Virginia legalized online poker in 2019. While online casino sites have launched since then under the igaming regulations, there are still no poker sites available under West Virginia’s law. This is due to the small player pool available to operators, not worth the cost of the launch. While MSIGA would provide the liquidity necessary to include West Virginia in the US online poker industry, the state’s governor has not signed the agreement.
On November 14, 2023, the West Virginia Lottery announced that the state did, in fact, just sign the MSIGA to share online poker.
Connecticut
Connecticut Governor Ned Lamont signed a law in 2021 to legalize online poker and other forms of igaming. Similar to the case of West Virginia, the state has seen online casinos and sports betting sites launch since then, but online poker operators declined to obtain licenses. This state, too, has not yet signed on to MSIGA.
Rhode Island was the latest state to legalize igaming. It did so in 2023, and it will be some time before it is clear whether or not this state will sign on to MSIGA to make online poker viable for its players.
Finally, Michigan
When Michigan legalized online poker in 2019, the legislators who spearheaded the Lawful Internet Gaming Act knew what they had to do. They worked with Governor Gretchen Whitmer to sign off on the bills that passed the legislature in late 2019. The next year, they passed an amendment to allow interstate online poker, and she signed that one, too.
The first poker site launched under state regulations in January 2021, and others followed in their own time. By early 2022, Michigan got involved in talks to join MSIGA. Then, Whitmer signed the agreement for Michigan, and the governors of the other participating states signed as well.
On the first day of 2023, PokerStars – the first to launch in Michigan – became the first to join its Michigan poker site to another state, which was New Jersey. (PokerStars has no online presence in Nevada or Delaware as of 2023.) This immediately catapulted PokerStars to the top of the traffic charts, as it was the only site to allow New Jersey and Michigan players to compete at the same tables.
As of the end of 2023, neither BetMGM nor WSOP had followed suit to join their sites.
Long Way to Go
It is unlikely that the United States will ever achieve the liquidity that once made it the largest online poker market in the entire world.
With that said, a significant amount of liquidity is possible.
It will require more states – ones with sizeable populations – to legalize online poker with the allowance to join MSIGA. States like New York and Illinois are good candidates to make this happen in 2024. These types of states signing on to MSIGA will allow the cooperative player pools to grow significantly. Not only will that benefit players, it will show lawmakers the true potential of a thriving online poker market.
The ecosystem will also benefit from all states with regulated online poker to join MSIGA. That includes Pennsylvania, Rhode Island, Connecticut, and West Virginia. If they can look toward the greater good of the game, they might be inclined to make the effort and help grow the game.
Each state has a role to play, if it chooses to do so. Together, they can collectively revive online poker in the United States through liquidity.
