Contracts and Poker: Where Are You?

You are playing internet poker when suddenly a message pops up on your screen that states, “We are unable to verify your location.” A few seconds later, you are booted from the site, and finish just short of the bubble while you are disconnected. Do you have any recourse against the site?

The WSOP.com rules very clearly state that you can play only while physically located in Nevada (and comparable software has a similar rule for playing in New Jersey). The WSOP.com Terms of Service section 3.6 states: “Persons located outside of the State of Nevada, at the time of their activity, may not use the Services for real money play.” Sites like WSOP.com attempt to verify your location using your IP (Internet Protocol) address. Some players, however, try to counter their attempts by using a VPN (Virtual Private Network), which is software that allows you to send websites a different IP address which is associated with another location – in this case, one inside Nevada.

On an episode of The Orbit, Daniel Negreanu voiced his contempt for the poker sites’ geographical restrictions and stated that he did not care if a player used a VPN to participate in the game while outside of the appropriate place. The comment was made in the context of a discussion of poker regulation, and he preceded it by pointing out that the principal purpose of regulation is to assure that the game is fair for all players.

In that context, he is undoubtedly correct. Banning VPNs does not make the game fairer, and Negreanu is right that he needs no protection from players who are not located where they lead the site to believe they are located. Therefore, he concluded, poker sites should not waste time and energy ascertaining players’ locations and taking steps to disqualify those who break the rules.

I must say I have a particular grudge against WSOP.com for enforcing this rule. On a number of occasions, I was ejected from tournaments because WSOP.com could not ascertain my location even though I was located on the Las Vegas Strip! But section 3.7 makes clear that I am out of luck when this happens. It is one of the few sections that is in bold print, apparently to show that they really mean it:

3.7 UNDER NO CIRCUMSTANCES WILL WE NOR ANY OF OUR AFFILIATES OR THIRD PARTY SERVICE PROVIDERS AND THEIR RESPECTIVE AFFILIATES BE RESPONSIBLE OR LIABLE IN ANY RESPECT FOR ANY LOSSES YOU MAY INCUR AS A RESULT OF YOUR LOCATION NOT BEING ABLE TO BE PROPERLY VERIFIED FOR ANY REASON. BY USING THE GAMBLING SERVICES, YOU UNDERSTAND AND AGREE THAT SUCH RESPONSIBILITY OR LIABILITY IS BORNE EXCLUSIVELY BY YOU.

Why is this such a big deal for Caesars, the owner of WSOP.com? Player protection is not the only reason for poker regulation, and sites have other reasons for enforcing this rule. The obvious reason is to comply with state laws that prohibit internet gambling. While we can certainly disagree with such a prohibition, we have to respect the right of each state to choose how much gambling it will allow.

It is both a strength and weakness of our federal system that each state may choose its own path with respect to gambling. We have come a long way from the (good old?) days when the only state in which gambling was legal was Nevada, and tribes were yet to take advantage of this aspect of their sovereignty. When a state prohibits gambling, the consequence of a violation usually falls on the organizer of the game, not the player. The theory seems to be that the players are rubes who need to be protected from the predators who would offer them a chance to gamble. This is not always the case, however. In Washington State, for example, it is a felony to play internet poker!

The consequences imposed by your state for engaging in prohibited internet poker are not much of a deterrent compared to the consequences imposed by the contract with the site on which you play. Section 15.2 of the WSOP.com Terms and Conditions states that “if You breach any of the terms and conditions of this Agreement … Your winnings may be forfeited at the discretion of the Company and the Company may retain any positive balance then existing in Your account on account of any damages or other amounts owed by You to the Company pending investigation and/or the conclusion of any legal proceedings.”

Under similar provisions in its agreement with players, PokerStars reportedly recouped over $1 million from the winner of the 2018 WCOOP main event for rules violations that may have involved the use of a VPN.

When a state allows gambling, it makes clear that a license to operate a gaming establishment is a privilege, not a right. This means that the operator’s license can be fairly easily revoked, without all the due process attached to deprivation of a right. Operators must therefore be vigilant that they comply with the terms of the license. Failure to sufficiently monitor out-of-state participants using the site could be interpreted as an open invitation to play, which would violate the terms of the license. Thus, Caesars probably monitors the location of players not so much to protect other players, but to cover its own ass.

In the process, the monitoring may inconvenience players like Negreanu, who would welcome all players to the site, no matter where they reside, and it inconveniences players like me, whose computer leads Caesars to believe they are somewhere else even when they are in the middle of Las Vegas. But that is a situation we will have to live with until legal internet poker gains more adherents among the states. ♠

Scott J. Burnham is Professor Emeritus at Gonzaga University School of Law in Spokane, Washington. He can be reached at [email protected].