I want to clarify a few misconceptions and other things that I have seen in this thread as a part of my duty to spread the good word about online poker.
In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) was pushed through by Bill Frist, the Republican Majority Leader at the time. You can read details about how he snuck it through
here. It did not make any type of gambling illegal, and it explicitly protected players in a way that allowed them to receive their withdrawals from online gambling even if it was illegal.
The main thing that it did is that it made it illegal for banks to process deposits that were to be used for illegal gambling on the Internet. As the government often does, it put the burden on the banks to determine what was legal and what was not. As a result, most banks just stopped processing all payments for online gambling as a safety precaution not caring if the gambling was legal or not. Bill Frist is a certified scumbag, and he was recognized on multiple instances as being one of the most corrupt members of Congress. That's pretty impressive.
Fun Fact: Bill Frist is the doctor who operated on General Petraeus in 1991 after he was shot with an M-16 during a training exercise. Apparently a soldier tripped and accidentally shot Petraeus in the chest.
In the meantime, the Department of Justice held the legal opinion that online poker fell under the
Wire Act of 1961 that banned sports betting over telephone lines, and that [ridiculous claim is what] made it illegal in their eyes. In late 2011, under the Obama Administration, they announced that they had changed their legal opinion and that the Wire Act only applied to bets on sports.
Years later in early 2011, PokerStars and Full Tilt Poker were the number one and number two online poker sites, respectively. They had found ways around the excessive blocking that the banks used after the UIGEA passed by using techniques that got them charged with bank fraud and a number of other not-so-fun things on April 15, 2011. This date has come to be known as "Black Friday," and they halted all business with players from the United States from that point on.
The subsequent investigation found that Full Tilt Poker was completely screwed financially since they didn't have enough money to pay off player withdrawals. They were supposed to hold player balances in separate accounts under the terms of their license, but they did not. PokerStars bought them out and made a deal to pay back player balances as part of a deal with the Department of Justice.
Right now, online poker is perfectly legal in several states. There is no federal law that makes playing online poker illegal, and not all states have laws that make playing poker illegal. Several states, however, are starting to look at legislation to regulate intrastate (within a single state) online poker to get more money from the tax end (players have always been required to pay taxes on winnings just like any other income). Nevada and "Ultimate Poker" fall under this case. Regulated interstate (within several states) online poker is probably at least a couple of years away.
I'm of the opinion that PokerStars will be running real-money games in the United States within the next three years. They have been looking at purchasing land-based casinos in the United States for the past several months, and they were in heavy negotiations with the Atlantic Club until the past couple of weeks.
