Money

Poker a Game of Skill Not Gambling, Judge Rules

| by Reason Foundation

Yesterday a federal judge threw out the conviction of a Staten Island poker room operator accused of violating the Illegal Gambling Business Act (IGBA), ruling that poker does not qualify as gambling under the statute because it is primarily a game of skill.

According to the Poker Players Alliance, which "played a central role in the case" by advising the defense, supplying briefs, and arranging for expert testimony, this is "the first federal court decision on whether poker is a game of skill rather than gambling."

The issue arose as U.S. District Judge Jack Weinstein grappled with the scope of IGBA, which does not mention poker. Instead the law, enacted in 1970 as part of a crackdown on organized crime, makes it a federal offense to operate a "gambling business" that 1) violates state law, 2) involves more than five people running the business, and 3) has been operating continuously for more than 30 days or takes in revenue of more than $2,000 in a single day.

The poker room run by the defendant, Lawrence Dicristina—who took a 5 percent rake from Texas Hold 'Em games with buy-ins of $100 to $300—met those three criteria. But was it a "gambling business"? The government argued that state law should determine the answer, while Dicristina said Congress intended a distinct federal definition of gambling. Finding that both interpretations were plausible, Weinstein concluded that the "rule of lenity," which says ambiguities in the definition of a crime should be resolved in the defendant's favor, required an acquittal.

"The fact that card games like poker, pinochle, gin rummy, and bridge were so widely played by law-abiding individuals in noncriminal settings may explain [their] omission from the IGBA," Weinstein writes. He notes that IGBA specifically mentions "pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein." While that list is not exhaustive, he says, it suggests Congress had in mind forms of betting similar to those explicitly included, all of which are dominated by chance. Poker, by contrast, is "predominately a game of skill"—a conclusion Weinstein reached based on the expert testimony and studies presented by the defense:

The influence of skill on the outcome of poker games is far greater than that on the outcomes of the games enumerated in the IGBA's illustrations of gambling....

Expert poker players draw on an array of talents, including facility with numbers, knowledge of human psychology, and powers of observation and deception. Players can use these skills to win even if chance has not dealt them the better hand. And as the defendant's evidence demonstrates, these abilities permit the best poker players to prevail over the less-skilled players over a series of hands....

[The government's expert witness] provided no basis for the court to conclude that chance predominates over skill in poker....

Neither the text of the IGBA nor its legislative history demonstrate that Congress designed the statute to cover all state gambling offenses. Nor does the definition of "gambling" include games, such as poker, which are predominated by skill. The rule of lenity compels a narrow reading of the IGBA, and dismissal of defendant's conviction.

Weinstein adds that Dicristina still could be prosecuted in state court. Although the "dominating element" test for gambling that Weinstein applied in this case is the one most commonly used by the states, New York defines gambling as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein" (emphasis added).

Citing several cases in which New York courts have deemed poker to be gambling under state law, Weinstein says any argument to the contrary "has no merit." But as I noted last year, it is not clear whether these courts are reading the law correctly. Bennett Liebman, executive director of the Government Law Center at Albany Law School, argues that the "material degree" test is essentially the same as the "dominating element" test that prevailed before a revised New York penal code took effect in 1967. Based on the argument accepted by Weinstein, courts should not classify poker as gambling under the latter definition.

As for federal law, Weinstein notes in passing that the Wire Act "applies only to wagering on sporting events." Although the Justice Department insisted for years that the Wire Act made online gambling (including poker) illegal, last year it finally conceded, in an Office of Legal Counsel opinion cited by Weinstein, that such an interpretation of the law is highly implausible.

But Weinstein's detailed, 120-page decision could influence how other federal statutes dealing with gambling are read. If his colleagues find his analysis persuasive, the Poker Players Alliance may achieve its goal of carving out a special immunity for this particular game based on the skill argument. That would be a significant achievement, although I would much prefer that the government, at the state as well as the federal level, refrain from trying to dictate the games people play.

Weinstein's decision, which anyone following the controversy over how to classify poker should find interesting, is here.