Federal Judge Rules Poker is a Skill Game: Context and Analysis

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On Tuesday August 21st, 2012, Judge Jack Weinstein (a federal judge in the Eastern District of New York) ruled that poker is predominately a game of skill and not one of chance.

What does the ruling mean? What is the likely impact of the ruling for poker in general and online poker specifically? Let’s walk through the background of the case and then survey early opinions on the decision to see what conclusions can be drawn from Weinstein’s ruling.

Background of the Case (US vs DiChristina)

In June of 2011, federal authorities arrested 15 people allegedly connected to a New York gambling ring.  Among the defendants charged with running illegal poker games: Lawrence DiChristina.

You can review the charges here, but the basics are: DiChristina was accused of violating the Illegal Gambling Business Act (read the text of the law here and a synopsis of the IGBA here).  He was convicted in July, but DiChristina opted to appeal on the grounds that poker isn’t gambling, and ergo running a poker game cannot be a gambling business (illegal or otherwise).

That decision set the stage for today’s decision by Judge Weinstein, who agreed with DiChristina and ruled that the IGBA doesn’t apply to poker.

What Does the Decision Mean / Not Mean?

Well, in immediate terms, it means that DiChristina is off the hook for the federal charges (although state charges may still be forthcoming).  As for the broader implications for poker players, there’s less here than you might expect, at least in the short term.  Why?

Matt Levine over at Dealbreaker sums it up pretty well:

[…] the important don’t-try-this-at-home headline is that this opinion “does not undermine the holding that poker is gambling as defined by New York law” and therefore probably illegal in New York. It’s just not federally illegal

Ok, but … why?  Because the IGBA and New York state law employ two different tests to determine whether a game is one of skill or one of chance.  In a nutshell, the IGBA relies on the Dominant Factor test (which dominates the game, skill or chance?) while New York law relies on the Material Degree test (does chance play a substantial, even if non-dominant, role?).

The Poker Player’s Alliance, who filed an amicus brief and provided expert testimony during the trial, released a statement applauding Judge Weinstein’s decision but even they couldn’t really draw a straight line from the decision to regulated online poker in the US:

“Judge Weinstein gave the government an opportunity to prove that poker was a game of  predominant chance, but even federal prosecutors could not provide an expert of any kind that could conclude that chance predominates over skill in poker. We could not be more pleased withthe outcome of today’s decision,” continued Pappas.In addition, Judge Weinstein relied substantially on the absence of clear guidance in federal law onthe question whether poker is illegal gambling. The decision therefore reinforces that now is thetime for Congress to enact a fair and reasonable regulatory model that protects players andgenerates tax revenues. The PPA continues to work towards that end.

PPA rep Rich Muny was a little more direct on Twitter:

… and Karak posting his analysis of the decision over at 2p2 drives home a similar set of points:

-This does NOT mean poker, online or otherwise, is suddenly deemed legal nationwide by federal law.

-This doesn’t mean the DC’s ruling on this specific statute is suddenly precedent nationwide either. It will be appealed, and this is just the district level of a federal court.

-The language he writes on skill predominating is fantastic, but this ruling is just a step in the right direction (and the predominate skill argument was just one factor of many, although clearly it was a major factor). This should only be construed as a ruling on THIS statute.

-Poker can be and still is considered gambling under many statutes in many states. Just because skill predominates doesn’t mean a legislature can’t call it gambling. (And just because this judge says skill predominates doesn’t mean every other will suddenly follow suit).

That’s Not to Say The Decision Isn’t Important

It’s quite important, and not just because it is obviously far more attractive than the alternative. Judge Weinstein’s decision could, for example, provide valuable ammunition to someone mounting a challenge to state gambling laws – a point made via Newsday:

DiCristina’s lawyer, Kannan Sundaram, said Weinstein’s ruling could encourage pro-poker challenges under other gambling statutes, a view that was echoed by the Poker Players Alliance, a group supporting legalization of Internet poker that submitted a friend of the court brief in the case.

While New York state law may rely on the Material Degree test to define an activity as one of chance or skill, the Dominant Factor test is far more prevalent in state gambling law as a whole – making Weinstein’s decision relevant (although not controlling) in more states than not.

The crucial question, of course, is who will bring such challenges to state law and how long those challenges will take to resolve; for example, by the time a successful challenge is completed, it may be moot if online poker has already been regulated by state or federal action.

Links and Resources

- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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