Last week the U.S. Court of Appeals for the Second Circuit heard oral arguments in U.S. v. DiCristina, a 2012 decision in which the district court held that poker, as a game of skill, did not constitute “gambling” and therefore could not form a basis for prosecution under the Illegal Gambling Business Act (“IGBA”).
It remains to be seen how the appeals court will rule in the case, though observations from sources at the hearing suggested that the panel seemed very likely to affirm the ruling from the district court.
While the Second Circuit decision in DiCristina will be awaited with great interest, one notable aspect of the Court of Appeals hearing was what was not mentioned during oral argument: a recent ruling in which the U.S. District Court for the District of Guam held that poker is considered gambling under IGBA.
Wai Kim Ho was charged with four other individuals with conspiracy to commit illegal gambling, operating an illegal gambling business, and multiple counts of money laundering.
Ho filed a motion to dismiss the illegal gambling business count and all related counts in the indictment relying on the district court’s ruling in DiCristina, and arguing that poker is a game of skill and therefore outside the scope of IGBA. The district court in Guam found that poker falls within the scope of IGBA and denied the motion to dismiss.
The charges against Ho are still pending and he is scheduled to go to trial in August.
The district court ruling on Ho’s motion to dismiss ignored the sound logic of the district court’s opinion in DiCristina. The court in Ho dismissed the extensive analysis of the legislative history of IGBA from the DiCristina court, which had concluded that Congress only intended to criminalize games of chance that also violated state law. The Ho court came to its different conclusion based on a prior Third Circuit ruling that it acknowledged did not review the legislative history to the same extent that the DiCristina court did.
The court in Ho also did not address the skill versus luck argument in poker. Instead, the court applied a broad and sweeping definition of gambling that makes it is hard to imagine a game that would not be considered gambling.
Applying a dictionary definition of the word “gambling” the court found that poker qualifies because “‘a game of chance’ can simply mean as that—a game where chance plays some role into the outcome, regardless of whether it predominates over skill.” (emphasis added)
By choosing to apply its own analysis of gambling and not apply the well-reasoned analysis from DiCristina, the court came to an incorrect conclusion that would make almost any game a game of chance.
In DiCristina, the defense had presented expert testimony from Dr. Randal Heeb who summarized the results of his study of 415 million hands of “No Limit Texas Hold’em” – the same game that Ho was playing – that were played online over a one year period. Dr. Heeb found that there is a correlation between a player’s skill and the amount of money won or lost.
The government’s expert witness in DiCristina did not produce any contrary analysis nor any studies that support the conclusion that chance predominates over skill in poker, and the DiCristina court adopted the analysis provided by Dr. Heeb.
Observers believe that the soon-to-be issued decision of the Second Circuit in DiCristina is likely to affirm the district court’s ruling.
An affirmative ruling will be a huge victory for poker players and would be hard for any district court like the one in Ho to ignore in the future. It will also give a new level of credence to the argument that poker is a game of skill.