Poker and casino companies rejoice! On August 21, 2012, U.S. District Judge Jack Weinstein came to the conclusion that poker is more of a game of skill than one of chance. The ruling, from the Eastern District of New York, certainly bolsters the hand of the companies that have been trying for decades to legalize online poker in the United States. In the case, U.S. v. Dicristina, ¹ the Judge entered a judgment of acquittal against a defendant who had been charged under the federal Illegal Gambling Business Act (IGBA) for operating a poker room out of the back room of a bicycle warehouse.² The players were playing Texas Hold ‘Em and had to pay for a spot at the table. A portion of the pot was paid to the operator and the dealer.

The case was brought under the theory that the business violated the IGBA. The IGBA defines “illegal gambling business” to include gambling operations that violate state law, that have five or more people involved in controlling roles, such as either directors, managers or owners, and that have been in substantial continuous operation for over thirty days or have a gross revenue of over $2,000 in one day. While the Court’s opinion found that the back room bicycle warehouse may have violated state law, it does not violate IGBA because the court found that poker may not fall within the definition of “gambling.”

The Court’s opinion largely focused on whether Congress intended for poker to be included in the definition of “gambling” within the IGBA. The IGBA defines gambling to include a number of games, such as slot machines, roulette wheels, bookmaking, and numbers games; but poker is not explicitly included. In one portion of the opinion, the Court states:

“Poker is, for the purposes of this case, an elephant — or perhaps an eight hundred pound gorilla — that Congress would have been unlikely to ignore. 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 its omission from the IGBA. As Sherlock Holmes would describe the clue, it is the dog that didn’t bark. See generally Sir Arthur Conan Doyle, Silver Blaze, in The Memoirs of Sherlock Holmes 1-38 (Random House 2012) (1894).”³

When considering the intent of Congress, the Court also looked to the statute’s legislative history and concluded that the statute was intended to stop gambling of “major proportions” rather than gambling that is of “sporadic” or “insignificant monetary proportions.” The Court also considered that, while the statute was being considered, many of the debates about what constituted “gambling” focused on “Mafia-run numbers rackets-intrastate lotteries that offered lopsided odds and thus leached significant sums from poor communities.” ⁴ In the end, the Court concluded that a reasonable doubt existed as to whether poker was meant to be included within the scope of the IGBA and therefore ruled that the defendant’s proposed construction of the statute — which was that poker was intentionally excluded — was more appropriate.

The second component of the decision was more beneficial to poker companies in the United States. Here, the Court analyzed the question of whether poker was a “game of chance.” The Court noted:

“Contrary to the government’s argument, chance (as compared to skill) has traditionally been thought to be a defining element of gambling and is included in dictionary, common law, and other federal statutory definitions of it. See Part V(A)(2)-(3), (B), supra. 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. While a gambler with an encyclopedic knowledge of sports may perform better than others when wagering on the outcome of sporting events, unlike in poker, his skill does not influence game play. A sports bettor is better able to pick a winning team, but cannot make them win. In poker, by contrast, increased proficiency boosts a player’s chance of winning and affects the outcome of individual hands as well as a series of hands. 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.” ⁵

One of the more compelling pieces of evidence were brought by an expert witness, Randal D. Heeb, an economist, statistician and poker player in national tournaments, who testified in a special hearing about the skill involved and provided extensive testimony about the level of skill involved in the various steps of each hand of poker. According to the opinion from the Court, Mr. Heeb said he studied 415 million hands from PokerStars to conclude that the players’ skill “had a statistically significant effect on the amount of money won or lost in a particular hand of poker.”

In the end, the Court came to a similar conclusion opining that it appeared that in the game of poker better skilled poker players will, ultimately, prevail over less skilled players. As a result, the Court concluded that skill predominates over chance in poker and acquitted the defendant.

The decision in this case marks a huge victory for poker advocates. In a press release, Poker Players Alliance (PPA) Executive Director John Pappas called the ruling a “major victory for the game of poker and the millions of Americans who enjoy playing it.” Still, it is important to note that the ruling will still need to survive an appeal. Moreover, it only concerns the IGBA, and there remain other federal and state laws in which poker still falls under the heading of illegal gambling.

Arent Fox is monitoring this case. Please contact Sarah Bruno, Anthony Lupo or Eva Pulliam with questions.