All In: Legal status of Poker as a Game of Skill in light of DiCristina
By Seshank Shekar
In June 2012, the New York Federal District Court convicted poker club owner Lawrence DiCristina on charges of operating and conspiracy to operate an illegal gambling business in violation of the U.S. Federal legislation The Illegal Gambling Business Act, 1970 (“IGBA”). DiCristina (The “Defendant”) brought a motion for acquittal, arguing that the operation of poker games did not violate the IGBA. Judge Jack Weinstein delivered a judgement in response to the Defendant’s motion of acquittal and ultimately overturned the verdict of the Federal District Court. While the detailed and comprehensive 120 page judgment mainly examined whether poker is “gambling” within the meaning of the definition in IGBA, it relied principally on expert witness testimony and scientific studies to specifically address the issue as to whether poker is a game of skill or game of chance, and held that it was the former. The decision may have far reaching implications on how games such as Poker are viewed in the future by courts in India.
United States of America v. Lawrence Dicristina [11-CR-414]
The Defendant operated a private poker club in the back room of a New York warehouse. The club charged a five per cent cut of all money gambled at the club (“Rake”) with the dealers being paid 25 per cent of the total Rake collected. A Jury held that the Defendant’s poker club was in breach of the IGBA, which criminalizes the running of an illegal gambling business. According to Section 18 U.S.C. § 1955(b)(1) of the IGBA, an illegal gambling business, is any business or activity that “(i) is a violation of the law of a State in which it is conducted; (ii) involves five or more persons who conduct, finance, manage, supervise, direct or own all or part of such business; and (iii) has been or remains in substantially continuous operation for a period in excess of 30 days or has a gross revenue of $2,000 in any single day”.
To obtain a federal IGBA conviction, prosecutors had to prove the above three factors and that the impugned activity fell under the definition of gambling under 18 U.S.C. § 1955(b)(2) of the IGBA, which elucidates, “gambling includes but is not limited to pool- selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein”.
In concluding that poker was a game predominated by skill, Judge Weinstein relied primarily on the testimony of Randal Heeb an economist and statistician who served as an expert witness on behalf of the Defendant at a pre-trial hearing, Judge Weinstein observed that while there is some amount of luck involved in poker, “bluffing, raising and folding require honed skills to maximize the value of the cards dealt by lady luck”. He observed that the fact that more players lose rather than win in a game of poker does not affect the quantity of skill demanded by a particular game. The fact that only one player or team wins a game or tournament does not diminish the skill required to achieve that victory. He further held that gambling in the IGBA refers to an activity where chance predominates over skill, but poker is a game in which skill and not chance predominates.
Judge Weinstein noted that the definition of “gambling” as provided in the IGBA was inclusive. However, it did not necessarily follow that gambling may mean only the nine activities enumerated in the definition container therein; nor did the definition of “gambling” include games, such as poker, which are predominated by skill. Accordingly, he held that poker does not fall within the definition of gambling under the IGBA and ultimately reversed the Defendant’s conviction and indictment by the jury.
It should be noted that Judge Weinstein has not implied that poker could never be considered gambling even though it is a game of skill. On the contrary, the judgement states that poker qualifies as gambling in New York as it is a “game of chance”, under New York Penal law which defines a game of chance, as a “game… in which the outcome depends in a material degree upon an element of chance, notwithstanding that the skill of the contestants may also be a factor therein”.
Poker could also fall under the definition of gambling in several state laws, or other federal laws including, the Unlawful Internet Gambling Enforcement Act, 2006 (“UIGEA”). The decision in DiCristina dealt solely and specifically with the IGBA, and expressly stated that poker may still be considered gambling under other laws.
In light of the decision in Dicristina, it appears worthwhile to revisit the current legal status of games such as poker in India, and whether playing such games for money may constitute gambling under Indian law. For an assessment of the same, reference may be made to several Supreme Court judgements which have addressed the skill versus chance debate on a general level, and The Public Gambling Act, 1867 (“PGA”) which is the principal gambling statute in India.
The PGA criminalises (a) the act of gambling in a public forum in India; and (b) the keeping of a ‘common gaming house’, which has been defined as any house, walled enclosure, room or place in which… instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such place… whether by way of charge for the use of the instruments of gaming, or of the house, or otherwise howsoever. However, the PGA creates an important exception in favour of games of skill, stating that “the provisions of the PGA shall not apply to any game of mere skill wherever played”.
In this context, it is important to note, that the Supreme Court of India in K.R. Lakshmanan v. State of Tamil Nadu (AIR 1996 SC 1153), while determining the legality of horse races, has interpreted the phrase “games of mere skill” to mean games where there is a predominance of skill over chance and not necessarily games which involve only skill. The judgement under Para 62 states that, “there are few games, if any, which consist purely of chance or skill, and as such a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one in which the element of skill predominates over the element of chance. It is the dominant element – “skill” or “chance” – which determines the character of the game”. Further, a game of skill according to the Supreme Court is a game in which success depends principally upon the superior knowledge, training, attention, experience and adroitness of the player although the element of chance necessarily cannot be entirely eliminated. A similar standard was previously laid down in State of Andhra Pradesh v. K Satyanarayana, (AIR 1968 SC 825), wherein the Court held that rummy is game of mere skill, thereby exempting it from the penalizing sections of the PGA.
In addition to the PGA, state governments are authorised by the Constitution to enact their own laws on betting and gambling. Thus, where a state legislation on gambling exists, it prevails over the PGA, which is the central legislation. Anti-gambling and betting laws which enacted by various Indian states are mostly in consonance with the PGA, barring a few exceptions.
Peculiarly, West Bengal is the only state in India which specifically excludes card games from the definition of gambling. Under Section 2 (1) (b) of the West Bengal Prize Competition and Gambling Act, 1957, “gambling includes wagering or betting except wagering or betting on a horse race or when such wagering takes place… but does not include a lottery or card games such as poker, rummy or nap”.
Therefore, with respect to state legislations that use the phrase “game of mere skill”, it is safe to assume that these legislations will be interpreted in light of the predominance test laid down in the Lakshmanan case, and games in which the element of skill predominates will not attract the penalizing sections of these legislations.
However, this view was not adhered to recently, in the case of Director General of Police and Others v. Mahalakshmi Cultural Association, (W.A.No.2287 of 2011), wherein the Madras High Court held that even games of skill, when played for stakes, would amount to gambling and would be a punishable offence. However, this decision has been appealed and is currently being heard in the Supreme Court, which has issued a stay order on the Madras High Court decision.
Indian law on point is ambiguous. For example, a recent Delhi District Court opinion observed that while games like chess, pool and golf were games of skill, it declined to accept that poker and similar card games could be considered as games of skill and was more inclined to classify poker as gambling, even though the opinion acknowledged the position laid out in DiCristina. While the DiCristina case may provide a fresh perspective to the debate, by persuading future judges to rely primarily on scientific evidence while determining a game as one of skill, it remains to be seen whether courts and lawmakers in India will do the same and bring some clarity to the present scenario.
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