Tilting at Poker Windmills

Quixotic—impractical: motivated by an idealism that overlooks practical considerations.

—Encarta Dictionary

The ongoing legal debate regarding whether poker is a game of chance or a game of skill took another turn recently as the Pennsylvania Superior Court (an intermediate appellate court) ruled that poker was indeed a game of chance, making home poker games illegal under the state’s gambling laws. Commonwealth of Pennsylvania v. Dent, 2010 PA Super. 47 (Mar. 25, 2010). The interesting legal issue raised in the case was that prior Pennsylvania case law requires a game to have chance as a “predominate factor” in determining the winner of a wager for the game to qualify as illegal gambling. This legal test requires “the court [to] determine the relative amount of chance and skill present in a game, and if the element of chance predominates, the game is a gambling game.” (Dent, p. 6, para. 11). In other words, rather than merely requiring an element of chance, however small, Pennsylvania requires chance to play a larger role than skill in order for a game to qualify as illegal gambling.

Now, for those of us who play poker with some degree of seriousness, it seems axiomatic that skill plays a greater role than chance in determining who wins at poker. The record before the court, as well as the lower court’s references to outside sources, would seem to have made this an easy win for the defendants; the evidence established that skill was a greater factor than chance, at least for serious players. In fact, the state’s evidence apparently was limited to observations by the undercover agent who orchestrated the bust of the home game: “You don’t have to know anything. You could go there as an idiot and you may get lucky but over the course of time it would be beneficial to know the game of poker[.]” (Dent, Colville, J., dissenting, at p. 3, para. 6, n. 1).

Despite the favorable evidentiary record, the appellate court nonetheless ruled that poker was a game of chance. Writing for CardPlayer.com, Stephen Murphy expressed surprise at the court’s decision:

So yeah, if you’ve been making a living through poker, consider yourself blessed. Because according to the Superior Court of Pennsylvania, you’re one lucky guy (or girl). Or, at least, you’re winning at a game that is primarily luck.

So, how did the Pennsylvania court arrive at the conclusion that chance predominates over skill in poker? The court looked at a series of prior cases from other jurisdictions which held that poker was a game of chance, including several fairly old precedents (1904-1935), and some more modern decisions (1971, 1995, and 2007). The court seemed to find particularly persuasive the recent North Carolina Court of Appeals decision which also found poker to be a game of chance while applying the same “predominate factor” test:

"[W]hile all games have elements of chance, games which can be determined by superior skill are not games of chance. For example, bowling, chess, and billiards are games of skill because skill determines the outcome. The game itself is static and the only factor separating the players is their relative skill levels. In short, the instrumentality for victory is in each player’s hands and his fortunes will be determined by how skillfully he use (sic) that instrumentality.

Poker, however, presents players with different hands, making the players unequal in the same game and subject to defeat at the turn of a card. Although skills such as knowledge of human psychology, bluffing, and the ability to analyze odds make it more likely for skilled players to defeat novices, novices may yet prevail with a simple run of luck. No amount of skill can change a deuce into an ace. Thus, the instrumentality for victory is not entirely in the player’s hand."

—Dent, p. 11, para. 21 (quoting Joker Club, L.L.C. v. Hardin, 643 S.E.2d 626, 630-31 (N.C. Ct. App. 2007).

The Dent court essentially adopted the reasoning of the Joker Club decision, rather summarily concluding:

While … skill can determine the outcome in a poker game, players are still subject to defeat at the turn of the cards. 

—Dent, p. 14, para. 23.

It appears, then, that neither the Dent court nor the Jokers Club court actually attempted to make any determination of the relative impact of skill and chance on winning at poker. Rather, both courts simply evaluated whether chance (or “luck”) is an intrinsic or inherent element of the game; not surprisingly, both courts found that it was.

The courts’ analytical approach is probably correct, despite the apparent legal requirement that the elements of skill and chance be weighed against each other. After all, how does one assign a meaningful weighting to the effects of skill and chance in a poker game? As a counterexample, let’s look at blackjack, where we know the house edge (depending on rules) is roughly 0.4% - 2.5%. We also know that card counting can give a player an edge over the house of roughly 0.5% - 1.5%. So, the skill element in card counting is roughly 1% - 4%, which is rather miniscule, yet great enough to be profitable over the long term. Does this make blackjack a game of skill? Not according to any legislature, court, or regulatory agency.

Turning to poker, then, how does one quantify either chance or skill in any meaningful manner? One can look at an isolated hand and determine the mathematical odds of winning for each player preflop, on the flop, and on the turn. But if the hand ends with a winner who had the worst of the odds at any stage, is that result the effect of luck (e.g., hitting a two-outer) or skill (e.g., a well-timed bluff)? We could also look at a player’s results over the course of a large sample of hands, and see whether he played each hand “skillfully” (i.e., in accordance with mathematical odds and game theory). Yet a “skillful” player might still lose even over a large number of hands due to chance, while an “unskilled” player (even a total donkey) might win over a large number of hands, again due to chance.

Looking at the skill/chance issue in this manner, poker begins to appear a lot like blackjack—a game where skilled play can adjust the statistical odds in a player’s favor, yet still leave that player’s actual results subject to the vagaries of chance, no matter how skillfully s/he plays. This inherent element of chance does distinguish card games (including poker) from games of pure skill, such as chess. Pull Joe Schmoe off the street—Garry Kasparov will beat Joe every time at chess (probably with his eyes closed), yet Joe stands a reasonable shot at beating Phil Ivey in poker, at least in one tournament or during one session of a cash game.

The Pennsylvania court also based its ruling on an argument I predicted earlier when discussing efforts to legalize online poker in Iowa:

A potential problem for Iowa's online poker players is that the explicit legalization and regulation of online poker would likely mean that any online poker outside the state-approved system would be deemed illegal. I suspect the state would assert that online poker is currently illegal in the state, but the existence of a legal state-approved system would remove any potential ambiguity about the legality of unregulated online poker play.

In the Pennsylvania decision, the court used the same line of reasoning, observing that the Pennsylvania legislature had recently legalized various table games for casinos, including poker:

This conclusion [that poker is illegal gambling] is buttressed by the recent passage and signing of the amendments to Pennsylvania Horse Race Development and Gaming Act, to allow for the authorization of table games, specifically naming poker as one, in certain licensed commercial facilities. The amendment further gives the Pennsylvania Gaming Control Board general and sole regulatory authority over the conduct and playing of table games, including poker, among others. There would have been no reason for the legislature to act to authorize playing of poker in certain facilities if playing poker did not constitute “unlawful gambling” prior to said authorization.

—Dent, p. 15, para. 26 (citations omitted) (emphasis added).

The Poker Players Alliance (PPA), which has been at the forefront in pushing the “poker is not gambling” legal theory, issued a press release bemoaning the adverse ruling:

We are disappointed by the result, which we believe is contrary to not only the better reasoned decisions around the country, but also to the wealth of scientific research that shows poker is a game of skill rather than chance.

Short-Stacked Shamus, posting over on Pokerati.com, observed “poker players have come to expect high variance when it comes to state courts’ attempts to decide the issue of whether poker is a game of skill or chance.” What Shamus and the PPA gloss over, though, is that all of the recent legal victories in the “skill vs. chance” debate have been at the trial court level. To this point, no favorable trial court ruling has been affirmed on appeal, and no state appellate court has entered a favorable ruling finding that poker is legal because it is a game of skill. This is an important distinction because trial court rulings are generally binding only on the parties to the case, while appellate decisions are binding on all trial courts in the state. In other words, poker players are winning a few small battles, but are definitely losing the poker legalization war.

Now, appellate cases on the “skill vs. chance” issue are still pending in the supreme courts for Colorado and South Carolina, though the deck seems stacked against poker-favorable rulings in both cases—Colorado law explicitly provides that poker is illegal gambling (except in certain social settings), while South Carolina has a draconian anti-gambling statute barring all card games played for money, without reference to any element of chance. If poker is illegal under the relatively lax legal tests applied by the Pennsylvania and North Carolina appellate courts, a decision in either Colorado or South Carolina finding poker to be legal and exempt from gaming statutes seems less likely than hitting a one-outer (or winning with Yaks).

The “poker is a game of skill” meme is entirely correct. The continuing legal campaign premised on using that meme to exempt poker from gaming laws is utterly quixotic. The PPA (and poker players in general) need to understand that the battle to legalize poker will not—indeed cannot—be won in court. At its core, the poker legalization debate is not about “skill vs. chance” at all. As a practical matter, poker is firmly entrenched in the public’s mind as a form of gambling. Look again at the Pennsylvania decision—it cites cases from nine states covering more than a century of legal decisions, all concluding that poker is gambling. In states with legalized gambling, poker is treated as just another casino table game, subject to the same general gaming regulations as blackjack, baccarat, craps, and roulette. Popular culture depicts poker players as swaggering gamblers and/or con men (e.g., The Sting, The Cincinnati Kid, Maverick, the new Casino Royale, and yes, even Rounders); to those not familiar with the game, poker as depicted in these movies is really indistinguishable from blackjack in 21, or baccarat in several James Bond flicks. Heck, look at the 2009 WSOP final table—anyone watching the ESPN coverage would come away convinced that poker routinely involves players winning hands against long odds (just ask Antoine Saout if he feels his final table results were due to skill or chance).

Given the publicly ingrained view of poker as gambling, attempting to persuade appellate courts to declare that poker is not gambling is ultimately a fool’s errand. Courts are inherently conservative institutions, reluctant to issue decisions that contradict a community’s long-standing and widely-held beliefs and values, absent some compelling argument. “Poker is a game of skill”—even though logically correct—is not particularly compelling beyond the insular poker community. Poker players probably gain some psychological boost from being able to convince their friends and family (and themselves) that their game is really different from other casino games. Poker books and websites benefit from persuading poker players that they can learn to win (if only they purchase specific products, of course). But setting aside laws that are more than a century old? If the PPA’s best argument is to parse the differences between Hold ‘Em and Let It Ride, they’ve already lost. Better for the PPA to spend its resources lobbying state legislatures and Congress for explicit legalization and regulation of poker, including provisions for low-stakes, not-for-profit home games.

It’s time to stop tilting at the “poker is not gambling” windmill.