June 13, 2010

Why Poker Litigation FAILS

Vinny Gambini:  I object to this witness being called at this time. We've been given no prior notice he would testify. No discovery of any tests he's conducted or reports he's prepared. And as the court is aware, the defense is entitled to advance notice of all witness who will testify, particularly those who will give scientific evidence, so that we can properly prepare for cross-examination, as well as give the defense an opportunity to have his reports reviewed by a defense expert, who might then be in a position to contradict the veracity of his conclusions.

Judge Chamberlain Haller:  Mr. Gambini?

Vinny Gambini:  Yes, sir?

Judge Chamberlain Haller:  That is a lucid, intelligent, well thought-out objection.

Vinny Gambini:  Thank you, sir.

Judge Chamberlain Haller:  Overruled.

—My Cousin Vinny

Last week, yet another court ruled that poker is a game of chance, rather than a game of skill, and thus is subject to laws regulating gambling.  The only twist was that this court ruling came not from a state court, or even a United States court. Nope, this time it was those evil Swiss yodelers and chocolatiers whose supreme court rejected the "poker is a game of skill" argument. The result is that poker tournaments must now abide by casino regulations, which include a 50% tax on profits, and requirements to identify players and prevent money laundering. Interestingly, the litigation leading to this decision appears to have been instigated by Swiss casinos who could not compete against unregulated and untaxed private poker rooms.  Funny how a European ruling predicated on commerce reaches the same result as American court rulings predicated on morality.

In any event, the International Federation of Poker (IFP) immediately began frothing at the mouth, waxing righteously indignant about yet another court being so stupid they couldn't see the obvious—that poker is clearly a game of skill, rather than a game of chance.  Predictably, the IFP whipped out its pride and joy—the "Mind Sport" certification—like it is some magical talisman to ward off the vampires and zombies who want to regulate poker:

This is yet another example of misguided poker thinking by courts and judges who simply do not understand the game—i.e., that poker is a 'mind-sport' of strategic skill far more than luck. …

We at IFP will continue this battle on behalf of the poker community. I urge you all to rally to our support.

Do not allow our skilful 'mind-sport' to be hijacked and repressed by ignorant legislators. We must persuade governments and courts throughout the world to separate it off from mere gambling.”

—Anthony Holden, President of the International Federation of Poker (IFP)
Take a look around the IFP website.  What, exactly, has the IFP done to advance the cause of poker legalization? They host some academic studies about poker that were already available elsewhere, but otherwise, the IFP's website seems mostly like a generic poker news website, with player profiles, tournament news, and other information unrelated to the poker legalization battle. The only "accomplishment" the IFP can take credit for is the "Mind Sport" "certification", which has all the significance and impact of a vanity license plate

License plate concept ripped off from Pokerati.com.

Although I've blogged quite a bit about the intersection of the law and poker, and even discussed the "poker is a game of skill" argument a few times (most notably HERE and HERE), the reaction within the poker community to the recent rulings by the Pennsylvania and Swiss courts confused me. Commentary in the poker community essentially mirrors the IFP position, and can be summarized as:  "How can these judges be so stupid?  Poker is obviously a game of skill!"  This attitude has baffled me a bit, but after the Swiss court decision, it occurred to me that the IFP and the poker community simply don't understand the legal system.

Here's how the poker community believes the legal system works:

A)  The legislature passes a law defining "gambling" so that "games of chance" are illegal, while "games of skill" are legal.
B)  Poker players sue and provide the court evidence that poker is a game of skill.
C)  Court rules that poker is not gambling, and is legal.

The legal process as envisioned by the poker community appears based on the assumption that the legal system operates in an analytical vacuum, partitioned off from consideration of historical and social context. This assumption is false. Legal analysis does not occur on a tabula rasa.

To try to illustrate how the poker community misunderstands the legal system, let's consider a counterfactual history of poker. Let's assume poker did not develop in the 1700s/1800s. Instead, let's assume that the only gambling card game in existence was blackjack. Then, in 2008, a group of college buddies were snowed in without internet access over Christmas break. They loved Magic: The Gathering (a card-based strategy game), so they decided to create their own card strategy game. After fiddling around with a standard card deck, they invented a game—PoKah—where various card combinations had different "power levels", and players could risk points (represented by different colored plastic chips) based on the cards in their hands. The object of PoKah was to score points by taking chips from other players, either by having the strongest cards, or making other players lay down their cards. Initially, PoKah was played without any money changing hands. However, after taking their game online (through PoKah.com and a killer iPhone PoKah app), the game's creators realized they could monetize PoKah by getting players to pay for more points/chips. Soon, playing PoKah was all the rage, and PoKah's creators were rich and famous. Most importantly, PoKah had no association at all with gambling or the gaming industry.

Unfortunately, occasional news stories broke about PoKah players who were obsessed with the game, playing for hours and spending all of their money buying more points/chips to keep playing. Based on these anecdotes, and pandering to their moralistic voting bases, several state attorneys general filed criminal charges against the PoKah.com founders for running an illegal gambling website. The game creators contested the charges, claiming that PoKah was no different than Magic: The Gathering in its card format, and no different in its online version than other interactive fee-based games like World of Warcraft or FarmVille. The PoKah Players Alliance got involved in the trial, providing the court with several academic studies demonstrating that PoKah players utilize mental skills, such as logic, mathematics, and game theory. Based on the overwhelming evidence, the courts invariably ruled that PoKah was not "gambling". Soon after, the first World Series of PoKah was organized in San Diego, inspiring a blockbuster movie, Dodecahedroners, which followed two fictional characters (played by Megan Fox and Ryan Gosling) as they battle for love and money over the PoKah tables.

So, what is the difference between our PoKah counterfactual and the current poker litigation? The key difference is in the varying historical and social context for PoKah and poker. Poker has two centuries worth of baggage, being associated with gambling, cheats, crooks, and other shady folks. State laws against gambling have always either explicitly included poker, or more commonly have implicitly been understood to include poker. Poker in popular culture similarly has been portrayed for decades as gambling. Poker is generally associated in the public mind with casinos or illicit gambling venues (e.g., Old West saloons, modern day underground clubs, and home games). Online poker sites are in the news for cheating their players, and being associated with money launderers. The UIGEA is widely viewed as being directed at online poker sites, and was enacted as part of an anti-terrorism bill, purportedly to help crack down on terrorists funding their operations and disguising their financing arrangements (i.e., money laundering).

Many in the poker community look at the legal system and expect the courts to ignore the entrenched historical and social context of poker and gambling laws. But laws cannot be interpreted in a contextual vacuum. The game of poker has been regarded by society as "gambling" for decades. Courts will rightly be very reluctant to rule in a way that contradicts long-established societal views of poker and gambling, absent some compelling reason, even if the court would have decided the poker-gambling issue differently if analyzing the issue as a matter of first impression.*  By contrast, a court confronted with the new game of PoKah would analyze that game in the context of its modern creation, and likely find that it was different in key aspects from games historically regulated as gambling. Deciding where a new game like PoKah fits into society's views of gambling as a matter of first impression gives a court substantially greater latitude to analyze the game based on its intrinsic properties.

The poker community needs to recognize that asking the courts to rule that poker is not gambling is essentially asking the courts to overturn a long-established social and legal understanding that poker is gambling. In essence, the "poker is not gambling" litigation is asking the courts to second-guess the initial determination that poker is gambling decades after the fact, rather than making an initial determination of poker's place as a new game in an established gambling regulatory environment. Unfortunately for the poker community, courts are generally unwilling to issue rulings contravening social conventions and established legal understandings; except when confronted with issues of discrimination or constitutional principles, neither of which is implicated in the poker-gambling debate. The poker-gambling debate is one where courts will ratify the established socio-legal view of poker as gambling, and leave it to the elected legislatures or Congress to determine whether and when to alter the legal status of poker.

So, if the poker litigation strategy is doomed to failure, does it have any redeeming value? One could argue that litigation has allowed poker legalization advocates an opportunity to air their arguments that poker is a game of skill. But, those same arguments could be made in the context of lobbying state legislatures and Congress to carve out regulatory exceptions for poker without the significant disadvantages of the litigation strategy. By tilting at the litigation windmill, poker advocates have instead worsened the position of poker.  There are now binding appellate court decisions in several states explicitly finding that poker is gambling. These rulings reinforce in the public mind—with the imprimatur of judicial decisions—that poker is gambling, while also removing any arguable ambiguity as to the legality of poker (and online poker) for players in those states.

In short, the "poker is a game of skill" litigation strategy, while certainly well-intentioned, is ill-conceived, counterproductive, and ultimately doomed to failure. Poker legalization advocates would be better off focusing their efforts on lobbying for legislative action legalizing and regulating poker.

* A excellent example of this principle in action was the late U.S. Supreme Court Chief Justice William Rehnquist, who opposed the Court's original Miranda decision imposing the requirement that police advise criminal suspects of their constitutional rights, but later voted to uphold those warnings, writing an opinion finding that the warnings were an established part of the law: "Whether or not we would agree with Miranda’s reasoning and its resulting rule, were we addressing the issue in the first instance, the principles of stare decisis weigh heavily against overruling it now. ... Miranda has become embedded in routine police practice to the point where the warnings have become part of our national culture."


  1. Grange, your firm clearly does not have a billable hour requirement, but you hit the nail on the head on this one. I just never put that much thought into why they've been pissing in the wind for a few years. Try to get Raymer on the phone (U of MN law schoold grad, btw!) and see if he'll listen to you...


  2. I think PoKah would be considered gambling as well. Boxing is a game of skill, football is a game of skill and I can gamble on both. Isn't gambling just wagering on the outcome, irregardless of how the outcome is determined?

    If Kobe Bryant bets on a Lakers win is it gambling or a game of skill or both?

  3. Actually the best thing to do would be to compare poker to bowling as the parrallels are there. Both run tourneys that are basically finaced by the participants themselves, both are largely games of skill which are affected by conditions the participant has no control over and both can be cheated at. So if bowling is considered a game of skill than so should poker.

  4. @ unaha-closp: "Gambling" is defined by statute, and the definition varies by state. A good compendium can be found here:


    Sports gambling is usually regulated separately from gambling on typical casino games, and it is usually governed more by "bookmaking" statutes. But, there is a lot of overlap. In any event, in looking at non-physical games (non-sports), most states have some kind of skill vs. chance test to determine what is or is not gambling. Sports events are just evaluated differently.