October 26, 2010

The Pokerhaus Lawsuit—Yes, They Can

Last week, news broke in the poker world about a lawsuit filed in Illinois federal district court by a Florida man, Scott Crespo, against a group of six young, fairly well-known online poker players from Illinois.  The defendants are connected to the website ThePokerhaus.com where they maintain blogs and participate in poker discussion forums.  At least a few of the men also lived together in a residence referred to as "The Pokerhaus".  The gist of the lawsuit is a claim under an Illinois anti-gambling forfeiture statute that the defendants profited from illegal gambling in Illinois by participating in a number of online poker tournaments.  Under Illinois law, the losers in an illegal gambling act can sue to recover their actual losses; if the loser does not make the claim, any third-party can sue to recover treble damages.

My initial inclination was not to post about the lawsuit, as it seemed rather straightforward from a legal perspective, and was mostly of interest to online poker players.  However, the lawsuit was discussed fairly extensively on the most recent Poker Beat podcast (beginning around the 20:53 mark for the impatient among you).  As a quick aside, the Poker Beat is a great podcast put out by PokerRoad, with host Scott Huff and a panel usually including notable poker media stars B.J. Nemeth (freelance poker photographer and reporter), Dan Michalski (of Pokerati.com fame), and Jessica Welman (Bluff Magazine reporter and columnist).  I personally am not a fan of most podcasts regardless of topic, but for those interested in keeping up on poker news with a lot of intelligent commentary, the Poker Beat is a must-listen.

In any event, the Poker Beat discussion of the Pokerhaus lawsuit basically concluded that the lawsuit was not only outrageous, but legally implausible to the point the case would likely be dismissed in short order.  Intrigued, I checked out the discussion threads on 2+2 and PocketFives, where a similar sentiment seemed to prevail.  Regrettably, as often seems to be the case, the poker community seems ill-informed about legal issues and greatly underestimates the risks of losing in poker-related litigation.  Although the Pokerhaus lawsuit is not a certain loser for the defendants, there is a legitimate legal claim being made, and there is a very real risk that the defendants, and other poker players like them, may wind up losing significant amounts of money in this and similar cases. 

EXECUTIVE SUMMARY:  After reading dozens of statutes and regulations and scores of cases (so you don't have to!), here's the down and dirty summary of what's in play with this lawsuit:
  • The state has the power to seize the proceeds of illegal gambling.  The state also may delegate its authority to pursue claims to private citizens, and to permit them to keep a share of the proceeds.  In the present case, the statute authorizing a third-party lawsuit to recoup gambling losses from the winners is valid, longstanding (a version of the statute has been in force since at least 1823), and frankly, not particularly unusual.
  • The purpose of the statute is twofold.  First, it permits gamblers or those close to them (typically spouses, parents, or children) to recover money lost in illegal gambling.  Second, it punishes those who engage in illegal gambling, and helps suppress illegal gambling (why gamble if you may have to pay back your winnings plus a penalty of treble damages?).
  • Poker is clearly illegal under Illinois law.  The "skill vs. chance" argument will not be in play, as the relevant statute bans all games of "skill or chance" played for money.  Also, numerous cases have held that draw poker, stud poker, hold-em, and poker tournaments are all illegal gambling.
  • The tricky question, and likely the major fighting issue, is whether online poker is illegal.  My reading of the law is that online poker is most likely illegal so long as any of the prohibited conduct took place in Illinois.  So, playing online in Illinois is most likely illegal in and of itself.  An even stronger case can be made that online poker is illegal if one of the losing players was also playing in Illinois.
  • The fact that the poker winnings in question came from tournaments as opposed to cash games is irrelevant.  Also, the fact that one player's losses might not be tied directly to another player's winnings is unimportant; the court merely looks at net wins and losses for any particular session of play.
  • The lawsuit's claims of cheating and collusion are not necessary to recover illegal gambling profits.  The allegations may have been thrown into the lawsuit to make it easier to recover money from all members of the group (if a civil conspiracy is proven, every member of the group is individually liable for all other members' actions).  Or, the allegations may have been included to permit discovery that might later set up possible other claims, such as RICO violations or violations of terms of services agreements between the players and the online poker sites.
  • Although the lawsuit is basically a legal shakedown, the defendants and the online poker sites have a lot to fear if discovery is conducted.  A quick and quiet settlement might actually be a smart play for the defendants.
  • Several other states have similar statutes authorizing third-parties to make these types of claims to recover illegal gambling profits.  Also, most states have civil forfeiture laws permitting the government to seize illegal gambling profits.  Poker players in those states should be smart and not make it easy to be publicly identified so that online poker nicknames can be tied to a real name and address.  Also, poker players should avoid publicizing their online poker winnings, so that they do not unwittingly put targets on their own backs.
(If you're at all interested in the nitty-gritty details of how this type of claim works, whether it is valid, and the impact it may have on online poker players, follow along after the jump. WARNING: Here there be monsters, and legal talk.).

I.  WTF?  How can some random dude sue to recover money he never lost?

This is likely the leading area of confusion, expressed eloquently by B.J. Nemeth on the Poker Beat podcast.  Indeed, at first blush, there is something that feels wrong about having some random person off the street being able to bring this type of claim.  But, the law in fact does allow this type of third-party claim in a variety of contexts.

As a first principle, it must be kept in mind that the purpose of the statute in question is not to reward third-parties, but instead is intended to punish and suppress illegal gambling:

The purpose of the Legislature in the enactment of this statute was to lessen, and, if possible, to prevent, gambling.  The evils resulting therefrom are among the most pernicious that afflict modern society.  The practice destroys in its devotees all desire to engage in legitimate employment or business.   The loser becomes intent on recovering his losses at the gaming table, and is frequently driven to embezzlement and theft.  The winner acquires a contempt for the small gains of honest pursuits.  He spends the profits of unlawful hours in idleness and debauchery, among dissolute companions.  Thrift is destroyed.  Wholesome pleasures soon pall upon the taste. The ties of home and domestic life are disregarded, and eventually annihilated, by the craze for gaming, and by the feverish excitement with which it fires its followers.  Being itself unlawful, it creates and encourages contempt for all law, and weakens every legal restraint and every honest impulse. Financial ruin and moral degradation alike inevitably overtake every man who cannot resist its allurements, no matter with what degree of skill he engages in the nefarious business.

Zellers v. White, 208 Ill. 518, 526-28, 70 N.E. 669, 672 (1904).

With the purpose of punishing illegal gambling firmly fixed as the state's goal, let's start our analysis of the statute with the concept of civil forfeitureCivil forfeiture actions permit the government (state or federal) to seize and confiscate property used in the commission of a crime, or that represent the proceeds of illegal activity.  These types of actions usually arise in the vice crimes—prostitution, drugs, gambling—but can be predicated on a wide variety of criminal offenses.  The action is actually brought against the property itself (an in rem action), so you wind up with some weird case names like United States v. $100,000 Cash & a 2009 Cadillac Escalade, or People v. Two Roulette Wheels.  But the insidious legal hook for these actions is that the government need not ever actually prosecute or prove the underlying crime.  Instead, they merely need to prove a link between the property and a criminal act or conspiracy by a preponderance of the evidence (far easier than convicting the alleged criminal by a reasonable doubt standard of proof).  Needless to say, civil forfeiture actions are ripe for abuse by police departments and prosecutors, who typically get to keep a portion of the proceeds of forfeited property.

Under Illinois law, illegal gambling proceeds are subject to civil forfeiture proceedings:

Every gambling device shall be seized and forfeited to the county wherein such seizure occurs. Any money or other thing of value integrally related to acts of gambling shall be seized and forfeited to the county wherein such seizure occurs.

—720 ILCS 5/28-5

Next, let's look at the concept of a private attorney general.  Certain statutes allow a private citizen to bring a lawsuit in the public interest, and if they prevail, they can recover attorney fees.  The private citizen is said to be acting as a private attorney general because they are acting on behalf of the public in enforcing the law in question.  Civil rights, environmental, and anti-trust issues are areas of law that tend to see private attorney general lawsuits, but there are literally scores of state and federal statutes which permit this type of claim.

Our next legal concept is a civil remedy for criminal conduct.  The paradigm for this type of statute is the federal Racketeer Influenced and Corrupt Organizations Act ("RICO Act" or "RICO").  This statute is famed for its role in curtailing mafia operations and putting mafia leaders in prison, but RICO has also been used to combat a wide variety of other types of criminal activity, including securities fraud, drug trafficking, gambling, and money laundering.  More to the point, RICO also permits a civil cause of action with treble damages for victims of a criminal enterprise.

Our final jurisprudential concept is qui tam actions.  A qui tam action is a claim brought by a private citizen on behalf of the government, with the citizen keeping a portion of any money recovered in the action.  Although qui tam actions have a history dating back to early English common law, today qui tam actions are most common pursuant to the federal False Claims Act, which permits a private citizen to file a lawsuit to recover fraudulent or improper government payments (such cases are easily recognized by the caption, with the plaintiff identified as a "relator" acting for the government, e.g., United States, ex. rel. Smith v. ACME Corp.).  An important point is that the citizen is not required to have suffered any personal injury or damages; rather, the citizen is merely enforcing the government's rights to recover improper payments.

Let's sum up the relevant legal principles:
  • Public policy of preventing someone from profiting from illegal or fraudulent conduct—civil forfeiture, RICO, and qui tam actions.
  • Private citizen can pursue claim on behalf of the public/government—private attorney general suits and qui tam actions.
  • Private citizen has right to collect treble damages for criminal or fraudulent conduct—RICO actions.
  • Private citizen has right to collect portion of damages recovered, even if the citizen did not suffer personal injury or damagesQui tam actions.
So, let's look at the Illinois gambling forfeiture statute, which was originally enacted in 1823:

Gambling Losses Recoverable.

(a)  Any person who by gambling shall lose to any other person, any sum of money or thing of value, amounting to the sum of $50 or more and shall pay or deliver the same or any part thereof, may sue for and recover the money or other thing of value, so lost and paid or delivered, in a civil action against the winner thereof, with costs, in the circuit court. ...

(b)  If within 6 months, such person who under the terms of Subsection 28-8(a) is entitled to initiate action to recover his losses does not in fact pursue his remedy, any person may initiate a civil action against the winner.  The court or the jury, as the case may be, shall determine the amount of the loss.  After such determination, the court shall enter a judgment of triple the amount so determined.

—720 ILCS 5/28-8

Essentially, then, section (a) permits the loser of an illegal wager the first right to pursue a lawsuit to recover those losses, plus court costs (but not treble damages; presumably to prevent a windfall to a losing gambler who participated in the predicate illegal wager). If the loser does not sue to recover his losses, then any person may initiate a lawsuit under subsection (b) to recover those losses, plus treble damages. In form, the statute is strikingly similar to a qui tam action with RICO-style treble damages, except that the statute permits a third-party plaintiff to keep the entire treble damage recovery.  Interestingly, the prior version of the statute as cited in pre-1900 cases reflects that the treble damages were split evenly between the person filing the lawsuit and the county government where the claim was made.  It's not clear when the statute was amended to permit a full recovery by the third-party plaintiff (most likely in 1961), but nonetheless, this statute is essentially a classic qui tam action with a very generous recovery for successful third-party plaintiffs.

In other words, yes, this type of third-party claim is recognized and permitted by law, and a third-party like Crespo is authorized to bring this type of claim.

II.  Why would the law allow a third-party to bring a claim for gambling losses when he personally did not lose money and may have never even gambled?

There are actually two policy reasons why third-parties are able to file these kinds of claims.  First, losing gamblers themselves might understandably be reluctant to sue on their own behalf; doing so might be dangerous, keep them from being able to continue gambling, offend their sense of honor, and/or be a shameful admission of a gambling problem.  However, losing gamblers may have a spouse or child who is an innocent victim of their losses, and the spouse or child may sue to recover the losses.  In fact, there are several reported older appellate cases involving claims by wives for their husband's gambling losses, and one more recent reported appellate case involving a mother suing to recover her underage son's gambling losses.  [FN1].

The innocent victim rationale doesn't explain why complete strangers are also allowed to bring this type of claim.  To understand the third-party plaintiff provision, one has to think back to the civil forfeiture concept—the state wants to punish illegal gambling.  Clearly the state could punish illegal gambling by imprisonment or a fine, which are provided for by statute.  However, civil forfeiture is an easier process, and treble damages serve as an effective deterrent.  By authorizing third-parties to bring these types of claims, the state advances the public interest by creating an incentive for punishing and deterring gambling activities that might otherwise go unnoticed or be ignored by state authorities.

Subjecting the gambler to the loss of that which he wins, is obviously, in its effect, adverse to the practice of gambling, in tending to make it unprofitable, and, perhaps, might be regarded to be as effective toward the accomplishment of the object of the act as is the fine, under section 126, of not less than $10 nor more than $100. It may be said to come within the strict definition of punishment, “to afflict with pain, loss or calamity, for a crime or fault.” (Webster's Dict.)  One mode of punishment is forfeiture, and what is there, in substance, here but that,--the forfeiture of what one has got by gambling?  Now, in the bearing upon the question, here, of making a different subject, which must be expressed in the title of the act, we may see the unimportance of the distinction insisted on, of criminal and civil proceeding, and of the giving of a civil remedy to the person injured, in an act relating to crimes and their punishment.  Upon this question, as we have seen, it is the effect of the means provided which tells.  It is not the technical designation.  The effect of the provision in this section we are considering is to mulct the winner in the loss of his gains, and thereby it aids in effecting the general object of the act,--the suppression of gambling.  In this respect of operative effect it matters not where the recovery of that which has been won goes,--whether into the State treasury, county treasury, school fund, into the hands of a common informer, or to the person losing; nor by what mode the recovery is had,--whether by a criminal or civil procedure; nor what the name given to the adopted means,--whether fine, penalty, forfeiture, or damages.

Larned v. Tiernan, 110 Ill. 173, 177-78 (1884) (emphasis added).

Given that the state has the power to punish illegal gambling and can do so by civil forfeiture of gambling proceeds, and given that the state has the power to delegate to private citizens its right to bring claims related to illegal or fraudulent conduct and to keep a portion of the proceeds recovered, it is hardly a stretch to conclude the state has the power to authorize the kind of lawsuit found in the Pokerhaus litigation.

III.  But how can this lawsuit recover "profits from illegal gambling"?  After all, isn't online poker completely legal?

There were numerous comments on the 2+2 and PocketFives comments making this point, and the Poker Beat crew also batted around whether this lawsuit will turn on the legality of poker, particularly under the "poker is a game of skill" arguments.  This is one of those legal situations where the poker community is ill-served by the PPA's overblown "online poker is legal" rhetoric.  Regrettably, the poker community seems to have bought that claim hook, line, and sinker without any critical thinking about the counterarguments made by essentially every state government.

First off, the "poker is a game of skill" argument will not be in play in this case.  Under Illinois law, illegal gambling is defined as:

§ 28-1. Gambling.

(a) A person commits gambling when he:

(1) Plays a game of chance or skill for money or other thing of value, unless excepted in subsection (b) of this Section; ...

—720 ILCS 5/28-1

Note that the statute includes all games of chance or skill.  The key point is not the nature of the game, but whether it is being played "for money or other thing of value".  This interpretation is further buttressed by the state's statute regulating the games which can be played in charity gaming fundraisers:

“Charitable games” means the 14 games of chance involving cards, dice, wheels, random selection of numbers, and gambling tickets which may be conducted at charitable games events listed as follows:  roulette, blackjack, poker, pull tabs, craps, bang, beat the dealer, big six, gin rummy, five card stud poker, chuck-a-luck, keno, hold-em poker, and merchandise wheel.

—230 ILCS 30/2

The statute not only includes "poker", but also "five card stud poker" and "hold-em poker".  My best guess is that the generic term "poker" refers to draw poker, as several very old cases mention draw poker as being illegal gambling, while later cases refer to stud poker and hold-em poker as being illegal gaming.  [FN2].  One fun example where the court discussed stud poker is this decision:

On the way out on a Sunday, while the train was speeding through the State of Montana, plaintiff accepted an invitation of three fellow passengers (whom plaintiff thereafter had reason to suspect were card sharpers) to play for modest stakes a game of chance with cards, known to the gambling fraternity as “stud poker.”  It is the usual story--plaintiff lost his money.

Porter v. First Nat. Bank, 212 Ill. App. 250, 251 (Ill. App. Ct. 1918).

But what about poker tournaments?  Several of the 2+2 and PocketFives posters argued that the forfeiture statute could not be applied in a tournament situation.  Well, the Illinois appellate courts have also decided that Texas Hold 'Em poker tournaments are illegal gambling:

In our opinion, the poker game played under the circumstances of the instant case is precisely the type of “game of chance or skill” which falls squarely within the plain meaning of the activity proscribed under subsection (a)(1).  Although there was some testimony tending to indicate that the poker games involved some degree of skill, we do not find the jury's implicit conclusion that they were not “bona fide contests for the determination of skill” so improbable as to warrant a reversal.  Both direct and circumstantial evidence was introduced to support the conclusion that the games, in fact, required a combination of skill and chance, and that they were definitely not the type of “bona fide contests” excepted from subsection (a)(1).  See Diesel, 128 Ill.App.2d at 394-95, 262 N.E.2d at 18-19.

Defendants next contend, again without citation to any authority whatever, that their convictions may not stand because the evidence showed that both defendants “through lack of skill” failed to reach the point where they qualified to win any money.  The argument is specious, at best.

The fact that poker chips were used in lieu of cash at the table and that the rules allowed for only two cash winners does not diminish the fact that each participant played “for money or other thing of value.”  Plainly, “things of value” (poker chips representing various dollar amounts by their colors) were what was being bet and money as all that could be won.  (There was no evidence tending to establish that the defendants merely donated $500 each to the pot for the entertainment of their friends with no hope of possibly winning money back.)  Were we to adopt the defendants' reasoning, we would effectively repeal the gambling statute, a legislative function which the judiciary is not empowered to perform.

People v. Mitchell, 111 Ill. App. 3d 1026, 1028-29, 444 N.E.2d 1153, 1155-56 (Ill. App. Ct. 1983).

The tournament considered by the court had a fixed buy-in of $500 per player, a freezeout format, and a top heavy payout structure with only the top two out of nine players getting paid.  That's right, traditional poker tournaments have been considered illegal gambling by the Illinois courts for more than a quarter century!

Well then, doesn't the fact that the tournaments in question were played online make a difference?  Probably not.  Now, I do disagree with the Pokerhaus complaint which cites to subsection 12 of this code section to contend that online poker is illegal:

§ 28-1. Gambling.

(a) A person commits gambling when he:


(11) Knowingly transmits information as to wagers, betting odds, or changes in betting odds by telephone, telegraph, radio, semaphore or similar means; or knowingly installs or maintains equipment for the transmission or receipt of such information; except that nothing in this subdivision (11) prohibits transmission or receipt of such information for use in news reporting of sporting events or contests; or

(12) Knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any game, contest, political nomination, appointment, or election by means of the Internet.  This item (12) does not apply to activities referenced in items (6) and (6.1) of subsection (b) of this Section.

—720 ILCS 5/28-1

The Plaintiff cites subsection 12 as defining "gambling" as "... mak[ing] a wager upon the result of any game ... by means of the Internet."  (Complaint, para. 6).  However, my reading of subsection 12 is that the only conduct made illegal is online bookmaking; what is illegal conduct is when a person "Knowingly establishes, maintains, or operates an Internet site that permits a person" to engage in illegal gambling, either by playing a prohibited game, or by making a prohibited wager.  Also, I included subsection 11 in the blockquote above to support my interpretation of subsection 12; since subsection 11 does not include reference to transmission of gambling information via the Internet, presumably such transmission is permissible (otherwise the legislature would have added "Internet" to subsection 11). 

However, just because a fair reading of subsection 12 does not prohibit online gambling, such gambling is nonetheless most likely illegal because subsection 1 of the anti-gambling statute makes no distinction between games played with physical cards and games played online; the focus is solely on whether a game was played for money or other thing of value.  Further, subsection 5 of the statute could conceivably apply:

§ 28-1. Gambling.

(a) A person commits gambling when he:


5) Knowingly owns or possesses any book, instrument or apparatus by means of which bets or wagers have been, or are, recorded or registered, or knowingly possesses any money which he has received in the course of a bet or wager; ...

—720 ILCS 5/28-1

This section arguably applies to computers used to play online poker, and also arguably applies to money received from cashing out of online poker play.  Now there will be some obvious jurisdictional issues in applying Illinois law to online poker, but there shouldn't be any real disagreement that Illinois law as written prohibits online poker.

IV.  Wait a minute!  What jurisdictional issues?  Does Illinois law apply to online poker or not?

This is really the key unresolved legal issue—whether and to what extent the states can regulate or ban online poker.  Now as we saw in the recent Rousso decision, at least one state supreme court has determined that a state may completely ban internet gambling within its borders without violating the Commerce Clause of the U.S. Constitution.  Although the Rousso decision is not binding on other state or federal courts, I think most courts will rule the same way as the Washington supreme court did in Rousso.

The more difficult jurisdictional issues arise from attempts to apply Illinois law to gambling transactions that occur, at least arguably, outside the state of Illinois.  Let's do a quick thought experiment:
  • Assume 100 Illinois residents gather to play a poker tournament in person in Chicago, using traditional cards and chips.  Clearly this is covered by the Illinois anti-gambling statute.
  • Assume all 100 players are present in person in the same room, but play via computer on a local network.  Again, likely covered by Illinois law.
  • Assume all 100 players are playing in person in the same room, but via an internet connection with a server outside of Illinois.  Covered?
  • Assume all 100 players are playing at home in Illinois, via an internet connection with a server inside Illinois.  Covered?
  • Assume all 100 players are playing at home in Illinois, via an internet connection with a server outside Illinois. Covered?
  • Assume roughly half of the100 players are playing at home in Illinois, and half are playing from locations outside of Illinois, via an internet connection with a server outside Illinois. Covered?
  • Assume only 1 out of 100 players is playing at home in Illinois, with the remaining 99 players playing from locations outside of Illinois, via an internet connection with a server outside Illinois. Covered?
Where the state draws the line for its jurisdiction is critical.  A state can attempt to regulate conduct within its borders, or which has effects within its borders.  The courts will limit that jurisdiction through principles of procedural due process, which uses notions of fair play to prevent states from overreaching in their attempts to regulate or criminalize various activities.  With respect to enforcing Illinois gambling laws, the Illinois appellate courts have stated:

7 Section 1-5 of the Criminal Code of 1961 (Ill.Rev.Stat.1991, ch. 38, par. 1-5 (now 720 ILCS 5/1-5 (West 1994))) limits Illinois' jurisdiction to cases in which an element of the crime occurs within its borders.  If an offense is defined solely in terms of conduct without regard to any result, there is no jurisdiction based on where the conduct causes harm.  All of the Illinois gambling offenses are defined by conduct, not results.  Because of section 1-5, therefore, Article 28 of the Criminal Code simply does not apply to gambling committed wholly outside of Illinois and defendant's conduct in Nevada was not “in violation of” the Gambling Act.  Accordingly, section 28-7(a) does not operate to void loans therefor.

Cie v. Comdata Network, Inc., 275 Ill. App. 3d 759, 767-68, 656 N.E.2d 123, 129 (Ill. App. Ct. 1995) (citations omitted).

In the present case, where Illinois residents have been accused of profiting from illegal gambling while residing and playing in Illinois, I expect the courts to lean toward applying Illinois law and allowing the case to proceed, because essential elements of the crime would have occurred within Illinois territory.  I expect the courts to be even more ready to apply Illinois law if Illinois residents are found to have lost money to the defendants; regulating gambling between Illinois residents (or people within the state) is clearly the intended purpose of the anti-gambling statute, and permitting residents to use the internet with out of state servers to place wagers while avoiding the gambling ban is an unlikely result.  At this point, however, it is impossible to know whether the defendants played all or most of the tournaments at issue while in Illinois, nor do we know whether any Illinois residents were losers in these tournaments.  The less of a connection between a particular tournament and the state, the less likely a court will be to apply Illinois law.

V.  But how can the plaintiff prove any of the defendants profited from a particular player in a particular amount, since all payments were tournament entry fees made to an online poker site?

One of the weaker arguments raised in many comments on the 2+2 and PocketFives forums was that the statute requires a payment by one player directly to another player; i.e., there must be a wager where one player loses to another player and pays him for that wager.  Although creative, this argument is merely linguistic legerdemain.  First, as discussed above, the Illinois courts already recognize poker tournaments as being illegal gambling (People v. Mitchell).  Further, the Illinois appellate courts long ago recognized the difficulties in applying the anti-gambling laws to poker, and hit upon a common sense solution:

Section 132, [the gambling losses recovery statute], is calculated to make its [gambling's] gains unavailing to the winner, and to remove, to some extent, at least, the incentive to play.  If the loser, after a long night at draw poker, must sue the man who won from him on each hand for the amount lost on that hand, and cannot have this remedy unless the sum so lost on that hand equal or exceed $10, the statute, for all practical purposes, would not be applicable to draw poker.  This form of gambling became so common recently that it was denominated the ‘national game’ of the American people.  Its peculiar terms and phrases have found their way into common use in our language, where their aptness for the purposes for which they have been borrowed attracts the attention of many to this game, and no doubt leads them to a closer acquaintance with it, when, but for a familiarity with its expressions thus obtained, they would not have sought its beguilements.  The interpretation placed upon this statute by appellant, so far as this seductive game is concerned, would enable the winner to substantially escape the salutary and chastening effect of this law, and deprive him of the refined pleasure which results from making restitution for wrongdoing.  The Legislature certainly did not intend that this game, which is a very common vice, should escape the ban of this section of the Criminal Code.

Keeping in view the wrong at which the statute is aimed, and giving consideration to the use of the word ‘sitting,’ in this section, we think the proper construction is that all that transpires in playing the game of draw poker from the time certain players begin playing together on any one occasion until they cease playing together on that occasion, no matter how many hands are played, may be regarded as one transaction or ‘sitting,’ and that all those who have won more than they have lost during the sitting are ‘winners,’ and all those who have lost more than they have won during the sitting are persons ‘losing,’ within the meaning of the statute; that all money or other valuable thing staked upon the game at any time during the sitting is to be regarded as in play so long as the sitting continues; and that the liability of the winner to the person or persons losing is measured by the net amount of his own winnings.  Resort may be had to equity, where necessary, for the purpose of making proper adjustments between the various winners and the various losers.

Zellers v. White, 208 Ill. 518, 526-28, 70 N.E. 669, 672 (1904).

In other words, the fact that one player's losses might not be tied directly to another player's winnings (as might be the case in a sports wager) is unimportant; the court merely looks at net wins and losses for any particular session of play.  Given the case law, it appears that where there is at least one player who lost $50 in a particular poker tournament, and where one of the defendants won any amount of money in the same tournament, the winner would be liable up to the amount of his winnings (and then trebled, if the claim were brought by a third-party).  However, any winner being sued could make a claim upon other winners for a pro rata contribution to any amount he was found to owe.  Nonetheless, the mere fact that the wagering occurred in the context of a poker tournament would not thwart a reimbursement claim in and of itself.

VI.  So why does the lawsuit make allegations of collusion and cheating?

The Pokerhaus lawsuit makes various allegations of collusion and cheating by the defendants.  Now, if merely winning an illegal wager is all that is needed for a recovery under the forfeiture statute, why bother with these extraneous allegations?

A couple of reasons come to mind.  First, if the defendants in fact acted in concert in winning tournaments, the players could be held jointly and severally liable for all the winnings of any member of the group, under a theory of civil conspiracy.  Essentially, this puts each individual defendant on the hook for all damages awarded by a judgment against any individual defendant.  This makes recovering damages much easier when one or more defendants are broke or out of state.  Further, this might be laying the groundwork for discovery related to additional claims based on violations of terms of services agreements between the players and the online poker sites.  Finally, claims of collusion and cheating can give rise to claims for enhanced damages, whether under a RICO claim, or a claim for exemplary/punitive damages.  As one Illinois court explained:

About 8 o'clock on Saturday evening, January 17, 1903, the plaintiff, who was a farmer living in the vicinity, in company with one Swisher, went to the saloon of defendant Harris, in the city of Sullivan.  He had been drinking intoxicants and had on his person at the time about $355.  Harris suggested to plaintiff that they go to a saloon kept by defendants Baker and Batman and play a game called “poker.”  They then went to a small room adjoining the Baker and Batman saloon, where they met defendants Batman and Farney, and at about ten o'clock were joined by defendant Baker; after which Farney, Batman, Baker, Swisher, Randol and plaintiff began to play a game of poker which continued until about four o'clock of the following morning.  Farney acted as “banker” for the game, issuing the chips and taking in the money.  Baker, Batman and Swisher besides playing took turns in passing whisky to the other players.  Harris did not participate in the game but was present and aided in serving the liquor.  Plaintiff testifies that the whisky was passed “like water at a school house in the summer time,” and that he took eight or ten drinks.  There is no evidence showing that any charge was made for the liquor, or that any one but plaintiff became intoxicated.  At the close of the game plaintiff had lost all the money he had.  The evidence further shows that plaintiff was the only one of the party who produced any money during the entire game.  The witness Randol, who was called by plaintiff, testifies that when the game broke up along about four or five o'clock in the morning, Farney remarked: “We'll give the suckers $20 or $25;” that Baker then handed Harris, Swisher and witness $20 each, and told them to take plaintiff away so that they could “divide up;” that the understanding was that they would divide even; that either Farney, Baker or Batman told witness that if he was fined for gambling they would pay his fine; that Batman stated they had won $260 from plaintiff which he was going to divide.


As we have said, there were two counts in the declaration based upon the charge of conspiracy, and one in trover based upon the statute.  In assessing the damages in the event of a recovery upon the former, what each defendant may have won or lost in the game was immaterial.  Plaintiff was entitled to recover the full amount taken from him by the defendants through, by means of, or as the result of the conspiracy.  The gist of the action upon which these counts are predicated is the formation and accomplishment of an unlawful conspiracy to deprive plaintiff of his money by unlawful means.  The gist of the trover count is the violation of the statute making gaming unlawful and providing that any loser at gaming may recover from the winner the amount so lost.  If a conspiracy existed and was consummated as claimed, which we think sufficiently appears, it was not necessary, as is contended by counsel, to show that each and every of the defendants actually won any money from plaintiff, nor was it necessary to establish the respective relations of the defendants


The acts charged in the conspiracy counts were essentially fraudulent and wilful.  Exemplary damages were therefore proper to be assessed thereunder, not as compensation to the plaintiff, but by way of punishment to the wrong-doers.

Batman v. Cook, 120 Ill. App. 203, 204-08 (Ill. App. Ct. 1905).

VII.  This case is nothing more than extortion!  Shouldn't the defendants fight this to the death?

Although the case is at least colorable under Illinois law, I agree wholeheartedly with those comments on 2+2 and PocketFives which view this case as a thinly disguised shakedown of these particular poker players.  The plaintiff likely filed this suit to attempt to force a quick and lucrative settlement.  The first inclination in a suit like this is to fight as hard as possible.  But, this case will almost certainly proceed to discovery before any critical legal rulings are made, and the defendants have plenty to fear from engaging in discovery.  The defendants will likely be forced to produce bank and financial records, allow inspection of their computers, and divulge online transaction records with any online poker sites (e.g., deposits, withdrawals, and tournament and cash game records and results).  Awkward questions may arise about violations of terms of services agreements (e.g., collusion, multi-accounting, "ghosting", improper data-mining, etc.), sketchy financial transactions (e.g., post-UIGEA deposits, money transfers between players via online poker sites), and tax payments (or lack thereof). 

The online poker sites may face subpoenas for the defendants' records, as well as the identities and records of players who played the tournaments in question.  Online poker sites would be placed in the tough spot of deciding whether to consent to or fight the subpoenas, which raise all sorts of perilous legal issues for the poker sites, including the effect of cooperation or an adverse ruling on jurisdictional and related matters in other litigation or criminal investigations, the effect of cooperation or revealing records on its business relationship with its customers, the effect of cooperation or resistance on future licensing in the U.S., and the possibility the records would be used against the company itself in future litigation or criminal investigations.

Of course, if the case progresses to the dispositive motion phase, then the poker players and the online poker sites face creating negative case law that can be used to fuel additional similar suits against other players, as well as risking adverse rulings on the status of the legality of online poker in Illinois.  Let's just say this case is not the ideal vehicle for arguing that online poker is not illegal under Illinois law.

In other words, nobody on the poker side of this litigation is particularly interested in seeing this case move forward.  At least they shouldn't be.

VIII.  Does this kind of law only apply to Illinois residents?  How do I avoid being sued?

Illinois is not the only state with this kind of third-party forfeiture statute.  According to Gambling Law (a great first stop for all gambling law issues), at least nine states and the District of Columbia have statutes that allow third-party lawsuits to recover gambling losses, and several others that allow first-party suits by the person that lost in an illegal gambling wager.  Further, many (if not most) states have civil forfeiture statutes that can be invoked by the government if a prosecutor ever decides to rattle some cages to burnish his/her anti-gambling credentials.  So, if you play online poker, or even just play in poker home games, in any of the states with forfeiture statutes, you have every reason to be worried.

So how can you avoid being sued under one of these forfeiture statutes?  First and foremost, guard your privacy!  In the Pokerhaus lawsuit, it appears the defendants were targeted because they were easily identified by real names and addresses to a particular set of online poker names, which in turn were easily linked to poker tournament results.  If your real identity is unknown, it is much more difficult to be sued just because you have great tournament results.  Also, online sites that publish tournament results by online player name (looking at you, PocketFives) are a dangerous source of information that might paint a target on the backs of its top ranked players in states with forfeiture statutes.

In sum, lawsuits like the Pokerhaus case are yet another legal nuisance for online poker players, and are yet another reason to push for federal legalization and regulation of online poker.

ADDENDUM (27 October 2010):  At the wise suggestion of reader KenP, I have added an "executive summary" section above the fold.  A lot of readers may just want the conclusions, and care little about all the detailed analysis of the statutes and case law.  Also, a hat tip to Ken for being one of the first wave of folks who let me know about the decision; much appreciated!


[FN1]  See, e.g., Larned v. Tiernan, 110 Ill. 173, 175 (1884) (wife sued to recover husband's gambling losses); Gaby v. Hankins, 86 Ill. App. 529, 531-32 (Ill. App. Ct. 1899) (wife sued to recover husband's gambling losses); Johnson v. McGregor, 55 Ill. App. 530, 531-32 (Ill. App. Ct. 1894) aff'd, 157 Ill. 350, 41 N.E. 558 (1895) (wife sued to recover husband's gambling losses); Vinson v. Casino Queen, Inc., 123 F.3d 655, 657-58 (7th Cir. 1997) (mother sued to recover minor son's gambling losses) ("The Loss Recovery Act was intended to deter illegal gambling by using its recovery provisions as a powerful enforcement mechanism.").

[FN2]  See, e.g., Zellers v. White, 208 Ill. 518, 526-28, 70 N.E. 669, 672 (1904) (draw poker was a "common vice" and also illegal gambling); Porter v. First Nat. Bank, 212 Ill. App. 250, 251 (Ill. App. Ct. 1918) (considering enforcement of note obtained by playing stud poker); People v. Mitchell, 111 Ill. App. 3d 1026, 1028-29, 444 N.E.2d 1153, 1155-56 (Ill. App. Ct. 1983) (hold-em poker played in a tournament format was illegal gambling).

October 25, 2010

"Wrong, bitches."—
Mastering Appellate Advocacy

As an attorney, the part of my job I enjoy the most is handling appeals.  Analyzing the law, plotting an argument, writing brief points, arguing the case to a panel of judges; nothing beats the appellate part of my practice.  Of course, there are different approaches to appellate advocacy, some more or less effective than others.  I always keep an eye out for examples of briefs and oral arguments that I find effective—to emulate, or ineffective—to avoid making similar errors.

Today, one of my partners handed me a Petition for Rehearing En Banc filed in the Ninth Circuit Court of Appeals by a pro se litigant in a bankruptcy action.  The plaintiff, one Paul Hupp, apparently had strong disagreements with the trial court and appellate court panel decisions which refused to discharge his student loan debt as part of his bankruptcy.  So, this pleading is Hupp's request that the full Court of Appeals reconsider his appeal, an unusual occurrence as most federal court appeals are resolved by three-judge panels.  From Hupp's petition, we can observe examples of several rhetorical techniques certain to sway the court:

I.  Nuance is key.  Use appropriate qualifiers to convey important context.

II.  Use specific facts to emphasize your important points.
Plaintiff has news for these slime ball, piece of shit, ass clown judges (Bowie, Canby, Thomas and Fletcher—this means you) that think they are going to rig the system and railroad the poor and innocent—such as blocking the discovery process so the poor cannot defend themselves, commit perjury in their orders and a host of other constitutional violations, and do it with impunity—that is simply not going to happen in this case.  You cock suckers are now on notice.

III.  Point out flawed legal reasoning in a direct, concise manner.
U.S.C. § 1095a is unconstitutional because it allows wage garnishment without a court order or due process of law.  I guess it is OK for this Court to allow such to acts to happen to the public, as long as it is the poor and those least able to fight back.  Wrong bitches.

IV.  Be polite and respectful when criticizing adverse rulings by the trial court.
Judge Bowie[’]s blocking of Plaintiff's entire discovery plan is one of the reasons the Defendant has gotten away with this bullshit.  Thank you Judge Bowie for violating F.R.C.P. Rule 26, as well as every other discovery rule you cock sucking motherfucker.

V.  Emphasize the adverse consequences inherent in the opposing side's position.
Civil unrest is the predicted outcome of such criminal and civil misconduct[.]  That civil unrest is going to start at the doorsteps of the slime ball, mother-fucking judges that allowed, engaged in and perpetuated it.  And when that civil unrest comes knocking at your doorstep, just tell it that it is "unpersuasive", and let us know how that works out—OK bitches.

VI.  Use bold language to emphasize key points.

VII.  Conclude with a strong, assertive point.

Submitted this 17th day of June, 2010.

/s/ Paul Hupp

Clearly this petition makes a strong case for a particular outcome.  In fact, I suspect the Ninth Circuit will find Hupp's arguments highly persuasive in resolving his appeal. 

So, what's the connection to poker?  Well, check out these arguments by the brilliant wannabe-lawyers over on the 2+2 Forums.  Apparently, the 2+2 consensus is that online poker is an unquestionably legal and constitutionally protected birthright.

Wrong, bitches.

October 24, 2010

Friday Fun (v.1.16)—
Dawn Summers, Crocodile Hunter

It's been awhile since my last link dump, but the interwebs have been in their autumn doldrums.  But, here are a few items worthy of your time ...
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As you will recall, last month, "Dawn Summers", n/k/a "Stephane", a/k/a "Wilma", went on an epic, whirlwind vacation-crimespree with her sidekick, MadBrooklyn.  The full and unintentionally hilarious report of the misadventures of two New York gals on the backroads of the Midwest is now posted, in serial format.  The Iowa segment is my favorite, but you should start at the beginning and read the whole story.  It starts slow, but picks up hilarious momentum once the gals leave Denver, and civilization as they know it.

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Given Dawn/Wilma's fear of animals, including mouse-eating chickens (seriously, read the trip report!), it's probably best if she avoids flying in the future.  You just never know when a crocodile will hijack the flight and kill all the passengers.

* * * * *

On a more serious note, there have been several tragic youth suicides in the news recently, related to bullying and taunting based on their real or merely perceived gay orientation.  One gay college student, Isaac Katz, wrote a gripping essay for the St. Louis Post-Dispatch on the experience of being taunted at school and facing a homophobic, and nationally famous, father at home.  The short essay really captures the experience facing many kids today, and hopefully will make some folks think about how they may inadvertantly make life difficult for gay youth, or even youth just perceived as gay.

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The philosophy major in me loved this article on trolleyology, a field of ethics that explores the psychological differences between sins of commission and sins of omission.  Just to be clear, if you hit a bad suckout to crack my monster hand, I will gladly tie you to the trolley track myself.  Well, as soon as Iowa gets trolleys.  So, the important take-away point for y'all is to avoid playing poker against me within driving distance of San Francisco.

* * * * *

Via Andrew Sullivan, awesome memos regarding censor panels' suggested changes to two of my favorite movies of all time:  Monty Python & The Holy Grail, and South Park:  Bigger, Longer & Uncut.  For The Holy Grail, the censors failed in attempts to remove the classic line, "I fart in your general direction," while in South Park, the negotiations over which profanities and obscenities made the cut is hysterical.

* * * * *

Via the DailyWh.at, here's an entirely too cute and overly peppy dog video of the day.  People who train their dogs like this must be stopped, as they give a complex to real dogs, like my Berkeley, who runs around like a maniac, unless biting my feet to get treats.  Still, pretty entertaining ...

October 22, 2010

Palmetto State Poker Litigation Tour

Earlier this week, the South Carolina supreme court heard oral arguments in Chimento v. Town of Mount Pleasant, a case that challenges whether home poker games are banned by the state's anti-gambling statute.  Although I have been unable to find any video or audio coverage of the argument online (which is typical for many state appellate courts), I was able to procure copies of the parties' appeal briefs* thanks to the Carolina-insider connections of the inestimable Otis, without question the best blogger in all the Carolinas, and likely throughout the erstwhile Confederacy.  So, let's take a tour of the legal arguments the court will consider.

Now appeals deal with legal issues, but they are driven by the underlying facts; lawyers often say, "Bad facts make bad law."  In Chimento, the court is considering whether poker players who participated in a home poker game violated the state's anti-gambling statute.  The relevant facts can be distilled as follows:
  • The game was held in a private residence.
  • The game was regular and recurring, typically being held once or twice each week.
  • There is some dispute about whether strangers could play in the game.  At a minimum, the game was open to new participants known to the game organizer or brought to the game by established players.
  • Participants—including new players—could learn about the game via an online social network, meetup.com.
  • The game involved very low stakes Texas hold 'em cash game play—blinds of 25¢ / 50¢, with a maximum buy-in of $20.
  • The game organizer (who also resided in the house with his girlfriend) took a small rake from each pot, ostensibly to cover food and beverage expenses.  Although the state's undercover investigator who infiltrated the game testified that the rake was $2 per pot, this was disputed, and appears to have been the maximum rake taken ($2 per pot flat rake is simply infeasible in such a small stakes game).  Testimony from the game organizer stated that the maximum rake was 50¢ per pot.
  • The game organizer pled guilty to "operating a house of gaming" as part of the same police investigation.
Although the Poker Players Alliance (PPA) has framed its press releases about the case in terms of their now-standard "skill vs. luck" argument, the case actually presents a Gordian knot of legal issues which the court will need to untangle in order to determine whether home poker games are legal in South Carolina.  The legal analysis, however, must begin with the language of the applicable anti-gaming statute:

If any person shall play at any tavern, inn, store for the retailing of spirituous liquors or in any house used as a place of gaming, barn, kitchen, stable or other outhouse, street, highway, open wood, race field or open place at (a) any game with cards or dice, (b) any gaming table, commonly called A, B, C, or E, O, or any gaming table known or distinguished by any other letters or by any figures, (c) any roley-poley table, (d) rouge et noir, (e) any faro bank (f) any other table or bank of the same or the like kind under any denomination whatsoever or (g) any machine or device licensed pursuant to Section 12-21-2720 and used for gambling purposes, except the games of billiards, bowls, backgammon, chess, draughts, or whist when there is no betting on any such game of billiards, bowls, backgammon, chess, draughts, or whist or shall bet on the sides or hands of such as do game, upon being convicted thereof, before any magistrate, shall be imprisoned for a period of not over thirty days or fined not over one hundred dollars, and every person so keeping such tavern, inn, retail store, public place, or house used as a place for gaming or such other house shall, upon being convicted thereof, upon indictment, be imprisoned for a period not exceeding twelve months and forfeit a sum not exceeding two thousand dollars, for each and every offense.

—S.C. Code Ann. § 16-19-40

Now there's a lot going on in this statute.  First, note that the statute distinguishes between gambling and "keeping a place of gaming".  Both activities are prohibited, but under different circumstances, with stiffer penalties for those keeping places of gaming.  Turning to just the ban on gambling, the ban is not complete, but only bans gambling that meets two requirements:  a) particular games, which are b) played in certain places.  For purposes of the Chimento appeal, both prongs of this test are in play.

Looking first at the type of game, the statute explicitly bans "any game with cards or dice".  On its face, then, the statute covers poker, which is unquestionably a game played with cards.  The defendants and the PPA, however, make two arguments:  1) the statute is vague and overbroad to the point it could arguably cover any game played with cards or dice, including family or childrens' games (e.g., Uno or Yahtzee); and 2) poker is a game of skill, not a game of chance, and thus should not be considered subject to an anti-gambling statute.

Looking at the first argument, the state counters that the statute implies a requirement that betting or wagering be a element of the game.  The defendants and the PPA respond that the courts should not read into the statute a requirement not explicitly identified by the legislature.  The problem with the defense position is twofold:  a) the statute itself does mention betting or wagering, and b) the statute has a long history of being interpreted to require an element of betting or wagering.  Looking at the statute, certain games are explicitly exempted from prosecution:

... except the games of billiards, bowls, backgammon, chess, draughts, or whist when there is no betting on any such game of billiards, bowls, backgammon, chess, draughts, or whist or shall bet on the sides or hands of such as do game ...

We'll return to this list of exempt games in a moment when considering the "game of skill" argument.  For now, the point to take away from the exempt games list is that the games are exempt only so long as there is no betting or wagering either by the players or by anyone not involved in the game.  Now it's true that there is no similar distinction made for the games banned as "games of cards or dice", but the historical context of the statute must be kept in mind.  The anti-gambling statute is more than two centuries old, and was enacted at a time when almost all games of dice and cards were played for money.  The legislature's purpose in addressing the ills of gambling can certainly be discerned from the text of the statute, and the South Carolina courts have long interpreted the anti-gambling statute to require betting or wagering, as in this appeal decision arising from jury instructions in a prosecution for running an illegal dice game:

The acts of our general assembly on this subject, now incorporated in the General Statutes of this state as sections 1715, 1716, do certainly denounce betting on the throwing of dice as an offense.  In general terms, the circuit judge was here seeking to enable the jury to see what was and what was not gambling.  He was seeking, in other words, to impress upon their minds that the mere handling and throwing dice, where money was not bet, was not an offense under our laws.

State v. Robinson, 40 S.C. 553, 18 S.E. 891, 892 (1894) (emphasis added).

Finally, the defense argument on this point is a bit awkward, essentially stating, "You can't convict us for gambling when we were playing cards for money, because the statute might arguably apply to the kids next door playing Old Maid."  Let's just say that the kids playing Old Maid, if they were ever arrested for gambling, would have a much stronger argument on this point than the poker players in this case.

Turning to the poker as a game of skill argument, the defense and PPA make the same familiar arguments, and even had testimony from Mike Sexton and Robert Hannum, PhD to buttress their claim that Texas Hold 'Em is a game of skill.  This evidence is really uncontroverted, and the facts are of less importance than the legal significance of those facts when the law is applied to the facts.  In other words, even though we may all be able to agree that skill plays a significant—even "predominate"—role in poker, that fact may have differing significance once the courts are asked to interpret and apply a state's anti-gambling statute.  To put it another way, the same game—Texas Hold 'Em—might be legal in one state under one definition of or test for "gambling", while being illegal in another state utilizing a different definition or test.

South Carolina has not yet explicitly adopted a legal test for whether a particular game is illegal gambling for purposes of the anti-gambling statute.  The state argues that poker falls within the "any game of cards or dice" prohibition, and thus no analysis of the relative role of skill or chance is necessary.  The defense counters that the court should apply the "dominant factor" test (sometimes also referred to as the "predominate factor" test) to discern whether a particular game—such as poker—is illegal gambling.  There is some suggestion from a dissenting opinion in a prior case that South Carolina might in fact adopt the dominant factor test. 

The problem with the defense argument is twofold.  First, as a matter of statutory construction, the legislature has identified a short list of what might be considered "games of skill" which are exempt from prosecution:  "billiards, bowls, backgammon, chess, draughts [checkers], or whist".  Whist is an old British trick-taking card game, which was frequently played for money—for example, Phileas Fogg, protagonist of Jules Verne's novel Around the World in Eighty Days, was depicted playing whist for money at his London gentlemen's club.  Modern derivatives of whist include popular trick-taking games like Hearts, Spades, Bridge, Euchre, and Pitch.  The interesting thing about Whist (and its modern derivatives) is that the game can be played simply for recreation by keeping score, or the game can be the basis for gambling, with monetary awards or penalties assigned for points scored, wins/losses, and sets (failed bids).  By contrast, games such as poker or blackjack are played only for money; money is how score is kept.  Further, a major principle of statutory interpretation is that items in a list exclude items not in the list, unless the list is merely illustrative.  In this case, the statute has carved out a very specific list of exempt games, each of which might be regarded as a "game of skill".  The failure of the legislature to designate poker as an exempt game of skill implies the legislature did not intend for poker to be exempt from the general prohibition against games of cards, even if poker is in fact a game of skill. 

However, even if the South Carolina supreme court analyzes poker under the dominant factor test, the court is unlikely to rule any differently on that issue than the many other state appellate courts which have found poker to be a game of chance.  South Carolina is a socially conservative state, certainly more conservative than states like Rhode Island, Pennsylvania**, Colorado, North Carolina, or New York which have all found poker to be a game of chance.  Further, the South Carolina supreme court has previously affirmed a conviction for maintaining a house of gaming in which poker was the game in question:

The appellants were indicted, as stated, for the crime of keeping a gaming house known as the Five O'clock Club. This night club was licensed in the name of and operated by the appellant, Douglas O'Neal, as owner. On the night of April 30, 1946, the witness, Bracey, who was visiting Columbia from his home in Virginia, went to the club about ten o'clock. The club was located on the second floor level of the building, and entrance to it was gained by a stairway on Main Street. The club comprised three rooms: One being used as a room for entertainment, where dancing was engaged in; another room or compartment was known as the ‘stag’ side, and contained two bars; and there was a third room, much smaller, in which there were two tables, which adjoined the stag room.

About two or three o'clock in the morning, after Bracey had indulged in several drinks of whiskey, a waitress, Aileen Thompson, who was employed and paid by the appellant, Douglas O'Neal, approached Bracey and asked him if he would like to play some poker.  After some short delay, Bracey entered the small room and found a poker game in progress, being participated in by four or five soldiers and the appellants, Walker and Harris, and another man named Whittle, described as the official ‘bouncer’ of the establishment.  The appellant, Harris, sold Bracey $10 worth of poker chips and he entered the game.  He proceeded to gamble until about twelve o'clock the following day.  As the game proceeded, the soldiers dropped out, and for the last eight or ten hours only Bracey, Whittle, and the two appellants, Walker and Harris, participated.  The stakes were increased in value from twenty-five cents a chip to $1, and when the game concluded Bracey, who was dazed from the effects of liquor, had lost in the neighborhood of $4,000.

During a great part of the time, appellant, Walker, who called himself the ‘house man,’ did most of the dealing.  At other times, the appellant, Harris, who acted as ‘banker’ of the game and who sold the chips and handled the cash, dealt the cards.  A short while, in which Bracey dealt, both Walker and Harris claimed the right to cut the deck before the cards were dealt.

There was testimony that Douglas O'Neal was manager of the club and Walker was manager of the gambling room, and that the latter paid Whittle from the cash box.  There was also evidence from which the conclusion could reasonably be drawn that a certain percentage of the amount staked on each game was deducted by Harris for the benefit of the ‘house.’  The evidence for the state also showed that sometime during the morning, before the game finally broke up, Douglas O'Neal approached the state's witness, Bracey, and asked him if he would like to have a cup of coffee.

Around midday two friends entered the club in search of Bracey, and realizing his condition went out and reported the situation to the city detectives.  They then returned to the club and took Bracey to his hotel.

It is the general rule that where the proprietor of a place not kept for the purpose of gaming, allows gaming to be carried on, in which he participates, or from which he in some way receives a benefit, he may be convicted as the keeper of a gaming place. [cites].

The rule is also well established that a person having general charge of a gaming place as an employee may be convicted of the offense of keeping a gaming house.  [cites]. The fact of agency need not be proved by direct evidence, but may rest in inference from facts and circumstances and the conduct of the parties.

State v. O'Neal, 210 S.C. 305, 313-15, 42 S.E.2d 523, 526-27 (1947) (citations omitted).

Given the text of the statute and the related case law, I think the South Carolina supreme court will most likely find that poker is prohibited by the anti-gambling statute, regardless of whether it is predominately a game of skill or a game of chance.  To hold otherwise would overturn decades of social agreement that poker is gambling, with the effect of essentially legalizing unregulated, for-profit poker rooms and poker tournaments statewide.  As I've discussed previously, asking courts to rule that poker is not gambling is really no better than tilting at windmills

However, the legal analysis does not end if the South Carolina supreme court should find that poker is a prohibited card game under the anti-gambling statutes.  As noted at the outset of our analysis, the statutory ban also requires that the prohibited card game be played in a prohibited place, specifically, "at any tavern, inn, store for the retailing of spirituous liquors or in any house used as a place of gaming, barn, kitchen, stable or other outhouse, street, highway, open wood, race field or open place".  The fight in the present case is whether a private residence can be considered a "house used as a place of gaming" (or "house of gaming" for short).  Although the defense advocates a fairly narrow interpretation of "house of gaming", let's look back at the prior South Carolina supreme court decsion in O'Neal, which affirmed a conviction for "keeping a place of gaming" after running a poker game at a night club:

It is the general rule that where the proprietor of a place not kept for the purpose of gaming, allows gaming to be carried on, in which he participates, or from which he in some way receives a benefit, he may be convicted as the keeper of a gaming place.

State v. O'Neal, 210 S.C. 305, 313-15, 42 S.E.2d 523, 526-27 (1947) (citations omitted).

Under this case law, a place (business or residence) which is normally used for proper purposes, may become a prohibited "gaming place" if the proprietor permits a prohibited game to be played and either:  a) plays in the game, or b) receives a benefit from allowing the game.  In the present case, it appears the game host not only organized the game, but also played in the game and took a rake.  Those facts might be sufficient to establish a private residence as a "house of gaming", thereby making the poker game at issue in this case a prohibited game.  Now, the court might find that playing in the game is not an appropriate factor to consider in the context of a private residence, rather than a tavern, club, or similar business.  Also, the de minimis nature of the rake—if one believes the host's testimony he rarely recovered more than his expenses—might be considered insufficient to qualify as receiving a "benefit" for running the game.  However, where does one draw the appropriate line?  Can a host be reimbursed for his time in organizing the private poker game?  How about for cards, chips, and other supplies?  Electricity and other utilities?

Interestingly, news reports indicated that the state conceded at oral argument that the anti-gambling statute does not apply to casual or recreational games.  It's not clear what is meant by "casual", though presumably it means low stakes games where no rake or fee is charged.  This concession is a smart legal strategy by the state, as it focuses the court's analysis on "professional" poker games, where the house is making money from hosting the games.  This argument also seems easier to defend as being more closely tied to the language of the statute, which suggests that private poker games (i.e., those not held in public places or in "houses of gaming") where the house does not take a rake or fee are not prohibited.  In fact, this is precisely the ruling I expect the court to reach—poker is gambling, and is legal if done as a private, no-rake game, but becomes illegal when played in a public place and/or for a rake or fee.  Such a ruling would preserve the traditional notion of poker as gambling, prohibit poker in public or for-profit setting contexts, but allow casual home poker games to be played legally.  Such a ruling is actually the result most poker players should want.

Of course, my prediction of the outcome is not the result most poker players think they want.  But those players are short-sighted.  Yes, the statute is rather poorly written, though that is mostly an artifact of its age.  Yes, the statute could use clarity.  Yes, it would be really nice if a court would recognize poker is a game of skill, and exempt it from an anti-gambling statute.  But such a ruling would essentially legalize unregulated, for-profit poker rooms and poker tournaments throughout the state.  The legislature would almost certainly react swiftly and negatively to such a ruling, and likely enact draconian restrictions against playing poker, including perhaps an explicit ban on online poker.  Don't forget, this is South Carolina, where conservative "family values" politics still hold sway.  Frankly, a fully pro-poker court ruling might be the worst result for poker players, a Pyrrhic victory leading to explicit and more onerous anti-poker laws.

It will be interesting to see how the court eventually rules in this appeal.  But, given the detailed evidentiary record developed in the trial court, the high quality legal work done by attorneys for the defendants and the PPA, and the admittedly poorly drafted statute at issue, if the "poker is a game of skill" argument fails here, it is difficult to imagine circumstances where the argument would ever prevail

In other words, Chimento looks like the last, best chance for the PPA to score a meaningful win in the poker legalization-by-litigation battle. 

Poker players shouldn't hold their collective breath.

*  I have posted the following briefs on my Google Docs page:

State Final Brief
Respondents' (Defense) Final Brief
State Final Reply Brief
PPA Amicus Curiae Brief

The underlying district court decision was posted HERE by another person.

**  The Pennsylvania supreme court has yet to decide whether to grant further review in the Dent case, in which a Pennsylvania appellate court found poker to be a game of chance subject to the state's anti-gambling statute.

October 17, 2010

Poker Massages—A Hidden Leak?

Massage gals are a common sight in many larger poker rooms and at lengthy poker tournaments.  As an aside, I can't recall ever seeing a massage guy in a poker room.  Presumably there are plenty of qualified male massage therapists, theoretically a poker player should care only about the quality of the massage rather than the gender of the person performing the masage, and the pay seems good.  So, one has to wonder if the gender disparity is due to the fact more women go into massage therapy than men, or if most poker players are men and everyone (management, massage therapists, and players) just assumes male players want women performing their massages, or if male players actually do prefer massage gals to guys because of some psychological need (having the attention/touch of an attractive woman, or not appearing gay).  Eh, I frankly don't much care, it's just one of those quirky social things that pop up in poker.

Anyway, I was thinking about poker massages the other day after reading an interesting blog post by Dan Ariely over at "Irrationally Yours".  Ariely discusses three interesting studies in which people received a 15-minute massage, a 45-minute Swedish massage, or were just touched on the shoulder by a woman (note:  these were three different studies, not three options compared in one study).  The studies reached interesting findings and conclusions:
  • Massage releases oxytocin, a chemical leading to feelings of well-being.
  • Massage recipients are more empathetic and trusting.
  • Massage recipients are more generous givers in a money "trust" game.
  • Massage recipients are more relaxed and less aggressive.
  • Massage recipients feel more safe and secure.
  • Massage recipients make riskier financial decisions when gambling or investing money.
In essence then, massages can alter a poker player's psychological state in profound ways.  Now, a little bit of artificial positive feeling and relaxation might help a player's performance; think of all the players you know who play better after one or two drinks.  But taken altogether, the findings above show that massages might lead a poker player to be less aggressive, more willing to make risky plays, and more likely to pay off with weak hands or to chase draws.  It's at least something to think about next time you're tempted to pull a $20 bill or two out when the massage gal walks by your table.

Of course, now that I think about it, the poker world should be grateful Phil Ivey appears to love getting massages at the poker table.  The Ivey juggernaut would be nigh-unstoppable otherwise!

October 15, 2010

Dog Day Morning

Sonny:  So, what country do you want to go to?
Sal:  Wyoming.
Sonny:  Sal, Wyoming's not a country.

Dog Day Afternoon
So, it's barely noon, and after my morning, I think moving to Wyoming—well, maybe San Diego—is a swell idea.

As my Twitter followers know, the sig other and I are puppy-sitting this week and weekend for Fritz, a year-old German shorthaired pointer (a/k/a "German shorthair").  Fritz is probably five inches taller than Berkeley, but also 15 pounds lighter, and more full of energy, if that's possible.  Basically, Fritz is the lanky wide receiver, while Berk has turned into a monster linebacker (75 pounds—so much for being "on the small side for boxers").

As might be expected, the pups have been tearing around the house like maniacs, chasing each other, playing games with toys, and wrestling.  We have resorted to sleeping in separate rooms with one pup each so that they will actually sleep.  Of course, Berk still wakes me up three times a night to see if it is time to go find Fritz and play.  When they do get let out of the bedrooms, it's as if they haven't seen each other in years.

This morning started off rather innocuously.  We took the pups out to take care of their business around 6:15.  I watched them while catching up on my Twitter and Google Reader feeds, letting the sig other get ready for work.  He left around 7:00, and I went in to brush my teeth.  That's when the pups decided to launch their evil plot.

As I'm brushing my teeth, I hear rustling around, along with the ominous sound of no puppy playing.  This cannot be good.  I walk out to the kitchen, and find the pups with a bag of treats in the living room, trying to paw it open.  Guess opposable thumbs do come in handy.  Since the treats are kept in the laundry room, it appears the sig other forgot to close that door on his way out.  Berk knows better than to get into the treats, but Fritz is raised in a "no-treat" home, so he was literally a kid in a candy shop.  Since it was actually pretty funny, I scolded them just a bit for show, then went back to start shaving.

I barely have shaving cream on my face when I hear a huge crash!  I walk back out to the kitchen, where I find a plate shattered on the floor.  Wonderful.  Hmmm, apparently Fritz can reach the five foot countertops, and wanted the plate of crackers he saw me put there last night.  Poor Berkeley was cowering under the coffee table (his hiding place since his first day at home), knowing Fritz had broken another rule, and desperately trying to stay out of sight.  Fritz was clear across the room, wearing a hangdog guilty face.  This time, the scolding was not so friendly.  Pick up the plate, get out the vacuuum, back to finish shaving.

I decided I couldn't trust the boys unsupervised, so I put them out on our deck.  Now our deck has typical three foot railings, plus it is built out over an eight foot deep "moat" that runs along the side of our townhome complex (to allow daylight windows for the basement on that side), with a five foot gap between the deck and moat edge.  So there is no way anyone—or any puppy—can get onto or off the deck without jumping about five feet, after first climbing over the railing.  In other words, the deck is a perfect place to keep a couple of pups out of mischief for a few minutes.

Apparently our deck is not the doggie supermax facility I had assumed.  I get out of the shower, look out at the deck, and see Berk staring down the road ... at Fritz, who somehow jumped off the deck, over the moat, and out onto the lawn without hurting himself.  Wonderful.  Yup, Fritz was happily chasing birds right next to the street, and appeared ready to romp over to the park. 

As much as I might want to murder the scamp, it wouldn't do to report Fritz being run down by a car.  So, in something of a panic, I throw on sweats, and pull on my sandals ... and one has been chewed into oblivion by a puppy who was bored by the other eight dozen toys strewn around the house.  Nice touch.  I decide to go for it Zola Budd-style and chase down Fritz, who gives me a big ol' grin as I drag him back in the house.  Brat. 

I go back in the bedroom to put on my work clothes.  I hear the boys running around the kitchen, then Fritz suddenly dashes into the bedroom, followed closely by Berk.  They both stare at me, with suspicious guilty faces.  I say, "What are you boys up to now?"  Berk looks right at me and ... starts peeing on the floor.  Awesome.

Berk got a stern scolding as I drug both boys out for a potty break.  Berk went right in his kennel; he knew I was mad.  Fritz fought me like a dervish before I could get him in his kennel.  Where's an alligator wrestler when you need one?  Then, as I turned to walk back into the bedroom, my sock felt wet and warm.  Oh yeah, Fritz had left a big puddle of pee in the kitchen, with a trail of pee running the length of the kitchen to the front hall, where another puddle was on the doormat.  Exceptional.  So, I got to use about a billion paper towels to scrub our carpet and the entire kitchen before finally getting to leave for work.  How much fun can one guy have?

I head out of the house about 8:00, 30 minutes behind my planned schedule.  Oh well, no big deal, nothing on the calendar for work today.  I look down at my watch, it says 6:50.  Yup, dead battery.   *Sigh*  I turn onto the main road to the freeway, only to discover that I had not put in my contacts because of the hullaballoo with Fritz (I have a mild near-sightedness, so I don't need contacts around the house).  I turn back for home, get my contacts, head back out.  I pull back out onto the main road, only to see ... a cop car right behind me.  What a lovely pickle for the sh*t sandwich that was my morning.  Yeah, I might have pulled a bit of a rolling stop.  In my first break of the day, the cop did not pull me over.  Thank gawd for variance.

Perhaps today is not the best day to play poker.

Two felons out on parole.  Fritz, the ringleader (left), and
Berkeley, the muscle (right).

October 14, 2010

An Ode to Arrogant College Football Fans

Nebraska is back and we’re here to stay.

—Nebraska head football coach Bo Pelini, accepting the 2009 Holiday Bowl trophy after the Huskers thrashed Arizona, 33-0.
I've been a lifelong Husker football fan.  Or, to be more accurate, I grew up in the Husker cult.  Most of the traditional college football powerhouses have legions of hardcore fans, but Husker fans are among the elite, perhaps rivalled nationally only by fans of a handful of teams—Notre Dame, Michigan, Ohio St., Alabama, Texas, Oklahoma, and USC (Southern Cal, not South Carolina, duh).  These are teams which have been consistently among the best teams since the 1950s, and also have rabid national fan bases.  Well, OK, Notre Dame is pretty consistently mediocre, but being the designated Catholic team for a couple of generations makes up for the relative lack of production on the field. 

Fans of powerhouse teams are a different sort than fans of more mundane teams.  Fans of powerhouse teams:
  • Are not satisified with just a winning season and a bowl appearance. No, they want a BCS bowl, or one of the other good bowl games (and then only in the rare "rebuilding season"). 
  • Have serious debates about how their team will win the National Title every season.
  • Believe that being ranked in the Top 25 is a birthright.
  • Complain when their team's game is only carried on ESPN2, rather than being a featured game of the week.
  • Expect their team to win most of their games simply by showing up.
  • Laugh at fans of upstart teams who dare to challenge their primacy in one-sided "rivalries", sort of the way a big brother laughs at a little brother who dares to challenge him to a fight (yeah, I'm looking at you, Kansas and Missouri).  
  • Measure their team's success only against other powerhouse teams ("Boise State?  Never heard of 'em.").
  • Only storm the field in a conference or national title game, or against a recognized elite level rival.
For Husker fans, this weekend's game against Texas is the most important game on the regular season schedule.  In terms of team goals, the Kansas St. and Missouri games matter more, because they are in the Big XII North Division with the Huskers.  In terms of talent and degree of difficulty, the games against Missouri and Oklahoma St. might pose a greater obstacle to an undefeated season.  But Husker fans regard their team's place in the college football hierarchy as being among the elite powers, so teams the Huskers have dominated over the decades simply don't matter as much as another of the elite teams.

Of course, there are all sorts of subtextual issues in play.  The Huskers leaving the Big XII for the Big 10 after the season, after Texas refused to commit its potential TV network money to the conference and flirted with its own move to the Pac-10 conference.  The long-simmering feud with Texas over control of the conference after Texas joined the then-Big 8.  The Longhorns' defeat of the Huskers in the 1996 Big XII title game, derailing the Huskers' drive for a third straight national title.  The controversial decision to put one second back on the clock in last year's Big XII title game, allowing Texas to kick a game-winning field goal (for what it's worth, I'm one of maybe five Husker fans who think the decision—although painful—was correct). 

Of course, the modern college game has changed significantly since the 1980s and 1990s.  With TV coverage proliferating and more money coming into more programs, it's gotten tougher for the college football powerhouses to maintain their elite status.  Former conference doormats can rise up and be competitive, at least for a few years at a time.  Non-traditional programs like Utah and Boise St. can run off winning streaks and put pressure on the big boys to let them play in the BCS bowl games.  It's no surprise that a team like Texas, even with all of its financial and recruiting advantages, is facing its first three-game losing streak in decades with a loss at Nebraska, while Husker fans continue to pretend the Bill Callahan era never occurred.  So yeah, there's a lot riding on the Big Game this weekend for both Husker and Longhorn fans.  Still, fans of both teams know that they are a cut (or two) above the average football fan.

Go Big Red!

* * * * *

To celebrate arrogant football fans, as well as to preview the Huskers' move to the Big 10 next season, here are a couple of videos sent to me by a friend who is a fan of the decidedly non-elite Iowa St. CyClowns:

A Hawkeye fan is given a dose of reality by a Husker fan:

Nebraska and Michigan fans debate the 1997 National Title:

* * * * *

Of course, it's not just Longhorn and Husker fans being arrogant this weekend.  Despite their team's tumble from its perpetual lofty perch in the Top 5 over the past decade, USC fans continue to act in the proper arrogant manner befitting a powerhouse team.  For a hilarious read, check out the USC arrogance series of posts over at the Lost Angeles blog.  Just to whet your appetite, here are excerpts from the brilliant pregame and postgame posts about last week's Stanford game (a loss for USC).

From the game preview:
[Stanford celebrates] easily the dumbest mascot in the history of guys-who-can’t-get-girls-dressing-up-as-animals-because-they-can’t-make-the-football-team.  We are treated to a Trojan warrior stabbing the fifty yard line with a sword and celebrating the death blow BEFORE THE GAME (That’s so arrogant I just filled a co-worker’s Sigg bottle with vodka while they were in a meeting and patiently am waiting for the fireworks.  Even more arrogant, I made the vodka from scratch by staring at a potato and calling it a bitch).  What does Stanford get?  A creepy tree that looks like it was an arts & crafts project from a methamphetamine rehab clinic.

And from the Stanford postgame recap:

Stanford was a DOUBLE DIGIT favorite to win the game on Saturday.  Long story short, the world expected Stanford to beat us.

So what happens when Stanford squeaks out a home win over unranked USC?  THEY RUSH THE FIELD.  Seriously.  It was the most pathetic, amateur hour display I have seen outside of a pre-school talent show (and at least THOSE kids are cute).  There is a saying in sports that goes, “Act Like You’ve Been There Before”.  I know Stanford has never been “there” before (“there” meaning a perennial powerhouse in anything other than academics), but if you want to change your lineage, you need to act like you were supposed to win, especially WHEN YOU WERE SUPPOSED TO WIN.  Rushing the field when you DO NOT COVER THE SPREAD is so ridiculous I bought some Stanford clothes, went into the streets of Westwood and let UCLA kids beat me up for fun (which took a really long time, totally reminded me of the part in Fight Club where everyone had trouble getting a stranger to pick a fight with them).  The official footwear of the Stanford football team is now officially clown shoes.
Side note, after the game a couple of my friends stole a Hummer Limo and took it to Mission Beach, broke into SeaWorld and dressed all the penguins in tuxedos. It was totally hilarious, especially since we brought along Morgan Freeman and he narrated the whole thing.

Zack, the creator of Lost Angeles, is also celebrating USC's super-arrogant coach—"Lane Fuckin' Kiffin"—and USC's current bowl game ban (for arrogantly violating NCAA rules) with commemorative t-shirts.  My personal favorite (which ironically could also be worn in a non-arrogant manner by my CyClown friends):