Online Poker Update

In my column about last week's onlike poker indictment, I noted that the underlying New York state offense cited by U.S. Attorney Preet Bharara involves "a contest of chance," a label that arguably does not apply to poker. A Las Vegas gaming attorney who blogs as CKBWoP explains that New York defines "a contest of chance" as "any contest, game, gaming scheme or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein." CKBWoP adds that a 1995 decision by the Criminal Court of New York identified poker as "a contest of chance":

Games of chance range from those that require no skill, such as a lottery, to those such as poker or blackjack which require considerable skill in calculating the probability of drawing particular cards. Nonetheless, the latter are as much games of chance as the former, since the outcome depends to a material degree upon the random distribution of cards. The skill of the player may increase the odds in the player's favor, but cannot determine the outcome regardless of the degree of skill employed. 

What about backgammon, where the outcome depends to a material degree on random rolls of the dice? Or Scrabble, where the outcome depends to a material degree on random draws of tiles? Or, for that matter, bridge, where...well, I don't know much about bridge, but I gather that it involves dealing cards out of a deck, so surely chance plays an important role in the outcome. It's hard to see why these are not considered games of chance but poker is.

I also mentioned in my column that the bank fraud charges against PokerStars, Full Tilt Poker, and Absolute Poker seemed dubious since these companies did not trick anyone out of their money. Instead they are accused of disguising their transactions so as not to alarm banks worried about potential liability under the Unlawful Internet Gambling Enforcement Act. Far from suffering any losses as a result of this alleged deception, the banks made millions of dollars in transaction fees. But that may not matter, argues an Iowa attorney who blogs as Grange95. He cites a 1994 case in which the U.S. Court of Appeals for the 7th Circuit held that telemarketers who camouflaged their transactions could be guilty of bank fraud even if the only thing of value they obtained was payment processing services at the usual rates. He says the parallels to the online poker case are "striking," although he also notes that the law may be read differently in the 2nd Circuit (which includes New York).

Meanwhile, gambling law expert I. Nelson Rose reports that "players in countries like England, where [online poker] is indisputably legal...found themselves unable to access their favorite sites" after the Justice Department seized the .com domain names associated with PokerStars et al. The government also "effectively froze the money deposited by hundreds of thousands of American players, who had done nothing wrong" since "there is no federal law against merely playing poker." New York's law likewise focuses on gambling promoters rather than players. On Wednesday, responding to dismay among American poker players anxious about their money, Bharara's office said (PDF) it had reached agreements that "allow for PokerStars and Full Tilt Poker to use the pokerstars.com and fulltiltpoker.com domain names to facilitate the withdrawal of U.S. players' funds held in account with the companies." PokerStars has more information here. The agreements with the U.S. Attorney's Office also "do not prohibit, and, in fact, expressly allow for, PokerStars and Full Tilt Poker to provide for, and facilitate, players outside of the United States to engage in playing online poker for real money."

Rose says "traffic on the seized sites seems to be down, but not precipitously." He speculates that "Americans must have quickly discovered that they can sign up to the same operators through .eu and .uk sites." Joseph Kelly, co-editor of Gaming Law Review and Economics, warns that "the long-range impact of this action may be to drive reputable poker operators out of the U.S. market."

[Thanks to Matt and Bob for the links.]

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  • jester||

    As long as the US Dollar isn't a victim of chance, I'm on board.

  • ||

    Regarding backgammon, Oregon (with a similar law to New York) did arrest someone for playing backgammon for money in 1981, but the Oregon court decided in the same way as Alabama's Supreme Court did in 1976, that it was a game of skill.

    Duplicate bridge is much more of a game of skill than bridge played where the cards are randomly dealt.

  • ||

    Back at the frat house in college, there were dudes who would win at backgammon consistently regardless of the dice. Chance was like 10% of the result. 90% or more skill.

  • Booger||

    In my frat house we got wasted and beat the shit out of frat guys that stayed in to play backgammon

  • ||

    Yeah, sure. Same is true of poker, though.

  • Not Sure||

    Not really. Even the pros go through deep losing streaks.

  • Somalian Road Corporation||

    Professional backgammon players double a lot to reduce their variance.

  • ||

    Sadly, if I'm in Shanghai - behind the Great Firewall - I can still play some poker on Full Tilt.

    I have to admit, I am flummoxed at this coming from the Obama Justice Department. Truly the last straw. Maybe I will vote for Donald Trump.

  • Mike M.||

    I have to admit, I am flummoxed at this coming from the Obama Justice Department.

    You must have bought the rubbish that this all had to do with those religious conservative bluenoses.

    Let me fill you in on a little secret: the government doesn't care a whit what religious conservatives think about anything.

  • ||

    If you define games of chance that broadly, it's stupid to say "games of chance" instead of just "games." Without reading the legislative history, I suspect the words "games of of chance" were used to garner votes from members opposed to extending the law to the extreme degree that the overbroad definition now extends it.

  • kinnath||

    Any game that uses dice or a shuffled deck of cards is a game of chance.

  • kinnath||

    So backgammon is a game of chance; chess and go are not.

  • ||

    What about football?

  • bishop||

    In chess, white has a better chance of winning than black since white gets the first move. When you start a game of chess one player holds a piece from each side in his closed fist and lets the other player pick the concealed piece.

  • kinnath||

    sometimes

  • ||

    Since it only happenz sometimes, what are the odds that a randomly selected chess match includes no element of chance in its outcome?

  • Zeb||

    Depends on the level of chess. I usually like to be black so I can react to what the other player does. But this strategy assumes that the other player will make mistakes.

  • ||

    I've played poker on the internet since 2005.

    To say that US players are still playing and signing up for real money games is quite erroneous. When you access the website you merely gain the ability to download the client software which allows you to play. Thus, if you've been a constant playing member the domain seizures were merely bad publicity making it difficult for new players to gain access and had NO effect on regular or continuing player's ability to get to the tables.

    However, none of this matters if you cannot cash in money and out the site. Now that US players can cashout (though right now those payments are still "processing") almost all them are doing so.

    Also, the site has restricted play for all US players and they are no longer allowed access to real money tables. If traffic has not gone down, then why have they cut almost every purse guarantee on their tournaments in half?

  • Doc S||

    Still can't cash out on full tilt

  • Doc S||

    "The government also "effectively froze the money deposited by hundreds of thousands of American players, who had done nothing wrong" since "there is no federal law against merely playing poker."

    And this is where I stand...

  • brec||

    [Rose] speculates that "Americans must have quickly discovered that they can sign up to the same operators through .eu and .uk sites."

    Nah. The web sites can't be used to sign up nor to play. That is done through a "client" software application, not browsers, on the user's PC or Mac.

  • Rrabbit||

    The card game bridge contains an element of chance, but card luck is reduced by having exactly the same cards being replayed by other players at other tables. Your score is then computed by comparing your result against the results other players achieved with the same cards.

    However, other elements of chance exist. I claim that an election is "a contest ... in which the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein."

  • brec||

    luck is reduced by having exactly the same cards being replayed by other players at other tables

    ...in the form known as duplicate bridge; but this is not inherent in the game.

  • ||

    Yes, but essentially all tournaments are in duplicate bridge. I suppose that somewhere there may be people who play bridge for money without playing duplicate, but I'm not aware of it.

  • Rrabbit||

    These days, there is (almost) only duplicate and IMPs, plus a few variations of those such as Butler. Classic rubber bridge pretty much died out 20 years ago.

  • kilroy||

    Liquor in the front, Poker in the rear.

  • ||

    The facts of life in this respect are these:
    1) Internet poker is a multibillion dollar global market ( about $12 billion)
    2)the biggest single component of that online market is the USA, therefore-
    3) somebody will step up if Full Tilt &c are knocked out.

  • CatoTheElder||

    Yes, but Joseph Kelly, co-editor of Gaming Law Review and Economics, is probably correct in warning that "the long-range impact of this action may be to drive reputable poker operators out of the U.S. market."

    In other words, Congress has just launched the War on Poker.

  • CatoTheElder||

    Well, I suppose Congress declared the War a few years ago, and the DOJ just launched its first battle.

  • ||

    Two words: Party Poker

  • kilroy||

    There are a significant number of ancillary business opportunities here.

  • ||

    Everyone decries "outsourcing of jobs" to foreign Countries, and the net result of this whole operation is that online poker is "outsourced" to European sites.

    My cousin is a good poker player, and he wins enough from the old folk on a cruise ship to pay for his ticket. I plan to make a citizen's arrest and not let him go until he gives me half the money.

  • Zeb||

    I think you have to consider poker a game of chance. Of course, there is skill involved as well, but the game itself is pretty random. Few games are purely chance, and most of those are for little kids. Craps, war, candyland, snakes and ladders. Drawing a line between what is a game of chance and what is not can't be done, since most games use both chance and skill.

    Of course, this shouldn't matter in any legal sense and people should be able to do whatever stupid thing they want to with their money. I've never had any interest in gambling myself.

  • brec||

    I think you have to consider poker a game of chance. ... Drawing a line between what is a game of chance and what is not can't be done ...
  • robc||

    One hand of poker is almost entirely chance.

    1000 hands is almost entirely skill.

  • Rrabbit||

    Poker is a game of skill. Play for a while against professional poker players, and you will come out losing, overall.

  • ||

    By the above definition, Baseball, Football, Basketball, etc. are also games of chance as are most games (Chess being an exception for the most part).

  • kinnath||

    In a perfect world, sports would purely be games of skills. Since the world is not perfect, luck interferes in the game.

    In a perfect world, dice are absolutely random. Games of chance are always games of chance.

  • ||

    The government also "effectively froze the money deposited by hundreds of thousands of American players, who had done nothing wrong" since "there is no federal law against merely playing poker

    Looks like a RICO class action suit to me. Wrap it in civil rights violations, and you get around sovereign immunity. The RICO gets you treble damages.

    Where is the bottom-feeding scum-sucking plaintiff's bar when you need it?

  • Anonymous Coward||

    At a bar association luncheon with the public defenders and judges.

    After lunch, they'll sing a rousing tune from High School Musical about being all in this together.

  • Mike M.||

    Amazingly, it's been largely forgotten that the World Trade Organization found the U.S. government in violation of their rules years ago over this issue.

    What this whole thing shows is that treaties and international agreements don't really mean anything; what truly matters is who has the biggest guns and the longest reach.

  • cynical||

    So, when are they going to shut that other large gambling operation based in New York City that, unlike poker players, caused something of a problem for this country?

  • Somalian Road Corporation||

    The gambling known as business looks with most austere disfavor upon the business known as gambling.

  • ||

    What this really means is that, in 3-5 years there will be a slate of "approved by the USgov" sites setting up shop with terrible rake formats (and NO rakeback), all so Uncle Sam can get their cut of the vig.

  • Robert||

    Since the legal action is under federal law that references "gambling", what matters is not how a state statute defines that word, but what it means in federal law.

    If, for instance, NY made nose picking illegal and had a statute that defined gambling as nose picking (or vice versa), that wouldn't make it a violation of a federal law forbidding transactions involved with illegal gambling in a state.

  • JB||

    It might be worth writing a novel about a PokerStars player who gets his money back and then uses it to fund hits on US Congresscritters.

    I'd read it.

  • Authentic jerseys nfl||

    So good!

  • Nike Dunk High||

    thanks

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