Online Gambling

Is Poker Gambling in New York?

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In my column last week on the recent federal indictment of 11 people associated with three online poker companies, I noted that the underlying New York state offense was promotion of illegal gambling. But since New York defines gambling as "a contest of chance," it's not clear poker qualifies. I followed the column up with a blog post noting a 1995 Criminal Court of New York case that identified poker as a contest of chance. CKBWoP, the legal blogger who cited that case, explained that in New York a contest of chance is one "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." But  the question remains: What is "a material degree," and does that description apply to the role of chance in poker?

Joseph Kelly, a SUNY-Buffalo expert on gambling law,  points me to a 2009 article in the journal he co-edits, Gaming Law Review and Economics, that addresses the first part of that question. Bennett Liebman, executive director of the Government Law Center at Albany Law School, argues that the "material degree" test is essentially the same as the "dominating element" test that prevailed before a newly revised New York penal code took effect in 1967. Under the latter standard, which was established by the New York Court of Appeals in 1904 and is still used in most states, "The test of the character of a game is not whether it contains an element of chance or an element of skill, but which is the dominating element." Liebman makes a persuasive case that New York legislators did not intend to change this standard when they included the "material degree" language in the new state penal code. At most, he argues, they sought to establish a presumption that a game in which chance and skill play equal roles qualifies as gambling.

If Liebman is right, there is a strong case that poker does not qualify as "a contest of chance" under New York law, since it is clear that skill is ultimately more important in poker than luck; otherwise it would not make sense to distinguish between good and bad poker players. That calls into question the whole premise that PokerStars CEO Isai Scheinberg and the other defendants broke the law by serving customers in the Southern District of New York, where they were indicted. U.S. Attorney Preet Bharara could cite other state laws, such as Washington's, that explicitly ban online poker. But if that is the basis for the indictment, why isn't Michael Ormsby or Jenny Durkan—the U.S. attorneys for eastern and western Washington, respectively—pursuing this case?