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Litigation: Changes made to federal law that could determine poker's legality

The 2nd Circuit said the Illegal Gambling Business Act did not require the prosecution to demonstrate playing poker violated federal law

We previously reported on U.S. v. DiCristina, a federal criminal case pending in Brooklyn, New York that generated stories in the New York Times and Wall Street Journal, with Federal District Judge Jack B. Weinstein determining that playing poker was not gambling under federal law.

Judge Weinstein had held the definition of “gambling” in the federal Illegal Gambling Business Act (IGBA) did not cover poker because federal law required that a game be predominated by chance rather than skill for it to be unlawful. In August, the U.S. 2nd Circuit Court of Appeals reversed Judge Weinstein. The court largely let alone Judge Weinstein’s conclusion that poker is not predominated by chance, but is a game predominated by skill. The 2nd Circuit reversed Judge Weinstein because the court determined that the IGBA did not require the prosecution to demonstrate playing poker violated federal law.

The 2nd Circuit held that the IGBA applied to running an “illegal gambling business,” and that as long as the gambling in question violated state law (in this case New York’s), Mr. DiCristina could be convicted of running an illegal gambling business. (The parties did not deny that running a poker game violated state law for purposes of the appeal.) The 2nd Circuit effectively sidestepped Judge Weinstein’s 120 page analysis which concluded poker was primarily a game of skill. For the poker aficionado or anyone in the gambling business, Judge Weinstein’s decision remains well-worth reading for its discussion of statistical evidence and survey of state gambling laws concerning poker. Its usefulness is limited, however.

While Judge Weinstein’s analysis remains persuasive on the skill/chance point, and the decision may be used in future arguments in other jurisdictions, it unfortunately will not do Mr. DiCristina any good. He is scheduled to be sentenced on Dec. 30, 2013. He faces 5 years imprisonment. Mr. DiCristina has filed a petition for certiorari to the United States Supreme Court, but his odds of success (statistically speaking) are about 1.2 percent, somewhere between drawing three of a kind and a straight in a single five card hand.

An interesting aspect of the appeal is that eight different friend of the court briefs were filed in support of Mr. DiCristina. Most were filed by disappointed fellow players, such as the “Poker Players Alliance,” a million-member non-profit that apparently invested serious money in retaining expert witness help in this case; a group of a 14 amateur players from the Eastern District; four “professional” poker players; two scrabble players, and one bridge player. Briefs also were filed by Robert Hanson, a “Professor of Risk Analysis and Gaming” from the University of Denver; former New York Times poker witness, professor James McManus; and a venture capital fund whose principal wants to bring to the court’s attention that “poker, like investing is a game of skill, not of chance”. These briefs were prepared and submitted by some of the country’s most distinguished and expensive firms.

One question we asked last time still remains unanswered. Why is the federal government bothering with a small time poker game ($3-10 opening) in the back of a bicycle shop fronting a warehouse in Staten Island, which the local authorities left alone, when there is no evidence of organized crime involvement? This question was asked in an amicus brief filed by Miguel A. Estrada from Gibson Dunn on behalf of former United States Attorneys Roscoe C. Howard, Jr. and Robert J. Cleary (former U.S. attorneys for the District of Columbia and New Jersey, respectively). The former U.S. attorneys argue, “The government claims that Mr. DiCristina should face imprisonment for up to five years, based on a reading of the applicable statute (18 U.S.C. § 1955) that would criminalize a commonplace activity that causes zero individual or public injury. That startling claim deserves every bit of the disbelief that it begets.” They point out the obvious, that this prosecution is an “unmitigated waste of federal prosecutorial and judicial resources. . . to the detriment of the government’s ability to enforce federal laws that address real problems”. This argument went unanswered by the 2nd Circuit.

What this means for “poker nation” is hard to say. People will keep playing as they have. This certainly sets back online poker gambling, but it continues to grow in popularity; there clearly is a huge market. Poker players have lobbyists and a voice in Washington. Texas Congressman Joe Barton, for instance, champions online freedom for poker players with his bill, the Internet Poker Freedom Act of 2013. His bill would allow people to play poker online as long as the entrepreneur gets a federal license — as always, the house must get its cut.

One final note on chance vs. skill: On Nov. 5, 23-year-old Ryan Reiss won the World Series of Poker, and the $8.5 million that went with it. According to Associated Press, when asked how he did it, Mr. Reiss said, “Everyone playing really solid, and the cards ran my way today.” Just lucky, I guess.

Contributing Author

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Neil Merkl

Neil Merkl is a partner in the New York office of Kelley Drye & Warren LLP. He focuses on complex commercial litigation. Some of the...

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Contributing Author

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Clifford Katz

Clifford Katz is an associate in the New York office of Kelley Drye & Warren LLP, in the litigation department.  He focuses on complex commercial...

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