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Skillful Argument

New York judge rules that poker is a game of skill, not chance

Skillful Argument

When Staten Island resident Lawrence DiCristina was arrested for running an illegal poker game last year, he was brought up on federal gambling charges. Depending upon a court-appointed public defender, DiCristina’s future didn’t look too bright. And it looked even worse when a jury convicted him in July and he faced up to 10 years in prison.

But his lawyer, Kannan Sundaram, tried to get the judge to rule on a technicality, that poker is a game of skill, not a game of chance, and was therefore not gambling. Federal Judge Jack B. Weinstein said he would not rule on the motion until the trial was concluded—and shocked observers by agreeing with Sundaram and vacating the verdict.

“The most skillful professionals earn the same celestial salaries as professional ballplayers,” he said in an exhaustive 120-page ruling that traced the roots of poker and the skill level necessary to be a consistent winner. “Because the poker played on the defendant’s premises is not predominately a game of chance, it is not gambling” as defined by federal law, the ruling said.

The Poker Players Alliance, an organization that fights for the rights of poker players, applauded the decision.

“As we worked for years defending players against vague gambling laws, we have patiently waited for the right opportunity to raise the issue in federal court,” John Pappas, the executive director of the organization, said in a statement. “Today’s federal court ruling is a major victory for the game of poker and the millions of Americans who enjoy playing it.”

While the defense produced several witnesses to back up the contention that poker was a game of skill, the prosecution failed to produce one expert who could argue the opposite. The judge also cited a lack of guidance for the prosecution of this particular gaming statute.

The decision may have some implications for online poker players. Several suits have been filed by online poker sites saying essentially the same thing: that poker is not gambling.

The ruling may also invalidate the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which punishes banks and other financial institutions for transferring funds used for illegal internet gambling. It could also impact cases brought by the federal government in the wake of the “Black Friday”—April 15, 2011—indictments for using methods to circumvent UIGEA.

Union Gaming Group says the ruling will cause even more confusion in the online poker field.

“(The) ruling would imply (to us) that poker would not be covered under the UIGEA, and therefore, financial transactions involving poker might not apply under the broader gambling regulations and could open the doors for online poker in the United States,” the group wrote in a note to investors. “Barring any appeals to the ruling, this could pave the way for a federal passage of online poker. The ruling is also positive on a state level. Several states, including Delaware, Nevada, New Jersey, Iowa and California, are in various stages of approval of intrastate online poker.”

In his ruling, Weinstein referred to a study conducted at Erasmus University Rotterdam by Ph.D candidates Rogier J.D. Potter van Loon and Dennie van Dolder, and Associate Professor of Finance Martijn J. van den Assem. The study analyzed 415.9 million individual poker hands the group purchased from an online casino.

“Our results suggest that skill is an important factor in online poker,” said van den Assem.

The study considered 76.7 million different games, with an average of 5.4 players, at all levels of cash stakes. Only 32 percent of players ended up winners after the deduction of a rake (38 percent if there were no rake).

The paper found that good players separated themselves from the pack.

“A player who is in the top 10 percent in a given six-month period is more than two times as likely as other players to rank among the top 10 percent in the next period,” the study reported. “A top 1 percent player is more than 12 times as likely to end up in the top 1 percent the next period.”

 

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