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WHO SAYS POKER IS A GAME OF SKILL?

By Wendeen H. Eolis
Poker Player Newspaper

Judge Lewis Kaplan Has Plenty to Ponder

Last week Kramer Levin Naftalis & Frankel LLP, the law firm recently brought in to defend Chad Elie and John Campos at their upcoming trial, hit the ground running. Elie and Campos are two of the indicted defendants in the April 15, 2011 Black Friday indictments in US v. Scheinberg et al and the related civil forfeiture actions.

Counsel has submitted a motion to the Court in limine, asking permission to present evidence to the jury concerning poker as a game of skill. Judge Kaplan, in charge of the upcoming trial of Elie and Campos, has thus far shown little sympathy to counsels’ arguments that poker is a game of skill; but, he did leave the door ajar.

There are pressing questions now center stage in Judge Kaplan’s courtroom, in the New York Federal District Court. Is poker gambling as a matter of law? Is poker a game of skill as a matter of fact? Is there an element of chance in the game? Is there a predominance of skill over luck required to be a winning player? Does an outcome depend to a material degree on chance?

Lawyers Weigh In

Several lawyers familiar with the cases say the recent appointment of Kramer Levin as counsel for trial makes eminently good sense, praising the new defense team as both highly intellectual in arguing the law and uniquely capable in resonating with a jury. Most lawyers queried for this article believe the defendants’ prospects for victory would improve dramatically if the judge rules favorably on this motion which gives poker its due as a game of skill. They explain the Government seeks to establish that poker is gambling as a matter of law.

Just days after the signing of UIGEA, the Fordham Intellectual Property, Media and Entertainment Law Journal published an article by Bennett Liebman titled: “Poker Flops Under New York Law” (2006, Volume 17, Issue I, Article 1—available on the internet) which includes a comprehensive analysis of the skill v chance arguments that swirl around poker.
At the time of publication, Mr. Liebman was the executive director of the Government Law Center at Albany Law School. He is now deputy secretary to New York Governor Andrew Cuomo for gaming and racing. He is tasked with the broad review of all gambling issues with a view toward considering legalization of gambling in New York under sound policies.

Liebman’s Article: Must Reading for Laypersons and Lawyers

Gaming law experts consulted for this article, acknowledge Mr. Liebman’s treatise as undeniably thorough in its discussion of both the straightforward and garbled questions and answers that have become part of an ever-fattening book of poker cases in courtrooms around the country. For non-lawyers (you should know I am not a lawyer), it speaks in clear English about relevant poker definitions and points made in court cases with abundant references to these cases among the author’s 240 citations.

Unmasked only at the very end of the article is Mr. Liebman’s apparent disposition toward poker as a game that requires a predominance of skill over chance and a game that should be removed from criminal prosecution and the clutches of gambling (as a matter of law). It is as startling as it is refreshing for professional poker players in the United States.

The article presciently concludes:

“It may be possible for poker in New York to reach the levels W. C. Fields suggested for it in the 1940 movie My Little Chickadee. Fields’ character, Cuthbert J. Twillie, is asked about a poker game by the prototypical rube Cousin Zeb, played by the actor Fuzzy Knight: “Uh, is this a game of chance?” Fields’ character responds, “Not the way I play it, no.”

Billy Baxter: Ahead of the Times

Back in the mid 80’s—when most top poker players kept their winning strategies close to the vest and above all avoided publicity about their skillfulness, William (“Billy”) Baxter Jr., a highly successful professional gambler with enviable poker results, was on the same page as W. C. Fields’ character in the movie (see updated author note at the end of the article).

Mr. Baxter took on the Internal Revenue Service in a landmark case that determined he had “derived his gaming income actively from his expenditure of time, energy, and skill rather than passively from use of his property: thus his gaming income constituted ‘earned income’ at a lower tax rate than if it had been judged a lucky windfall.” The trial judge famously quipped, “I just wish you had some money and could sit down with Mr. Baxter and play some poker.”

Liebman Has His Eye on the Ball

Liebman’s research ends in 2006, but neither the many poker skill studies conducted over the past few years nor the more recent cases in state courts diminish his work. In the course of reading Liebman’s law journal article, one stumbles into an understanding of the Government’s vulnerability in pursuing gambling charges related to poker and possible reasons for the Government’s decision to prosecute online poker defendants in New York.

Without drawing legal conclusions the takeaways from Liebman’s article could be simply the following:
The laws related to gambling and to poker in particular, are filled with riddles that make for unending confusion in determining the legal status of poker as gambling.

To make matters more complicated in the state of New York, the test of a predominance of skill over luck in determining if an activity is gambling under the law, as applied in many states, apparently is not necessarily applicable in the Empire State.
Liebman’s research indicates there could be a serious problem of overcoming Judge Lewis Kaplan’s apparent leaning toward the treatment of poker as a “gambling” activity as a matter of law and thus not a question of fact for a jury to decide.

Wide Range of Experts Tell It Like It Is

In recent years numerous academic studies are virtually unanimous in their conclusions that skill is the predominant factor in distinguishing winning players over losing players. These collective findings are more than sufficient cause to ask jurists to visit anew and with open minds, the role and extent of skill in modern day poker with a view toward removing it from the status of conventional gambling games to be played in casinos. A non-exhaustive but significant representative list of relevant and publicized studies since 2006 is provided at the conclusion of this article.

In addition to serious academic studies and empirical data produced by the poker community, esteemed gaming lawyers and professors including the likes of Harvard Constitutional law giants Lawrence Tribe and Alan Dershowitz and even Louis Freeh, the former head of the Federal Bureau of Investigation have weighed in on the skill argument for poker as a matter of fact.

Poker Pros Prove Their Skills

Professional poker players, generally regard any contentions that poker is gambling as not only misleading but factually unsupportable and therefore outdated legal drivel. The poker community has mobilized in making a direct contribution to the arguments for poker as a game of skill.

Epic Poker League: Annie Duke, a co-founder of Federated Sports +Gaming and Commissioner of its Epic Poker League sought the help of professionals in information systems and software development to create the Global Poker Index. The GPI is arguably the first poker ranking system to be taken seriously—both by professional players and the mainstream press. The League is a “members only” organization, designed to include the top 300 performing poker players in major tournaments worldwide, in accordance with the GPI ranking formula. The rankings are published weekly in the pages of USA Today.

International Federation of Poker: The International Federation of Poker, led by acclaimed British journalist and recreational poker player Anthony Holden was launched in 2009 with a mission that combines a commitment to poker as a mind sport and a skill game. The website flashes its poker mantra boldly: “No gambling! It’s a game of skill.”

Holden spent a full year on the international tournament trail observing the variable skills of his opponents for his poker memoir “Big Deal” in 1990 and followed up with a sequel, “Bigger Deal,” in 2007 before founding the IFP.
Germans Prove Most Skillful: In 2011 The IFP held a “duplicate” poker tournament that attracted top performing poker players from around the world, teasing, “Time has come to find the most skillful nation in the world.” It would seem that the IFP did just that! At its inaugural “Nation’s Cup” last November, Germany emerged victorious, following up on top performances by German players Pius Heinz, main event winner at the 2011 World Series of Poker, Benny Spindler at the European Poker Tour’s London stop last September, and Martin Finger at EPT Prague, thereafter.

United States Poker Federation: The nascent United States Poker Federation is a member nation of the International Federation of Poker; it is headquartered in New York within walking distance of Wall St. USPF President, Peter Alson, points to Wall Street as “one of the biggest institutions in the country and the biggest casino in town.” A Harvard graduate and regular poker warrior with substantial writing credits in gambling subject matter, Alson labels as a “hypocrisy” any scorn toward poker as a mere gambling game against the backdrop of accepted professionalism of stockbrokers and traders who make dicey bets, daily, at far higher stakes.

Black Friday: Rubber Meets the Road

Would proof that poker is a game of skill make any difference in the current cases? To get to first base, the defendants will have to convince Judge Kaplan to take a step back from his previously stated initial inclination to view poker as gambling—as a matter of law. In this regard, online poker sites were apparently at far more peril than any of the online companies considered—and more peril in the state of New York, than most anywhere else in the United States.

Be that as it may, many legal efforts to push the skill argument in the US have been made in state courts over the past five years in one way or another and to almost no avail in the upper courts. At present, one case could become timely in Judge Kaplan’s courtroom; Town of Mt. Pleasant v. Chimento. A mid-level appellate court in South Carolina ruled poker to be a game of skill in a bizarre case where a raided home game led to the arrest of 20 poker players. The State Attorney General has appealed to the South Carolina Supreme Court which heard arguments in the fall of 2010 but has yet to report a decision.

Several gaming lawyers queried for this article say but for the charges of bank fraud and money laundering that emerged as part of the online poker cases, it is questionable as to whether the Government would have proceeded. They cite the motion before the Court as predictable and of enough potential significance to have caused the Government pause.

Circling Back to Bennett Liebman

Bennett Liebman may have the clearest vision of all. His Fordham Law Journal article explained not only how and why the online poker sites could get into such sticky wickets in their gambling business, but more importantly, his last words may soon help lead the way out of such trouble for both online and live action poker players who have turned one of America’s favorite pastimes into hardworking livelihoods.

Mr. Bennett concluded in 2006, while at Albany School, “New York now has the potential to make Fields’ view of poker the correct one.” Now as a senior advisor to the Governor in gaming matters, could Mr. Liebman actually be in a position to influence needed change?