by Hillary LaClair, Senior Editor
March 23, 2009
Twice in two week’s time a trial court has given online poker a fighting chance for its legalization. This week, a trial court ruled that poker is a game of skill, rather than a game of pure chance, and therefore absolved the defendants in each case, accused of operating real-money poker games. After hearing scientific evidence and analyzing statistical data, court judges have begun to realize that not anyone can play poker, even if dealt the right hands.
A first trial in Pennsylvania dismissed criminal gambling charges against the operators of a garage poker room and his girlfriend who played dealer, after a ruling stated that poker is a game of skill. Columbia County Judge Thomas A. James, Jr. dismissed all charges – or 20 counts of violating Pennsylvania’s anti-gambling statutes. The prosecution argues that the pair had illegally solicited and allowed “persons to collect and assemble for the purpose of unlawful gambling.”
Both sides in the case agreed that the deciding matter was whether or not the game of Texas Hold’em poker was considered “unlawful gambling” under the law, which like many states in the U.S. and the Unlawful Internet Gambling Enforcement Act of 2006, has no clear definition of what gambling is. The only text that Judge James could base his decision on was a prior lawsuit of the same nature wherein the Judge ruled that gambling has three elements – “consideration, chance and reward,” – “Thus, the controlling sub-issue is whether Texas Hold’em is a game of skill or a game of chance, or, if both, does skill trump chance or vice-versa,” said James. The court had developed several means of testing the game, and it was inevitably ruled that poker is more a game of skill.
In his final ruling, Judge James states, “Beginning poker players rely on big hands and lucky draws. Expert poker players use their skills to minimize their losses on their bad hands and maximize their profits on their big hands… It is apparent that skill predominates over chance in Texas Hold’em poker.”
Just nine days later, a Colorado jury found that Kevin P. Raley was not guilty of gambling charges brought against him for having organized a poker tournament in a local bar. A major factor in the state’s decision was the testimony of Robert Hannum, Professor of Statistics at the University in Denver. In the counterpart case, the defending attorneys referred to recent books and articles such as the Gaming Law Review and Economics.
Similar court cases are popping up globally. Last year, Van der Genugten, a Dutch professor, appealed to the Dutch Supreme Court demanding that poker be defined as a game of skill, and omitting to “game of chance” label that it has been given. Genugten developed a very simple mathematical formula that would prove that the game is one of skill, using the idea of a skill ratio.
The formula, co-created by mathematics professor and game theory specialist Peter Borm wasn’t enough to convince the court when van de Genugten was called to provide expert testimony, and so he has appealed to the Supreme Court.
The formula implements the basic principle of a skill ratio, and the ability to learn and adapt to the game. The learning effect determines the outcome of a game between a skilled play and an amateur. Van du Genugten has ascertained, using this formula, that a game like roulette which has no learning effect would produce a skill ratio of 0; Blackjack holds a ratio of 0.049, fantasy sports 0.3 and poker 0.4. A game that involves only skill would have a skill ratio of 1.
Unfortunately, both of last week’s cases are unpublished rulings of state trial courts, and may not serve as binding precedents in any other related court case. However, the results are significant in that they prove that poker is becoming a more socially accepted game. Most importantly, whether state or federal court, offline and online poker operators are gaining support from legislators and investors in legal and gaming issues. The Poker Players Alliance, which has fought for years to have the online poker industry legalized, is one of these support groups that continues to follow every legal battle that may have a negative or positive impact on the internet poker industry.
“Clearly, the Judge had an understanding of how poker is played,” said John Pappas, PPA Executive Director, of the Pennsylvania ruling. “Coming to this decision, to him, was not a far leap. The decision sets an excellent bar for us in the future.”
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