A federal judge in New York recently held that Texas Hold ‘Em poker is a game of skill and therefore not gambling under federal law. This is the first time a federal court has held that poker is not gambling under the Illegal Gambling Business Act (the “IGBA”).
Federal prosecution under the IGBA requires both a violation of the applicable state law and proof of the operation of an “illegal gambling business,” involving five or more employees and operating for at least thirty days or earning $2,000 or more in any given day.
The issue of whether poker is a game of chance or skill has been a hot button issue with inconsistent treatment from state to state. The majority of state courts have found that an activity is illegal gambling if a person risks something of value on an activity predominately determined by chance for the opportunity to win something of greater value than he or she risked. Most federal courts have considered poker to be a game of chance and therefore characterized it as gambling.
In large part, the decision focused on research by an expert witness, a statistician and competitive poker player, who provided studies of online poker games to prove that despite luck determining what cards players receive, skill is the predominant factor in players’ success. The information presented suggested that a player’s abilities “permit the best poker players to prevail over the less-skilled players over a series of hands.”
In arriving at its decision the court compared sports betting to poker, stating that poker involves an “array of talents.” The court added that the defendant could have been prosecuted in state court under New York state law.
So, while the federal court ruling does not overturn state illegal gambling laws, some of which include poker in their statutes or define it as a game of chance (for example, Connecticut, Wisconsin, Arkansas and Florida), it may have a significant impact on the treatment of poker under United States law.
Despite the fact that the government intends to appeal the decision, the ruling should go a long way toward guiding marketers that conduct skill-based promotions.
Consult with a promotions law attorney to provide guidance and analysis regarding games and contests under state lottery laws to ensure that they are genuinely skill-based.