JURIST Guest Columnist Gerard Dondero, University of Nevada William S. Boyd School of Law Class of 2013, argues that while the recent New York district court decision in US v. Dicristina represents a change in the legal analysis of games of skill, most US states still utilize outdated judicial standards to evaluate gambling...
out of the US District Court for the Eastern District of New York has been making waves. Most US courts confronted with the question of whether poker is a game of skill under the predominance test tend to categorize poker as a "game of chance." However, Judge Weinstein in US v. Dicristina found
poker to be a "game of skill," which represents a break from typical analysis. More noteworthy is that the court considered and was sympathetic to the concept of skill manifesting in the "long-run." Most noteworthy is that the court used this long-run skill factor to conclude that, even in a single hand, skill predominates chance in poker. So what's not to like?
Despite the obvious victory for poker players, most state courts utilize the dominant factors or "predominance" test in determining whether a particular activity is gambling. Even in light of the New York opinion, the predominance test remains mired in uncertainty. In its most general form, the test is whether, in a mixed game of skill and chance, chance predominates skill. If so, then the game is one of chance. While the calculation is straight-forward for an all-chance game like dice, legal analysis gets dicey when the game has elements of both chance and skill. The test lacks guidance for how to evaluate mixed games, even though courts designed the test for that very reason. So, while the New York decision manages to clarify one instance of legal application, the predominance test still fails at generating consistent results or even providing a clear guideline for the legal line between chance and skill. All of this legal murkiness may be fine in a more static area of law, but scholars have noted [PDF] that so-called mixed games ones that combine elements of chance and skill make up the majority of real games. Without a clear test, the amount of inconsistent results will continue to multiply.
The good news is that, through this opinion, a helpful approach to the predominance test becomes possible. First, after determining that the Illegal Gambling Business Act was ambiguous, the court decided that only games "predominated by chance" were considered gambling under the statute. Essentially, the court used the predominance test. In breaking down its particular formulation of the predominance test, the court focused on game elements within a player's control. While a few state courts have hinted indirectly at this analysis, several more have been content to rely on tradition and more superficial examination of a game's rules.
Further, the court stated that poker is a game dominated by skill even in the context of a single hand although hard evidence of this may only appear over the course of several hands. The court seemed to implicitly recognize that the proper unit to analyze is the smallest unit where all elements [PDF] of gambling intersect. In the context of a poker cash game, that would be a single hand. Other state courts also undertake a similar analysis.
The problem with demonstrating long-run skill without tethering it to this atomic game element where prize, chance and consideration issue is one of discretion. How can a court decide how long the long run should be? Is it 100 iterations? One thousand? Ten thousand? Other commenters [PDF] have become aware of this seemingly arbitrary cut-off and have even gone so far as suggesting doing away with the predominance test altogether. So, while long-run skill can serve as evidence of skill predomination, it should not be dispositive.
Next, the New York opinion also did away with another problematic trend in developing predominance test state law. The court correctly noted that a player being subject to defeat because of chance does not make the game one of chance an important point, because multiple states have ruled otherwise. Indeed, the folly of this approach is immediately apparent: how can a game be mixed if the player is not subject to defeat by chance at least sometimes?
However, the court, in its zeal to showcase the prior point, fudged the difference between chance and accident recognized under the predominance test. It probably overlooked the distinction because it was interpreting a federal statute and not officially deploying the predominance test. The court discussed chance's possible effect on games like golf, referring to a "lucky bounce." But, in the predominance test precedent, courts have accounted for such a phenomenon.
Since the earliest cases, courts deploying the predominance test have carved out a distinction between unforeseen actions that interfere with an intended result and external forces relied on to produce the result. The former are accidents, and the latter are legally, at least chance. So, when a runner stumbles because of a random gust of wind or a golfer's shot is thrown off by the same, these are accidents according to the law.
Honing in on this distinction makes the court's analysis clearer. In focusing on what elements of a game a player controls, the court is attempting to discern a key fact about the underlying game. Does the chance within the game operate to simulate an accident or does the chance operate within the game operate to produce the final result?
However, instead of taking this route, the court instead relied on a common formulation and battle-axe of the predominance test: the amount of skill must determine more than 50 percent of the outcome. The problem with this 50 percent approach is that it leads to absurd results. If two individuals were competing with one another at flipping coins, then a court would conclude that the coin-flipping game was one of chance. But, what if a certain flick of the wrist could increase the odds of heads or tails from 1:2 to 98:100? Technically, under the rigid formulation above, it would not matter. The game is still one of chance because chance is responsible for half the result.
By funneling its analysis through the 50 percent filter, the court was forced to take some other questionable turns. For example, the expert had to concede that only a small minority of players would ever outperform their raw odds due to skill. This concession is not good for a predominance test analysis. Under the predominance test, the court must look at what an average player can do. But because the New York court set such a high standard, it could only point to a small sample size to bolster or make persuasive its conclusion.
The court backed its analysis by arguing that many players losing is apposite and takes nothing away from the quantity of skill demanded by the game. Perhaps in the realm of federal law, but under the predominance test, it is quite inapposite. The court pointed to chess and stated that though many registrants competed, only a few won. However, the question is not how many winners a game can have. The question is whether the game is one of skill. In chess, it's readily apparent that the skillset the strategies, the moves is available to the average player. Games that feature a large element of chance are murkier when it comes to this average player feature.
So, while the New York opinion is an imperfect guide for states in the pursuit of refining the predominance test, it features several helpful points of analysis. States have made several missteps in analyzing predominance. The New York opinion addressed the most serious threats to clarity: being subject to defeat by chance does not make the game one of chance, the game should be one of skill in a single iteration and a rigorous analysis of the game's rules not a superficial look at traditional perceptions of the game are all necessary for a clear analysis. I hope the states actually put the New York opinion to use in refining the predominance test, but I am not sure if I would bet on it.
Gerard Dondero is a Notes Editor for the UNLV Gaming Law Journal. Dondero has participated in the Clark County Moot Court Competition and is a member of the Sports and Entertainment Law Association.
Suggested citation: Gerard Dondero, Poker: Game of Skill but Tested by a Game of Chance, JURIST - Dateline, Sept. 26, 2012, http://jurist.org/dateline/2012/09/gerard_dondero_gambling_law.php.
This article was prepared for publication by Elizabeth Imbarlina, the head of JURIST's student commentary service. Please direct any questions or comments to her at firstname.lastname@example.org