Illegal Gambling and Legal Promotions: The Effect of the Recent Poker-Related Decision

There is a fine line between a lawful promotion and illegal gambling. Sweepstakes are legal, while private lotteries are not. Paying entry fees for a skill contest can be legal (depending on the circumstances), while placing bets is generally not. So it is with great interest that we follow gambling laws – of both the federal and state variety – throughout the country (and internationally as well).

For example, recall that last year the U.S. Department of Justice revised its interpretation of the Wire Act to exclude communications about state-run lotteries (thereby opening the door for sales of state-run lottery tickets via the Internet). Or take a look at our compilation of state gambling laws that we provide to you free of charge (though this hasn’t been updated since 2009, so laws may have changed).

As such, we were very interested in last month’s opinion from Judge Jack Weinstein, Senior Judge for the Eastern District of New York, in the case of United States of America v. DiCristina. This was the case that found that operating a private poker game was not a violation of the Illegal Gambling Business Act, 18 U.S.C. § 1955 ("IGBA").

The upshot of this decision is that the defendant – DiCristina – could not be guilty of violating the IGBA for running a private poker game because it was unclear under the IGBA whether poker was "gambling" or not. The IGBA had an enumerated list of gambling activities – slot machines, roulette wheels, dice games, etc. – but did not explicitly include poker, which by its nature has more of an element of skill than a slot machine or a roulette wheel. As such, the judge could not say with certainty whether poker was intended to be covered by the IGBA, and therefore could not allow a conviction of the defendant based on the rule of lenity.

So, does this mean that poker is now legal, and you can begin operating private, for-profit poker games anywhere in the country? No, it does not. There are several reasons why this decision, though interesting and possibly important in the long-term evolution of U.S. gambling laws, should not be taken as blanket approval for all poker-related activities:

  • The case was brought under a federal law – the IGBA – not state anti-gambling laws. Had this case been brought in state court for violations of New York law, the defendant likely would have been convicted because New York state laws have long held poker to the same standards as other gambling activities, like roulette or blackjack.
  • The decision in this case was highly fact- and statute-dependent. Had other allegations been brought against the defendant – e.g., that the defendant used telephones or the Internet to set up games, invite players, establish table minimums, etc., or that there was an organized crime element to the games – and had the government charged the defendant with violations of the Wire Act or RICO, then the outcome would likely have been different.
  • This is just one judge’s opinion, and therefore is not binding on any court other than the Eastern District of New York. Thus, courts in California, Texas, or even other parts of New York can disagree with Judge Weinstein’s findings.
  • A decision in the Third Circuit casts doubt upon Judge Weinstein’ reasoning. That case – United States v. Atiyeh – held that the operation of a sports-betting business violated the IGBA because it violated state anti-gambling laws. There was no proof in Atiyeh that running a sports betting operation was "gambling" as defined by the IGBA, but the Third Circuit did need that to establish liability. Instead, the Third Circuit was satisfied that a business that met the state law definition of gambling was "gambling" for the purpose of the federal law. That was not the reasoning adopted by Judge Weinstein. Judge Weinstein held that the business must also be "gambling" as defined by the IGBA for there to be an IGBA violation. Thus, there is a conflict between this case and Atiyeh, and it could be the basis for an eventual appeal to the Supreme Court.
  • By pointing out that the IGBA is not sufficiently clear as to include poker in its definitions, this gives Congress the opportunity to revise the statute so as to explicitly include poker games.

Why This Matters:  The decision is important because it shows a trend toward the liberalization of laws and interpretations regulating poker. If Judge Weinstein’s reasoning is upheld, it could be the basis for future actions designed to establish poker as a legitimate business operation under federal law. This could also have a collateral effect on helping clarify the line between legally permissible promotions and illegal gambling.

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