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AGAINST HOST OF HIGH-STAKES POKER GAMES. Online poker playing may have received a big boost as a result of a decision by a federal judge in New.
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SEPTEMBER 2012

ADVERTISING, MARKETING & PROMOTIONS

>> ALERT COURT REJECTS FEDERAL CRIMINAL CHARGES AGAINST HOST OF HIGH-STAKES POKER GAMES Online poker playing may have received a big boost as a result of a decision by a federal judge in New York. The decision overturned a federal criminal conviction against Lawrence Dicristina for operating an illegal gambling business involving poker games in violation of the federal Illegal Gambling Business Act (the Act). A jury convicted Mr. Dicristina, who hosted “No Limit Texas Hold’em” games, for violating the Act. He then moved for a judgment of acquittal on the grounds that a poker room does not fall under the definition of an illegal gambling business proscribed by the federal law because poker is predominately a game of skill rather than of chance. The court agreed, ruling that his acts “did not constitute a federal crime.”

A GAME OF SKILL In a lengthy and well-reasoned decision, the court pointed out that the Act does not specifically include poker as a prohibited game. The court reasoned that to constitute an illegal gambling business under the federal law, a business must operate a game that is predominately a game of chance. Poker, the court continued, is influenced by both the cards dealt (determined by chance) and the decisions made by players (determined by skill). The court found that poker is “predominately a game

of skill” and that the ability of players to influence game play “distinguishes poker from the other games, such as sports betting (bookmaking)” that are specifically enumerated in the Act. Accordingly, because the poker played in Mr. Dicristina’s games was not predominately a game of chance, it was not gambling as defined by the Act, and the court overturned his conviction.

LIMITS It is important to recognize that generally federal courts have treated poker as a game of chance and have characterized it as gambling. This case is only one federal district court decision applying the Act to poker. Thus, federal prosecutions of poker still may continue in other jurisdictions. Moreover, states maintain the ability to bar poker games under their own laws. For example, courts in New York have long considered that poker contains a sufficient element of chance to constitute gambling

THE BOTTOM LINE The ruling in the Dicristina case and the specific findings about skill predominating over chance, combined with fairly recent rulings and regulatory changes relating to fantasy sports and the applicability of the Wire Wager Act, seem to be positive steps in the direction of loosening existing restrictions on poker and other skill-based “fringe” gambling activities. Ultimately this could be a big win for companies seeking to operate in the online gaming space.

under New York law. Several state gaming laws (ranging from California and Connecticut to Idaho and Wisconsin) explicitly include “poker” in their definition of gambling or define it as a game of chance. Other states (such as Florida and Michigan) implicitly include poker in their definition of gambling. >> continues on next page

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SEPTEMBER 2012

ADVERTISING, MARKETING & PROMOTIONS >> ALERT In addition, in certain instances, state gambling laws criminalizing poker could serve as the basis for federal prosecution under the Racketeer Influenced and Corrupt Organizations Act. It should be noted

that video poker, which is “housebanked” and where players play against a machine (the house) rather than other players, may not fit within the court’s decision in the Dicristina case.

FOR MORE INFORMATION Joseph J. Lewczak Partner 212.468.4909 [email protected] or the D&G attorney with whom you have regular contact.

Davis & Gilbert LLP T: 212.468.4800 1740 Broadway, New York, NY 10019 www.dglaw.com © 2012 Davis & Gilbert LLP