Is Poker Gambling?

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The standard dictionary definition of gamble, as it relates to games, has two parts:

a. to risk something of value (money) on an uncertain outcome;
b. to play a game of chance for stakes.

Traditionally, state laws that outlaw gambling – usually exempting gambling at regulated facilities, state lotteries and sometimes charitable enterprises – include two classes of gambling which match these two definitions.

The first class is betting on the outcome of some sort of sporting event or contest between others, or some other event whose outcome is unknown. This we commonly call bookmaking. It is also probably the most common type of social betting (private betting amongst friends, family and co-workers), covering bets on such things as sports pools, fantasy sports, etc. (This is also the type of gambling that is outlawed by The Professional and Amateur Sports Protection Act and The Wire Act, federal laws which both specifically address sports betting.)

The second class of gambling is wagering on games of chance. These are mostly the games which we consider casino gaming, plus the various numbers games such as lotteries. The house is always the long-term winner at these games because the payout structures are designed to give the house a statistical edge and either there is no skill the player can apply to influence the outcome or the influence of a player’s skill is too small to be able to overcome the house edge – chance still predominates. You also find in this class of gambling the street confidence games, such as three-card monte and the shell game, operated by unsavory characters who, through legerdemain or other deception, manage to always win.

There is also a third class of gambling which fits the first part of the dictionary definition: wagering by a participant in a game or contest of skill on the outcome. The participant, or player, is betting that he will be the winner based on his superior skill. Online role-playing games played for money, such as WorldWinner, fit this third class, as do other types of online skill games. Wagering on chess, backgammon, bridge, etc., also falls into this class of gambling.

Although this third class fits the dictionary definition of gambling, all but seven states either do not include or specifically exclude this type of skill game wagering from their statutory definition of gambling based on the “dominant factor test” (is skill or chance the dominant factor in determining the outcome of the game?), either in the wording of the state law or through subsequent state court interpretations of the law. (There are an additional four states where this test may or may not be applicable.) Likewise, where federal law touches upon the definition of gambling, this class is not included:

TITLE 18–CRIMES AND CRIMINAL PROCEDURE, PART I–CRIMES, CHAPTER 50–GAMBLING (The Wire Act)Sec. 1081. Definitions

The term “gambling establishment” means any common gaming or gambling establishment operated for the purpose of gaming or gambling, including accepting, recording, or registering bets, or carrying on a policy game or any other lottery, or playing any game of chance, for money or other thing of value.

Tournament-style games and sporting contests, where players pay an entry fee and win prizes funded by the fees seem to fit this third class as well. However, courts have routinely ruled that such tournaments are not gambling. This was reaffirmed by the U.S. District Court of New Jersey in dismissing a case brought against the operators of online fantasy sports:

Courts throughout the country, however, have long recognized that it would be “patently absurd” to hold that “the combination of an entry fee and a prize equals gambling,” because if that were the case, countless contests engaged in every day would be unlawful gambling, including “golf tournaments, bridge tournaments, local and state rodeos or fair contests, . . . literary or essay competitions, . . . livestock, poultry and produce exhibitions, track meets, spelling bees, beauty contests and the like,” and contest participants and sponsors could all be subject to criminal liability. State v. Am. Holiday Ass’n, Inc., 151 Ariz. 312, 727 P.2d 807, 809, 812 (Ariz. 1986) (en banc).Courts have distinguished between bona fide entry fees and bets or wagers, holding that entry fees do not constitute bets or wagers where they are paid unconditionally for the privilege of participating in a contest, and the prize is for an amount certain that is guaranteed to be won by one of the contestants (but not the entity offering the prize). Courts that have examined this issue have reasoned that when the entry fees and prizes are unconditional and guaranteed, the element of risk necessary to constitute betting or wagering is missing:

A prize or premium differs from a wager in that in the former, the person offering the same has no chance of his gaining back the thing offered, but, if he abides by his offer, he must lose; whereas in the latter, each party interested therein has a chance of gain and takes a risk of loss . . .The fact that each contestant is required to pay an entrance fee where the entrance fee does not specifically make up the purse or premium contested for does not convert the contest into a wager.

Las Vegas Hacienda, Inc. v. Gibson, 77 Nev. 25, 359 P.2d 85, 86-87 (Nev. 1961).

Where does poker fit in this scheme? Poker is one of class of wagering playing-card games, including baccarat, blackjack and faro, wherein players make wagers and the best hand is determined by the fall of the cards. All these games have a slight edge built in for the dealer position. (There are also house-banked versions of all these games, as found in casino table games, but these fall into the second class of gambling games as the house always has the edge by being the dealer and as well usually by specialized house rules that serve to increase the house statistical edge.)

Among these wagering card games, poker is unique. In all the other wagering card games, the wagers are placed before the start of the hand and every player stays to the end, their fate lying in the last flip of the cards. There are some small decision points that a player can make in these other games in either taking or refusing one or more additional cards. This is the only point where skill enters into these games. Although in the very long run one would expect to find that a player who is more adept at this skill would come out ahead of the others, it is doubtful that any of these other games would be classed as skill games. The deal of the cards is by far the dominant factor in determining who wins in every hand or session.

Uniquely in poker games, tactical betting takes place during the play of the hand and can affect the outcome both by changing the size of the betting pool and by causing some or all but one player to drop out of the hand. These unique factors facilitate the inclusion of a host of skills that a knowledgeable player can employ to dominate over the other players. To really understand how large a role these skills play in the outcome, one needs to separate the game itself from the factor that makes a game into gambling – the risking of something of value.

Consider a game of poker played without any buy-in or entry fee. The bets are made only with chips, which have no real-world monetary value. The game plays essentially the same, except perhaps some players will take bigger risks as they have nothing at stake. The skill set employed by the knowledgeable player remains largely the same. At every point of action, whenever the player has to make a betting decision, a very large set of skilled decisions comes into play:

Should I continue to play this hand?
How will my position at the table affect my play of the hand?
Who else is likely to be in this pot?
Are any of the other players showing tells?
Should I try to take this pot now?
Should I try to build this pot with bets for value?
What hands do I think the other players hold?
Do I likely hold the best hand?
Can I get the other players to lay down a better hand?
Are the other players showing strength or weakness?
What starting hands are the other players likely to be playing?
What are the relative stack sizes of the other players and which ones should I attack?
Can I use this hand to trap?
How do I best control the pot size?
Is a player to act after me likely to raise if I let the betting go around without a raise myself?
Should I change up my play on this hand to keep my playing style unreadable?
Should I try to isolate against one other player?
How do I best use my stack size in this hand to maximize the pot size?
What are my odds to win this pot?
How much can I win from the other players if I get the cards I need on the next draw?

All of these questions, and many others, come into play almost every time the skilled player is to act. The game is one of very complex strategy, employed at the point of each and every turn to act of the player during the betting rounds of each hand. The unskilled player may be unaware, unable or not inclined to apply some or all of these skilled decisions, but the advanced player almost always does. Put back into the game the risking of something of value, and even more skills come into play – bankroll management, game selection (which stakes), etc.

The argument that poker is a game of skill because the skilled player will statistically win in the long run is too weak an argument by itself. The same could be said of any game of any amount of skill, no matter how slight. Poker is a game of skill because the skilled player employs a tremendously complex set of skills to make multiple decisions in each hand, which will in the long run maximize his wins and minimize his losses. Yes, the chance element can override the skill in the outcome of individual hands, just as the chance element can turn play in the favor of the less skilled in any skill game. But that does not invalidate the skills used or make wrong the decisions of the player.

Is poker gambling? According to the dictionary it is, as would be any game where something of value is risked on the outcome. But poker, as played by the advanced player, is a thinking strategy game of a complex set of skills. Yes, the deal of the cards affords the poker game a much larger element of chance than found in many other skill games. But the complex array of skills put to use by the skilled poker player lets him dominate over this element of chance, making the professional player and the skilled amateur winners in the field. Legally poker should fall into the class of games of skill, not games of chance, and as such be excluded from falling under federal laws and most state laws on gambling.  It falls on the shoulders of all poker players to reinforce this reality by refusing to refer to poker as gambling and refuting the efforts of others to classify poker as a gambling game.


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