Player Protection for Recreational Games
Legislative Proposal: Recreational Game-Playing
Posted Jan 1, 2006
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WHY WE NEED PLAYER PROTECTION It is time to take a fresh look at some of our traditional laws that control gambling and game-playing. There is no state that has an ideal set of gambling laws at this time; most have serious deficiencies. Some of these laws are recent, but many of them date back to the 19th century, and are clearly out of touch with modern society mores, practices, and needs. The current climate, where nearly all states have lotteries, many Indian casinos have been legalized, and poker tournaments for huge stakes are frequently televised, is obviously a lot different than even a couple of decades ago. Gambling is legally defined by state laws in a manner similar to this: " Gambling means staking or risking something of value upon the outcome of a contest of chance or a future contingent event not under the actor's control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.” This definition is normally followed by exempting activities that, while clearly gambling, are legal and accepted in our society because of their extensive use in the business world. Examples of such activities are buying insurance or trading in stock options. Most states then define gambling as illegal unless otherwise specified as allowed. A few states do not declare gambling to be illegal per se, instead stating under which circumstances gambling becomes illegal. Let us look at the type of state laws controlling gambling that we have on the books now to see what needs to be done. All fifty states prohibit unlicensed gambling “as a business,” meaning you cannot generate house revenue through methods like raking a poker game or charging a fee or commission to those who bet on the outcome of a contest such as a sporting event unless you are either specifically licensed to do so by the state or, in many states, you offer a guaranteed amount to participants in the prize contest, or the prize pool is made up exclusively of “bets” made by the participants among themselves[1]. We have no desire to change this portion of anti-gambling laws. At present, there are two basic types of gambling activity that are not allowed. One is where you bet on the outcome of an event that you do not control, such as sports betting and lotteries. The other is betting on yourself. Laws prohibiting sports-betting and lotteries (other than licensed sports books and state-run lotteries) are in place for all fifty states. It is only the laws that involve betting on yourself that are the type we seek to change and improve. One of the legal devices used by states to allow certain types of gambling activity is to put in a section that allows “social gambling.” Social gambling is generally defined as gambling that fulfills two conditions: no one derives revenue from the gambling (other than player winnings), and the gambling is not held in a public place. Oregon Revised Statutes 167.117(21) is an example of such a law, defining social gambling as follows: "Social game " means: (a) A game, other than a lottery, between players in a private home where no house player, house bank or house odds exist and there is no house income from the operation of the social game; and (b) If authorized [by local ordinance], a game, other than a lottery, between players in a private business, private club or place of public accommodation where no house player, house bank or house odds exist and there is no house income from the operation of the social game. All states acknowledge the difference between hosting gambling activity for compensation on the one hand and being only a “mere player” in the gambling activity on the other. Being a mere player is usually a lesser offense. Some states give the mere player protection against prosecution under certain conditions. It is our belief that all of the present methods to protect the player used by states are flawed, either by not protecting the player when he is in need of protection or by protecting the player when he is not in need of protection. Let’s take a closer look at the current methods used to protect mere players. (1) Direct player protection: There are some states that now have statutes directly exempting a player from prosecution. The laws in those states expressly say that a player cannot be prosecuted under certain specified conditions. Two of these states, Washington and Maine, do not protect the player against prosecution if the promoter breaks the law by making money from conducting the activity. Some other states, such as New Jersey, New York, Missouri, Alaska, and Oregon, are unclear in whether they protect the player from prosecution if a promoter makes a profit from the activity. The New York statute is an example. It provides: "Player" means a person who engages in any form of gambling solely as a contestant or bettor, without receiving or becoming entitled to receive any profit therefrom other than personal gambling winnings, and without otherwise rendering any material assistance to the establishment, conduct or operation of the particular gambling activity. A person who gambles at a social game of chance on equal terms with the other participants therein does not thereby render material assistance to the establishment, conduct or operation of such game if he performs, without fee or remuneration, acts directed toward the arrangement or facilitation of the game, such as inviting persons to play, permitting the use of premises therefor or supplying cards or other equipment used therein. A person who engages in “bookmaking” as defined in this section is not a “player.” NY Cons. Law Sec. 225.00(3) The New York law then defines “advancing gambling activity” as follows: 4. "Advance gambling activity" A person "advances gambling activity" when, acting other than as a player, he engages in conduct which materially aids any form of gambling activity. NY Cons. Law Sec. 225.00(4) These statutes are unclear because the first part of the statute, defining “player,” does not exclude any situations from player protection, but the second part, describing what constitutes “material assistance,” gives protection only if the activity is a “social game of chance.” This runs into the problem that if the house has income from the game, then the game is not a “social game of chance.” Kentucky does essentially the same thing as New York, but puts the “social game of chance” clause in the “advancing gambling activity” definition that determines when the player protection is applied. In other words, it could be argued that the construction used by the other states directly giving player protection suffers from the same flaw as in the Washington and Maine player-protection statutes. That is, when the house breaks the law by making a profit, the player can be prosecuted for playing in such a game. It appears that the states that explicitly confer some protection to the player do so in an unambiguous manner only when the house does not profit from the gambling activity. (2) Indirect player protection. The “New York approach” to gambling laws, which is followed in many states, is to declare that any form of gambling not authorized by the state is “unlawful gambling.” Delaware uses this method, declaring “All forms of gambling are prohibited in this State except the following:...” Delaware State Constitution, Art. 2, § 17. However, protection against prosecution of players is effectively provided without even mentioning the word “player.” Delaware Code Sections 1401 through 1405 list penalties for things such as keeping a gaming house and unlawfully disseminating gambling information, but does not provide a penalty for gambling by the player (with the exception of playing in certain lotteries and the playing of craps). So, while it is technically against the law to be a player in Delaware, there is no penalty specified for it. Pennsylvania follows this same approach. Penn. Cons. Stats. Secs. 5512 through 5514. Several states do not specify gambling as such to be against the law, but designate certain gambling activities as illegal. Jurisdictions taking this approach include Montana, North Dakota, Wyoming, and Washington DC. Activities that are disallowed include “professional gambling,” “public gambling,” “keeping a gaming table,” and “maintaining gambling premises.” Because participating in the prohibited activities is not expressly stated to be illegal, the player is effectively protected against the charge of illegal gambling. Two states, North Dakota and Louisiana, define gambling in a manner that differs from both the definition used in any other state and the ordinary meaning of the word gambling as used in normal discourse. North Dakota law states: "Gambling" means risking any money, credit, deposit, or other thing of value for gain, contingent, wholly or partially, upon lot, chance, the operation of gambling apparatus, or the happening or outcome of an event, including an election or sporting event, over which the person taking the risk has no control. N.D. Century Code Sec. 12.1-28-01(1) North Dakota goes on to prohibit running a gambling house other than a private residence, and has this to say about a player: “It is an infraction to engage in gambling on private premises where the total amount wagered by an individual player exceeds twenty-five dollars per individual hand, game, or event.” N.D. Century Code 12.1-28-02(1) Louisiana defines gambling as: “Gambling is the intentional conducting, or directly assisting in the conducting, as a business, of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit.” Louisiana Rev. Stat. Sec. 90 A(1)(a). Louisiana then goes on to define “gambling in public” in a stricter manner. The net result is the player is protected against prosecution unless he gambles in public. In our opinion, all the present state laws that appear to protect the player have serious drawbacks. Either the player is not protected if the house makes a profit in running the game, or the player is protected even in situations where he is playing a hard-core casino gambling game such as craps or blackjack. We advocate reaching a middle ground, where the player is protected when playing social games of mixed skill and luck other than in what is clearly an illegal casino. This approach is particularly pertinent now that we have a boom in poker tournaments. In some of these tournaments the house makes a profit, and in others it does not. Sometimes the activity is lawfully run by a legal charity entitled to make a profit. Other times it is run by someone incorrectly claiming that status. The player faces a difficult task in determining whether the activity is lawful, especially where law enforcement authorities have previously tacitly countenanced the activity. The distinction between a game played for money where no one makes a profit and one where someone makes money is rightfully a very important difference. As stated before, the house profiting by gambling activity without being licensed to do so is against the law in every state. But we ask why the player should be penalized if the house breaks the law. He often is not in a position to know what gambling is legal and what is illegal. A West Virginia legal decision states that “The provision of our statute against gaming...is intended to prevent gaming from becoming an annoyance or a nuisance to the public, and not specially to suppress gambling as a vice per se.” (State v. Brast, 1888, 7 S. E. 11, 31 W. Va. 380). Many states function as if this is their philosophy. This is certainly reflected in law enforcement practices, which often vary substantially even under the same gambling laws within a single state. Law enforcement authorities are given wide discretion in how they enforce gambling laws. This may lead to a player drawing the wrong conclusion. He may pay more attention to how the law is enforced than what it says, assuming erroneously that an activity being openly carried on is fully legal, or will at least be tolerated. Suppose a player wants to take precaution against being prosecuted by finding out for sure whether an activity is illegal. What could be more reliable than going to the State Attorney General’s website to determine if entering a poker tournament would be breaking the law? Here is the “answer” he would be greeted with in Michigan: “Whether a given promotion is a game of skill or a game of chance depends on the skill level of the participants and the predominance of skill or chance. It is not advisable to offer generalizations in cases where aspects of both skill and chance are present, as the determination is specific to the facts and circumstances of a particular case.”. The determination of whether skill or chance predominates at poker is one that is debated constantly among poker players. Some state attorneys generally have noted that poker may be a game of skill. Others say that it isn’t. Case law generally holds that it is not, but also holds that the determination of whether a game is one in which the elements of skill predominate is a question for the trier of fact in an appropriate court proceeding. This could make for a costly lawsuit. So, the player is back to square one. Is it any wonder a player often assumes that a contest which is openly advertised, proclaimed by the sponsor to be legal, and held in a place such as a reputable hotel’s convention area is a legitimate activity? Here are some practical examples taken from real life of situations where a player might conclude that a certain gambling activity is reasonable to indulge in, where it is quite possible it is actually illegal.
In all of these situations, it is highly unfair to hold the player responsible for what the entity hosting the activity does. Charge the host with a gambling crime if need be, but don’t prosecute the players, who derived no profit from the illegal activity. In the corporate world, when a company breaks the law, is everyone who works for that company held responsible? Of course not; just the policy makers and the people who rake in the profit. Why should a gambling violation be any different? Do not think that a gambling violation is always a mild infraction that only results in a small fine. In a number of states, a second conviction on a gambling charge is a felony. In Oklahoma you can get up to ten years in jail. There is also the problem of how a gambling activity is shut down. What actually happens when an illegal gambling activity is raided by the police? Here is an account of such a raid, which occurred in 2005, written by one of the players. We wish we could tell you this was a highly unusual type of police raid, but it is not. “I was playing in a little $100 buy-in no-limit tourney at an apartment complex clubhouse in a nice subdivision, in the middle of a Saturday afternoon, with a group of sixteen corporate America type guys just having a fun time. Two hours into the tournament, police officers came busting into the clubhouse just like something off of the TV show COPS, guns drawn, literally shoving us on the floor with guns pointed at our heads. They yelled, “Warrant; get down on the ground and don’t move.” They held us on the floor for some time handcuffed behind our backs until they made sure the room was "Clear," why I still don’t know. They searched our cars and left no item unturned or in the order it was. My wife unfortunately pulled up the clubhouse with my two children in the back to let me know she was on her way to a birthday party, and the police stopped her told her to turn off her car and get out and proceeded to question her, finally telling her to leave. Anyway, they made us post $450 bail and said they would give us a court date to appear. They confiscated everything, the chips, computer that was running the clock, cards, the payout money that was in the hosts pocket, and even my money clip that was on the table without money in it. I asked if I could have it back and they said it was evidence.” Our approach to the need for player protection is based on looking at the basic nature of the game being played. Is it a recreational game that is being played for money, or a hardcore casino gambling game? We define recreational games as those of mixed skill and chance such as poker, backgammon, bridge, and scrabble, which feature players competing only against each other. They should be treated differently under the law than casino gambling games that are played against the house. Despite the fact that each of these recreational games uses a randomizing agent such as cards, dice, or tiles, which inject a luck element, these games are a lot closer to games of “pure” skill such as chess that lack a formal luck factor, where players often compete against each other for money. In fact, despite the luck element, these games are in many respects more like games of pure skill such as chess or go. True, the luck element gives less skilled players a better short-term chance to win. On the other hand, look at some of the similarities to games of pure skill: (1) The player has decisions to make that can greatly influence the result. (2) A great deal of skill can be present even when luck is involved. For example, bridge is nearly as difficult a game to play at the highest level as is chess. (3) Experience allows continual improvement in play. (4) There can be extensive literature on the various strategies used. (5) Psychology can play a major role. (6) Mathematical knowledge can be of great importance. (7) There is a strong social element present when playing. (8) If the game is played for money, the opponents are other players competing under the same rules, rather than a house employee with a fixed strategy and built-in advantage. What all this means is that a recreational game having a luck factor, when played for money, gives not just whatever pleasure comes from the gambling portion, but also the joy of using one’s knowledge and experience to great benefit. A recreational game played for money is a lot closer in character to games of pure skill played for money than it is to a casino gambling game. We believe that the laws governing recreational games should not be identical to the laws governing hard-core casino gambling games. Yet in many areas of gambling law, this distinction is not made in legislation. A poker tournament for prizes or a bridge tournament with prizes is treated just like a slot-machine tournament or a blackjack tournament, instead of more like a chess tournament for prizes. Here is an example of equating a recreational game (poker) the same as a casino gambling game under the law, as excerpted from an Oregon anti-gambling statute: “(4) Casino game means any of the traditional gambling-based games commonly known as dice, faro, monte, roulette, fan-tan, twenty-one, blackjack, Texas hold-’em, seven-and-a-half, big injun, klondike, craps, poker, chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of fortune, chemin de fer, baccarat, pai gow, beat the banker, panquinqui, red dog, acey-deucey, or any other gambling-based game similar in form or content.” Oregon Rev. Stats. Sec. 167-117(4). (Emphasis supplied.) The problem with the above law is that does not distinguish between a hardcore casino gambling game, where the player is pitted against the house, facing adverse odds, and a recreational game, where the player competes against only other like-minded players, using equal conditions. A situation where the house is not a participant and does not care who wins is fundamentally different from a regular casino gambling game. Financial disinterest in the outcome is much more likely to produce fair conduct of the game. We believe there is a pressing need to create a term that we can use in player protection laws that describes a game of mixed luck and skill where the players compete only against each other, not against the house, irrespective of whether the house makes a profit or not. Hence, we coin and define the term “recreational game-playing” to refer to such games. We believe the need for player protection in many gambling situations has been clearly demonstrated. Our suggested law avoids some of the pitfalls that exist in the legislation passed by those states sharing this view. We do not permit player gambling activity at games like blackjack or craps, where the player is well-placed to know that the activity is illegal. On the other hand, we do not punish a player for the transgressions of the promoter in the situations where someone makes money off gambling at a recreational game such as poker or bridge. We believe the gambling law suggested here is efficient for restricting player protection to only those who need it, yet does not unduly interfere with shutting down gambling that has become a public nuisance. No gambling activity that the state wishes to make illegal is allowed to be carried on under this law. All our suggested set of laws does is make sure that the private citizen who misjudges the legality of a recreational game-playing activity is not held responsible for someone else’s profit-making. [1] There are several sources of the “participant exemption.” One is the theory that the “entry fee” in a prize contest in which the player participates, such as a sporting tournament, like golf, does not constitute a “bet,” at least in situations where the prize is a guaranteed amount and the person putting up the prize cannot recover it under any circumstances. See, Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85, 77 Nev. 25 (Nev., 1961). The other is exemptions for games of skill, such as contests among the participants in skill-based sporting events like golf. These exemptions arise in one of two ways: a specific statutory provision or the application of the so-called dominant factor test in interpreting what constitutes gambling under the given state’s laws. An example of a specific statutory exemption is Colo. Rev. Stat. § 18-10-102(2)(a), which exempts from the definition of gambling bona fide contests of skill, speed, strength, or endurance in which awards are made only to entrants or the owners of entries. An example of the application of the dominant factor test is provided by several New York cases which effectively held that wagering by the participants on the outcome of a game of skill is not gambling because the element of chance had been eliminated. That is, a game of skill “is one where the player predominantly has control over the circumstances of the game, where the element of luck or chance is subordinate to the proficiency or skill of the player in the determination of the outcome of the game.” People ex rel. Love v. Schapiro, 77 N.Y.S.2d 726 (N.Y. 1948). See also, People v. Hunt, 616 N.Y.S.2d 168, 162 Misc.2d 70 (N.Y. City Crim. Ct., 1994) (holding that three-card monte is a game of skill.) |
TEXT OF PROPOSED LAW Purpose: This law is designed to protect a mere player who wagers something of value in recreational game-playing against prosecution for illegal gambling. This law does not protect the house from prosecution for illegal gambling. Definitions: Recreational game-playing: Means the play of a recreational game where: (1) No player receives any economic benefit other than personal winnings, (2) Except for the advantage of skill or luck, the risks of losing and the chances of winning are the same for all participants, and (3) The house does not have any financial interest in the outcome of any game or series of games other than as a mere player. Recreational Game: Means a mental contest of mixed luck and skill played with cards, dice, tiles, or some other like agent that produces a luck element, or a game lacking such a luck element that is considered to be a contest of pure mental skill. Recreational games include but are not limited to: poker, bridge, gin, hearts, euchre, pinochle, backgammon, Monopoly, Scrabble, dominos, chess, and go. A game that is primarily played as a casino gambling game where the player wagers against the house, such as blackjack or craps, is not a recreational game. Contest of mixed luck and skill: Means the play of a game that possesses an element of luck, but also contains substantial, though not necessarily predominate, elements of mental skill. A mental skill element is present when a game’s essential nature gives a player material decisions to make that may affect the outcome of the game to a significant degree, and where the player’s strategy is affected in some measure by what strategy the opponent adopts. A game whose essential nature lacks a skill component does not become a contest of mixed luck and skill by introducing decisions as which tournament strategy to adopt. For example, a game such as craps normally involves decisions of only of how much to bet and which bets to make or avoid, so lacks a skill element as defined herein. House: Means the person or persons offering, hosting, or supervising the game. Player: Means a person who is solely a contestant, wagering only on himself or herself, without receiving or becoming entitled to receive any profit from that particular gambling activity other than personal winnings. Player Protected : The status of being a mere player in recreational game-playing shall be a defense to any prosecution under a state anti-gambling law, even if the game as played is subsequently determined to involve the house as being in violation of such an anti-gambling law. |