On Tuesday, the Federal Circuit Court for the Second Circuit handed down a surprising decision that some are claiming will have a monumental impact on the online poker industry.

DiCristina Case Background

As we previously discussed, early last year, the United States Department of Justice brought an action against Lawrence DiCristina for operating an illegal Texas Hold ‘Em tournament on his property, allegedly in violation of the Illegal Gambling Business Act (“IGBA”).  Under the IGBA, an illegal gambling business is defined as “includ[ing] but . . . not limited to pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein.” 18 U.S.C. § 1955(b)(2).

DiCristina moved to dismiss the indictment, asserting that poker does not fall within the definition of an illegal gambling business under the IGBA due to the fact that poker is predominantly a game of skill, rather than chance.  At trial, the defendant was convicted.  On appeal, the District Court Judge for the Eastern District of New York, Jack B. Weinstein, overturned the conviction, finding that:

[P]oker played on the defendant’s premises is not predominately a game of chance, it is not gambling as defined by the IGBA. That the statute was targeted at limiting the influence of organized crime, and organized crime groups have operated poker games beginning in the years since its passage, does not retroactively change the statute’s scope.

In ruling that Texas Hold‘em is a game of skill, Judge Weinstein noted that “[e]xpert poker players draw on an array of talents, including facility with numbers, knowledge of human psychology, and powers of observation and deception.”

DiCristina Ruling Overturned

The United States Department of Justice immediately appealed the DiCristina ruling and on August 6, 2013, the Circuit Court for the Second Circuit handed down its opinion, reversing the District Court, and finding that the plain language of the IGBA covers DiCristina’s poker business.  Therefore, the Circuit Court remanded the case back to the District Court with instructions to enter a judgment of conviction on both counts, and ordering the District Court to proceed with sentencing DiCristina.

Is Poker a Game of Chance or Skill?

The Circuit Court declined to address this issue, stating that “the question of whether skill or chance predominates in poker is inapposite to this appeal . . . [because] [t]he language of the statute is clear that it contains only three requirements . . . all of which were met in this case.”   Those three requirements are as follows: 1) the gambling business violates the law of the state in which the business is conducted; (2) the business involves five or more persons who conduct, finance, manage, supervise, direct, or own  all or part of such business; and (3) the business has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.  It was not in dispute that these three requirements were met in the case of DiCristina and, under New York law, courts have long considered that poker contains a sufficient element of chance to constitute gambling.  See N.Y. Penal Law Section 225.00(2).

It is important to note that the Circuit Court did not disagree with the District Court’s finding that poker is primarily a game of skill; it just did not believe that such a finding was relevant or necessary to enforce the IGBA.

Takeaway and the Effect on Internet Poker

While the decision by the Circuit Court is a small setback for online poker, it is by no means a death knell for the industry.  So long as the individual state’s laws do not outlaw the type of gambling in question, the IGBA has no effect and with several Federal Online Poker Bills alive on the Congressional floor, the fight for online poker becoming a reality across the U.S. is far from over.