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February-17-2008,
Poker Dealt a Big Blow in the UK...By Hartley Henderson

Robert Wexler's bill to legalize skill-based gaming online is still on the table in Congress. If the bill is ever adopted then all games that are predominantly based on skill would be exempted under the UIGEA. In his reasoning for introducing the bill, Wexler specifically mentions poker as a game of skill that should not be illegal since it is normal for people to profit as a result of their skills. The following is his exact wording:

Playing poker is not a crime. Rather than pretend online poker does not exist, as current law does now, the United States should address it in a pragmatic way and regulate it, similar to how states control lotteries. To accomplish this, I have introduced the Skill Game Protection Act. Under the Skill Game Protection Act, games of skill, such as, poker, mah-jong, bridge, chess, and others will be classified by law as games of skill. So long as participants compete against one another, and not "against the house," these online games will be legal. Along with the allowance of skill-oriented games, the bill includes safe-guards to prevent minors, and those with, or likely-hood of having, a gambling addiction from participating in online gaming. The bill also protects American's basic privacy rights and security from fraud or money laundering.

The implicit suggestion in that statement is that when determining what entails "skill" others in congress, as well as the DOJ, will agree that so long as two or more people are betting against each other and not against the house then the game will be deemed as skill. If, either congress or the DOJ do not agree with that definition, however, then his bill may be meaningless. Clearly Wexler is confident that his definition of skill will apply to online poker. However, if that is the case, Wexler may be in for a rude awakening. Last week in a landmark ruling, a British court considered a case of whether a poker room was operating illegally in Britain. David Kelly, the chairman of the Gutshot Club in London, England was charged in 2006 with illegal gambling because he was operating a poker room and charging rake without a license. Under a 1968 law, any establishment in the UK profiting from games of chance must obtain a license to do so. The law, however, makes an exemption for any games that are predominantly based on skill. Kelly's lawyers argued that Gutshot was operating legally because poker is a game of skill and hence exempted under the law. The prosecution, however, argued that poker is not a game of pure skill but is a combination of skill and luck with luck playing a major role in the outcome. The prosecution's argument centered on the fact that cards are shuffled before each hand and the cards the players receive are obtained purely by luck. As well, many hands of poker are won and lost by the luck of the draw which would not happen in a game of skill. In a game like chess there is really no luck at all as the outcome relies solely on the players' skill set. Obviously in any game people make mistakes, but it's hard to argue that Bobby Fischer beat Boris Spassky in their epic match predominantly because of luck. Sure, Kasparov made errors that allowed Fischer to win, but it was up to Fischer to notice the errors and capitalize on them. In hold'em poker, however, when a player with pocket aces loses to someone with pocket eights after an 8 comes on the turn, it is hard to argue that was a result of anything but luck.

The jury sided with the crown and found Gutshot poker room guilty of breaking the 1968 gambling act, agreeing that poker is predominantly luck with some skill thrown in. It may seem somewhat irrelevant to many readers in the United States what a UK court decided since U.S. ruling bodies generally don't care what foreign jurisdictions decide in their own countries. Without question, however, members of the department of justice that want online poker made illegal will definitely use that decision to their advantage. The DOJ will surely be taking notes from that decision to use in any hearing regarding Wexler's bill. As well, they will almost certainly quote the decision as "precedent" when presenting their side. The Department of Justice may have had no problem telling Britain to mind their own business when the UK government approached the U.S. suggesting they attend a meeting to discuss online gambling regulation, but they will likely be only too happy to borrow reasoning and quote decisions from Britain that supports its own agenda. So the question has to be asked: is poker mainly based on skill or luck? And is the ruling in Britain a good one? In a statement provided to me for a different article last year, famed lawyer Alan Dershowitz obviously believes poker is a game of skill. "I play (poker) against the same people all the time and we all know who the best players are. Sometimes the best players don't win but each of us can easily point out who is the best player, 2nd best, etc. and that's skill."

Fellow Harvard professor Charles Nesson seems to concur. In fact, Nesson has gone a step further and created the Global Poker Strategic Thinking Society (GPSTS) which not only aims to prove that skill is paramount in poker, but also aims to demonstrate how online poker can help with strategic thinking to benefit people in day to day life. In a press release issued last year when creating the group, Nesson stated the following: "The formation of GPSTS comes out of using poker as a highly effective educational tool at Harvard. We believe that poker can be a superior means of teaching critical life skills including negotiation, resource management, risk assessment and numeracy." In fact many chapters of GPSTS have since formed at other universities. In an episode of The Colbert Report Nesson added, "Poker is the quintessential American game. Your move depends completely on what the other player does." The show aired on Comedy Central so the information Hesson was trying to relate was lost by the innate joking of the host, but to anyone who was paying close attention the message was clear - poker is a game of skill where the best players will win in the long run as a result of their strategic play. If that same strategic thinking is applied in other day to day decisions, in the end the person and American society will benefit. Furthermore, it is anti-American to punish people who engage in activities that can further their lives as long as it doesn't physically harm others. Colbert actually suggested if that was indeed true, then the players could still benefit from poker without actually putting money on it. However, what was not mentioned in the show is that the money aspect of poker is essential if the game is going to be meaningful. Not only does betting add to the enjoyment of the experience, but more importantly in non-money games strategy (skill) usually isn't used. Anyone who has played the free online games will understand that concept. More often than not, in the "play money" games or tournaments offered at all online poker sites, strategy is irrelevant. More often than not in these play money games someone will bet before the flop with 2-9 off-suit and will be called by 3 others with other garbage hands because there is no real incentive to win. If a player busts out, big deal; they will take more play money to the next free online game where they can make another stupid move. When money is at stake, on the other hand, the mindset changes and the players act in a more strategic manner.

When I discussed the topic of skill with a poker room manager at a nearby casino, he agreed with Hesson. "Poker is all about strategy," the manager told me. "I spend upwards of 10 hours a day watching people play poker and I know within 5 minutes whether someone will be ahead when he or she leaves the poker room or not. They may start out strongly, but if they are not skilled players they will lose in the long run." The manager continued, "This is especially true in tournaments. We run 2 large tournaments a week and in the end the final table always consists of the players who are good. Bad players may get lucky and win at the beginning, but they never last until the end. Poker is all about odds and strategy and there is no way to beat that. Name me one time an unskilled player has made the final table of a World Poker Tour tournament?"

When asked about the UK's decision that poker is mostly luck, the poker manager laughed. "Everything in life has some measure of luck," the manager commented. "Driving a car involves skill and luck. You are rewarded with a driver's license because of your skill, but often you end up in accidents because of bad luck or because of someone else's poor skills. In the end if you are a good driver you will get rewarded with lower insurance rates. If you're a lousy driver you will get higher rates, tickets or even lose your license. It's the same with poker. Many hands will be won or lost because of luck, but in the end skill will prevail."

Those comments of course are true. Even in sports, players make the big leagues because of their skill, but often even the most skilled players will experience good or bad luck. Martin Brodeur has been a standout goalie in the NHL for years and is deemed one of the best in the game. Yet often a puck will ricochet oddly off a board and end up in his net or a player will often score when Brodeur is screened and can't see the puck. Consequently Brodeur will lose many games for reasons beyond his control or he may simply have a bad game. But when it comes to being rewarded with contracts, the New Jersey Devils ignore those "lucky goals" or bad days and instead only care whether Brodeur's skills will win them more games than not in the long run.

Assuming Congress and/or the Department of Justice concede that poker is a game of skill, so what? Why should someone benefit from gambling because of their skills? The answer to that question again can be implied by statements from Hesson and the GPSTS--- namely because it is quintessentially American. Throughout life Americans have been told that if they work hard and apply their skills they will be rewarded for it. If someone has skills that a company needs then the company will hire them and will reward them monetarily. If the person is good at his trade he will keep his job and perhaps get a raise. If he does not possess the necessary skills he will lose his job. Similarly, with investments if someone is skillful and invests wisely and strategically he will make money in the long run. If he is not skillful or does not invest strategically he will almost certainly lose that money. Even in schools many try out for team sports. Those with the necessary skills will earn their chance to participate and the lucky few will go on to the major leagues. The majority, however, will learn quickly that they aren't good enough and will have to go a different way. So the simple answer to the question of why Americans should be allowed to gamble on skill games online is that if someone has a skill (that happens to be internet poker) then they should be allowed to profit from it just as a skilled investments trader should be able to profit from online stock trading. As well, poker is an American tradition. The Poker Player's Alliance perhaps has summarized it best on its poker talking points page where it states the following:

"Americans have played poker throughout history. Playing poker on the internet is simply an example of an American tradition evolving into the 21st century. It is unfathomable that poker, an American pastime and game of skill, should be banned for the millions who enjoy playing responsibly."

The British courts correctly ruled that poker is a combination of skill and luck. But to suggest that luck plays more of a role than skill is simply untrue - at least in the long run.

02-17-2008
Hartley Henderson
MajorWager.com
henderson@majorwager.com

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