Home > Blog Post > Skill versus Luck. What a great court case this would be.

Skill versus Luck. What a great court case this would be.

United States Attorney General Eric Holder (pictured) said today that there is skill involved in poker. Enough skill to be considered a "Skill game?"

Today US Attorney General Eric Holder spoke at a House Judiciary Committee meeting and was asked some questions about the Southern District of New York’s indictment of the three largest US friendly online poker sites.  The part that struck me, I think that Holder really at his core is going to see that poker is a skill game.

While Holder said that he “agreed” that the actions made sense, he wasn’t exactly a great sales person for the prosecution.  Firstly, Holder said at the committee meeting today that “We have to enforce the law as it exists and there are laws on the books with regard to Internet gambling that we have to enforce.  The case that we brought for instance in the Southern District of New York involved pretty substantial amounts of money and big financial institutions and I think those cases are appropriate.”

I’m reading a little between the lines here, but my basic thought on this quote is that the only reason that they brought the action is because these companies made so much money.  While I think that he believes the UIGEA violations occurred by the sites, I don’t think that action would have been taken if the companies were only making a few thousand bucks a year.  But because that number was around $40 Billion, well, now you have our attention.

Now don’t get me wrong, I think that the sites are going to have a hell of a time defending themselves from the allegations.  In intentionally mis-coding their deposits by saying to the Banks that the transactions were for Pet Supplies, Flowers, or Golf Balls, they showed some pretty damn shady activity.  Subsequent charges of Fraud, Money Laundering, and intent to commit these acts will prove to be an interesting battle in court however because to me, it comes down to whether or not the Justice Department is going to consider the transactions for Full Tilt, PokerStars, and Absolute Poker as “Illegal Gambling Operations.”

In short, is the game of online poker considered illegal according to the law?

This is really going to be the key argument if this trial ever sees a courtroom.  The issue itself is as Grey as the Asian Elephant that I saw that the L.A. Zoo with my family this weekend.  There isn’t a law that specifically says that the game of poker is illegal.  If it IS illegal, then I don’t know why they would permit those games in casino’s and card room’s across America in several states, and permit a legalized online poker law in the District of Columbia (Washington D.C. passed a law allowing online poker to residents of D.C. earlier in April).  But poker walks a very fine line between gambling and a game of luck, versus being a game of skill.

Proponents of poker will argue vehemently that poker is really a skill set, more akin to Tennis or Golf.  Obviously in those types of games, luck can play a roll (a ball can take an odd spin in Tennis off of the line, or hit the top of the net to change directions…or in Golf, a myriad of “lucky” things can happen).  When you think of those games, the best players win consistently, which provides evidence that they are games of skill.  The same applies in poker where there are a number of people (i.e. Phil Ivey, Daniel Negreanu, Erik Seidel, Jason Mercier, Vanessa Selbst, just to name a few) that just seem to win, and keep winning, year after year, tournament after tournament, and are considered favorites every time they take a seat at the table.  Why is that?  Are these players just luckier than the rest of the world?  Or are they the best in the game?

That question was asked today at the hearing by Senator Steve Cohen (D-Tennessee) who asked ““Do you think Phil Ivey is just lucky, or he is the world’s greatest poker player?”

Holder side stepped the question saying “I am not sure I know who Phil Ivey is, but I am sure there is some degree of skill that is involved, some degree, I am not a poker player myself.”  Well if the DOJ wants to do their homework on skill versus luck, they’re going to have to get very familiar with who Phil Ivey is, as well as several thousand other excellent poker pro’s who have made their living playing this game all over the U.S. and other areas of the globe.  It will be interesting to see how the prosecution for the US Department of Justice will attempt to defend this argument when they’re put up against the results of some of the best players in the game.

To make a comparison, I think Tiger Woods would beat me in match play every time that we play a game of golf, and I believe that Rafael Nadal would clean my clock in every game of tennis that we play.  But if I sat down with either of those guys at the poker table, I think that I have an edge because I’m a more experienced player than either of them, and I don’t consider myself that good of a player.  Put them up against the best in the world (maybe heads-up No Limit Hold’em over 4 tables versus isildur1 or Pot Limit Omaha versus Durrrr), and I don’t think that Nadal or Woods would stand a chance.

Holder went on to explain that it’s up to Congress to clarify the laws on online poker, but added that the Justice Department will enforce the law as it currently exists. He said the Justice Department’s criminal division in Washington D.C. did coordinate with the prosecutors in Manhattan who brought the recent action against the online poker industry’s biggest websites.

The bottom line is, Poker is a skill game.  You can’t get around that fact.  But it will be up to the courts to decide what happens here, and I for one, hope that this sees a courtroom so that we can once and for all, get a decision on the books that gives all of its opponents the truth, and hopefully brings our game back to us.

  1. May 5th, 2011 at 02:07 | #1

    http://www.taxfoundation.org/taxdata/show/23034.html

    Average combo (state and federal tax rates) corporate tax rate 39.3%

    http://thehill.com/blogs/hillicon-valley/technology/156655-rep-barney-frank-blasts-obama-admin-for-online-poker-crackdown

    Biggest sites saw $16 billion in wagers for 2010

    So according to the statutory rate of 39.3% * $16 billion, the IRS and state governments could collect $6,288,000,000 or $6.2 billion if you want to be conservative with the revenue base.

    http://www.justice.gov/jmd/2011justification/pdf/fy11-fbi-justification.pdf

    Checked out the FBI’s budget request for FY 2011, they requested (an increase) a little over $75 million for white collar crimes (money laundering and fraud). It’s on page 2-1.

    So instead of fighting congress for more money during a time when the revenue base is dropping like flies, Congress should legalize gambling, tax it and have an extra $6.2 billion for the budget. This way the FBI would not have to fight for expense increases and not have to use valuable resources cracking down online poker.

    Okay, so you say gambling is an addiction and needs to be outlined online, then why is alcohol and smoking legal? Drunk drivers kill people every year (our family just spends holidays at home to avoid the risk), yet alcohol is sold and taxed like any other business. And of course cigarettes, there was a time when Mike Wallace would introduce himself and say, “The cigarette if Phillip Morris and I’m Mike Wallace . . .“ What happened? I don’t know. All I know is that all vices kill: sugar=diabetes, beef=cholesterol, etc. etc.

    Also approach legalized online gambling as a cluster industry, one job in online gambling creates other jobs. Think about it, online poker sites had creative ways to get money to clients, once legal they can just hand their accounts to paypal and verisign, both IT firms that can hire the countless experienced professionals I know who were unemployed when Obama was elected and still unemployed (not much Change there).

    And finally, don’t regulate it. Regulating it means forcing taxes on the industry that turn into earmarked revenues to pay for guess what? Another regulatory agency! Simply let the customers decided which online sites will pay them quickly and be honest when hosting online tournaments.

    What’s that? You think it is the government’s duty to regulate this industry (if legalized). Then why don’t they regulate people who write software? That’s right, anyone, and I mean ANYONE can write software, sell it or distribute it freely (That’s called Linux or Gnu). So why do I need a license to serve alcohol, serve food and cut hair. Yet I can write software which affects our lives every day, completely unregulated?

    Cheers to Freedom . . . and Pablosplace!

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