Friday, October 13, 2006

Game On


PokerStars, the second largest online poker company, should put on a clinic in the art of statutory interpretation. They're currently doing quite the interpretive two-step in response to some anti-gambling legislation that Congress unexpectedly passed last month as a rider to a pretty uncontroversial port safety bill. The Unlawful Internet Gambling Enforcement Act purports to ban basically all online gambling, something it defines as "a sporting event or a game subject to chance." So what is an online gaming company to do? Well, PokerStars just announced that its lawyers have determined that the Act doesn't apply to it. How might it make such a claim that you ask? Simple... because Poker is not a game of "chance," but of "skill."

13 comments:

Alice said...

"a sporting event or a game subject to chance." --- well there goes online dating :).

BA said...

I think there are a lot of attorney's who will rip that statutory language to shreds. Additionally, there is a lot of "proof" that poker is no less a game of chance than the stock market. I would love to hear the oral arguments over this one. The main problem is statutory intent is pretty unambiguous...

Marc said...

Legislative intent?! Oh BA... Justice Scalia would be so disappointed in you.

Anonymous said...

unambiguous indeed!

BA said...

I didn't mean to let my favorite Justice down. How can I redeem myself? I'll just write a really strict abortion law or maybe lobby to outlaw gay hand holding, that should put me back his good graces.

Marc said...

Just as long as you're not handing out any "special rights" now, you hear?

David Kennedy said...

Well, I suck at poker and I don't think it's because I'm unlucky. Definitely poor choice of words in defining gambling.

melbo said...

In any case it still qualifies under a "sporting event." Only true sporting events get aired on ESPN; i.e. Nascar, Texas Hold'em, dominoes, and spelling bees.

SmootheP said...

so does this mean that my high-stakes online Chutes and Ladders gaming site is going to be disbanded?

Marc said...

David - We need you drafting legislation on Capitol Hill kiddo.

Melbo - You forgot to mention Scrabble.

Smoothep - Depends on how
"smooth" your statutory interpretation skills are.

Anonymous said...

Anyone who has played Texas Holdem knows that there is a certain level of skill involved, to quote a famous movie line, "There is a reason the same people end up at the final table in the Wolrd Poker Tour every year".

I think it's tough to make concrete definitions, gambling vs. the stock market, skill vs. luck. etc.

I'd BET a million dollars that if the Us Greeedverment could find a way to tax these offshore companies, this law would have never passed.

BA said...

TFB, that famous line is not true. The same people don't end up in the finals of the WSOP. I still think a lot of skill is involved, but it is still a game of chance.

Sheldon said...

David Post at Volokh Conspiracy has a funny argument that the act doesnt actually illegalize ANY online gambling!!! An even BETTER loophole!

"The law, oddly enough, does not make it unlawful to engage in gambling over the Internet. (Of course, it's not really so odd -- if Congress actually passed such a law, and they started fining or throwing in jail individuals who use the Internet to gamble,they'd have a lot of very, very pissed off constituents on their hands.)
Instead, it prohibits anyone "engaged in the business of betting or wagering" from knowingly accepting payment "in connection with the participation of another person in unlawful Internet gambling." (§ 5363). And it requires the Federal Reserve to promulgate regulations requiring banks, credit-card companies, and other financial institutions to "identify and block or otherwise prevent or prohibit restricted transactions," i.e. those involving "unlawful Internet gambling."
But -- and this is the interesting part -- the Act doesn't itself make any Internet gambling "unlawful." It defines "unlawful Internet gambling" as "knowingly transmitting a bet or wager" using the Internet "where such bet or wager is unlawful under any applicable Federal or State law."
In other words, the act of placing the bet has to be unlawful under some other Federal or State law for it to be covered by this Act.
No provision of Federal law, at present, makes it unlawful to place a wager at an Internet gambling site. So what gives this statute teeth are the provisions of State law that do so. NOTICE TO STATE LEGISLATURES: Would you like to have about $20 billion or so directed towards financial institutions in your State? It's easy! Here's what you do: Permit Internet gambling. Say that Vermont passes a law saying that it is legal to gamble over the Internet. I could then open up a bank account in Vermont; when the offshore gambling site gets my inquiry to set up an account, I can transfer money from my Vermont account -- not illegal! -- to the gambling site, and vice versa.