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Old 06-18-2013, 06:00 PM   #1
Skallagrim
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US v. DiCristina update

The Federal case that recognizes poker as a game of predominantly skill is headed for its next Court hearing. On Wednesday, June 19, 2013 the US Second Circuit Court of Appeals will hear oral arguments in the case of US v. DiCristina.

Lawrence DiCristina is the fellow who hosted some small poker games in a warehouse in Brooklyn. Eventually the authorities discovered his games and arrested him. For reasons not entirely certain, the case was transferred to Federal authorities for prosecution. They chose to indict in Federal Court Mr. DiCristina alleging that he violated the Illegal Gambling Businesses Act (IGBA - 18 U.S.C. 1955), the same federal Statute that the online poker sites were charged with violating on Black Friday.

Mr. DiCristina, represented by attorney Neal Katyal, chose to fight the charges on the grounds that poker, being a game of skill, was not a game that could be prosecuted under IGBA. For help in this fight they turned to the PPA and its Litigation Support Team. Working directly with Mr Katyal the PPA legal team, headed by attorney Tom Goldstein, worked to produce the most comprehensive presentation of evidence yet seen in a courtroom, primarily through the expert testimony of Dr. Randall Heeb.

After all was said and done, Judge Jack Weinstein agreed with the poker players. In a 120 page opinion the judge found that 1) DiCristina had proved his point, poker was clearly a game in which skill is the predominant factor in determining the outcome; and 2) that under IGBA this fact mattered as Congress only intended to criminalize clear games of chance (that also violated state law). The charges against Mr. DiCristina were therefore dismissed.

The Department of Justice appealed. In their appeal it is interesting to note that they do not directly challenge Judge Weinstein's finding of fact that poker is a game in which skill predominates. Instead they argue that such a fact does not matter because Judge Weinstein got the interpretation of IGBA wrong.

Briefs were filed with respect to this appeal in March and April, including many Amicus Curiae ("friend of the Court") briefs in support of Mr. DiCristina and Judge Weinstein's ruling. Among the Amici were the PPA and many other lawyers and activists who have long supported the PPA (including your truly). All the briefs are available for reading at the PPA website: http://theppa.org/resources/legal/

The importance of this case is clear. The ramifications of poker not being covered by IGBA may have significant affect on the future of online poker.

Yours truly will be at the Second Circuit to hear the oral argument and will provide updates and insights as available. Although Courts of Appeals never issue rulings from the bench, and the decision in this case is not expected for many weeks, it is possible sometimes to see which way the wind might be blowing.

Stay tuned for more updates and if you have any questions about the case you can ask them here and I will do my best to answer.

And lets all wish Mr. Katyal good luck - law and poker are a lot alike in this regard, while the ultimate winner is almost always determined by skill, a little luck on your side can only help.

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Old 06-18-2013, 06:24 PM   #2
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Re: US v. DiCristina update

So what would a favorable ruling be? And if we get it, then...?
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Old 06-18-2013, 07:55 PM   #3
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Re: US v. DiCristina update

A favorable ruling would be one that upholds the lower Court decision.

Less favorable, but still important, would be a ruling that specifically accepts poker as a game of skill but overrules the lower Court's interpretation of IGBA.

Any decision will have an effect on legislation, especially Federal legislation.

Also important is how this decision will affect PokerStars in its attempt to be licensed in the US.

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Old 06-18-2013, 08:55 PM   #4
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Re: US v. DiCristina update

Thanks for the update!
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Old 06-18-2013, 10:25 PM   #5
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Re: US v. DiCristina update

Quote:
Originally Posted by Skallagrim View Post
The Department of Justice appealed. In their appeal it is interesting to note that they do not directly challenge Judge Weinstein's finding of fact that poker is a game in which skill predominates. Instead they argue that such a fact does not matter because Judge Weinstein got the interpretation of IGBA wrong.
This was sound strategy by the DOJ; it reduces their appellate standard of review and avoids having an adverse ruling with precedential value on the finding of fact that it's a skill game.
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Old 06-18-2013, 11:12 PM   #6
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Re: US v. DiCristina update

Quote:
Originally Posted by mpethybridge View Post
This was sound strategy by the DOJ; it reduces their appellate standard of review and avoids having an adverse ruling with precedential value on the finding of fact that it's a skill game.
Agreed it was the smart move for this particular case.

But by failing to challenge the ruling on the predominance of skill it can be argued that the DOJ has accepted the finding.

It is also of note that in the lower court proceedings the DOJ was unable to find an expert to testify that poker is not a game of predominantly skill. The best they could produce was an expert who questioned Dr. Heeb's conclusions but was unwilling to say they were definitely wrong.

It is a fight against a significant prejudice, the prejudice being "of course poker is a game of chance, it all depends upon the cards." As you well know, however, that prejudice is incorrect. How you play your cards is far more determinative of your results than what specific cards you are dealt.

For centuries white people thought black people were intellectually inferior. Now it is known that they were wrong. And while poker rights and civil rights are in far different categories of importance, the logical principle is the same: just because many have assumed it for a long time does not mean it is true.

Someday the truth will prevail (I hope in my lifetime).

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Old 06-18-2013, 11:28 PM   #7
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Re: US v. DiCristina update

Good luck with the case and ty for your hard work.
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Old 06-19-2013, 12:12 AM   #8
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Re: US v. DiCristina update

So would states that offer skill games be able to fire up poker now for money once this case goes through? How huge is this news on the impact of poker legislation in the future on a scale of 1-10?
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Old 06-19-2013, 12:50 AM   #9
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Re: US v. DiCristina update

@Skall: agree with you on the skill game argument being accepted in this case. Anything not appealed is conceded. So if DOJ did not appeal this finding of fact, for the purposes of the appeal, it has conceded that poker is predominantly skill.

But, as you know, that concession for the purpose of appeal gains us no legal argument in future cases. Instead, we are guaranteed a positive, but welter weight, argument based on the trial court's finding of fact. Good stuff to have in any subsequent wrangling on the subject, but not dispositive under any circumstances.
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Old 06-19-2013, 08:07 AM   #10
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Re: US v. DiCristina update

Quote:
Originally Posted by Grasshopp3r View Post
Good luck with the case and ty for your hard work.
+1
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Old 06-19-2013, 08:21 AM   #11
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Re: US v. DiCristina update

Very much looking forward to the updates today. Thank you!
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Old 06-19-2013, 10:31 AM   #12
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Re: US v. DiCristina update

Quote:
Originally Posted by Grasshopp3r View Post
Good luck with the case and ty for your hard work.
Quote:
Originally Posted by gnvsnk View Post
+1
+2
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Old 06-19-2013, 12:23 PM   #13
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Re: US v. DiCristina update

Thanks for the updates skall
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Old 06-19-2013, 01:17 PM   #14
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Re: US v. DiCristina update

Skall, couldn't the admission that the ruling that poker is a game of skill affect the applicability of the UIGEA to online poker?
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Old 06-19-2013, 01:40 PM   #15
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Re: US v. DiCristina update

Thanks for the links to the briefs.

Particularly liked the curious DOJ argument that facts do not matter if the standard is a common dictionary understanding, even if that understanding is fallacious:

"However, it would read too much into the phrase “game of
chance” in some dictionaries to interpret it with the kind of
mathematical precision used by Dr. Heeb
, in which the respective
roles of chance and skill are determined by conducting
sophisticated statistical analyses of voluminous data
. A “game of
chance” can simply mean a game where chance plays some role in the outcome, whether or not it predominates over skill."

Bystander: "Is this a game of chance ?"

WC Fields: "Not the way I play it, no."

Last edited by DonkeyQuixote; 06-19-2013 at 01:45 PM.
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Old 06-19-2013, 01:49 PM   #16
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Re: US v. DiCristina update

Quote:
Originally Posted by CohibaBehike View Post
Thanks for the updates skall
So if DiCristina wins, will a company take a chance and start a US site? Or state site?
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Old 06-19-2013, 02:03 PM   #17
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Re: US v. DiCristina update

DOJ argues at one point that, even if Poker is a game of skill, so is sports betting, something clearly outlawed, citing numerous sources and the example of Bill Walters.

Ironically, despite "poker only" advocates arguing that "skill" distinguishes poker from other past-times, that skill argument's weakness as a legal point has eventually come home to roost when the skill factor of sports-betting is included in the analysis.

For its part however, the DOJ goes overboard however, in trying to equate the point spread effect of a bet with the role of betting in a particular poker hand:

"[t]he district court’s effort to distinguish the respective
roles of chance and skill in sports betting and poker was
unconvincing. (SPA 110-11). The court relied upon the notion that
poker players’ strategy can influence a poker hand’s outcome
whereas the outcome of a sporting event is wholly outside of a
bettor’s control. (Id.). This distinction is faulty. While a
sports bettor cannot (legally) influence the outcome of a game,
sports bettors can and do influence the “betting line” or “point
spread” in order to improve their odds of making a successful bet.
Specifically, a gambler intending to make a large bet on one team
may first place one or more smaller, strategic bets on the other
team to move the betting line and make it more favorable for the
ultimate intended bet. See “The Gambler,” supra (explaining how a
gambler can “bet[] on both sides to move the line”)
; Garrett
Downing, supra (noting that professional sports bettors “try to
move the betting lines” to improve their odds). This technique is
analogous to bluffing, raising or folding in poker, which are
means by which skillful poker players can influence the outcome of
a hand independently of chance."

While indeed, Billy Walters can move lines and engage in arbitrage, as Cantor Gaming has seen, his is a unique position among sports bettors. This DOJ analogy goes too far in trying to indicate that a bettor can affect the outcome of a particular betting opportunity.

Last edited by DonkeyQuixote; 06-19-2013 at 02:14 PM.
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Old 06-19-2013, 05:28 PM   #18
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Re: US v. DiCristina update

Post hearing update, part 1.

The 2nd Circuit Court of Appeals had 4 cases on its docket today. US v. DiCristina was scheduled to be hear last. The very small courtroom was filled to its 50 person capacity and even after the first three cases where heard it remained full. A larger group of people watched the hearing from the live video feed available in the waiting area. About 25 2nd year law students working as summer interns for the DOJ crowded the waiting area. It was apparent that this case was viewed as unique and interesting by that crowd.

Prior to the hearing I got to meet Diamond Flush in person for the first time. Shortly thereafter Mr. DiCristina and his immediate legal team arrived. About 5 minutes later the rest of the PPA's legal team was there. It was enjoyable to meet a number of folks whom I had previously only known by voice.

The DiCristina oral argument began a little after 11 AM. The DOJ lawyer, representing the appealing party, went first. She tried to swing big with her opening but it was apparent that it fell short. "Simple common sense tells us poker if gambling" she urged and then repeated variation on that theme until a judge quickly interrupted her and asked her to direct her comments to the statute in question; what in that statute declares poker to be one of the covered games?

When she again started talking about things everyone knows the judge stated that it appeared the intent of Congress was to assist in the fight against organized crime. How does that lead to poker he asked. After speaking for a few minutes about the evils of organized crime and how it made money from gambling operations, the judge again asked her to tie the point to this case: was there any evidence Mr. DiCristiina was tied to organized crime? She had to admit there was not, but tried to make the facts that Mr. DiCristina had a security guard and a surveillance system at his warehouse into something sinister. I do not think the Court was impressed at this point.

Then the DOJ got to the most curious part of its argument: IGBA was meant to cover all gambling businesses and "of course" what Congress meant by "gambling" was "wagering." Any time money is put up to be paid upon an uncertain outcome, gambling has occurred. And since people do not know the outcome of a poker hand before they bet on it, that is gambling as defined by Congress. At that point the chief judge told her that her allotted time for speaking was all used up. The lawyer then spoke for a couple of minutes with no interrupting questions using standard lawyer speak about the importance of the case and the need to overturn the lower court.

Skallagrim

I apologize for not having the name of the DOJ attorney who spoke, it was not on the docket sheet I saw unfortunately.
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Old 06-19-2013, 05:29 PM   #19
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Re: US v. DiCristina update

Post hearing update part 2


Then it was time for Mr. DiCristina's attorney to speak. Neal Katyal conducted the oral argument. Beginning with the point that since there is nothing in this statute that says poker is included, how could someone like Mr. DiCristina know he was violating this law? He started to describe Mr. DiCristina as no different from the legion of well known poker enthusiasts, like some Supreme Court justices, this got a laugh. But then he was quickly shot a series of questions about the other part of the statute that mentions state laws. It was clear that one judge really wanted to discuss how this whole issue would be avoided if they ruled, as has the 3rd Circuit, that only state gambling laws matter under IGBA. One judge at this point read the first section of the statute and asked isn't that enough? Neal first responded that the government had waived that argument, but the Court noted and Neal ultimately agreed, that the Court's interpretation of the statute was potbound by what the DOJ argues or doesn't argue. So Neal then responded that if you rule that way, you would be ignoring all of the second section of the statute (the part with the list). Neal then did a great job of reminding the Court of its own precedent stating that each and every part of a statute should be given meaning and never merely considered superfluous. That means the list has to have some meaning.

Then the argument turned toward what that meaning should be. Neal noted the big point - everyone in Congress knew about poker but it was not mentioned in the statute. He continued on to note that organized crime and poker are not usually associated. At the point a judge interrupted and brought up the John Gotti case where the Court had declined to give meaning to this section. Neal stated that the issue he was raising was not raised in the Gotti case. The judge said it was, he said the court ruled IGBA was "defined" by section 1. Neal then read a part of the Gotti decision in which it was specifically noted that the argument he was raising was not raised in that case. I was impressed by this and I think it worked on the Judge too as he stopped his line of questioning after that reading.

Neal then spoke for a few more minutes mostly about how poker is so different form the other games listed, how poker is clearly a game where skill predominated, and how his client was no mobster. He concluded, very effectively in my opinion, by reminding the court of its prior decisions emphasizing how criminal statutes must be clear and easily understood. Given that poker is not on the list of illegal games, given that poker as a game of skill is unlike all those games, and given how the definition of "gambling" the DOJ proposes to cover poker has changed 3 times in the course of the case, how could anyone think that is clear and easy that IGBA includes the game of poker?

The DOJ lawyer was then given a few minutes rebuttal. She was quickly asked why she had conceded that the second section of IGBA must be used to craft a definition of gambling different from state law. She started to note the rules of statutory construction but then when a judge made a remark about poker not being mentioned she stated that the government was conceding nothing. But then she went back to arguing that Congress obviously meant to make wagering illegal. You can play all the games of chance you want, she said, but if you wager on a game not knowing its outcome, that creates the "evils of gambling" Congress wanted to prohibit.

I really wanted Neal to have a second chance at this point, but that is not how it works. I would have loved to ask this DOJ attorney to imagine everything about this case being exactly the same except that instead of playing poker for money the players played chess with a $10 wager on the outcome of the game (of which Mr. D would take his 5% for providing the pieces board and venue) - would he still be guilty. Of course hindsight is 20/20.

The DOJ's final remarks were directed at Mr. DiCristina to emphasize how "bad" he was. She noted that average pots at his games were $250 to $300 and that people played for hours at 20 hands an hour. That means that hundreds of thousands of dollars were involved. Again the flaw in that reasoning was obvious but not mentioned (I think the judges had lost interest in this aspect of the case): this lawyer is obviously not a poker player or she would realize that there were not hundreds of thousands of dollars at play, but the same few thousand bet over and over again.

At that point the hearing was over.

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Old 06-19-2013, 05:42 PM   #20
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Re: US v. DiCristina update

Thanks for being there and for the report Skall!

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Old 06-19-2013, 05:43 PM   #21
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Re: US v. DiCristina update

The issue of skill in sports betting came up briefly during the DiCristina oral argument.

The point that was made by DiCristina's attorney is that there is a clear difference between wagering on the outcome of a game played by other humans (or animals) and wagering on the outcome of a game in which you are a participant and will receive a return based on your performance in the game; sports betting is illegal because (allegedly) it hurts the integrity of the game, not because it itself is a "game of chance" - its really not a "game" at all.

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Old 06-19-2013, 06:40 PM   #22
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Re: US v. DiCristina update

excellent write up. i like DiCristina's chances here.
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Old 06-19-2013, 07:27 PM   #23
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Re: US v. DiCristina update

Thanks for this, skall - really appreciate it.
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Old 06-19-2013, 08:36 PM   #24
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Re: US v. DiCristina update

Quote:
Originally Posted by DonkeyQuixote View Post
DOJ argues at one point that, even if Poker is a game of skill, so is sports betting, something clearly outlawed, citing numerous sources and the example of Bill Walters.

Ironically, despite "poker only" advocates arguing that "skill" distinguishes poker from other past-times, that skill argument's weakness as a legal point has eventually come home to roost when the skill factor of sports-betting is included in the analysis.

For its part however, the DOJ goes overboard however, in trying to equate the point spread effect of a bet with the role of betting in a particular poker hand:

"[t]he district court’s effort to distinguish the respective
roles of chance and skill in sports betting and poker was
unconvincing. (SPA 110-11). The court relied upon the notion that
poker players’ strategy can influence a poker hand’s outcome
whereas the outcome of a sporting event is wholly outside of a
bettor’s control. (Id.). This distinction is faulty. While a
sports bettor cannot (legally) influence the outcome of a game,
sports bettors can and do influence the “betting line” or “point
spread” in order to improve their odds of making a successful bet.
Specifically, a gambler intending to make a large bet on one team
may first place one or more smaller, strategic bets on the other
team to move the betting line and make it more favorable for the
ultimate intended bet. See “The Gambler,” supra (explaining how a
gambler can “bet[] on both sides to move the line”)
; Garrett
Downing, supra (noting that professional sports bettors “try to
move the betting lines” to improve their odds). This technique is
analogous to bluffing, raising or folding in poker, which are
means by which skillful poker players can influence the outcome of
a hand independently of chance."

While indeed, Billy Walters can move lines and engage in arbitrage, as Cantor Gaming has seen, his is a unique position among sports bettors. This DOJ analogy goes too far in trying to indicate that a bettor can affect the outcome of a particular betting opportunity.
This argument has to be one of the dumbest things I have ever read.

Thanks for the updates.

Last edited by konar; 06-19-2013 at 08:48 PM.
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Old 06-19-2013, 09:18 PM   #25
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Re: US v. DiCristina update

Skallagram: This is a really clear synopsis of a case that is very important to all of us.

I think that when a lawyer knows he has the last word, he tends to get a little more creative with the facts. The DOJ lawyer may have actually had a better understanding of how the hands were raked than one would think from his testimony.
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