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STATE OF SOUTH CAROLINA COUNTY OF CHARLESTON Town of Mount Pleasant, vs. Robert L. Chimento, Scott Richards, Michael Williamson, Jeremy Brestel, and John Taylor Willis, Defendants. IN THE MUNICIPAL COURT TICKET Nos. 98045DB, 98050DB, 98040 DB, 98035DB 98043DB BRIEF OF AMICUS CURIAE THE POKER PLAYERS ALLIANCE IN SUPPORT OF DEFENDANTS Thomas C. Goldstein Christopher M. Egleson Akin Gump Strauss Hauer & Feld LLP 1333 New Hampshire Ave., NW Washington, D.C. 20036-1564 (202) 887-4000 Kenneth L. Adams Adams Holcomb LLP 1875 Eye Street NW Washington, D.C. 20006 (202) 580-8822 TABLE OF CONTENTS TABLE OF AUTHORITIES…………………………………………………………………………………………….. ii STATEMENT OF INTEREST……………………………………………………………………………………………1 ARGUMENT…………………………………………………………………………………………………………………..1 I. II. III. Background …………………………………………………………………………………………………………..2 South Carolina Law Does Not Prohibit Gaming Unless Chance Predominates Over Skill ……………………………………………………………………………………………………………..5 Poker Matches Are Contests of Skill ………………………………………………………………………..8 A. B. Making Correct Decisions in Poker Requires a Diverse Array of Sophisticated Skills that Gambling Does Not………………………………………………….9 Skilled Players Beat Simple Players in Simulated and Real Poker Matches………17 CONCLUSION………………………………………………………………………………………………………………22 i TABLE OF AUTHORITIES Cases Page(s) In re Allen, 377 P.2d 280 (Cal. 1962)……………………………………………………………………………………………….7 D’Orio v. Startup Candy Co., 266 P. 1037 (Utah 1928) ……………………………………………………………………………………………….6 Darlington Theatres v. Coker, 190 S.C. 282 (1939) ……………………………………………………………………………………………………..6 Gallatin County v. D & R Music & Vending, Inc., 676 P.2d 779 (Mont. 1984) ………………………………………………………………………………………….17 Harris v. Missouri Gaming Comm’n, 869 S.W.2d 58 (Mo. 1994)…………………………………………………………………………………………….6 Johnson v. Collins Entm’t Co., 333 S.C. 96 (1998) ……………………………………………………………………………………………………6, 7 Morrow v. State, 511 P.2d 127 (Alaska 1973) …………………………………………………………………………………………..6 Pennsylvania v. Dent, No. 2008-733, slip op. (Pa. Ct. Com. Pl. Jan. 14, 2009) ………………………………………..1, 6, 9, 10 PGA Tour, Inc. v. Martin, 532 U.S. 661 (2001) ……………………………………………………………………………………………………..8 Statutes S.C. Code § 16-19-40…………………………………………………………………………………………………1, 5, 6 Opinions S.C. Atty. Gen. Op. dated Jan. 22, 2004 ………………………………………………………………………………7 Books David Apostolico, Machiavellian Poker Strategy: How to Play Like a Prince and Rule the Poker Table (2005)……………………………………………15 Doyle Brunson, Doyle Brunson’s Super System: A Course in Power Poker (2002)…………………15 Mike Caro, Caro’s Book of Poker Tells (2003)…………………………………………………………………..11 Gus Hansen, Every Hand Revealed (2008)…………………………………………………………………………15 Dan Harrington, Harrington on Hold ’Em: Expert Strategy for No Limit Tournaments (2005) ………………………………………………………….15 Eric Lindgren, World Poker Tour: Making the Final Table (2005) ……………………………………….15 ii Steven Lubet, Lawyer’s Poker (2006) …………………………………………………………………………………3 David McCullough, Truman (1993) ……………………………………………………………………………………2 Joe Navarro, Phil Hellmuth Presents Read ’Em and Reap: A Career FBI Agent’s Guide to Decoding Poker Tells (2006) ………………………………………….11 Daniel Negreanu, Power Hold’em Strategy (2008)……………………………………………………………..15 Blair Rodman & Lee Nelson, Kill Phil: The Fast Track to Success in No-Limit Hold ’Em Poker Tournaments (2005)………………………………………………………………15 David Sklansky, The Theory of Poker (1994) …………………………………………………………………….15 David Sklansky, Tournament Poker for Advanced Players (2002)………………………………………..15 Jeffrey Toobin, The Nine (2007)…………………………………………………………………………………………3 John von Neumann & Oskar Morgenstern, Theory of Games and Economic Behavior (1944) ………………………………………………………5, 18 John Whitcomb & Claire Whitcomb, Real Life at the White House: 200 Years of Daily Life at America’s Most Famous Residence (2000) ………………………………..2 Articles Noga Alon, Poker, Chance & Skill ……………………………………………………………………………………20 Anthony Cabot & Robert Hannum, Poker, Public Policy, Law, Mathematics, and the Future of an American Tradition, 22 T.M. Cooley L. Rev. 443 (2005) ………………….17 Rachel Croson, Peter Fishman & Devin G. Pope, Poker Superstars: Skill or Luck? CHANCE (Vol. 21, No. 4, 2008) …………………………………………………………………………………….21 Laure Elie & Romauld Elie, Chance and Strategy in Poker (Sept. 2007) (unpublished manuscript) ………………………………………………………………………….20 Shawn Patrick Green, Online Poker: Interview With Annette ‘Annette_15’ Obrestad, CardPlayer.com (Aug. 12, 2007) …………………………………………………………………………………………14 Paco Hope, Brian Mizelle & Sean McCulloch, Statistical Analysis of Texas Hold’Em (Jan. 28, 2009) (unpublished manuscript) …………………………………………………………………13, 14 Trevor Hughes, Definition Clears Man of Gambling Charges, Coloradoan (Jan. 30, 2009) ……………………………………………………………………………………………1 Patrick Larkey et al., Skill in Games, 43 MANAGEMENT SCIENCE 596 (May 1997)………… 9, 17-20 Howard Lederer, Why Poker Is a Game of Skill (May 6, 2008) (unpublished manuscript) ………………………………………………………………….13, 16 Oskar Morgenstern, The Cold War is Cold Poker, NEW YORK TIMES MAGAZINE, Feb. 5, 1961……………………………………………………………………..5 Michael A. Tselnik, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 35 Hofstra L. Rev. 1617 (Spring 2007) …………………………………20 Ferdinand Ward, “General Grant As I Knew Him,” New York Herald, Dec. 19, 1909 ………………2 iii Christopher Wills, “How Obama Plays Poker Could Be Telling,” Chicago Sun-Times, Sept. 24, 2007 ………………………………………………………………………………..3 Abraham J. Wyner, Chance and Skill in Poker (Apr. 17, 2008) (unpublished manuscript) ……………………………………………………………………..20 Websites Global Poker Strategic Thinking Society, Website ……………………………………………………………….5 Barry Greenstein – Professional Poker Player Profile, Pokerpages, Website ……………………………4 Univ. of Alberta Computer Poker Research Group, Website………………………………………………….5 World Poker Tour Stats, Website ……………………………………………………………………………………..13 iv STATEMENT OF INTEREST Amicus curiae the Poker Players Alliance is a nonprofit organization whose members are poker players and enthusiasts from around the United States. The Alliance works to protect the legal rights of poker players. The group’s membership has a direct interest in the outcome of this case, because it will determine whether they are permitted to play poker in South Carolina. ARGUMENT Defendants in this case have been charged with playing cards in a “house used as a place of gaming” in violation of S.C. Code § 16-19-40. The state and Defendants agree that “gaming” in the statute means “gambling.” As Defendants have also explained in their brief, and as discussed below, under South Carolina law poker is “gambling” if the outcome is determined predominantly by chance rather than skill. For the reasons we explain, this case presents a narrow legal question: to resolve the case in Defendants’ favor this Court need only that a home game of poker in particular does not violate the statute. A ruling that playing poker in a private home does not by itself render the home a “house of gaming” would not affect whether the law prohibits card rooms or prohibits playing poker in other settings. In this brief, amicus explains why skill predominates over chance in poker, and why Defendant’s particular conduct here therefore does not violate the statute. While this is a case of first impression in South Carolina, a Pennsylvania court recently addressed precisely the same question in almost identical circumstances and under an indistinguishable legal regime. See Pennsylvania v. Dent, No. 2008-733, slip op. at 14-15 (Pa. Ct. Com. Pl. Jan. 14, 2009) (attached for the Court’s convenience as Ex. A). In Dent, the court concluded that the defendants were not engaged in unlawful gambling activity because the game they were playing, Texas Hold ’Em, is a game in which skill predominates over chance. Similarly, a Colorado jury recently acquitted a man who had hosted regular informal poker tournaments at a local 1 bar after the man defended his actions by demonstrating that poker requires skill to win. See Trevor Hughes, Definition Clears Man of Gambling Charges, Coloradoan (Jan. 30, 2009) (attached as Ex. B).1 This court should follow the course set in those cases and hold that poker is not a game of chance, and that playing poker in a private home therefore does not violate Section 16-19-40. I. Background Every day, millions of Americans play poker. Television networks scramble to broadcast tournaments in which hopeful amateurs challenge the game’s top professional players. The biggest winners have fan clubs and endorsement contracts. They rub elbows with society’s elite, and donate substantial amounts of their wealth and fame to those less fortunate. Although poker has recently become a mainstream cultural phenomenon, the game has been an American pastime for over a century. Poker came of age during the Civil War, entertaining Union and Confederate soldiers alike. General Ulysses S. Grant enjoyed the game. See Ferdinand Ward, “General Grant As I Knew Him,” New York Herald, Dec. 19, 1909.2 In the 19th century, poker was often hosted in saloons, where soldiers and civilians viewed the challenging game as less likely to be rigged than other popular entertainments. A saloon running casino-style games like roulette and craps would structure the games to give themselves an edge (and would often load the equipment). But in poker, players simply paid the saloonkeeper by buying drinks. From humble origins, poker grew to become a favorite of the country’s highest elected officials. During his presidency, Warren G. Harding assembled his “poker cabinet” for friendly games two times a week. John Whitcomb & Claire Whitcomb, Real Life at the White House: 1 2 http://www.coloradoan.com/article/20090130/NEWS01/901300328, last accessed Feb. 9, 2009. http://www.granthomepage.com/intward.htm, last accessed Feb. 9, 2009. 2 200 Years of Daily Life at America’s Most Famous Residence 268 (2000). Franklin D. Roosevelt loved the game (id. at 309), and Harry Truman preferred poker to the more fashionable bridge and mah-jongg – it was, he said, “my favorite form of paper work” (David McCullough, Truman 142, 611 (1993)). During Truman’s first term, Richard Nixon launched a run for the U.S. House of Representatives with money he won at the poker table. Steven Lubet, Lawyer’s Poker 211 (2006). And focused poker play has been a staple entertainment throughout President Barack Obama’s political career. Christopher Wills, “How Obama Plays Poker Could Be Telling,” Chicago Sun-Times, Sept. 24, 2007.3 Poker is also a favorite within the federal judiciary. In 1972, Washington attorney Bob Bennett invited the newly appointed Associate Justice William H. Rehnquist to join his monthly poker game. Jeffrey Toobin, The Nine 115 (2007). For the remaining thirty-three years of his life, Justice Rehnquist rarely missed a game. Id. at 115-16. Over the years, other players in the monthly game have included Associate Justice Antonin Scalia and Judges Robert Bork, David Sentelle, Thomas Hogan, and Royce Lamberth of the U.S. Court of Appeals for the District of Columba Circuit and the U.S. District Court for the District of Columbia. Id. Around the same time the late Chief Justice joined his monthly game, modern tournament play started to catch on. Binion’s Horseshoe hosted the first World Series of Poker in 1970. In the first tournament, the players voted for their champion. In 1971, the format changed to its current incarnation: a “freeze-out” tournament where players start with a fixed number of chips and are eliminated when they run out. The World Series of Poker was the first major poker tournament, and it has remained the largest event to this day. In 2007, the grand prize went to Jerry 3 http://www.suntimes.com/news/politics/obama/729330,obamapoker092407.stng, last accessed Feb. 9, 2009. 3 Yang, a Laotian refugee who held off 6,357 competitors to win the coveted title, and the Main Event in 2008 drew 6,844 players. ESPN has been broadcasting the World Series of Poker for decades now, and has continued rights for the Series through 2010. The World Series of Poker includes multiple events every year. In 2008, the Series consisted of fifty-five different tournaments held in the summer. In addition to the summer Series, the World Series of Poker hosts “circuit” events throughout the year. Players also frequently compete on the “World Poker Tour,” a truly global set of tournaments that are televised on the Travel Channel. Players who compete on these circuits are ranked based on cumulative performance, and at the end of every season, “Player of the Year” awards go to the most consistently successful players. Not surprisingly, those players are always professionals who are at the top of their game. In addition to internationally prominent poker tournaments, local casinos and card rooms host smaller tournaments every day where players develop their skills and compete for prizes. Tournament poker also raises substantial amounts of money for charity. From 2003 to 2006, the Bravo! Network televised eight “Celebrity Poker Showdowns” in which contestants competed for some $3.5 million to distribute to favorite charities. The most successful participant – actor Jason Alexander of Seinfeld fame – won three of his four matches and earned more than half a million dollars for charity. More recently, at the 2007 World Series of Poker in Las Vegas, numerous celebrities competed in the separate “Ante Up For Africa” charity event. Organized by Oscar-nominated actor Don Cheadle and professional poker player Annie Duke, the event raised over $700,000 to spread awareness of the ongoing crisis in Darfur. Barry Greenstein, a former software designer who plays in the largest cash game in Las Vegas, donates all of his tournament winnings to children’s charities, a total of over $5 million to date. See Barry 4 Greenstein – Professional Poker Player Profile, Pokerpages.4 Small-money charity poker tournaments are also common. Poker is replacing bingo as a way to generate revenue for fire houses, churches, schools, and other charitable organizations because the game is more fun, engaging, and challenging than the pure gambling involved in watching a bingo card. The academy is similarly fascinated with poker – though more for what can be learned from it than from what can be earned by playing it. John von Neumann and Oskar Morgenstern, pioneers of game theory, devoted a chapter of their seminal text to poker. John von Neumann & Oskar Morgenstern, Theory of Games and Economic Behavior 186–219 (1944). Morgenstern later wrote that the Cold War was not a chess match with the Soviet Union, but a poker game: the rival countries had to make strategic moves based on imperfect information. Oskar Morgenstern, The Cold War is Cold Poker, NEW YORK TIMES MAGAZINE, Feb. 5, 1961. A leading laboratory in Alberta built its Polaris computer to put artificial intelligence machines to the test – by playing poker. See Univ. of Alberta Computer Poker Research Group, Website.5 Harvard Law Professor Charles Nesson recently launched a Global Poker Strategic Thinking Society, which hosts academic conferences and workshops to explore the lessons of poker for advanced strategic thought. See Global Poker Strategic Thinking Society, Website.6 II. South Carolina Law Does Not Prohibit Gaming Unless Chance Predominates Over Skill Defendants were charged with violating Section 16-19-40 after playing poker in a private home. The state can show that playing poker in such a setting violates the statute only by proving that poker is a game in which the outcome is determined predominantly by chance rather 4 5 6 www.pokerpages.com/players/profiles/55033/barry-greenstein.htm, last accessed Feb. 9, 2009. www.cs.ualberta.ca/~games/poker, last accessed Feb. 9, 2009. www.gpsts.org, last accessed Feb. 9, 2009. 5 than skill. That is true because Section 16-19-40 prohibits playing “any game with cards or dice” in “any house used as a place of gaming.” The state can show that the house in question was being “used as a place of gaming” only if poker constitutes gambling because, as all parties agree, “gaming” in Section 16-19-40 means “gambling.” The question in this case does not extend to whether other activities, such as establishing a card room or playing poker in any other setting, would violate the law; the question here is instead limited to whether playing poker in a home game turns the home into a “place of gaming.” The threshold legal issue in this case thus turns entirely on whether poker is gambling. The common test for whether an activity is “gambling” is the so-called “dominant factor” test, which has been adopted by the high courts of Alaska, California, Missouri, and Utah, among other courts. See Harris v. Missouri Gaming Comm’n, 869 S.W.2d 58, 62 (Mo. 1994); Morrow v. State, 511 P.2d 127, 129 (Alaska 1973); In re Allen, 377 P.2d 280 (Cal. 1962); D’Orio v. Startup Candy Co., 266 P. 1037, 1038 (Utah 1928); see also, e.g., Dent, slip op. at 14-15. While the courts of this State have not yet had occasion to squarely address what test governs whether a game is gambling, the opinions of two Justices in the Supreme Court’s recent decision in Johnson v. Collins Entertainment Co., Inc., 333 S.C. 96 (1998), offer strong evidence that the dominant-factor test governs under South Carolina law. In Johnson, the question was whether video gaming machines constituted a “lottery” under the Constitution. The majority decided that the machines were not a lottery, establishing a principle that the term “lottery” in particular is to be narrowly construed. Id. at 102. The majority opinion, therefore, did not reach the more general question of what constitutes gambling. Justice Burnett in dissent, however, read the term “lottery” more broadly, finding support in the Court’s earlier decision Darlington Theatres v. Coker, 190 S.C. 282 (1939). Under Darlington 6 Theatres, Justice Burnett understood the term lottery to describe any game involving “(1) [t]he giving of a prize, (2) by a method involving chance, (3) for a consideration paid by the contestant or participant” (Johnson, 333 S.C. at 109), thus reading the term “lottery” to be expansive enough to cover gambling in general. From there, Justice Burnett reasoned that the majority American rule should apply to determine what degree of chance is required to satisfy the second prong of the test, and so concluded that “where the dominant factor in a participant’s success or failure in a particular scheme is beyond his control, the scheme is a lottery.” Id. at 113. Although not conclusive on the question as a matter of precedent, since the rest of the Court did not reach the issue, Justice Burnett’s logic is convincing, and the wealth of authority that he collects persuasively demonstrates that the consensus view in America law in cases of this sort is that the dominant-factor test states the proper question. See id. at 114 n.10 (collecting cases). Justice Burnett’s view is further bolstered by the fact that he was joined as to the proper “legal standard” by Justice Toal. See id. at 120. The only two votes ever cast on the Supreme Court that have spoken to the question have therefore been cast in favor of the dominant-factor test, and there is no indication that any other Justice would disagree. The Attorney General has furthermore “consistently stated that the test of whether a particular game is a game of chance or skill is governed by the so-called ‘predominance’ test.” S.C. Atty. Gen. Op. dated Jan. 22, 2004 (2004 WL 235411) (citing S.C. Atty. Gen. Ops. dated Aug. 2, 2001; Sept. 5, 1995; Dec. 5, 1978). In the absence of a strong indication to the contrary, the necessary conclusion from the Justices’ analysis and that of the Attorney General is that under the law of this State, as under many others’, the question of whether an activity constitutes gambling turns on whether “the dominant factor in a participant’s success or failure in a particular scheme is beyond his control.” Id. at 113 (Burnett, J., dissenting). 7 III. Poker Matches Are Contests of Skill Under the dominant-factor test, poker is not gambling. Unlike the simple and addictive games that casinos invent to maximize their profits – like roulette, blackjack, and the slots – poker matches have no “house edge.” Players compete against one another, and the casinos make money only by collecting a fee to cover the costs of providing the dealers and space. Poker resembles games like golf, chess, billiards, and bridge. Cf. In re Allen, 377 P.2d 280, 281 (Cal. 1962) (bridge requires skill and is not a “game of chance”). Each involves some element of chance, but in each, when good players play against bad players, they consistently beat them. And poker garners such academic attention precisely because it is not like a roulette wheel or a game of craps: it is a game of skill that requires sophisticated thought processes, keen intuitions and concentrated observations. Poker is thus similar to other games that are often played by professionals, such as golf and chess. Players who enter golf and chess tournaments pay a fee to enter, and earn a cash reward if they win, but these games are not gambling because their outcome is determined more by skill than by chance. So too with poker, and it therefore is not “gaming” under South Carolina law. To be sure, there is some cumulation of luck over the course of a poker match that will affect how individual players perform. That is also true, for example, of golf, where “changes in the weather may produce harder greens and more head winds for the tournament leader than for his closest pursuers” or a “lucky bounce may save a shot or two.” PGA Tour, Inc. v. Martin, 532 U.S. 661, 687 (2001). But, as in golf, skill is nonetheless dominant in poker play. This is because first, there are specialized skills that a player must master in order to win at poker, and second, in the long run, only skill will make somebody a winning player, not luck. The fact that every hand of poker involves multiple decision points (at each of the multiple rounds of betting), 8 multiple decisions at each decision point (bet, call, raise, or fold), and innumerable factors that call for skill to evaluate each of those decisions (for example, the player’s own cards, the odds of his hand improving, his sense of the strength of the other player’s hand, his sense of the other players’ perception of him), establish that skill predominates over the chance element of the next card to be dealt. One way in which courts and commentators have examined games in order to determine whether skill or chance predominates is thus to evaluate how the game is played. See, e.g., In re Allen, 377 P.2d at 281-82. What techniques do players use to increase their chances of winning against an opponent? A Pennsylvania court recently took this approach in ruling that Texas Hold ’Em is a game of skill. Dent, slip op. at 14-15. A second method “characterize[s] players by outcomes.” Patrick Larkey et al., Skill in Games, 43 MANAGEMENT SCIENCE 596, 598 (May 1997). In games of skill (but not in games of chance) “more skillful players tend to score better than less skillful players.” Id. at 596. Thus, in order to determine whether skill or chance predominates in a given activity, it is vital to look at the actual results of repeated game play to determine whether some players – the more skilful – consistently prevail over others. This section proceeds first by explaining the techniques that strategic poker players use to beat their opponents. It continues by examining the outcomes of computer simulations of poker matches, and of real, recent tournaments, and shows that good poker players win against worse poker players. A. Making Correct Decisions in Poker Requires a Diverse Array of Sophisticated Skills that Gambling Does Not The essence of poker is correct decision-making. Each time it is your turn to act you must choose among several decisions, typically whether to bet, raise or fold. During the course of a single session, you will have to make hundreds of those decisions. Each time, in order to 9 make the optimal decision you must take into account a variety of known and unknown factors. Players who consistently make good decisions win. Those who do not, lose. The “luck of the cards” has little to do with one’s decision-making skills. There are two ways for a player to win a hand of poker. The player can either show the best hand after the final round of betting, in what is known as a “showdown,” or the player can induce all of his opponents to fold by making bets that his opponents refuse to call. To make the right decisions consistently, poker players must employ a range of skills. And by skill, we do not mean simply a sophisticated knowledge of odds. Knowledge of the odds is simply a prerequisite to competent poker play. To be skilled at poker, players must develop an ability to directly influence the way an individual hand turns out – who collects the pot at the end, and how much is in the pot. “Successful players must possess intellectual and psychological skills. They must know the rules and the mathematical odds. They must know how to read their opponents’ ‘tells’ and styles. They must know when to hold and fold and raise. They must know how to manage their money.” Dent, slip op. at 14-15; see generally id. (concluding that these skills determine the outcome in poker and that it therefore is not gambling under Pennsylvania law). The essential task in a poker hand is persuasion. A player with a strong hand has choices; he may either bet a lot in order to price his opponents out of the pot and protect his hand from the risk of being overtaken by a weaker hand, or he may check in the hope that his opponents will perceive weakness and invest more chips in the pot even though they are likely to lose. A player with a weak hand may attempt to bluff, or he may protect his chips by folding and waiting for a more favorable opportunity to invest them. No matter what kind of hand he has, in order to 10 make the right decision the player must observe his opponents to learn how they play, and control how he plays so that he can trick his opponents into making mistakes. First, the player must watch his opponents to learn how they will behave at each stage of play when they have certain cards. Opponents may play tight – betting only when they have strong hands. Or they may be loose – playing any two cards. They may have a tendency to play passively – mostly folding, checking, and calling, such that when they raise, it indicates a particularly strong hand. Or they may play aggressively, so that when they check it probably indicates a weak hand. An opponent may be fond of maneuvers like the “check-raise,” a basic trap where an opponent checks in order to induce a player to bet, and then raises that bet to drive up the size of the pot. Or a player may frequently check strong hands on the flop, but bet them aggressively on the turn, or vice versa. Every player has tendencies. Those patterns suggest what cards they are holding, and also how they are vulnerable to manipulation. In addition to spotting patterns in his opponents’ play, a good player will also learn to spot “tells.” Tells are unconscious gestures that reveal an opponent’s hand. For example, some players shuffle their chips, others visibly shake, or start talking uncontrollably, all in response to particular hands. Spotting tells is hard. There are books that explain the minutiae, with photographs and analyses of why players show particular tells. See, e.g., Mike Caro, Caro’s Book of Poker Tells (2003) (detailing over 170 different poker tells); Joe Navarro, Phil Hellmuth Presents Read ’Em and Reap: A Career FBI Agent’s Guide to Decoding Poker Tells (2006). Just as vital to winning poker hands as spotting patterns and tells, a player must vary his own play to prevent his opponents from being able to correctly gauge how strong a hand he holds. He must first be aware of how the table perceives him. This perception, known as the player’s “table image,” will affect his opponents’ behavior. For example, if he is playing aggres- 11 sively in a conservative game, then he should expect that his opponents will attempt to trap him when they have good hands. If one of these players raises him, he should worry that it is because that player has an excellent hand – much more than he should if he were raised by a generally aggressive opponent. But if his opponents are savvy enough to vary their play, one of them may start to make bluff raises. So the aggressive player may need to tighten up in response. Being self-conscious of his own patterns and judging whether others have noticed them is necessary to a player’s success. This is not to say that having patterns is always bad. Patterns can be useful when one knows how to deviate from them at the right moments. For example, if a player shuffles his chips while bluffing once, and he believes that an opponent noticed, then he should shuffle his chips the next time he has a strong hand in order to increase the odds that his opponent will make the mistake of thinking he is bluffing and will call his bet. A talented player will work to establish a particular table image because once the other players at the table believe they can predict what he will do, the player can do the opposite and reap significant rewards. This enumeration of some of the skills essential to good poker play demonstrates that poker is simply not gambling. True, individual moves in poker are called “bets.” But that vocabulary is misleading. The “bet” is not a wager on a chance event. Unlike poker “bets,” true wagers do not alter the outcome of the event. A bet on the Super Bowl does not change the score; bets at a blackjack table are made before the cards are dealt; bets on roulette wheels are placed before the ball is dropped; and the lottery is true blind luck. Bets at a poker table are different. What is called a “bet” in poker is really a “move” like a move in any other game: it is a gambit designed to provoke a desired reaction from an opponent. 12 The importance of these moves is heightened because, in typical complex poker games like Texas Hold ’Em, the game played here, a player must contend with a large number of decision-making stages and a variety of possible courses of action at each of these decision-making stages. In each hand of Hold ’Em, for example, a player has four principal decision-making opportunities, in which he has available to him many courses of action. The focus of each decision is how worthwhile it is to risk additional chips relative to the chance of winning all the chips in the pot in that hand. These decision-making stages significantly reduce the element of chance in the game, since logical decision-making at each of these stages allows the player to control his “fate.” To make optimal moves at each of these stages, players must be mathematicians, observers of human nature, and capable deceivers. Poker players use their “bets” principally to communicate with, manipulate, and intimidate their opponents. Skeptics sometimes say that no amount of skill can turn a deuce into an ace. It is true that skill cannot change the cards. But skill allows the player with the deuce to make his opponent believe he has an ace, causing his opponent to fold a hand that would have won the pot. So skill also means that a good player will lose less with a deuce and win more with an ace than a bad one. Indeed, more than 75 percent of all hands are won when one player bets and all remaining players fold in response.7 See Paco Hope, Brian Mizelle & Sean McCulloch, Statistical Analysis of Texas Hold’Em at 5 (Jan. 28, 2009) (unpublished manuscript, attached as Ex. C); see also Howard Lederer, Why Poker Is a Poker is sometimes thought to be gambling simply because the vernacular of poker resembles that of gambling – players make “bets” as they play. But this Court should avoid that mistake, and should look beyond the labels to the way the game is played. A “bet” on a poker hand is not a wager, because poker hands are not usually resolved by a chance event. 7 13 Game of Skill (May 6, 2008) (unpublished manuscript, attached as Ex. D); World Poker Tour Stats, Website (in World Poker Tour play, only 15% of hands go to a showdown).8 Even in that subset of hands, the players typically are not betting on the outcome of a chance event. For example, when a poker player bets as a bluff, he is not hoping that his cards will prove to be better than his opponents. Instead, the player hopes to win the pot by convincing his opponent to fold the best hand. As it turns out, in roughly 50% of hands that do play to a showdown, a player who would have won had he stayed in will have folded – attesting to the skill of the winning player in scaring his competitor into folding. See Paco, Statistical Analysis at 5. Of course, a player trying to chase another player out may get called and may lose. But what he was betting on was not what cards his opponents held – the essence of gambling. He was betting to influence what his opponents would do – the essence of strategy. A striking example of the limited role that the cards play in determining the outcome of a hand may be found in the recent story of Annette Obrestad, a 19-yead-old poker prodigy who beat 179 other players—without looking at her own cards. See Shawn Patrick Green, Online Poker: Interview With Annette ‘Annette_15’ Obrestad, CardPlayer.com (Aug. 12, 2007).9 Obrestad’s feat shows it is the player’s skill rather than the deal of the cards that determines outcomes. But while Obrestad is evidently an exceptional player, the ability to make use of the variety of skills described above is not limited to a few players, and an ordinary person can learn them and make use of them. This is true also with regard to the basic statistical calculations that 8 9 http://www.worldpokertour.com/StatsAndTools/Landing.aspx, last accessed Feb. 9, 2009. http://www.cardplayer.com/poker-news/article/2536/online-poker-interview-with-annette-annette-15obrestad, last accessed Feb. 9, 2009. 14 a poker player needs to make. These are not particularly complex, and every person can learn them and make use of them for his benefit. Moreover, a Texas Hold ’Em player who is a beginner can improve his talents and raise the level of his game by study and by accumulating game experience. After only a short time a player can acquire basic game skills, learning when to fold and how to make the basic calculations. But the more a person continues to practice and learn, the more his skills will improve, something which is also true for chess, golf, and bridge players. Over time the player will learn how to exploit his changing place at the table, how to apply game tactics, and how to identify and exploit recurring strategies of his opponent. This consistent improvement of a Texas Hold ’Em player’s ability over time is possible, inter alia, because of the existence of professional literature with regard to the game. And indeed, the importance of skill in determining poker outcomes is independently demonstrated by the arsenal of strategy and training guides offered to aspiring poker players, teaching them how to master the game. The titles number in the hundreds, and there are too many to recount here. A sample of the best-known titles should begin with David Sklansky’s classic The Theory of Poker (1994), but the list of could run for pages. See, e.g., Doyle Brunson, Doyle Brunson’s Super System: A Course in Power Poker (2002); Gus Hansen, Every Hand Revealed (2008); David Apostolico. Machiavellian Poker Strategy: How to Play Like a Prince and Rule the Poker Table (2005); Daniel Negreanu, Power Hold’em Strategy (2008); Dan Harrington, Harrington on Hold ’Em: Expert Strategy for No Limit Tournaments (2005); Blair Rodman & Lee Nelson, Kill Phil: The Fast Track to Success in No-Limit Hold ’Em Poker Tournaments (2005); Eric Lindgren, World Poker Tour: Making the Final Table (2005); David Sklansky, Tournament Poker for Advanced Players (2002). 15 These characteristics of poker—the ability to quickly learn the basics of play but the need for lifelong development in order to achieve mastery—are unique to games of skill. In games of chance, such as roulette, experience has no importance, and there is no professional literature that allows players to improve their skills. These characteristics show that a person can become a skilful poker player. The effect of these skills in individual hands of poker is confirmed by research showing that more than 75 percent of the time, one player succeeds in forcing all other players to fold and wins the pot without ever having to show his cards. See Hope, Statistical Analysis; Howard Lederer, Why Poker Is a Game of Skill. This fact shows the small effect of the random dealing of the cards. First, the statistic standing alone shows that the winner of three out of four hands is not determined by the (random) deal of the cards, since the hole cards were not even revealed. Hands without showdowns are won based not on the “luck of the cards” but rather by the player who succeeds in persuading his opponents to fold (regardless of whether or not he actually held the best hand). A skilled player may induce others to fold even when he holds relatively “weak” hole cards, thus rendering the random deal of the cards irrelevant. Second, the high percentage of non-showdown hands evidences the ability of players to determine the outcome of the hand by influencing the behavior of their opponents. In many cases a player who folded at the beginning of the hand because of his opponents’ moves could ultimately have won the hand had he waited for all the cards to be revealed. A player who succeeds in making his opponent drop out of the hand at an early stage prevents the cards from determining the fate of the hand against him. 16 The principal explanation for a player’s decision to fold is that he made a logical analysis of his position (inter alia, by means of a statistical calculation) and concluded that folding was the best course of action. A player’s decision to drop out of the hand is made on the basis of the available factual data, including the representations made to him, in the form of betting moves, by the other players are the table. These other players will have employed the skills described above in calculating each of these moves, hoping to induce the fold. The high percentage of nonshowdown hands thus demonstrates the large number of hands in which skill is the primary determinant of the outcome. Together, the specific skills required to play poker, the enormous literature dedicated to teaching poker players the skills necessary for mastery, and the demonstrated fact that poker hands are won by maneuvering rather than in a showdown between the dealt cards 75 percent of the time, all show that skill is required to be a winning poker player. All of this is particularly true for Texas Hold ‘Em, the version of poker played by Defendants here, which is a particularly demanding form of the game and thus distinct from other forms of poker in which skill plays a lesser role. See Anthony Cabot & Robert Hannum, Poker, Public Policy, Law, Mathematics, and the Future of an American Tradition, 22 T.M. Cooley L. Rev. 443, 483 (2005) (skill predominates in Texas Hold ’Em; distinguishing Hold ’Em from other forms of poker); see also Gallatin County v. D & R Music & Vending, Inc., 676 P.2d 779, 781 (Mont. 1984) (in poker “one player pit[s] his skills and talents against those of the other players,” distinguishing electronic poker against a machine). B. Skilled Players Beat Simple Players in Simulated and Real Poker Matches The conclusion that skill is required to win at poker has been further proven by several recent studies. Until quite recently, any rigorous analysis of whether skill or chance predominated in poker could involve only an assessment of the rules of play themselves, because no sta17 tistical assessment of the role of skill in poker had been assembled. Now the subject has received academic attention, and the studies uniformly confirm that skill determines the outcome in poker games. In one recent game-theoretical study, for example, the author demonstrated through the use of a computer simulation that a combination of the skills discussed above is required in order to consistently win at poker. See Larkey, supra. For his 2001 paper on “Skill in Games,” Professor Larkey built a computer model of a simplified version of poker.10 See id. The “general behaviors mandated for player success” at this simplified game were: • • • • • • observation, memory, computation, knowledge of the random device, misleading opponents about the actual strength of your position, and correct interpretation and forecasts of opponents’ behaviors. Id. at 597. To evaluate the relative importance of these areas of skill, singly and in combination, the authors programmed twelve different robot players who would compete against one another. Each was programmed to use a different combination of strategies. Id. The simplest robot only knew the rules of the game – when to bet and how much it was allowed to bet – but aside from that essentially played randomly and without regard to its hand. A second robot understood the relative values of the hands. It would bet aggressively when it was dealt a good hand, and hold back when it got a bad hand. It ignored its opponents, As von Neumann and Morgenstern noted, “actual Poker is really a much too complicated subject for an exhaustive discussion” in a theoretical piece (von Neumann at 186), but skillful strategic play is vital to winning even simplified poker tournaments. 10 18 while three other similar robots made conservative or aggressive assumptions about what the other player’s hands contained. Another robot bluffed aggressively. The more sophisticated robots watched their opponent’s betting patterns and made deductions about what those opponents were likely to be holding. Some of these robots would bluff by playing randomly a small percentage of the time in order to confuse other opponents capable of watching and learning. The authors ran a tournament that pitted each robot player against each other player in 100 one-on-one games. Over the course of the tournament, the random-play robot won only 0.4% of its games. It lost $546,000. The four robots that dominated the contest were the ones capable of sophisticated calculations about their odds of winning. The robot that could only calculate odds came in fourth. The robot that could calculate odds and that also bluffed occasionally came in third. But the two most successful robots of all were the robots that most closely emulated tournament poker players. A robot that not only calculated odds but also observed fellow players and adjusted its style of play came in second at $400,000. The best robot of all calculated odds, learned about its opponents, and bluffed occasionally in order to throw its competitors off track. Even in the simplified game of poker designed for the study, with simple hands and only two rounds of betting, the best robot was the robot with the essential skills that every tournament player learns, practices and tries to master. It calculated the odds it was playing against, which was essential to its success. But it outperformed the others by deceiving its competitors with strategic bluffs while learning about and adjusting to its competitors’ style of play. It won 89% of the hands it played, and earned $432,000. See Larkey at 601, table 2. 19 The Larkey study’s conclusions are confirmed by several other recent works. Professor Noga Alon at Tel Aviv University created a simplified version of Texas Hold ’Em that examined some elements of basic poker strategy and concluded that “the result of a soccer match, and probably even that of a tennis match, are influenced by chance more than the results in poker played over a long sequence of hands.” Noga Alon, Poker, Chance & Skill 16–17.11 “Practice and study do help to improve in poker,” he found, and his data supported the conclusion that “skill is far more dominant than luck, and that poker is predominantly a game of skill.” Id. at 17. Several other scientific papers have similarly concluded that skill predominates over chance in poker play. See Laure Elie & Romauld Elie, Chance and Strategy in Poker (Sept. 2007) (unpublished manuscript, attached as Ex. E) (examining several variants of Texas Hold ’Em and concluding that skill determined the outcome in all); Abraham J. Wyner, Chance and Skill in Poker (Apr. 17, 2008) (unpublished manuscript, attached as Ex. F) (a skilled player who can calculate the odds and bet and bluff on that basis has a substantial advantage over players who lack these skills). The same conclusion has been reached by two recent legal analyses. Professor Robert Hannum, a professor of probability and statistics at the University of Denver, and Anthony Cabot, a leading practitioner of gaming law, ran a sophisticated computer simulation and concluded that poker victory depends on skill. Cabot, Poker (conducting Texas Hold ’Em simulations to determine that skilled opponents beat unskilled ones). The author of a second recent article similarly concluded that “poker should not constitute a ‘game subject to chance.’” Michael A. Tselnik, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 35 Hofstra L. Rev. 1617, 1664-65 (Spring 2007). 11 www.math.tau.ac.il/~nogaa/PDFS/skill4.pdf, last accessed Feb. 9, 2009. 20 The number of identifiable skills required to excel at poker and the simulations all predict that, in real life, the more skilled players will win at poker. In fact, that is what we find. The best poker players beat other poker players as often as the best golfers beat other golfers. The fact that poker has a “random device” (see Larkey at 597) introduces short term uncertainty into each hand, but over time the randomness of the cards evens out and all players eventually get the same share of good and bad hands. Their results differ based on how skillfully they play those hands. In the 25-year period beginning with 1976 and ending in 2000, 21 different players won the World Series of Poker. One person won three times in that span Back-to-back winners Poker 3 21 4 14 of 21 2.48 187 Golf 2 22 3 15 of 22 2.96 156 (Stu Ungar), and three more won twice (Johnny Moss, Doyle Brunson and Johnny Chan). Three of these repeat winners won on streaks – Number of different winners Winners of more than 1 title Winners with other top 10 finishes Top 10 finishes per winner Average number of entrants back-to-back wins in consecutive years (Brunson, Ungar and Chan). Fourteen of the twenty-one were “repeat finalists” who finished among the top ten in one or more of the other tournaments. In the same period, there were twenty-two different winners of the PGA Championship, and three multiple winners. Only Tiger Woods won back-to-back titles. Fifteen of the twentytwo champions made it into the top ten in another Championship. These numbers confirm that poker requires as much skill as golf to win consistently. See also Rachel Croson, Peter Fishman & Devin G. Pope, Poker Superstars: Skill or Luck? CHANCE (Vol. 21, No. 4, 2008) (concluding that golf and poker require similar amount of skill to win). 21 It is precisely because poker requires roughly the same amount of skill as golf that poker tournaments now rival golf tournaments in popularity on television. The only people who watch anyone play roulette on television are casino security guards. People only watch lottery drawings to see if they have won. But poker matches are spectator events because, as in any game that people tune in to watch, it is fun to watch good players get beaten by even better players. Like golf, poker is a game won and lost predominately on the basis of the skills of the players. Defendants in this case were playing a game of skill. They were not engaged in unlawful gambling. CONCLUSION For the foregoing reasons, the Court should hold that S.C. Code § 16-19-40 does not prohibit playing poker in a private home, and should dismiss the action against Defendants. Respectfully submitted this 9th day of February, 2009. By: /s/ Thomas C. Goldstein Thomas C. Goldstein Christopher M. Egleson Akin Gump Strauss Hauer & Feld LLP 1333 New Hampshire Ave., NW Washington, D.C. 20036-1564 (202) 887-4000 Kenneth L. Adams Adams Holcomb LLP 1875 Eye Street NW Washington, D.C. 20006 (202) 580-8822 22