The Texas Attorney General was asked to rule on the legality of so-called “bar” or “amateur” poker leagues under the Texas anti-gambling statutes.  (See RQ-0305-GA under the 2005 selection box.)  The request covers two alternative variants of Texas Hold’em tournaments held in an establishment with a Texas liquor license. 

In the first variant, players pay a cash entry fee of from $25 to $50 to play.  The establishment does not keep any of the entry fee.  Rather, all of the fee is contributed to a prize pool that is paid out to the top finishers in the tournament.  The establishment does not charge a door fee or require any minimum purchase of food or beverage.  It profits only from any discretionary sales of any food or beverage to the players.  No gambling is otherwise allowed.  The players are given chips without further charge and wager these, with the prize pool being distributed to the top finishers based on the number of chips accumulated.

In the second variant, the play of the tournament is the same as in the first.  However, players neither pay an entry fee nor are charged a door fee or otherwise required to pay the establishment anything.  Again the establishment only profits from discretionary sales of food or beverage to the players.  At the end of the tournament prizes put up directly or indirectly by the establishment are awarded to the top finishers.

On June 20, 2005, the Texas Attorney General issued his Opinion No. GA-0335, which concluded:

“A holder of an on-premises alcoholic beverage permit may not, without violating both section 47.04(a) of the Penal Code and Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants risk money or any other thing of value for the opportunity to win a prize. A holder of an on-premises alcoholic beverage permit may, without violating either section 47.04(a) of the Penal Code or Rule 35.31 of the Alcoholic Beverage Commission, host a poker tournament in which participants do not risk money or any other thing of value for the opportunity to win a prize.”

Those conclusions confirmed the views I expressed in the following brief I filed with the Texas Attorney General concerning these situations.

January 25, 2005

To the Honorable Greg Abbott
Attorney General for State of Texas
P. 0. Box 12548
Austin, TX 78711-2548

Re: RQ-0305-GA

Dear Attorney General Abbott:

The captioned request for an Attorney General’s opinion concerns the applicability of the Texas anti-gambling statutes to two different situations involving the holding of poker tournaments on the public premises of the holder of a Texas liquor license.

In the first situation the hypothetical facts include the payment of an entry fee of from $25 to $50 by each player, all of which is placed in a prize fund and awarded to those who finish in first through fifth place (or through a greater number of places in the case of a tournament with a larger number of players.) There is no question in my mind that this scenario constitutes a violation of the anti-gambling statutes of Texas as applied to the license holder and the players since the entry fee paid by the players is consideration paid by them to win a prize in a contest of chance.

There are three basic common law elements of gambling—prize, chance and consideration.

On the hypothetical facts it is clear that there is a prize.

It is also clear that chance is present. The game being played is a form of poker and no court that I am aware of has ever held any form of poker to be a game of skill.  A further analysis of this is contained in an article on my Website entitled Is Poker in the U.S. a Game of Skill?

Finally, there is clearly consideration paid by the players in the form of the entry fee. This consideration would constitute a “bet” as that term is defined in § 47.01(1) which requires that there be “an agreement to win or lose something of value solely or partially by chance.”

(The request for your opinion is silent on the issue of whether an alternative “free” means of entry is made available. If that were the case it would be possible to make an analogy to legal promotional contests where the element of consideration is eliminated by virtue of the offer of the alternative means of free entry.)

The second question presented in the request involves the same situation, but the payment of an entry fee is eliminated. No player is required to pay any consideration in order to be allowed to play and compete for the prizes offered, which the request notes may range from a cap or T-shirt to the chance to play in a subsequent tournament, again without the payment of any consideration by the player, the winner of which may receive a prize of substantial cash or cash-equivalent value.

I believe these so-called “bar league” or “amateur league” poker tournaments do not violate the Texas anti-gambling statutes because there is no “bet” made. An argument has been advanced that the statutory definition of bet is triggered by the mere exchange of chips the players received for free since the chips represent the right to a prize if a player accumulates enough of them. See “A hold on Texas Hold’Em” by Markus Kypreos, in the Nov-Dec 2004 issue of The Texas Prosecutor magazine. I believe the word “agreement” in the statutory definition of “bet” must be read to require the player to part with something of value other than the free chips.

A reading of the statute such as that advocated by Mr. Kypreos would cause the prize being offered to also serve as the consideration for the winning of that prize. I believe that argument is insupportable. I am not aware of any decided case in which the facts leading to a violation of one of the Texas anti-gambling statutes did not involve the actual out-of-pocket payment of cash or some other valuable consideration by the player in order to win a prize in either a game of chance or a lottery.

Also, such a reading of the statute would criminalize promotional contests, thousands of which are held in Texas every day. Promotional contests would clearly contravene the anti-gambling statutes if the players had to pay to play. Most such contests are uniquely akin to the bar leagues in that the player in the contest either is given a free entry or given a means to secure a free entry if the entries are handed out on the purchase of groceries, hamburgers or other items. Glick v. MTV Networks, 796 F. Supp. 743, is a fascinating case that involves New Jersey’s anti-gambling and gambling debt collection statutes and contains an analysis of the need for an element of consideration in the context of gambling in the form of a lottery….

Thank you for considering my views.

The Opinion cited my brief for certain matters.  The opinion also said:

“On the other hand, a number of state courts have held that poker is not predominantly a game of chance. See, e.g., Ginsberg v. Centennial TurfClub, Inc., 25 1 P.2d 926,929 (Colo. 1952); State ex rel. Evans v. Bhd. ofFriends, 247 P.2d 787,797 (Wash. 1952); State v. Coats, 74 P.2d 1102,1106 (Ore. 1938). 

That observation is incorrect.  It perpetuates a long-standing mythical belief that some court somewhere has held that poker is a game of skill (i.e. that the elements of skill, whatever they may be, predominate over the elements of chance, whatever they may be, in determining outcome.  It is not inconceivable that a court may so rule at some time in the future.  However, no court has as yet done so.  Here is my supplemental letter to the Attorney General commenting on that observation in his opinion:

June 22, 2005

The Honorable Greg Abbott Attorney General for the State of Texas
P. O. Box 12548 Austin, TX 78711-2548

Re: GA-0335.

Dear General Abbott:

I was flattered to be mentioned by way of footnote in your recent opinion on the so-called “bar poker leagues.” I found the opinion to be very well reasoned and thorough. However, the statement in the second full paragraph on page 3 perpetuates a myth that there is a court decision somewhere that has held poker to be a game of skill. In my extensive research on this topic I have never been able to find such a case in any state.

The referenced paragraph in your opinion states:

“On the other hand, a number of state courts have held that poker is not predominately a game of chance. See, e.g., Ginsberg v. Centennial Turf Club, Inc., 251 P.2d 926, 929 (Colo. 1953); State ex rel Evans v. Bhd of Friends, 247 P.2d 787, 797 (Wash. 1952); State v Coates, 74 P.2d 1102, 1106 (Ore. 1938).”  (Emphasis supplied.)

The Ginsberg case involved the question of whether pari-mutel betting on greyhound racing under a Colorado enabling statute was a violation of the Colorado Constitutional ban on lotteries. The Court there made the point that all lotteries were gambling, but that not all gambling constituted a lottery. In support of that conclusion the Colorado Supreme said:

“In Colorado a ‘lottery’ or ‘gift enterprise’ cannot be authorized by law. However, there is no prohibition in our Constitution which prevents the legislature, or the people, from authorizing certain forms of gambling. It unquestionably is true that all lotteries and gift enterprises are forms of gambling, but it does not follow that all gambling is a ‘lottery’ or ‘gift enterprise,’ as those terms are defined in law. No one would contend that a game of poker, in which money is bet upon the relative value of the cards held by the participants, constitutes a lottery, but it most certainly is a form of gambling. 251 P.2d at 929.”

Thus, it is clear that the Colorado Supreme not only did not find poker to be a game of skill, but did find it to be a gambling game, which would tend to support the conclusion that all three of the common law elements of gambling were present in poker, i.e. prize, consideration and chance.

In Evans v. Board of Friends the operation of garden-variety slot machines was involved. The legal issue was whether the operation of the machines constituted a lottery prohibited under the Washington Constitution. The Washington Supreme Court held that running such machines did constitute an illegal lottery. It, favorably citing the opinion in State v. Coats, saying:

“…as to the element of chance and the possible factor of skill or judgment, the court further stated in this case, 158 Or. at page 132, 74 P.2d at page 1106:

“Poker, when played for money, is a gambling game, but, since it involves a substantial amount of skill and judgment, it cannot reasonably be contended that it is a lottery. “

41 Wn.2d 133, at 150.

Again, the Washington Supreme Court decision makes clear that while poker is not a lottery, it is nonetheless a gambling game. While the Court concluded that poker was a skillful game, it certainly did not hold that poker was a game of skill. To constitute a legal “game of skill” the elements of skill must predominate over the elements of chance in determining outcome. That issue was not addressed by the Washington Supreme Court. The implicit holding, however, was that poker is a game of chance, since the Court found it to be a gambling game.

Your opinion cites the decision in State v. Coats, 74 P.2d 1102. That case involved the question of whether a pinball game constituted the operation of an illegal lottery. The Oregon Supreme Court noted:

“The defendant contends that, since the pinball game, under the allegations of the information, involves an element of skill, it cannot, under the law, be deemed a lottery. The defendant further asserts that, before any game can be said to constitute a lottery, “pure chance” as distinguished from “dominating chance” must be involved. In the instant case, it is alleged that the course of the marble ball “is controlled to a certain degree by the skill of the player.” Hence, defendant contends, the playing of the game does not involve “pure chance” and therefore cannot be a lottery….”

“Three things are necessary to constitute a lottery, viz, prize, chance and consideration: (Citations omitted.) If any substantial degree of skill or judgment is involved, it is not a lottery. Of course, all forms of gambling involve prize, chance and consideration, but not all forms of gambling are lotteries. A lottery is a scheme or plan, as distinguished from a game where some substantial element of skill or judgment is involved. Poker, when played for money, is a gambling game but, since it involves a substantial amount of skill and judgment, it cannot reasonably be contended that it is a lottery. In the instant case the mechanical device is the means of carrying into execution the illegal scheme or plan. Tested by the legal principles above stated, we are convinced that the mechanical device described in the information constitutes a lottery.”

Thus, it is again clear that poker was not held to be a “game of skill” in the legal sense. Rather, since poker is a game in which some skill is involved, it is not a lottery, but it is nonetheless “gambling,” which implies the conclusion that it is a game of chance.

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