For now it depends on where you live…
In the United States, each individual state possesses its own authority to decide whether it is legal to play poker for money, and the regulations vary significantly. In Texas, poker for money is legal only in private residences. In Indiana, poker for money is legal only at regulated casinos. In Utah, poker for money is not legal at all.
Last year in a ruling handed down by Judge Thomas A. James in Pennsylvania, it was ruled that Texas Hold ‘em is a game of skill, and therefore, not gambling under state law.
Cigital Inc. Study
A study released in 2009 proves poker is without a doubt a game of skill. Cigital Inc. in cooperation with Rational Entertainment Enterprises Limited (REEL) and PokerStars, recently published the findings of its 103-million-hand study.
The 103 million hands were taken from a series of Texas Hold ‘em cash ring games on PokerStars and were played between December 1, 2008 and January 2, 2009. Texas Hold ‘em is a 7-card game with simple rules that a beginner can learn and begin to play immediately and is the most played form of poker today. However, it is a fast and complex game that takes skill and practice to master.
The Cigital study analyzed hands from multi-player games in the micro-limit arena with 10 cent, 25 cent, and 50 cent blinds. Cigital looked at the data without predisposition towards the final outcome and found that the majority of the hands played were won without deference to the actual value of the cards, as only 24.3% of the hands went to a showdown, and only 50.3% of those were won by the player holding the best five-card hand.
The most interesting statistic though, was that only 12% of the hands were won by the players who made the best hand early and took it to a showdown to take the pot. The vast majority of hands were won through betting strategies that did not rely on the best five-card hand to win.
This study is a major breakthrough in the fight for regulation and legalization of online poker. It actually says something about successful poker players and their skill set. The fact that they do rely on skill to win the vast majority of their hands likens poker to any other legal sport such as baseball. The average person doesn’t pick up a bat and hit a homerun the first time. However, in time, he will improve. Furthermore, while he can’t determine where his next opponent will hit the ball, he can still learn to catch it.
University of Hamburg’s Institute of Law and Economics Study
This study performed by Ingo Fiedler and Jan-Philip Rock of Germany was not an analysis of hands but an analysis of players. For three months, they recorded the outcomes of more than 55,000 online players playing millions of hands of No Limit Texas Hold ‘em in mid-level games. They began with the assumption that poker is a game of skill but pointed out that no matter what the poker community may believe, this is still a hypothesis subject to test.
Their aspirant for this measure is the Critical Repetition Frequency (CRF). The CRF is based on two factors: 1) the number of hands needed before a player can be confident that his results reflect skill level and 2) that a scientist evaluating the date will be confident that these numbers are reliable.
Basically, the CRF for an individual player is the point in their playing career where the impact of skill crosses that of a random turn of a card. Please note, that the word “confident” in these analyses means “95% certain.” There is always room for error in statistical analyses. What they found may surprise you.
First of all, a lot of players whose data they had access to were winners, one-third to be exact (standard thinking would put only 5-7% of these players as winners). The vast majority of players in their sample though, played fewer than 100 hands, went broke, and never logged on again. The impact of this infusion of “dead money” is to make many players winners, though most of them don’t win much and the “standard wisdom” is undoubtedly far closer to the truth. Second, they measured the average value of a player’s winnings or losses: highly skilled or terrible players would do noticeably better or worse than would be expected by chance alone.
Based on these factors, they found that the threshold at which the effects of skill start to dominate over chance is typically around the 1,000th hand, equivalent to about 33 hours of playing poker in person or 13 hours online, where the rate of play is faster.
Poker Players Alliance Stance
John Pappas of the PPA in Washington DC says both studies are badly needed to help properly define the law. In many US states, judges and juries use a so-called “predominance test” to gauge skill and chance, based on the opinions of the expert witnesses. Although courts in Pennsylvania, Colorado, and South Carolina have all ruled that poker is a game of skill, not all courts do.
Pappas says, ”It would not be wise for any of us to rest on our laurels.” The PPA expects the Cigital study will now be used as evidence to fight appeals against court rulings that decide poker is not a game of skill.
Determinants by States
One way states decide whether or not a game violates state anti-gambling statutes is the Dominant Factor Test. The occurrence of chance in a game is a determining element of whether or not a game is considered gambling or non-gambling. Most US state governments have deduced that when a game also has an element of skill, that factor prevails over the element of chance. Many states apply this predominance test, aka Dominant Factor Test to determine whether or not a game is legal.
Another issue addressed by states is the aspect of social gambling. The answer here lies within what the game is being used for and how money is being handled. Many states do allow playing poker in a social context, which is most often defined as a game that does not involve a host or bookie, takes rake for the house, profits anything as a whole over the individual player’s winnings.
Some states have ruled on Internet gambling, some have not. However, it should not be assumed that if there is no specific ruling then there is no law to break.
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