Tuesday, March 02, 2010

Felony Poker

I recently had a disagreement with the manager of a local restaurant where we played free poker.  The manager wanted to refuse to allow the tournament winner to participate in winning the prize money unless the winner had made a purchase of at least $10.  I pointed out this would be illegal, but the manager was undeterred by my concerns.

What follows is the written result of my research into the matter that I made available to the restaurant.  What was the reaction I got?  Let's just say they were not pleased that I would not go along with them.  Enjoy...

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I've tried to provide a short summary of how your proposed policy interacts with existing gambling law in Virginia.  Included are a number of relevant quotations from an official Attorney General "opinion."

Gambling is generally illegal, in particular unlicensed gambling.  But what is gambling?  It is generally agreed that a three-prong test must be applied to define something as gambling.  These three prongs are 1) Consideration, 2) Chance, and 3) Reward.  If any of the three prongs are missing, then there is no gambling.  If all three are present, then gambling is occurring.  Bar poker is only legal because it lacks the "consideration" prong.

This is codified in Virginia law 18.2-325.  Consideration is referred to as "placing a bet of money or other thing of value."  Chance is mentioned as "[an] event the outcome [of which] is uncertain or a matter of chance."  Reward is mentioned as "a prize … or thing of value."

Consideration is what you pay to play.  This is generally money for a buy-in, or money to purchase a ticket, or the "bet" that is made.  In North Carolina the state has construed that entry into a restaurant to play poker is "consideration."  In some such states, non pecuniary consideration is accepted, such as walking in the door.

In Virginia this concept is clarified by 18.2-333. 
no consideration shall be deemed to have passed or been given because of any person's attendance upon the premises of another … where no charge is made to, paid by, or any purchase required of him in connection therewith.

So by law, the act of walking in the door is not consideration in Virginia, unless a purchase is required. 

A March 2006 Attorney General opinion on bar poker states:
In our opinion, the type of poker tournaments that you describe does not involve illegal gambling so long as the participants do not pay any money or other valuable consideration, directly or indirectly, in order to participate in the tournaments at any level.

Relevant excepts from the Attorney General opinion include
There is no requirement that a player make a purchase at the tavern – e.g., purchase a drink – in order to play

If there is no consideration, then these poker tournaments would not
be illegal gambling prohibited by the State’s criminal law. An
essential element of gambling is absent when “there is no money or
other thing of value given or required to be given for the opportunity
to receive an award determined by chance. Mid-Atlantic Coca Cola Bottling Co. v. Chen, Walsh & Tecler.

Consideration may simply be money paid to participate in the game. However, consideration may also take many other forms. See, e.g., Opinion of the Texas Attorney General GA-0385, 2005 WL 3568394 (2005) ($10 donation to charitable cause to enter “poker run” was consideration, even if it was not commingled with prize money); Opinion of the Texas Attorney General GA -0335, 2005 WL 1464850 (2005) (“nominal fee” paid to enter Texas Hold ‘Em tournament was consideration even if house did not share proceeds); Opinion of the Kansas Attorney General No. 05-04, 2005 WL 218294 (2005) (payment of cover charge to enter bar where poker tournament was held constituted consideration); Opinion of the Arkansas Attorney General No. 2004-357, 2005 WL 591228 (2004) (entrance fees for poker tournament or membership fees for poker league would supply element of consideration); Opinion of the Tennessee Attorney General No. 05-159, 2005 WL 2755423 (2005) (admission fee to Texas Hold ‘Em tournament was consideration).

In conclusion on the topic of Consideration, the Attorney General says:
Thus, if participants in the tournament you describe were required to pay a cover charge or to purchase a beverage as a prerequisite to participation in the poker tournament, the element of consideration would be present.

Based on my understanding of your proposed policy, requiring $10 in purchase to win the prize would be considered according to Virginia Law 18.2-238 to be illegal.  The restaurant and operator of the game would be guilty of a Class 6 felony.  And under 18.2-326 any player who makes a purchase in the game would be guilty of  Class 3 misdemeanor.

As you requested, this hopefully will help explain to you why I do not wish to be a part of such illegal activities.

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