Opinion: The Meaning of United States v. DiCristina

In late August, a judgment was handed down by a US District Court in Brooklyn that caught the attention of several infrequent observers of the US poker industry.

The decision concerned what The Economist called a little fish: Lawrence DiCristina ran “a Staten Island poker parlor” (in the words of poker historian James McManus – a two table, twice-weekly “poker club in the back room of a warehouse out of which he conducted a legitimate business selling electric bicycles”, in the words of US District Judge Jack Weinstein. The house at this poker room charged a 5% rake.

If the stakes seemed low for all but Mr DiCristina, the decision itself has given those with an interest in the legal status of poker in the US some interesting points to ponder. Many advocates for poker as a game of skill, and for online poker’s legalisation, will find much to cheer in Judge Weinstein’s lengthy, detailed, and citation-rich decision, while on the flipside another group of criminal defendants in New York might not find much comfort in the judgment.

The Decision

Earlier this summer, a federal jury convicted Mr DiCristina of operating (and of conspiracy to operate) an illegal gambling business contrary to the federal Illegal Gambling Business Act (IGBA). The defendant brought a motion for a judgment of acquittal based on his contention that the operation of the poker games themselves did not violate the IGBA. Judge Weinstein’s reasons were in response to this motion. On a close reading of the statute, the court vacated Mr DiCristina’s conviction and dismissed the indictment.

The IGBA makes it a federal crime to conduct, manage, finance, supervise, direct, or own all or part of an illegal gambling business. An illegal gambling business under the statute means a business that is in violation of state (or a political subdivision’s) law; that involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of the business; and, that has been or remains in “substantially continuous operation” for more than 30 days or has a gross revenue of US$2,000 in any one day.

That, the government contended, was fundamentally all that was required. Judge Weinstein commented that “[t]he overwhelming majority of cases have assumed, without analysis, that the government need only prove that the business involved gambling as defined by state law.” Put another way, as long as the minimum size of business was met (as to persons and length of time or revenues) and there was a predicate state law gambling violation as to the illegal gambling business, the prosecutors thought they were home free.

Not so, said the court, examining another definition, this one under 18 U.S.C. § 1955(b)(2). “Gambling,” according to the IGBA, “includes but is not limited to pool-selling, bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein.” The DiCristina court held that this constituted a separate federal definition that had to be satisfied in addition to the state law violation to obtain a conviction under the federal statute.

The court noted that the definition of “gambling” is inclusive. It doesn’t “mean” only the nine enumerated activities associated with running a gambling business; it includes but isn’t limited to them. The basic question before the court was whether poker counts as gambling. An exhaustive review of the text of the provision and of Congressional intent in the judgment was inconclusive. However, the judge noted that, if Congress merely intended to include every criminal gambling offence as defined by state law, it could have done so. It chose not to. Having little judicial precedent to go on, and taking the common law and dictionary definitions of gambling, Judge Weinstein held that “gambling” in the IGBA means an activity where chance predominates.

The court preceded this with a comprehensive overview of expert witness testimony, other evidence, and judicial considerations about chance versus skill in poker. The defence put together a solid case that skill predominates over chance. The defence expert offered a devastating series of qualitative and quantitative analyses that skill was the dominant element. In the end, the judge agreed. This won’t surprise many savvy poker players, but a more cogent judicial statement about why poker is predominantly a game of skill will be hard to find.

In several points in the ruling the court found it was settled law that poker amounted to illegal gambling in New York state, which depends on a material element of chance, not a predominance of it. The judge wrote that Mr DiCristina could have been prosecuted under state law in state court by the Richmond County District Attorney’s Office. But the state law violation is only a necessary – not a sufficient – condition. An IGBA conviction also requires gambling under the IGBA. Poker, as a game in which skill predominates, doesn’t fit the bill.

What Happens Now?

Aside from whether the ruling will be appealed (it’s not clear at the time of writing if it will be or not, but it wouldn’t surprise me if it is) one important question is whether this decision could be applied next door in the Southern District of New York where the prosecutions in United States v. Scheinberg et al (the Black Friday indictments) are ongoing. Judge Weinstein’s ruling is not binding but is highly convincing, and a great exposition of many of the judicial and factual considerations around the IGBA. It would be surprising if it went unnoticed.

At the same time, the IGBA charges in the Black Friday indictments are only a part of the picture there, and a small part at that. At the time of writing, six of the original criminal defendants have pled guilty and the remaining five have, variously, pleaded not guilty or haven’t presented themselves before the court. The charges facing those remaining include Unlawful Internet Gambling Act violations, bank fraud, and money laundering. Even if the IGBA counts were lopped off, many of the most serious charges are still outstanding.

The DiCristina decision does potentially weaken the US Attorney’s case in Scheinberg on the IGBA counts and could be used by the Black Friday defendants to lever a plea out of the government. DiCristina is confined to poker under the IGBA. Conducting an unlicensed poker room could still fall afoul of the federal UIGEA and the Travel Act, for example, as Judge Weinstein’s opinion clearly suggests. In fact, DiCristina may portend more reliance on the Travel Act by federal authorities in interstate or foreign commerce cases if DiCristina is upheld on appeal, and if it’s appealed.

DiCristina should be read by everyone with an interest in legalisation of poker in the US; it’s a well-reasoned and informative decision, but we shouldn’t necessarily expect it to play a decisive role in other poker prosecutions based on the IGBA and other alleged federal offences.