A Comparative Study of State Laws on Social Gambling

by Bob Ciaffone

The purpose of this study is to draw attention to the wide variations in state laws pertaining to social gambling. This hopefully will help highlight poor laws in certain states that do not seem to be taking a realistic approach. It will also ease the task for someone who wishes to improve a state's gambling laws by directing him where to look.

A comparison of state gambling laws shows a number of very large differences. Some states take the view that any form of gambling, even private games in someone's home, should be prevented by law. Other states allow contests for prize money, as well as social gambling. Penalties vary widely from state to state. A violation that gets a small fine in one state can theoretically result in a sentence of ten years of jail time in another state. There does not appear to be any significant differences in the internal gambling situations faced by each state to explain or justify such a wide gulf in approach. They cannot all be right. This study takes a close look at the specifics of gambling laws to see what these differences are and what should constitute a reasonable approach.

This analysis only looks at the laws pertaining to social gambling, and the holding of games and sporting contests for prize money. It does not delve into charity gambling, lotteries, carnival games, racetracks, bookmaking, or casino gambling. This survey is also limited to laws that are made at the state level. There are also city and county laws that regulate gambling. These are often stricter than the state law. Therefore, information presented in this survey does not necessarily mean that a form of gambling is definitely legal in a particular locality.

METHODOLOGY

The information for this study was obtained by going to the "state statutes" section of the law library. All the states were represented, and each state has an index of its laws. By looking up "gambling" in the index, the appropriate laws can be located. Copies of the gambling laws of each state were assembled, studied, and categorized.

Although the author considers this study to be useful, it is not likely to be error-free, for the following reasons:

The author is not a lawyer, and has no formal training in legal research. This deficiency may prove to be meaningful in tracking down updates and amendments to state laws.
With a few states, all their laws on gambling are not grouped in a single concise section. Thus, some laws may have been overlooked in this research.

There are two states not mentioned in this survey. Nevada and New Jersey are absent because their legalization of casino gambling has produced too many laws on gambling to be reasonably integrated into this study. The author apologizes for this shortcoming.

WHAT CONSTITUTES GOOD GAMBLING LAWS?

What characteristics should be expected from a gambling law to make it a "good law?" Here are some guidelines:

Is the law in tune with the general sentiment of the citizenry? Many state laws on gambling are much more strict than prevailing attitudes, mores, and practices. Therefore, although these laws are on the books, they seldom actually come into play. Furthermore, when some laws on gambling are perceived as unrealistic, this can inhibit the enforcement of other laws that do have value.
Will the law be properly enforced? A poorly conceived gambling law puts unreasonable pressure on law enforcement. Can the law be enforced without making a value judgment about its appropriateness? To do so inevitably brings the cry of why law enforcement is not out chasing real criminals. On the other hand, can law enforcement officials ignore a complaint made about an activity that violates the law? An unreasonable law will usually be only enforced sporadically, which opens law enforcement to the charge that the manner of enforcement is capricious in nature.
Will the enforcement of the law bring discredit on the legal system? A Pennsylvania decision said: "Until legislature makes some distinction between gambling which is considered harmless or primarily for amusement and that which is considered harmful to public, or makes some distinction as to degrees of gambling, courts have no option but to enforce the law when gambling is established according to meaning of statutes" [Petition of Hewman, 49 Lack. Jur. 77, 1948].
With a bad law on gambling, there is always the possibility of a serious injustice occurring. For example, a complaint is made, perhaps by an irate spouse or someone with a grudge. The police act on the complaint, and arrest a group of people that includes the target of the complaint. The court has no choice but to enforce the law. The result is that a group of citizens have an arrest and gambling conviction that becomes a black mark on their personal record, which must then be noted on job applications and other forms. This type of injustice can and does happen. The best solution is to improve the law.
Will the law create expensive litigation? Vague and poorly worded laws are not in the public interest. They cost the taxpayers money by bringing about unnecessary court cases. Many gambling laws should be changed in their wording to more clearly define which types of gambling activity are legal and which are illegal.

BADLY WORDED LAWS

Is it a "game of chance" or a "game of skill?" These phrases are frequently found in gambling statutes. Unless they are properly defined, trouble in the form of expensive litigation can ensue.

How should such games as backgammon, poker, and bridge be classified? In the short run, there is a strong element of luck in each of these; in the long run, skill predominates. Even a game where the effectiveness of a good player over an average player is not large, there can still be a huge advantage against a very weak player. For example, consider two players playing blackjack, where one of them adopts the ridiculous strategy of hitting until he either makes 21 or goes bust. He would clearly do very poorly against any opponent of even mediocre quality.

Nearly all the states using the phrase "contest of chance" have a good definition for it. Here is the excellent wording used by New York state: "'Contest of chance' means any contest, game, gaming scheme, or gaming device in which the outcome depends in a material degree upon an element of chance, notwithstanding that the skill of the contestants may also be a factor therein." Some other states using virtually identical wording are Alabama, Alaska, Hawaii, and Maine.

The only states that could be found using the phrase "contest of chance" without bothering to define it at all were West Virginia and North Carolina. In North Carolina the phrase was defined in a court decision. That decision said "a game of chance is one in which the element of chance predominates over the element of skill, and a game of skill is one where the element of skill predominates over the element of chance" [State v. Eisen, 16 N.C. App. 532, 192 SE 2nd 613 (1972)]. This poor definition for "contest of chance" is used with alarming frequency in local ordinances throughout the United States. The lesson is simple: jurisdictions should give a good definition of any unclear terms used in constructing a law.

There does not seem to be anyone claiming that athletic games have chance as a material factor, at least in law cases. Of course, there is an element of luck in any game. For example, two golfers each hit a shot into a tree. One of them has his ball ricochet into the fairway, and the other into deep rough. Obviously, one was lucky, and the other unlucky. Nevertheless, speaking in a legal sense, there is not considered to be any element of luck or chance in a game such as golf. To have an element of chance in a legal sense, there needs to be some luck that is introduced as an integral part of the game. This would be done by using dice, cards, tiles, or some other "randomizing agent."

Perhaps the most expensive gambling litigation has taken place in the state of California. The California law reads in part: "Every person who deals, plays, or carries on ... any banking or percentage game played with cards, dice, or any device ... is guilty of a misdemeanor ..." [Title 9, section 330]. This law could have been ruled unconstitutionally vague by a court case in the late 1800s; however, the court upheld the law by a two to one decision. The dissenter said: "If the state of California wishes to use those words, let it define what it means by them."

After 100 years of hindsight, one wishes the court had struck down the statute's wording as too vague. In the years between 1987 and 1990, enormous sums of money were spent by the California Card Club Association and the Office of Attorney General in disputing the meaning of these terms. So far, cases have only been decided at the local level, and the end is nowhere in sight. The terms "banking game" and "percentage game" are used by two other states in anti-gambling laws, Arizona and Oklahoma; however, neither defines them.

The state of Louisiana outlaws gambling "as a business," but fails to define that crucial term. This omission almost resulted in a major lawsuit when a two-week poker tournament was held as an annual event in Lafayette, Louisiana. It had been held for three straight years without a problem. However, after it had run for five days in the fourth year, federal and state authorities decided to close down the tournament. Over a thousand people were in attendance. The litigation that could have stemmed from a raid was mind-boggling. Fortunately, the organizer was merely threatened, and he closed down voluntarily. As in this case, it seems foolish for a state to use the phrase "as a business" without clarifying what it means.

SOCIAL GAMBLING

Social gambling is common in virtually all societies. Many people feel that a game or sporting event becomes "more interesting" if something of monetary value is at stake.

"Serious" gambling activities are either banned outright or closely regulated in every state of the United States. There are many different approaches taken in the wording of each state's laws on gambling. Some states distinguish social gambling from "serious" gambling; others do not. In this analysis, states are classified by their legal treatment of social gambling.

It is perhaps easier to look at individual cases to see whether or not they are "social gambling," than to draw up a broad definition. For example, Joe bets Bill $50 on the Super Bowl. Bob bets John a "$ 10 Nassau" on their golf match. Alice and her girlfriends have a weekly poker game. Strictly speaking, to be considered social gambling, each of these harmless-sounding activities should in the author's opinion comply with the following suggested criteria to be considered "social gambling":

Nobody other than the parties themselves should derive any monetary benefit from it. For example, if someone were to run a "golf match booking agency" to which was paid a fee for arranging a money match between Joe and Bill, their actions would take on more serious weight.
Nobody may be paid a commission for making or taking a bet. An important distinction between a social bet and bookmaking is the fee paid to the bookmaker for accepting the wager.
Nobody may advertise the activity in a formal manner. Were Alice to place an ad in the classified section of the newspaper, "poker players wanted," the nature of her activity would change.
It should not be held in a public business-place.

In some states, Alice could have a poker game at her house and not be in violation of the law. She would not be allowed to advertise her game, rake the game, or have a built-in house advantage, such as "Alice always deals." Perhaps she could charge a small amount for playing to cover the expenses such as food and beverages, but nothing beyond that.

In other states, the mere fact that Alice and her friends were betting on the outcome of their game would make such activity illegal. No distinction is made in state law to exempt "social gambling." While police departments do not ordinarily spend much time and energy busting home poker games, they are still obligated to enforce the law. Were someone to complain about Alice's game, law enforcement would probably feel obligated to take some action.

Some states have a law which permits social gambling, but do not define the term. For example, Alabama law 13A-12-21 reads as follows:

"Simple Gambling.

(a) A person commits the crime of simple gambling if he knowingly advances or profits from unlawful gambling activity as a player.

(b) It is a defense to a prosecution under this section that a person charged with being a player was engaged in a social game in a private place. The burden of injecting the issue is on the defendant, but this does not shift the burden of proof."

Other states that explicitly allow "social gambling" without defining that term extensively include Alaska, Colorado, Connecticut, Kentucky, Minnesota, New York, Texas, Virginia, and Wyoming.

It is better to clearly define what is meant by a term such as "social gambling." Four states which do so are Hawaii, Maine, Oregon, and Iowa. The following three examples are spelled out in their entirety, because they all seem to be reasonable and thoughtfully conceived.

"Hawaii, Law 712-1231. Social gambling; definition and specific conditions, affirmative defense.

(a) Definition. 'Social gambling' means gambling in which all of the following conditions are present:

1. Players compete on equal terms with each other; and

2. No player receives, or becomes entitled to receive, anything of value or any profit, directly or indirectly, other than his personal gambling winnings and

3. No other person, corporation, unincorporated association, or entity becomes entitled to receive, anything of value or any profit, directly or indirectly, from any source, including but not limited to permitting the use of premises, supplying refreshments, food, drinks, lodging or entertainment; and

4. It is not conducted or played in or at a hotel, motel, bar, nightclub, cocktail lounge, restaurant, massage parlor, billiard parlor, or any business establishment of any kind, public parks, public buildings, public beaches, school grounds, churches or any other public area; and

5. None of the players is below the age of majority; and

6. The gambling activity is not bookmaking."

The state of Maine injects its definitions of social gambling by the way it defines "player."

"Maine, Law 17-A 952

'Player' means a person who engages in social gambling solely as a contestant or bettor on equal terms with the other participants therein without receiving or becoming entitled to receive something of value or any profit therefrom other than his personal gambling winnings. 'Social gambling' is gambling, or a contest of chance, in which the only participants are players and from which no person or organization receives or becomes entitled to receive something of value or any profit whatsoever, directly or indirectly, other than as a player, from any source, fee, remuneration, connected with said gambling, or such activity as arrangements or facilitation of the game, or permitting the use of premises, or selling or supplying for profit refreshments, food, drink service or entertainment to participants, players or spectators. A person who engages in 'bookmaking' as defined in subsection 2 is not a 'player.'"

The author's personal preference for a model definition of social gambling is that used by the state of Oregon. It reads more like plain English than lawyers' jargon. In Oregon, "social game" means:

"(a) A game, other than a lottery, between players in a private home where no house player, house bank or house odds exist and there is no house income from the operation of the social game.

(b) If authorized pursuant to ORS 167.121, a game, other than a lottery, between players in a private business, private club, or place of public accommodation where no house player, house bank or house odds exist and there is no house income from the operation of the social game."

The ORS 167.121 referred to says "Counties and cities may, by ordinance, authorize the playing or conducting of a social game in a private business, private club or in a place of accommodation." Of the states which defme "social gambling," we see that Oregon has the most liberal definition. It permits, under certain conditions, games at country clubs, offices, and the like.

The only state to have a specified amount of winnings or losses in its legal definition of social gambling is Iowa. That state's law says one of the qualifications of social gambling is:

"h. No participant wins or loses more than a total of fifty dollars or other consideration equivalent thereto in all games or activities at any one time during any period of twenty-four consecutive hours or over that entire period. For the purpose of this paragraph, a person wins the total amount at stake in any game, wager or bet, regardless of any amount that person may have contributed to the amount at stake."

This law could easily be violated in the following scenarios:

(b) Eight people sit down to play poker, each with $25 in chips to start.

(d) A golf game is played at $20 Nassau stakes.

One can imagine some interesting conversations produced by the law: a) "Better not invite Alice to our poker game any more; she plays so loose that she's liable to exceed the $50 loss limit." b) "Partner, we can't bid any higher than game on this hand, or Joe will be stuck over 50 dollars." c) "Well, Tom, I've got you on a blitz, but I'm going to have to keep drawing cards and let you score, even though I have gin in my hand, so the 50 dollar limit won't be exceeded."

Obviously, the idea of a $50 dollar win-or-loss limit being an integral part of social gambling was not conceived of by someone who had much gambling experience. It seems better to follow the concept used in all other state laws that social gambling is not determined by the stakes at risk, but by other factors such as where it takes place.

It is apparent that excluding social gambling from the scope of anti-gambling statutes is an important part of state policy on gambling, for many states. I believe those states who make all forms of gambling illegal, without considering the social setting where that gambling takes place, are being unreasonably strict in their gambling laws.

CONTESTS AND TOURNAMENTS

This section will not concern itself with racetracks, lotteries, merchandising schemes, or amusement park games. Since the focus of this study is on social gambling, the scope is confined to looking at the legality of competing for money at various sports and games.

There are an enormous number of competitions staged in the United States — and other countries — where prizes can be won. There are sporting contests such as bowling leagues, golf tournaments, fishing contests, dance contests, and shooting competitions. There are tournaments at games of pure skill such as chess and checkers. Games having a blend of luck and skill that are often played in competition are bridge, backgammon, Monopoly, Scrabble, and dominoes. There are many other activities that could be added to the list, because one can have a competition at virtually any human endeavor. It is evident that competing for prizes at sports and games is an enjoyable recreation that is frequently indulged in by mainstream America. One of the shocking findings of this survey is that there are still a lot of states that consider competing for prizes in a competition to be illegal gambling. An example can be found in Mississippi, Law 97-33-1. Gambling — wagering generally — carries the following penalty:

"If any person shall encourage, promote or play at any game, play or amusement, for money or other valuable thing, or shall wager, promote or encourage the wagering or betting any money or other valuable things, upon any game, play, amusement, cock-fight, Indian ball play, or duel, or upon the result of any election, event or contingency whatever, upon conviction thereof, he shall be fined in a sum not less than five dollars nor more than five hundred dollars: and, unless such fine and costs be immediately paid, shall be imprisoned for any period not more than twenty days nor less than five days."

It is a safe bet that the letter of the law is not firmly enforced in Mississippi!

The tool used by many states to allow competing for prizes is the "bona fide contest" clause. In defining "bet," Kansas Law 21-4302 is typical when it says a bet does not include: "Offers of purses, prizes, or premiums to the actual contestants in any bona fide contest for the determination of skill, speed, strength or endurance or the bona fide owners of animals or vehicles entered in such a contest." Illinois is even more direct. Illinois Law 38-28-1 says: "Participants in any of the following activities shall not be convicted of gambling," and then it gives the bona fide contest clause. Some other states using the bona fide contest clause method of allowing for competition for prizes are Colorado, Connecticut, Indiana, Iowa, Michigan, Minnesota, Nebraska, New Mexico, North Dakota, Texas, Virginia, Wisconsin, and Wyoming.

A tool used by a number of other states to allow competition for prizes is the way they define gambling. For example, Alabama law 13A-12-20; definitions, reads:

"Gambling. A person engages in gambling if he stakes or risks something of value upon the outcome of a contest or chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome."

This implies if a person bets on himself, he is not gambling. Some states using the "not under his control or influence" clause are Alabama, Alaska, Hawaii, Maine, Missouri, New York, and Oregon.

It seems to the author that a state wishing to allow contests for prize money is better advised to say so explicitly via a "bona fide contest" clause, rather than by the rather artificial method of declaring that betting on yourself is not gambling. The "bona fide contest" method also has the advantage of making it obvious that people associated with the organization and running of a contest are not breaking the law.

Table 1 presents a listing of the status of all the states with regard to allowing social gambling and bona fide contests. It is the author's opinion that any state that does not allow social gambling and bona fide contests has a fundamental flaw in its gambling laws. The number of states in this situation is 28, and half of those have neither social gambling nor bona fide contest laws.

TABLE 1

STATES ALLOWING SOCIAL GAMBLING AND/OR BONA FIDE CONTESTS

STATE

SOCIAL GAMBLING OK

BONA FIDE CONTESTS OK

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

STATES ALLOWING SOCIAL GAMBLING AND/OR BONA FIDE CONTESTS

STATE

SOCIAL GAMBLING OK

BONA FIDE CONTESTS OK

Maryland

Massachusetts

Michigan

Minnesota

Mississipi

Missouri

Montana

Nebraska

New Hampshire

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

STATES ALLOWING SOCIAL GAMBLING AND/OR BONA FIDE CONTESTS

STATE

SOCIAL GAMBLING OK

BONA FIDE CONTESTS OK

Tennessee