Feature: Is poker a game of skill or chance? - February 2007  

Tom Lippiett, a solicitor in the betting and gaming group at Berwin Leighton Paisner LLP, outlines the recent verdict in the case against Derek Kelly and the Gutshot Club in London, England.

The UK Gambling Commission (and its predecessor the UK Gaming Board) have long maintained that poker (pictured right, courtesy of Getty Images Sport and photographed by Simon Fergusson), is a game of mixed skill and chance, and therefore needs to be licensed. Accordingly, it came as little surprise to lawyers in the gambling sector when, on 16 January 2007, a guilty verdict was returned in the trial of the owner of the unlicensed Gutshot poker club, Derek Kelly. Kelly denied two counts of contravening the Gaming Act by organising poker games at the Gutshot Club in Clerkenwell without a licence.

The Gaming Act 1968 - the peer to peer loophole

We understand that Kelly’s defence was based on the fact that poker is a game of skill, under the more relaxed rules for ‘peer to peer’ games contained in section 52(6) of the Gaming Act 1968.
Broadly speaking, while skill games in the UK may be subject to wider ‘chance’ issues that may affect the participation by the player (e.g. the run of a ball in online, electronic, snooker), components of the game itself cannot contain any of those elements. Section 52(6), however, states that this will not apply in cases where the game is played ‘against’ one or more other players (i.e. peer to peer) where superlative skill can be taken into account (e.g. in certain games of bridge), even if there is an element of chance inherent in those games. Put another way, an inherent element of chance is allowed in peer to peer games provided that this can be eliminated by superlative skill.
Despite Kelly’s reliance on 52(6), lawyers (along with the Gambling Commission, the prosecuting authorities and, ultimately, the jury in the Gutshot case) have maintained that this does not apply to poker where, despite elements of skill being deployed, for example, in bluffing other players into betting more or folding, the dealing of the cards preserves a significant chance factor inherent in the game, that cannot be eliminated by superlative skill.

A landmark case?

The Gutshot case was somewhat misreported in the English media. Rather than being a final (and ongoing) determination of whether poker was a game of chance or skill in the UK, the case would merely have determined whether or not a loophole in the Gaming Act 1968 could prevent the owner of an unlicensed poker club from facing criminal penalties. If the loophole had applied to poker, it would have been closed in any event in September 2007.
Whilst the British press hailed the fact that an innocent verdict would have been ‘landmark’, it would not have been. The Gambling Act 2005 will replace the Gaming Act 1968 in September, and therefore, from 1 September 2007, the Gutshot club would have been forced to adhere to the provisions of the Gambling Act. Needless to say, the loophole contained in s52(6) of the 1968 Act has been closed in the 2005 Act, which makes it very clear that games of skill and chance combined (whether peer to peer or not) are to be treated as games of chance.

Offering poker legally

If an entity wishes to make money out of the provision of premises for poker, it will need to obtain a casino licence to provide such facilities (unless it falls within one of the limited exemptions set out in the Gambling Act). Having done so, at present, it may only then charge an entry fee and not a rake on the proceeds. That said, we understand that the Gambling Commission is reviewing this position and may permit a rake to be charged in the future.

The upshot of the Gutshot case

Whilst the Gutshot verdict was not of particular significance, it perhaps emphasises the very fine line that exists in English law between gaming for money (which is subject to a stringent licensing procedure), and skill gaming (which is subject to no licensing whatsoever). While we can now say with absolute certainty that poker, in all its forms, is an activity that requires licensing, there are likely to be similar arguments in relation to the plethora of potential (and yet-to-be-devised) skill games that will hit the UK market as the skill gaming phenomenon grows. Backgammon is a classic example of a game that many consider to be pure skill, but, again, the Gambling Commission have already indicated that they consider it to be a game of chance.
Our advice would be if there is any doubt, seek legal advice and perhaps approval from the Gambling Commission before attempting to market a ‘skill’ game that is not very obviously exclusively skill-based.

Tom Lippiett is a solicitor in the betting and gaming group at Berwin Leighton Paisner LLP, specialising in UK and international aspects of the law on gambling and skill gaming. Headed by Hilary Stewart-Jones and David Collins, the group offers a full service regulatory, commercial and corporate service to clients and has been ranked number one in the betting and gaming sector by the Legal 500 for the last six years. 

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