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Internet Gaming In Massachusetts

In Massachusetts, the legality of gaming is determined by three principle factors: the location where the game takes place, the type of game (including the implements used to play it), and the relative balance of skill and chance in the game. Historically, Massachusetts law has defined illegal gaming as “any game of chance or skill, on the issue of which money, or property having any value, depends.” Commonwealth v. Gourdier, 80 Mass. 390 (1860). “Gaming” is synonymous with “gambling.” Commonwealth v. Theatre Advertising Co., 286 Mass. 405 (1934). However, the Massachusetts laws were not written with an eye to the Internet. As a result, the statutory provisions under which this broad interpretation of “gaming” may subsist are tied to the location of the gaming activity and the use of specific gaming implements. For example, MGLA 271 §§ 2-5 creates penalties for both the players and those who maintain the premises at which the gaming activity occurs. It is illegal to “play at cards, dice, or any other game for money or other property” in a “public conveyance or public place.” MGLA 271 § 2 (2006). It is illegal to use a house, building, or other place as a “common gaming house” and to maintain “implements such as are used in gaming” for the purpose of “hire, gain or reward.” MGLA 271 §§ 3, 5. It is difficult to fit Internet gaming within the scope of these statutes, because Internet gaming does not require literally gathering people together in a single location or using physical gaming implements. Rather, the location and implements are provided “virtually” in cyberspace.

Massachusetts law also criminalizes specific types of gaming activity, regardless of the place at which the activity is conducted and the specific gaming implements used.

MGLA 271 § 7 prohibits setting up or promoting lotteries in Massachusetts. The statute declares:

Whoever sets up or promotes a lottery for money or other property of value, or by way of lottery disposes of any property of value, or under the pretext of a sale, gift or delivery of other property or of any right, privilege or thing whatever disposes of or offers or attempts to dispose of any property, with intent to make the disposal thereof dependent upon or connected with chance by lot, dice, number, game, hazard or other gambling device, whereby such chance or device is made an additional inducement to the disposal or sale of said property, and whoever aids either by printing or writing, or is in any way concerned, in the setting up, managing, or drawing of such lottery, or in such disposal or offer or attempt to dispose of property by such chance or device, shall be punished by a fine of not more than three thousand dollars or by imprisonment in the State prison for not more than three years, or in jail or the house of correction for not more than two and one half years. MASS.GEN.LAWS ch. 271 § 7 (2006) (emphasis added).

 For a game to be a “lottery” within the meaning of the statute, the First Circuit explained that “chance must predominate over skill in the results of the game, or the element of chance must be present in such a manner as to thwart the exercise of skill or judgment in a game.”  United States v. Marder, 48 F.3d 564, 569 (1st Cir. 1995).  See also, Commonwealth v. Lake, 317 Mass. 264, 266 (1944).  The relative importance of chance versus skill in determining the results of the game is a matter for the jury.  Marder, 48 F.3d at 569.  The Supreme Judicial Court of Massachusetts has also found this to be a proper jury question.  Lake, 317 Mass. at 268 (the decision of whether a ‘rotary merchandiser’ qualified as a lottery was properly left to the jury).  

The statute covers much more than “traditional” lotteries, such as those commonly run by State governments, where a player purchases a ticket in exchange for a chance to win a prize; § 7 extends generally to games of chance that hold out the possibility of winning property of value for a price. Indeed, in Marder the First Circuit upheld the district court ruling that video poker games were an illegal lottery under § 7. The Court pointed out several, non-exclusive factors that the jury properly could have considered in reaching the conclusion that chance predominates over skill in video poker. First, the jury could consider that “the machine dealt the cards electronically” and “winning depended on the cards dealt by the machine.” Id. Second, the jury could consider the length of time for the average game play, which was a mere two to ten seconds per hand, “hardly sufficient time to use poker skills.” Id. Third, the jury could consider “the profit that defendant made.” In particular, it was relevant that “there were a great many more losers than winners.” This rationale was consistent with that articulated by the Supreme Judicial Court of Massachusetts in Lake that “it is permissible in appropriate instances to look beyond the bare mechanics of the game itself and to consider whether as actually played by the people who play it chance or skill is the prevailing factor.” Lake, 317 Mass. at 268. The argument is that if most people lose, then skill does not enter sufficiently into the game such that it can predominate over chance for the actual people who play the game. In other words, above a certain threshold requirement for skill – where the skills are too specialized or difficult to obtain – the game ceases to be one of skill for practical purposes, because most people can win only through a chance occurrence. See, id. As articulated by Justice Holmes, “what a man does not know and cannot find out is chance as to him, and is recognized as chance by the law.” Dillingham v. McLaughlin, 264 U.S. 370, 373 (1924).

The courts have not considered whether a game such as Holdem, when played over the Internet, falls within the definition of a lottery under § 7. When anticipating how a jury might decide such a case, it is helpful to consider the factors articulated by the First Circuit in Marder.

First, the profit made by the defendant weighs in favor of chance. The house typically makes its money by charging the players an entrance fee and offering the winners a fixed prize (i.e. the house keeps the difference between the entrance fees and the prize money), as opposed to charging per hand. For example, in the “World Series of Poker,” the players bet on each hand, but these bets count only for determining the final winners, who receive fixed prizes. The vast majority of players do not win a prize. Under the logic of the Marder and Lake courts, this creates an inference that “as actually played by the people who play it” chance is the predominant factor. It might also be relevant if the total amount of prize money awarded is significantly less than the sum of the entrance fees paid by the players, because this would also suggest that the game was intentionally designed such that most players would not have an opportunity to win.

Second, as in video poker, the electronic nature of the game likely weighs in favor of chance. Typically, the players are only able to view the cards on the board. They cannot see one another. The players’ inability to “read” the body language of other players makes it significantly more difficult to bluff and to anticipate another player’s hand, skills often touted by poker players. Another inference here is that the electronic nature of the game makes the outcome less predictable. Contrary to any claims made by the website, players have no way of knowing for certain what algorithm is used to draw the cards. Only an opaque computer program ensures that the cards are drawn in a fair manner. Whereas a deck of cards is a deck of cards, a computer program might contain errors, which increases the element of chance.

Finally, the length of the game may weigh in favor of skill, if the jury considers the entire length of game play and not just a single hand. Chance has a large role in determining whether a player can win any particular hand; but, over the course of multiple hands, the odds of getting good cards should naturally even-out. Because the odds are even in the long-run, a player’s skill should assert itself over multiple hands in determining the final winner (the skill is knowing when, and how much, to bet). This argument presupposes that each player stays in the game long enough for their odds to even-out. The argument is weaker if the jury takes a single hand of the game as the relevant time period, an approach suggested in Marder, where the court found it relevant that “one hand of video poker took from two to ten seconds to play.” Marder, 48 F.3d at 569. In Holdem, each individual hand involves several rounds of betting as the boardcards are successively turned over, and probably takes much longer than two to ten seconds to play. Nonetheless, this difference may not be enough to sufficiently reduce the element of chance, especially given that the added time does not change the player’s odds. It is impossible to say at the outset whether a particular game conducted over the Internet and combining some elements of skill and chance is illegal as a matter of law in Massachusetts.

Aaron Perez-Daple