On March 25, 2010, Governor Steve Beshear of Kentucky launched his latest attack against online gaming companies. Previously, he had tried to seize Internet domain names using ancient anti-slot-machine laws. This time, he is suing Pocket Kings, who he falsely claims is the operator of Full Tilt Poker, for all the money lost by Kentucky online poker players, times three.
In the 19th century, the Kentucky Legislature passed a law allowing losers at gambling to sue winners. And, if the loser does not sue, then anyone else may sue and get three times the money lost.
Where does a strange law like this come from?
In 1710, Queen Anne of England signed an Act making gambling debts legally uncollectable. It may seem strange that a 300 year old statute from another country – it has an exemption for gambling in the royal palaces – would matter in 21st century America. But the Statute of Anne is still the law of every state, until it has been changed by a court or legislature. If you don’t believe it, try suing a Nevada casino that refuses to pay a jackpot.
Anti-gambling feelings ran so high in early America, that many states wrote into their constitutions that they would never allow lotteries. And some legislatures passed statutes allowing losers to sue winners, or allowing state attorneys generals to sue to get the money back, or even three times the losses.
Of course, times change. A majority of the states today have state lotteries. And every state, except Utah and Hawaii, has commercial gambling – including Kentucky.
You don’t have to be a lawyer to see the big issue: Is the operator of a poker room a “winner” under these statutes? Gov. Beshear would have had a much stronger case if he had gone after online casinos. But he is obviously not a gambler. Since he does not play the games he is trying to stomp out, he does not understand the difference between banking and non-banking games.
Modern cases don’t help Gov. Beshear’s crusade. The most recent one was in 1952 and involved a husband suing a fraudulent charity for his wife’s losses at bingo and slot machines.
As an interesting aside, three ancient cases involve operators suing their winning customers. Kentucky games were either honest, or the players were better crooks than the operators.
But the Governor’s lawyers did find a decision from 1890, in which the Court of Appeals of Kentucky ruled that a loser at poker could sue the partners who ran the card rooms, because they raked the pot. The case, Triplett v. Seelbach, involved a very big loser indeed: He lost $1,905, at a time when a “fine brick house” cost only $2,500.
The Court must have wanted to help this big loser, at a time when virtually all gambling was illegal. But in an example of bad cases making bad law, the Court wrote, “We do not understand that the winner, in the sense of said statutes, must be one of the players with cards in his hands; but if he is to receive a per cent. [sic] of the winnings by the actual player, he is, in the sense of the statute, a winner. This per cent., [sic] or ‘take out,’ as it is called, is a part of the loser’s losses.”
Today, we know that a poker operator’s interest is not the same as someone who actually plays a hand, whether in poker or a banking game like blackjack. The card club does not care who wins, any more than a lottery or a racetrack cares who wins.
But maybe Gov. Beshear’s next suits will be against the Kentucky State Lottery and the Kentucky Derby.
© Copyright 2010. Professor I. Nelson Rose is recognized as one of the world’s leading authorities on gambling law and is a consultant and expert witness for players, governments and industry. His latest books, Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.
In the past few years, I testified as an expert witness in two major hearings where “best practices” had important and surprising roles. The Bergin Inquiry reexamined the entire system of regulating casinos in New South Wales, Australia. Five years earlier, NSW had...