Contracts and Poker: Player Deals

A tournament comes down to three players. The players agree that they will “chop” the prize money three ways, but will play out the tournament to determine who gets the trophy. Is the agreement enforceable?

The previous articles in this series have discussed the terms in the implied contract that is formed between the player and the casino when a player enters a poker tournament. On occasion, the terms are found in an express contract. For example, when a player enters into an event sponsored by the World Series of Poker or the World Poker Tour, the sponsor requires the player to enter into a detailed written agreement.

Most players sign these contracts without reading them, just as they might agree to an internet contract that indicates they agree to the terms and conditions with a “click here.” In fact, contract law says this objective manifestation of assent does bind you to the agreement even if you have no idea what the agreement says.

Even though it is a valid contract, that does not necessarily mean all the terms are binding. Contract law calls an agreement that is prepared on a form by one party and offered to the other without negotiation a “contract of adhesion” – you either take it or leave it. While there is nothing wrong with a contract of adhesion as such, the party who drafted it may be tempted to insert overly-favorable terms. Thus, courts give such contracts extra scrutiny to see whether that party used its power unfairly.

Under the doctrine of “unconscionability,” a court can strike a contract or a contract term that it finds to be shocking – one that no reasonable party would have asked the other to agree to. A term has to be pretty bad to be unconscionable. A term that violated the law would probably qualify. For example, the WPT contract was challenged by some players who claimed it violated anti-trust laws. The matter was settled and some of the terms were changed.

Under the doctrine of “reasonable expectations,” a court can strike a term that is not outrageous per se, but a person would not have expected that term to be in the contract – it takes them by unfair surprise. To secure enforceability of such a term, the drafter of the form might highlight those terms or have the other party separately sign them so they can’t claim they didn’t know they were there.

Another contract players might enter into is a contract with a backer. It is not unusual for a player to “sell a piece of himself” in return for a share in his tournament success. Tom McEvoy made such an arrangement with Martin Sigel before he won the main event in 1983. McEvoy then refused to pay, claiming that Sigel was trying to enforce an illegal gambling debt. In Sigel v. McEvoy, the Nevada Supreme Court disagreed, finding that the contract was a lawful business arrangement.

In general, oral contracts are just as valid as written contracts, but writing the terms down can prevent factual disputes about whether there was a contract and what its terms were. Greg Raymer had backers when he won the main event in 2004 and paid them off. Raymer being a lawyer, his written contract was a model of clarity that worked through the various future contingencies that might occur and how they would be dealt with. Jamie Gold, on the other hand, made oral agreements prior to his 2006 win that left much to be desired – such as clarity and comprehensibility.

Another contract that players might make is a “chop” prior to completion of the tournament. Poker rooms take a variety of approaches to this situation. At one extreme, the house might assist by tallying chips, computing the amount each player would be paid under the ICM, and then making the agreed-upon payouts. Others might not assist the players in determining the amounts, but would make the agreed-upon payouts. Others are silent on the issue. For example, the WSOP has no rule on player chops. Silence does not mean approval, however. Such an agreement could violate the rules against soft play or collusion. Most importantly, silence means that the house will make the payouts as per the rules, leaving it to the players to make the agreed-upon distribution at some future time.

Leaving performance to the players can obviously pose a problem if an unscrupulous player refuses to comply with the agreement. Would the agreement be enforceable at law? In the McEvoy case, the court noted that the parties’ agreement was not a gambling contract because Sigel could not lose money to McEvoy; in the chop situation, however, each player is in a position to lose to the other. So I am not sure how it would come out in court. For most players, the issue is moot because most people — and perhaps gamblers more than others — feel a moral obligation to honor their agreements. Nevertheless, there are some who might take advantage, perhaps unknowingly paying homage to the great jurist Oliver Wendell Holmes, who thought morality had no place in contracts. His view was that you had an economic choice to either perform your contract or pay damages for not performing. But those damages can be hard to extract. Perhaps the “shaming” of the community can assist with enforcement.  

At the other extreme, a poker room might forbid a chop. That is the rule of the WPT. The WPT Player Release states:

Player represents and warrants that Player has not entered into, and will not enter into, any understanding or agreement (whether oral or written) with any other player at a Tour final table with respect to the outcome of a Tour final table or the division of any prize money between players at a final table, and Player further acknowledges that it is a violation of WPTE rules to enter into any such understanding or agreement. WPTE may prevent Player from participating or continuing to participate in the Tour for a violation of the rules of the Tour, …

Note that this rule bars not only deals made at the final table, but also previously made deals, like those where players agree at the outset of the tournament to take a piece of each other. This rule probably makes sense when there is drama created by the televised final table and that drama would be dissipated if the outcome had been predetermined. On the other hand, it probably frustrates players’ desires and forces underground the enforcement of any deals that are made.

In conclusion, be sure you know the rules before you make a deal. Be as clear as possible about what you are agreeing to, including putting it in writing if possible. Think through what might happen in the future, and weigh the risk that the other party might not perform. ♠

Scott J. Burnham is the retired Curley Professor of Commercial Law at Gonzaga Law School in Spokane, Washington. He can be contacted at [email protected]. This column is adapted from his article, A Transactional Lawyer Looks at the Rules of Tournament Poker, which was published in Gaming Law Review and Economics.