Contracts and Poker: Ambiguity

You hear a news reporter say, “Mrs. Trump greeted Mr. Putin wearing a red dress.”
The question is, who was wearing the red dress?

Ambiguities are common in the English language, and unfortunately they plague contracts and statutes. The connectives “and” and “or” are frequently problematic. Recently, the First Circuit Court of Appeals was asked to resolve such an ambiguity in the federal Wire Act.

At the time the Act was enacted in the early 1960’s, there was of course no internet and the wire was the telephone, often used to connect bookie joints with information about the outcome of horse races. If you have seen The Sting, you get the idea.

The Trump Department of Justice (DOJ) saw an opportunity to use the Act to curtail not just sports betting, but internet gambling as well, by exploiting an ambiguity in its wording. The part of the Act that was in issue prohibits “[t]he transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest.”

For this discussion, let’s get rid of some of those connectives and shorten it to prohibiting “[t]he transmission of bets or information assisting in the placing of bets on any sporting event.”

Do you see the ambiguity? The issue is whether the phrase “on any sporting event” modifies only “information assisting in the placing of bets” or also “the transmission of bets.” If it does not modify the latter, then all bets transmitted across state lines are prohibited and not just those involving sporting events.

Under one view, the Act can be interpreted as prohibiting two things, one broad and one narrow: “(The transmission of bets) or (information assisting in the placing of bets on any sporting event).” Under the other view, it can be interpreted as prohibiting two narrow things: “(The transmission of bets or information assisting in the placing of bets) on any sporting event.”

The former interpretation, with the broad prohibition of bets, was promulgated by the DOJ, and it was bad news for online poker players. Under this interpretation, internet poker could still be conducted within a state, but interstate compacts allowing players in different states to play in the same game would be prohibited.

Fortunately for poker players, the interpretation offended another powerful interest – state lotteries. Under the DOJ interpretation, interstate lotteries such as Powerball would be prohibited. So the New Hampshire Lottery Commission sued, asking the courts to determine whether the DOJ interpretation was correct.

If your answer to my opening question was “Mr. Putin,” then Trump’s DOJ would agree with you. There are a number of “maxims of interpretation” that courts use to resolve ambiguities. The DOJ urged the court to apply the “rule of the last antecedent.” Under that rule, a phrase ordinarily modifies only the noun or phrase that it immediately follows — like “wearing a red dress” would modify “Mr. Putin,” the noun it immediately follows.

The court was quick to point out that that may be the general rule, but there are exceptions. In spoken English, it is awkward to say “Mrs. Trump, wearing a red dress, greeted Mr. Putin.” Therefore, we often put the modifier at the end and expect the listener to figure out from the context which part of the sentence it is modifying.
Similarly, the court pointed out that in the Wire Act, literal application of the rule made little sense. It stated:

Under the government’s reading, anyone can transmit over the wires information assisting someone in placing a bet or wager over the wires on a non-sporting event, but the person receiving the assistance commits a crime if he then places the bet or wager. In short, there is no congruity between the two prohibitions under the government’s reading. Conversely, if we read “on any sporting event or contest” as qualifying both antecedents, harmony is restored: You cannot use the wires to place a bet or wager on a sporting event, and you cannot use the wires to send information assisting in placing that bet or wager.

The court also pointed out that the DOJ argument was inconsistent with the next section of the statute. A second clause in the Act also omits the limiting language, prohibiting “[t]he transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers.” The court noted that if the first clause is limited to sports betting but the second clause is not, then it does not prohibit placing a bet on a lottery outcome but would prohibit telling the winning lottery participant that he is entitled to payment. It is more consistent to read the limitation as applying to sporting events into both clauses.

Finally, another part of the Act exempts from liability transmissions “for use in news reporting of sporting events or contests.” Were the DOJ correct, this exemption’s exclusive focus on sporting events would not make sense. Why, for example, is there no exception for news reporting on other events upon which people might bet? This question does not arise if one reads the prohibition, like the rest of the statute, as limited to bets on sporting events.

Putting all of this together, the court concluded that in this context the rule of the last antecedent did not apply, and the Wire Act applies only to sporting events.

Contract and statute drafters need to practice preventive law to avoid problems of interpretation. Unfortunately, ambiguities are hard to spot and frequently lead to litigation. The resolution of the ambiguity in this case is good news for poker players, as the expansion of internet poker is likely to continue unimpeded by the Wire Act. Unless, of course, it is argued that poker is a sporting event. But that is a discussion for another day. ♠

burnham_Scott J. Burnham is Professor Emeritus at Gonzaga University School of Law in Spokane, Washington. He can be reached at [email protected]._