Contracts and Poker: A Weird Gambling Statute

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In a recent column on the legality of home poker games, I pointed out that often the goal of state regulation of gambling is not to punish the player, but to punish the winner or organizer of the game. An example of this is the Massachusetts law that provides:

Whoever, by playing at cards, dice or other game …, loses to a person so playing or betting money or goods, and pays or delivers the same or any part thereof to the winner, …, may recover such money or the value of such goods in contract; and if he does not within three months after such loss, payment or delivery, without covin or collusion, prosecute such action with effect, any other person may sue for and recover in tort treble the value thereof.

The section that follows that one provides that the owner or tenant of the property where the gambling took place has the same liability if he knew of or consented to the gambling. So if Larry loses $1,000 to William in a home game at Owen’s house, Larry has three months to recover the money from both William and Owen, and if he doesn’t, then anybody could make the claim on Larry’s behalf and collect $3,000 from William and Owen.

If this sounds like an antiquated statute, you are right. It all goes back to the famous English Statute of Anne in 1710 which provided that gambling debts were unenforceable, presumably to prevent the ruling classes from gambling away their property and inheritances. This law was carried over to the colonies and is still the rule in most states. It was a big deal in Nevada in 1983 when the law was finally changed to allow licensed casinos – but not private parties – to enforce gambling debts.

The general rule is that gambling contracts are unenforceable – by winners and losers alike. So winners will be thrown out of court if they try to sue the losers to collect. This partly explains the popularity in the movies – as well as in real life, no doubt – of other forms of enforcement as an alternative to the courts. But the same rule applies to losers. If you paid your gambling debt and then sued the winner to get your money back on the grounds that the contract was illegal, you would be thrown out of court because you were a party to the illegal transaction and thus in no position to challenge it. This goes by the Latin name of in pari delicto.

But the Statute of Anne carved out an exception to that rule, allowing the loser to sue the winner or owner “in contract,” even though the contract was illegal, and that exception was the basis for the Massachusetts law. Of course, the “anyone” who can bring the claim after three months could not sue in contract. Since they are a third party who had no contract with the winner, their claim is in tort rather than contract.

There was an interesting 1884 case that called for an interpretation of the part of the statute that allows the third party to make the claim only if they act “without covin or collusion.” I had to look up the word covin – it is an archaic word for fraud or deception. Suppose Larry the loser thought, “Hmmm. I can forego suing William for the $1,000 for three months and then my friend can sue William for $3,000. So why don’t I agree with my friend that I will do that on the understanding that we will each get half of the recovery. That way I can get $1,500 instead of $1,000.”

Does that sound like the kind of collusion the statute was designed to prevent? No, said the Massachusetts Supreme Judicial Court – that agreement would be perfectly okay! Since the law is designed to punish the winner for gambling, it doesn’t matter who gets the benefit from suing him. The court said that the statute was designed to prevent collusion between the winner and the loser, not between the loser and the third party.

What would collusion between the winner and the loser look like? I suppose the winner might say to the loser, “Bring a claim against me for the loss. I’ll give you a couple of bucks and that will give me insurance that no third party can later make a claim against me for three times the loss.”

The statute came up again in an interesting 1949 case. The plaintiff claimed that racetracks had offered a “daily double” bet that was not legally permitted. He was suing not for himself as a loser, but as a third party to recover what was lost by everyone who had made such a bet but had not made a claim against the winning racetrack for the previous three months.

Not only did he stand to recover three times the amount lost by all those bettors, but by suing the owners of the property as well as the operators of the racetracks, he stood to recover six times the amounts lost on such wagers. A victory would likely have bankrupted the racetracks, but presumably would have served the purpose of discouraging illegal gambling. Fortunately for the racetracks, the court determined that the daily double wager was not illegal.

We will take a look at other weird gambling laws in future columns. ♠

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