Contracts and Poker: Home Games In Iowa

There is an old saying that “ignorance of the law is no excuse.” The underlying presumption is that you should have looked up what the law is before you acted. But that assumes that the law is easy to find and understand.

Let’s test that proposition with some laws for conducting home games of poker. We’ll put ourselves in the position of a conscientious poker player who wants to obey the law. Let’s see just how easy that is.

Since gambling laws are different in every state, let’s assume we are in Iowa. It isn’t that hard to find § 99B.42 of the Iowa Code, which is captioned “Social gambling general requirements.” The first thing it tells us is:

1. Social gambling is lawful under section 99B.43, 99B.44, or 99B.45, when all of the following requirements are met:

a. The gambling occurs between two or more people who are together for purposes other than social gambling. A social relationship must exist beyond that apparent in the gambling situation.

So the first thing I learn is that we can’t get together for the purpose of playing poker. I used to play at my local casino with the father of one of my students. When I saw her in class, I would joke, “I saw your dad at our philosophy discussion group.”

That gives me an idea for complying with this provision. I could just tell everybody we were going to meet at my house for a philosophy discussion, or book club, or similar high-minded endeavor. We would start by exploring the role of chance in our existence, and then decide to exemplify that proposition with a game of chance, thus keeping our game within the law since we met for a different purpose.

The other requirements should be easy to comply with. What if I wanted to recover the cost of the refreshments I provide the group? One of the requirements is:

A cover charge, participation charge, or other charge shall not be imposed upon a person for the privilege of participating in or observing the social gambling, and a rebate, discount, credit, or other method shall not be used to discriminate between the charge for the sale of goods or services to participants in the social gambling and the charge for the sale of goods or services to nonparticipants.

Since I can’t collect a cover charge, we could rotate providing the food and drink. Alternately, I could recover my hospitality costs by selling the food and drink, as long as I charged players and railbirds the same amount.

The next two sections of the law concern social gambling in bars and public places. I scroll past those to find the one that concerns my home game, § 99B.45, captioned “Social gambling between individuals.” This one tells me that in addition to the general requirements of 99B.42, I have to satisfy some specific requirements.

One of these is “All participants in the gambling are individuals.” This should not be too hard to comply with, as I would not allow dogs or corporations to play. Another is that each person “must have the option to take their turn at dealing.” At first this sounds like we each have to deal, but a close reading indicates that this is optional. Therefore, if everyone agreed, one person could be the dealer or we could use a non-playing dealer as long as we figured out some way to pay the dealer that did not involve a charge for participating in the game.

The most interesting rule is back in the general requirements:

A participant shall not win or lose more than a total of two hundred dollars or equivalent consideration in one or more games permitted by this subchapter at any time during any period of twenty-four consecutive hours or over that entire period.

This would not be too hard to follow “over that entire period.” If we played once a week, we could settle up when the game was over. If you won more than $200, you would have to cough up the excess and we could figure some equitable way to distribute it. If you lost more than $200, the winners would be taxed to bring down your losses. This rule seems particularly unsuited for poker, as it would encourage bad decisions since there would be a limit on the cost of those decisions.

However, a careful reading of this provision indicates that a participant can’t win or lose more than $200 “at any time” during that period – not just at the end of the session. In theory this would mean that after each pot, accounts would have to be settled. But how would you do it? If we each started with $100, and I won a big pot, putting me more than $200 ahead, what would I do with the excess if there was no one who had lost $200?

Fortunately for Iowa players, that rule was recently updated. A few years ago, the limit was $50! Furthermore, the rule limiting wins or losses to $50 used to be followed with this rule:

For the purpose of this paragraph a person wins the total amount at stake in any game, wager or bet, regardless of any amount that person may have contributed to the amount at stake.

If I understand that rule correctly, if we have three-way action in a pot, and each of us has gone all-in for $50, then when I win that $150 pot, I have to surrender my winnings of $100, since I won the total amount of $150, and that puts me ahead by $100. I can see why that one was repealed.

At any rate, lots of luck complying with the law in your state, especially if you live in Iowa! ♠

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