Royal flush, full house or time to fold?

The Times, Law, 17 January 2006

Just months before gaming laws change, a poker club has been charged under 1960s laws, says Alex Wade.

A ‘gutshot’ is the term used in Texas Hold ‘em poker to describe the acquisition of a straight – a good, potentially winning, hand – by means of a middle-ranked card. It is also the name of London’s most popular poker club, one which, since its opening in March 2004, has capitalised on the worldwide explosion of interest in poker and, specifically, the Texas Hold ‘em version of the game. But the Gutshot Club faces troubled waters. Criminal charges have been brought against the club’s chairman, Derek Kelly, which, though they may clarify the law on poker, could see Kelly sentenced to jail.

The Gutshot, on Clerkenwell Road, is a private members’ club that boasts 15,000 members. It was set up “by poker players, for poker players, for the love of poker,” according to Kelly, and has rocketed in popularity, providing a forum in which many newcomers to poker – introduced to the game by the online boom – can test their skills in a live environment.

But Kelly, as chairman of the Gutshot Private Members Club, finds himself charged with alleged contravention of sections 3 (1), 4 and 8 (1) of the Gaming Act 1968. The sections – still in force pending full implementation of the Gambling Act 2005 - prohibit the activity of gaming in any circumstances where a charge, in money or money’s worth, is made for the gaming, or where a levy is made on either the stakes or the winnings of the players.

Poker in the UK is big business - newspapers routinely carry full-page advertisements for the major online poker sites, there have been much-touted public share offerings, and it seems to have become de rigueur for television channels to broadcast late-night poker tournaments. There are some 300 poker websites worldwide and an estimated 350,000 people playing the game online every hour – a staggering 100 per cent increase in the past year. Poker’s new acolytes are fuelled by a love of the game and dreams of emulating the likes of Joe Hachem, this year’s World Series of Poker champion, who walked away from this summer’s Las Vegas showdown with a cool $7.5million.

But for all that poker is booming, in legal terms it is something of an imponderable. Kelly says as much himself: “When we set up the Club, we didn’t want to be a smoky backroom operator but instead wanted to be transparent and totally above-board. I contacted the police and the Gaming Board and told them what we were doing, before we’d even opened. We’ve operated for 18 months without complaint from anyone, and have always co-operated closely with the authorities. Our intention is to continue doing so. I think we’re being charged under laws from the 1960s that are no longer appropriate to the modern British gaming landscape.”

Tony Singh, a sports and media consultant with Addleshaw Goddard, agrees that “the law is outdated in this area. It hasn’t caught up with the modern leisure society in which poker is an acceptable activity.” Singh has some harsh words for those who denigrate poker. “The mid-market press perennially cite so-called ‘moral’ arguments against poker. They seem to dislike the fact that poker players can make money, seemingly without doing much. I’d question how different that, in itself, is from playing the stock market. The fact is that poker is a game of skill. The best players will, over time, always prevail thanks to their greater skill and ability.”

Whether poker is a game of skill or chance is likely to be tested in the proceedings brought against Kelly, according to Julian Skeens, an expert in betting and gaming law with Jeffrey Green Russell. “Kelly’s defence may well be that poker is a game of skill and therefore not caught by the 1968 Act,” says Skeens. “This, though, is not an easy argument. The legislation expressly says that in determining whether a game is of chance or skill, a combined game of skill and chance is still caught. But if the defence won on this point, poker could be played anywhere, as well as the places where it is currently legal, such as participants’ homes or in private members’ clubs.”

The Gutshot is a private members club, but the 1968 Act prohibits charges or levies on winnings, even in such clubs. A cornerstone in Kelly’s defence is likely to be the argument that the Gutshot plies all its profits back to its members, and is therefore not making a charge for gaming as such. This, says Skeens, is “a question of fact for the court.”

Which court will be decided by Highbury Magistrates Court on 10 January, when Kelly’s application for Crown Court trial will be heard. Kelly has already entered a plea of not guilty. Meanwhile, his defence team will muster their arguments, the poker boom will continue – and the Gutshot is open for business.