United States v. Hsieh
| Decision Date | 12 April 2013 |
| Docket Number | CRIMINAL CASE NO. 11-00082 |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. JIMMY HSIEH, WILLIAM M. PEREZ, WAI KAM HO, and JENNIE WEN CHIN PAU, Defendants. |
| Court | U.S. District Court — District of Guam |
The Motion to Dismiss Count 2 and all related counts of the Second Superseding Indictment, filed by Defendant Wai Kam Ho, came before this court for a hearing on March 15, 2013. Co-defendant Jimmy Hsieh filed a joinder to the motion but was not present at the hearing. After hearing the argument from counsel, the court took the Motion to Dismiss under advisement. For the reasons discussed more fully herein, the court sets forth the bases for its decision in DENYING the Motion to Dismiss.
Defendant Wai Kam Ho ("Ho") moves to dismiss Count 2 (Illegal Gambling Business, in violation of 18 U.S.C. §1955(a) and (b)) and all related counts of the Second SupersedingIndictment (hereinafter "Indictment").1 See Mot., ECF No 234. Co-defendant Jimmy Hsieh ("Hsieh") moves to adopt and join Defendant Ho's Motion to Dismiss. See Adoption of and Joinder in Motions to Dismiss, ECF No. 254. Defendant Ho alleges that the Indictment "fails to state a charge based upon the recent decision of United States v. DiCristina." See Mot., ECF No. 234 at 1. In that case, the U.S. District Court for the Eastern District of New York held that poker is not gambling under the Illegal Gambling Business Act (hereinafter "IGBA"). See United States v. DiCristina, 886 F.Supp.2d 164 (E.D.N.Y. 2012). An appeal of the trial court's decision in DiCristina is currently pending before the Court of Appeals for the Second Circuit.
Defendant DiCristina was charged with operating an illegal gambling business involving poker games in violation of 18 U.S.C. § 1955. DiCristina, 886 F.Supp.2d at 168. DiCristina moved to dismiss the second superseding indictment on the basis that not only does the government have to prove that poker2 is illegal under New York law but also that the government must prove that poker meets the definition proscribed in the IGBA statute (i.e., it must be sufficiently similar to the nine games listed in 18 U.S.C. § 1955(b)(2)). Id. at 169-170. Defendant DiCristina contends that in order to be sufficiently similar to those enumerated, the game in question must be predominately a game of chance rather than skill. Because poker, as claimed by defendant DiCristina, is predominately a game of skill rather than chance, it does not meet the IGBA definition of illegal gambling. Id.
The court held a pretrial hearing that included the testimony of an expert witness. Id. at 171. However, the court reserved its decision and the case proceeded to trial. Id. The jury foundthe defendant guilty, after having been instructed that poker constituted gambling under the IGBA. Id.
Subsequent to the jury verdict of guilty, the court held a post-trial hearing on the defendant's motion to dismiss. Id. Both parties offered testimony from their respective witnesses. Id.
The defense presented expert testimony of Dr. Randal D. Heeb, who stated that poker is predominately a game of skill rather than chance. Id. at 176. Dr. Heeb summarized the results of his study of 415 million hands of "No Limit Texas Hold'em" that were played online between April 2010 to March 2011. Id. at 178. Based on his study, Dr. Heeb found that there is a correlation between a player's skill and the result (amount of money won or lost). Id. at 181-82. The more a player is highly skilled in poker, the more winnings he gets to take home. Id. Dr. Heeb testified that skills play a big part in poker and that many people make a living playing poker, whereas it is impossible to make a living playing other casino games such as roulette. Id. at 176. This fact alone, according to Dr. Heeb, was an independent foundation for his opinion that skill predominates over chance in poker. Id.
However, Dr. Heeb did acknowledge that poker also involves an element of chance. Id. at 178. Dr. Heeb stated that "[o]n any given hand . . . the probabilities are certainly finite." Id. Dr. Heeb further acknowledged that "poker falls in between chess, which he characterized as an almost pure game of skill, and roulette, which he characterized as a pure game of chance." Id.
The Government presented expert testimony of Dr. David DeRosa, who questioned Dr. Heeb's finding. See generally id. at 185. First, Dr. DeRosa testified that in Dr. Heeb's analysis, Id. at 186. Dr. DeRosa asserts that poker players play poker to win money and therefore, in determining success at a session poker, the test should be whether a player profits from playing the game. Id. at 185. Second, Dr. DeRosa testified that in determining whether skill or chance predominates, the relevant frame of reference should be a single hand because there is no requirement for a poker player to play forever. Id. at 186. A poker player can drop out any time during the game. Id. Third, Dr. DeRosa testified that the presence of persistent winners and losers does not prove that skill predominates over chance in poker, because such result is normally from random chance variation. Id. at 187. Finally, Dr. DeRosa questioned Dr. Heeb's data and methodology. Id. at 189.
In response, Dr. Heeb stated that "the question of whether skill predominates requires only an examination of the relative importance of skill." Id. However, he conceded that only "10 percent to 20 percent of the players in any given game are good enough to win consistently." Id. Also, Dr. Heeb acknowledged that "even in a game of 100% skill, the more skillful player could make an error, leading to a win by the less skillful player." Id.
DiCristina's argument for dismissal of the second superseding indictment is two-fold. First, DiCristina argues that the government needs to prove that poker is illegal under New York law and that poker is illegal under the definition of the IGBA statute. Id. 169-70. Second, DiCristina asserts that the illegal gambling games enumerated3 in the IGBA statute are predominately a game of chance rather than skill, and because poker is predominately a game of skill, it does notfit in the definition proscribed in the IGBA statute. Id.
The government, on the other hand, argues that the plain language of the IGBA statute does not restrict what kinds of games constitute gambling. Id. at 170. The government asserts that the purpose of the IGBA was to curb the funding sources of organized crime (the majority of which comes from gambling) and that the IGBA was passed to assist the states in accomplishing this goal. Id. Thus, it follows that any gambling activity that is illegal under state law is "gambling" under the IGBA. Id. Additionally, the government argued that poker is a game of chance rather than a game of skill. Id.
In its decision, the DiCristina court considered the experts' testimony and other studies to determine whether poker is predominately a game of chance rather than skill. It also considered how state and federal courts treat poker, as to whether it is illegal gambling or not. Further, it reviewed the IGBA's legislative history, including its purpose. It also looked at definitions from various dictionaries, and how other federal statutes define gambling. Lastly, it also considered case law from other federal jurisdictions.
The DiCristina court reasoned that because both parties' arguments are plausible and that the legislative history of the IGBA is unclear, the court found the statute to be ambiguous and thus applied the rule of lenity. Id. at 170. Moreover, the court agreed with Dr. Heeb, the defendant's expert witness, in that poker is predominately a game of skill rather than chance. Id. at 234. Accordingly, the court ruled in favor of the defendant by dismissing the second superseding indictment and vacating his conviction. Id.
The IGBA provides, in pertinent part, that:
The GUAM CODE ANNOTATED prohibits gambling, specifically the making or accepting of "a wager involving money or anything of monetary value upon the result of any game or...
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