Kelly, R. v

In March 2004, the appellant opened the Gutshot Club in Clerkenwell Road, Islington, London where he organised a variant of poker called “Texas Hold ‘Em Poker” (TH Poker); he charged players for participation and made a levy on the winnings. The participants in TH Poker were largely enthusiasts for the game and the evidence before the courts was that all the profits in the card room were ploughed back into the club for the benefit of the members. The appellant had no licence which would have been needed under Part I of the Act, if gaming had been organised at the club in these circumstances. He contended that he was not engaged in organising gaming as TH Poker was not the playing of a game of chance within the meaning of the Act. Following a complaint from the Gaming Board, police made covert visits to the club in December 2004 and January 2005.

The appellant was charged under s. 8 with an offence of organising gaming in which a levy was made in December 2004 and organising gaming where a fee was charged to participate in January 2005. He was tried before HH Judge Wilkinson and a jury at Snaresbrook Crown Court in January 2007. The appellant accepted that he had organised the game of TH Poker, a charge had been made to players for participating in the game and a levy had been made on the winnings; in the circumstance, if the prosecution proved that playing TH Poker was gaming, then he accepted the offences had been committed. The sole issue was therefore whether TH Poker was a game of chance.

It was common ground that the successful playing of TH poker required considerable skill. The appellant called expert evidence from Professor Kelly and Nick Szeremeta. No expert evidence was called by the prosecution.

It was the evidence of Professor Kelly that TH Poker was a game of chance and skill. It required more skill than any other game of poker. Even though the first two cards drawn by each player were completely at random and subsequent cards also drawn at random, the element of skill was predominant. For example, each player might get to know 5/7^ths of the hand of each other player when the final card was drawn; meaningful predictions could then be made by the skilled player. He did not commit to a ratio of skill to chance; research work had shown that the ratio was 70:30 of skill to chance. He accepted that a 30% chance was not insignificant.

Mr Szeremeta gave evidence that some types of poker required more skill than bridge; skill was more significant than chance. He gave detailed evidence about the mathematical calculations necessary to explain the odds and the strategies employed.

On 16 January 2007, the judge heard argument as to the directions to be given to the jury. The appellant contended (on the basis which we will set out) that the test as to whether TH Poker was a game of chance depended on whether skill predominated over chance; as TH Poker was predominantly a game of skill, it was not a game of chance within the meaning of s. 52(1). The judge in a short ruling rejected that submission and held that no gloss was required on the definition in the Act, though he accepted the prosecution submission that the prosecution had to prove that there must be a significant element of chance, though not necessarily a predominant one, as most games contained some elements of chance even to an infinitesimal extent.

The judge then summed up the law on what constituted a game of chance to the jury on the basis of his ruling:

“Now, the Gaming Act provides that the expression ‘Game of Chance’ includes a game of chance and skill combined. As a matter of law I direct you that that means exactly what it says. As a matter of law it is irrelevant as to whether chance predominates over skill, or whether skill predominates over chance. What matters is that there must be a significant or meaningful element of chance, as opposed to an element which is simply token, notional or a scintilla. If Parliament had intended the test to be dependent on whether chance or skill predominated it would have said so. The issue, therefore, that you have to decide in this case is a narrow one and I shall return to that issue in a moment.”

He then added:

“It is common ground in this case that the successful playing of [TH Poker] requires considerable skill. The issue, therefore is this, does the game also include a significant element of chance?”

At common law, the playing of any game of chance, including dice and card games, was not unlawful: The Case of Monopolies (1603) 11 Co Rep 87; Sherbon v Colebach (1691) 2 Vent 175. However, the keeping of a common gaming house was punishable at common law as a nuisance: Hawkins Pleas of the Crown (book 1 c.75, s.6) made clear that:

“All common gaming-houses are nuisances in the eye of the law; not only because they are great temptations to idleness, but also because they are apt to draw together great numbers of disorderly persons which cannot be very convenient to the neighbourhood.”

The prohibitions on games of chance and games of skill were all statutory. From an early time, Parliament had placed restrictions on playing games of chance. In 1541, by the Unlawful Games Act (33 Hen 8 c.9), Parliament had prohibited certain games at certain locations at certain times. Various enactments changed the law over the centuries; some restricted the circumstances in which games might be played; others prohibited certain games. The Gaming Act 1845 (8&9 Vict c 109) made significant changes; it legalised all games of skill, but preserved all the penalties which attached to the playing of unlawful games anywhere, or gaming at all (even of lawful games) in common gaming houses. It made specific provision for proof of what amounted to a common gaming house:

“in default of other evidence proving any house or place to be a common gaming-house, it shall be sufficient, in support of the allegation in any indictment or information that any house or place is a common gaming-house, to prove that such house or place is kept or used for playing therein at any unlawful game, and that a bank is kept there by one or more of the players exclusively of the others, or that the chances of any game played therein are not alike favourable to all the players, including among the players the banker or other person by whom the game is managed or against whom the other players stake, play, or bet; and every such house or place shall be deemed a common gaming-house”

In 1854 by the Gaming Houses Act it was made an offence by s.4 to use any premises for unlawful gaming.

In Jenks v Turpin (1884) 13 QBD 505, the Divisional Court considered a case stated on the issue as to whether a person who ran a club where baccarat was played and entrance fees charged was keeping premises for unlawful gaming contrary to s.4 of the Gaming Houses Act 1854. The court decided that the premises were kept for unlawful gaming if the place where the activity occurred was a common gaming house or if the game was illegal; on the facts the club was a common gaming house and baccarat was an illegal game.

In reaching the conclusion that Baccarat was an unlawful game Hawkins J (at page 523) considered that unlawful games could be divided in two classes:

“first, those which are absolutely forbidden by name, and to the gaming at which a penalty is attached. This class includes ace of hearts, pharaoh (or faro), basset, and hazard,…

He then listed those specifically prohibited, including certain games of pure skill. He then turned to consider the second class:

The second class comprises a number of games not altogether prohibited under penal consequences, nor declared to be altogether illegal, but which nevertheless have been styled "unlawful" by the legislature, because the keeping of houses for playing them and the playing them therein by anybody were rendered illegal.

After referring to the change in the law made by the Gaming Act 1845, he continued:

“Since that statute the only games made unlawful by 33 Hen. 8, c. 9, are games of dice or cards, whether such games were known at the time of the passing of that statute or have been since invented. All such games, if they are games of chance, or games of chance and skill combined (which cannot be called games of mere skill), are in my opinion clearly within the meaning of the words unlawful games in Gaming Houses Act 1854 (17 & 18 Vict. c. 38). The language of the 1st section of the Gaming Act 1845 (8 & 9 Vict. c. 109), in referring to 33 Hen. 8, c. 9 [The Unlawful Games Act 1541], and repealing only so much of it as applies to games of skill, is a strong indication of the intention of the legislature that all the other games mentioned in the statute of Hen. 8 were to continue to be treated as unlawful in the sense in and to the extent to which they were made unlawful by that statute, viz. unlawful if played in a house kept for playing at them.

The unlawful games, then, now are, ace of hearts, pharaoh, basset, hazard, passage, roulet, every game of dice except backgammon, and every game of cards which is not a game of mere skill; and, I incline to add, any other game of mere chance.”

He then concluded that baccarat was a game of chance; although experience and judgment made one player more successful, it could not be described as a game of mere skill. It was therefore unlawful.

The test set out by Hawkins J was consistently followed in a series of cases in the years down to 1960; it is only necessary to refer to three:

The court pointed out that the cases dealing with machines were different; since 1913, when Kennedy LJ formulated the test set out above,

“ the courts, in automatic machine cases, have taken as a test, not whether the game is one of mere skill, but whether or not the proportion of skill to chance is such as to establish that skill is the dominant or governing factor in the game. That test has never been applied to games of cards, and, in our opinion, rightly so, because, as was pointed out in Jenks v. Turpin by Hawkins J., there is a distinction between card games, which by statute are unlawful unless they are games of mere skill, and such games as those played with automatic machines which are not unlawful unless they are games of mere chance and become mere instruments of gaming. It appears, therefore, that in the present case, the learned chairman applied the right test, namely: Is this game a game of mere skill?”

First, he relied on an observation in Armstrong v DPP [1965] AC 1262. The defendant in that case ran a postal bingo club; he was prosecuted for running a lottery contrary to the Betting and Lotteries Act 1934. It was admitted that there was a lottery, but it was contended that the defendant could rely on a provision of the Gaming Act 1960 which provided that nothing in the 1934 Act made unlawful any gaming conducted in such a way that no offence was committed under the relevant part of the 1960 Act; in connection with that issue a question of law arose as to the element of participation required to constitute “playing a game” of chance within the meaning of s. 52(1) of the 1960 Act. Lord Pearson (who gave the only substantive speech) considered that on the facts there was no participation by those who played bingo as could reasonably be said to constitute the playing of a game. At page 1280D, he observed that the Act contained only the partial definition of a game of chance. Mr Luba QC relied on this very short observation for the submission that it was necessary to provide a fuller definition of the game of chance than that provided in the Act. We do not think that this provides any real assistance as the particular observation was directed at what was meant by “playing” a game of chance and not whether a particular game constituted a game of chance – see the argument of counsel for the appellant at page 1276E.

Mr Luba QC next submitted that the primary object of the definition was to ensure that any game of chance which included an element of skill was nonetheless to be treated as a game of chance. There was, however, nothing to suggest that Parliament intended games which were predominantly games of skill to be considered games of chance. Indeed as every game included an element of chance, construction of the 1968 Act which led to the inclusion within the definition of “games of chance” games such as chess and scrabble would be absurd; it could not therefore be right, as suggested in Halsbury Laws of England, Vol 4(1) 4^th edition para 3 that only games of pure skill where there is no element of chance, are excluded from the definition.

In support of this submission Mr Luba QC referred us to a number of cases decided in the USA where the courts had considered what was meant by a “game of chance”. A considerable number of decisions, from courts in Massachusetts, Ohio, North Carolina, California and Alaska were put before us in a bundle of authorities; specific reliance was placed on the summaries of the law by Judge Dull in Stubbs v Dick (1949) 89 N.E.2d 480 (Court of Common Pleas of Mercer County Ohio), by the Supreme Court of North Carolina in State v Stroupe (1953) 76 S.E. 2d 313 and by the Supreme Court of California in Re Allen (1962) 377 P. 2d 280. In those cases the courts referred to well established rules:

“The universal acceptation of a game of chance is such a game as is determined entirely or in part by lot or mere luck, and in which judgement, practice, skill or adroitness have honestly no office at all or are thwarted by chance.”

“The real test is whether chance is the determining element in the outcome of the game and not whether the game contains elements of chance or skill. If chance is the determining element in the outcome, then it is a game of chance.”

“Most courts have reasoned that there are few games, if any which consist purely of chance or skill, and that therefore a game of chance is one in which the element of chance predominates over skill and a game of skill is one where the element of skill predominates over chance.”

“The test is not whether the game contains an element of chance or an element of skill but which of them is the dominating factor in determining the out come of the game.”

Mr Luba QC also relied on the minority judgment in the decision of the Supreme Court of Canada in Ross, Banks and Dyson v The Queen (1968) 70 DLR (2d) 606. The Supreme Court had to consider whether the game of contract bridge fell within a statutory provision which stated “ “game” means a game of chance or mixed chance and skill”. The majority judgment (delivered by Pigeon J) held that the provision in question was clear:

“The word mixed implies no indication of the respective proportions of the two elements. Nothing shows that they must be equal or nearly so. Nothing indicates which is to be preponderant.”

Spence J in the minority disagreed:

“Once the cards have been dealt then in the progress of the play all element of chance disappears and any chance thereafter can only result from the deal. In these circumstances, therefore, I believe that it must be taken as established that in the game of bridge the only chance involved is the chance in the dealing of the cards and that certainly the element of skill predominates in the playing of the game.”

Spence J considered that the purpose of the provision was to ensure that games of chance were to include games where, although the predominating element was chance, there was a degree of skill. He concluded:

“I am nonetheless of the opinion that in the game of bridge where the element of skill far outweighs the element of chance and where in fact the element of chance is a mere coincidental preliminary, it should not be considered as being within the words of the statute “ a game of mixed skill and chance.”

The judge had not therefore applied the test in the 1968 Act, but had based his summing up on the old law; he should have directed the jury that a game in which skill predominated over chance, was not a game of chance. There had been a misdirection.

The meaning of a game of chance set out in s.52(1) of the 1968 Act is not by its terms an exhaustive definition, as the word “include” is used. However, it does not seem to us that this was intended by Parliament to enable a more restrictive definition to be given. It is clear that Parliament could have adopted a test of preponderance; it did not and we see no reason to write into the Act a further restriction or qualification which Parliament could easily have included but which it did not.

In our view, the definition in the Act is in simple terms and needed little elaboration; it was a question of fact for the jury to determine whether on the statutory definition TH Poker was a game of chance.

It may be in some cases the definition would need some elaboration. If a prosecution was brought where the element of chance was insignificant or de minimis, then it would be necessary to spell out that that element of chance should be ignored in determining whether the game is a game of chance. For example, if chance was be used to determine which player had the right to start a game, but the game was otherwise a game of skill, then that element should be regarded as insignificant or de minimis and therefore should be ignored.

In his direction to the jury the judge may have gone further than this in favour of the appellant. He directed the jury that there must be a significant or meaningful element of chance as opposed to an element which was simply token, notional or a scintilla. In our view, as Parliament has provided that games of combined skill and chance are to be treated as games of chance without any qualification, then the only circumstance where chance should not be taken to make a game of skill and chance a game of chance is where the element of chance is such that it should on ordinary principles be ignored – that is to say where it is so insignificant as not to matter. Parliament did not provide that in a game of mixed skill and chance that the element of chance had to be significant for the game to be a game of chance; there is no reason for the courts to do so.

It seems to us that the element of absurdity to which so much weight was attached on behalf of the appellant is properly catered for by ignoring chance where the element of chance is so insignificant as not to matter.

We have reached this conclusion on the basis of our interpretation of 52(1) of the 1968 Act. It was common ground that s. 52(6) was directed at the operation of games played against “the bank” such as in casinos or where gaming machines are used, as it refers to games “played otherwise than against one or more other players.” It was argued on behalf of the appellant that, as Parliament had considered it necessary to refer to “superlative skill eliminating the element of chance” in relation to games played against “the bank”, Parliament had envisaged courts would, in determining whether a game of combined skill and chance was a game of chance, have regard to the predominance of the elements of skill and chance. We do not consider that this in any way follows; on the contrary, on the definition of a game of chance as set out in the Act, if there was no element of chance (as that had been eliminated by superlative skill), it would not be a game of chance and skill combined. The subsection was therefore directed at bringing within the definition games against the bank where (if such exist) skill had eliminated any element of chance.

Argument was also directed to the question of whether assistance as to the statutory definition of a game of chance could be derived from s. 40(2) which provided an exemption from s.3 in certain circumstances in respect of miners’ welfare institutes or clubs. It was contended by the Crown that the exemption was directed in part at bridge clubs and, if the test was one of predominance of chance over skill, then that provision would have been unnecessary. We do not think that this subsection really assists either way.

We were grateful to Mr Luba QC for referring us to the US and Canadian authorities. We do not think that any real help can be derived from the US authorities where the concept of predominance has become embedded. Although the definition of game in the Canadian statute under consideration was exhaustive, the approach of the majority of the Supreme Court of Canada in Ross to the construction of the Canadian legislation is very much the approach we have adopted in relation to the UK legislation; for the reasons that are evident from this judgment, we were not persuaded by the views of Spence J.