Can I Host a Poker Tournament in My Home with Friends, Only for Entertainment Value?
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UPDATED: Dec 17, 2018
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The answer to this question will depend on what you mean by “entertainment value”; the laws where you live regarding the impact of “chance”; and your state’s laws about “social gambling”.
Entertainment value criteria
What is “for entertainment only” or “only for entertainment value?”
If by that, you mean either or both of
1) no one paid money to enter and also did not bet cash (i.e., they bet only valueless chips or “Monopoly” money); and/or
2) no one wins prizes, whether cash or not, with any value,
then you can host away to your heart’s content.
To be considered “gambling,” there must be “consideration”–or something of value offered to play–and “prize”–or something of value you can win (a broader discussion of these elements can be found on “The Three Core Elements That Make Up Gambling“). If you can either play for free or you pay a charge to play, but can’t win anything of value, it is not gambling. For example, if you play poker but don’t buy into the game and just keep track of how much you “win” on a notepad without actually getting anything, that’s not gambling. There must be value in and value out for something to potentially be considered gambling. Without value, there is no gambling. And if it’s not gambling, it’s legal.
Laws of the state you live in: how much chance is required
Even if there is “value in” to play (consideration) and “value out” if you are successful (prize), there must also be “chance“, or something beyond the player’s control, to make it gambling.
Poker clearly has at least some chance–the draw of the cards. There is also skill in poker: calculating the odds of different hands; being able to bluff, as well as determine if the other players are bluffing. Many states say that if there is any chance, that is enough. But some states require that chance “predominate,” or be more than 50% of the game. And some of those states find that poker is more than 50% skill. So while most states consider poker gambling, a few do not, and in those states, if it’s not gambling, it is legal.
Social gambling: even if it is gambling, if it falls under the criteria to be considered “social gambling,” it would be legal.
The majority of states allow social gambling. “Social gambling” means, broadly speaking, that the game’s host is not acting as “house” or “bank” and everyone is playing on equal terms, having an equal opportunity to win and profit. In those states, if the host is not taking a cut for running the game and is playing on the same terms as all the other players, then even if —
(1) there is consideration, prize, and chance, and
(2) the tournament would be considered gambling (and be illegal unless specifically licensed) if held at a casino or card room,
the neighborhood “for entertainment” poker tournament would be legal.
For example, in New Jersey, under N.J.S.A. 2C:37-1,
“[a] person who gambles at a social game of chance on equal terms
with the other participants therein does not thereby render
material assistance to the establishment, conduct or operation
of such game if he performs, without fee or remuneration, acts
directed toward the arrangement or facilitation of the game, such
as inviting persons to play, permitting the use of premises therefor
or supplying cards or other equipment used therein”
is considered just another “player”. “Players” do not incur liability for gambling–only those who run or operate the games for profit. So if you organize a poker tournament but don’t take any payment or cut or percentage for doing so, and simply play the game (or not play–your choice) on the same terms as any other participant, you have not done anything illegal and it is okay to host the game–at least in New Jersey.
The law concerning “social gambling” varies state by state, since gambling is regulated at the state level. This means that for a definitive answer, you have to check your state’s laws and local ordinances to make sure your poker night will not run afoul of the law. However, New Jersey’s law is typical: if a poker game is just between friends and neighbors, with no one taking a cut or piece of the action or being paid a fee to run it, it is most likely legal.