Judge calls bluff on online gambling site

Judge David Harvey

The poker news websites went wild. "New Zealand Court Backs Poker" proclaimed gamblingonlinemagazine.com. "In a groundbreaking ruling a New Zealand court has delivered a huge blow to opponents of online poker, and poker in general," said pokernewsboy.com.

"Though they may be an ocean away, the nation of New Zealand has fired a shot which could reverberate through the poker landscape," said flopturnriver.com.

What they were all raving about was a ruling District Court Judge David Harvey delivered on June 23 which found that advertisements for Pokerstars.net and the Asia Pacific Poker Tour run on TV3 and C4 were not promoting online gambling.

The Department of Internal Affairs, which brought the case, has said it will appeal the decision.

Interactive online gambling within New Zealand is prohibited, but it is not illegal for someone in New Zealand to gamble using websites outside New Zealand. Under New Zealand law it is, however, illegal to advertise, publicise or promote offshore gambling, which is what the case was about.

Between April and May in 2007, the local TV show Celebrity Joker Poker screened several times on C4, during which advertisements for Pokerstars.net and the Asia Pacific Poker Tour were run, some of which also ran on TV3. One of the players on Celebrity Joker Poker at the time was All Black Ali Williams. The show was sponsored by Rational Entertainment Enterprises which runs the websites Pokerstars.net and Pokerstars.com, and various online poker tournaments.

The Department of Internal Affairs brought 21 pairs of charges, against TV Works, the owners of TV3 and C4 - that in running the advertisements they either publicised or promoted a gambling operator outside of New Zealand; or that they ran advertisements that were likely to induce people to gamble outside of New Zealand.

A feature of the case was the difference between the "dot net" and "dot com" Pokerstars websites. The .net site is for practise poker games using "play money". The .com site has online poker with gambling for real money. A key plank of Internal Affairs' case was that the use of the generic word "Pokerstars" in both the.net and .com domain names were two ways of saying the same thing. "It is the prosecution case," says the judgment, "that the advertisements were de facto advertisements for pokerstars.com, using and emphasising the brand name 'pokerstars'."

Dot net versions of poker sites are widely used online - often referred to as the dot net strategy. According to flopturnriver.com many .net poker sites "help develop and teach beginner poker players utilising their play money poker tables in the hopes that the player will eventually convert to the real money games". Flopturnriver, a site which aims to "help the average Joe become a winning, profitable Texas Holdem poker player," says .net poker rooms were also developed as part of a marketing strategy. "Since advertising online gaming websites is illegal in many jurisdictions, the online poker rooms created a "non-gaming" site - the .net version - and used this website as their property to advertise in the mass media."

Judge David Harvey is widely regarded as New Zealand's most technologically savvy judge. Appointed to the bench in 1988 he serves in the District Court holding warrants for general, jury and Youth Court jurisdictions. A former chair of the Copyright Tribunal, he lectures part-time in law and information technology at the University of Auckland, has been involved in the introduction of information technology for the Judiciary since 1990, and is the author of internet.law.nz - Selected Issues. A former international Mastermind champion (his speciality was J R R Tolkien's The Lord of the Rings), he writes widely on law and internet topics, is currently completing a PhD and has been active in making submissions on our laws relating to copyright and legislating against spam.

Judge Harvey is also no stranger to controversy. In 2008 he bewildered many when he took the unprecedented step of banning news websites from naming two men charged with murder while allowing newspapers, radio stations and TV networks to reveal who they were. People thought he was bonkers. Blog sites around the world called him King Canute or, worse, said he was out of touch and the ruling nonsensical. Some blatantly defied his suppression order.

Eventually, after argument presented by New Zealand media companies, the ban was lifted and some began to see what Judge Harvey was concerned about. The suppression of the names wasn't really the issue. It was the concern that a jury might be contaminated by reading information - false, misleading or otherwise - about the defendants on the internet, affecting their right to a fair trial. It also highlighted the key difference between print and web. Print information could just as easily be contaminating, but usually by the time the trial comes around most of us have forgotten what was said - a phenomenon known in legal circles as "slippery memory". On the internet, however, that same information is just a Google search away.

But perhaps Judge Harvey's most controversial judgment was in 2000 when he suppressed the name of American billionaire Peter B Lewis who, after an agreement to pay some money to charity, was discharged without conviction for importing cannabis into New Zealand. The Court of Appeal subsequently overturned the suppression order.

This time around Judge Harvey appears to have taken an important lesson from his earlier mis-step - that judges must always make the reasons for their decisions abundantly clear. His judgment extends to 47 pages. It's also New Zealand's first digital judgment - a 9MB "PDF" digital document, complete with embedded video of the advertisements in question. It sits in the court file, not on paper, but on a CD.

The judgment goes into deep detail about the mechanics of the web - hypertext transfer protocol, universal resource locator (aka web address), global top-level domain, internet protocol, etc. The technological detail becomes critical when discussing internet navigation and whether the .net and .com names could become confused.

In response to the evidence of prosecution expert witness Professor Sarah Todd, a professor of marketing, Judge Harvey said he had concerns about the basis of her assumption - that there was a high chance those intending to go to the free pokerstars.net site, may in fact, end up on the pokerstars.com by accident. "Internet addresses are unforgiving of errors. A mistake in one letter of a domain name may produce a nil result or may direct a user to a completely different website."

He then pointed out the sort of mistake suggested involves typing three wrong letters and seemed to overlook the fact the advertising was directed to online poker sites, anticipating an audience with some familiarity in the use of computers and the internet.

The judgment also goes through each of the advertisements - and provides the videos so that people reading the text can see for themselves what was being advertised. The web address shown in each advertisement is always pokerstars.net and often includes the words "this is not a gambling website" or "play for free". In some of the ads, professional poker players are linked to popular sports - Noah Boeken plays soccer, Daniel Negreanu hockey and Isabelle Mercier boxes. Their commentaries include lines like, "Practise for free at the world's largest poker site, pokerstars.net and find the pokerstar in you."

Analysing the evidence before him Judge Harvey found "the nature of the material in the advertisements made it clear that what was being advertised was free websites that do not involve gambling". He noted too, that the .com website is not mentioned at any time. Thirdly, he said "the navigational realities of the internet mean that there is a very significant difference between web addresses of any nature, be they .net, .com and .org even though they may be associated with a similar domain name." On that basis he said the advertisements were not overseas gambling advertisements and dismissed the charges.

But perhaps the biggest bombshell of the judgment was regarding the advertisements for the Asia Pacific Poker Tour. On the face of it, the tournament, which visits Auckland in September, seemed like gambling because real money was involved. There are two ways to participate in the tournament - by paying a sum of money to compete, or by gaining enough frequent player points from practising on pokerstars.net and reaching a sufficient skill level. Players in the tournament are then given the same number of chips and engage in a number of rounds of games of poker. Those who win the most games and most number of chips become the winners and the prize pool is shared among the top 10 players.

Judge Harvey found the tournament wasn't gambling because it operated as a competition with the players playing for a prize. The defence argued the definition of gambling meant the paying or staking of consideration on the outcome of the game, seeking to win money as a result of the stake, when the outcome depends wholly or partly on chance. The prosecution argued any activity of a competitive nature, which involves an entry fee and the winning of a cash prize at the end of it, where there is an element of chance involved in the outcome, would constitute gambling.

On the latter basis Judge Harvey pointed out a yacht race has an element of chance. If the yachtsmen and women participating paid an entry fee and won prizes based on who won the top places in the race, that would also be gambling, which it clearly is not. As a result he found that the way Asia Pacific Poker Tour was structured was not gambling and dismissed the charges. "It does not involve the payment of consideration based upon the outcome of the game. It involves the splitting of a sum of money derived from the payment of entry fees between the winning players." The Tour clearly involved poker, but not gambling, so those operating the Tour were therefore not gambling operators. "They are conducting a competition involving the game and play of poker."

As the judgment points out, the case highlights an anomaly in our gambling laws. "Although engaging in remote interactive gambling with a gambling operator outside New Zealand is not prohibited by the Statute, the publication of information about the existence or availability of such gambling facilities is so prohibited."

The overall sentiment of the Gambling Act is to minimise the potential harm caused by gambling. The restriction on advertising is designed to do just that. In a world saturated by advertisements, many will be thankful New Zealand has, until now, been spared being bombarded by ads encouraging us to play poker, even if it's not for money. The question this case brings up is whether playing poker without wagering is actually harmful.

If Judge Harvey is right - that there is a significant difference in our gambling laws between playing poker with or without money, or for a share of a prize pool - we could be about to see a whole lot of ads encouraging us to play.