In landmark news for poker, a New Zealand court has ruled that .net advertisements are not promotions for gambling operators, and that poker tournaments themselves are not gambling but a form of competition.
The Department of Internal Affairs recently brought charges under the Gambling Act 2003 against TVWorks Limited (which owns the television stations TV3 and C4). The DIA claimed that a number of advertisements for PokerStars.net (the play-for -free site) promoted an overseas gambling operator (PokerStars.com or PokerStars or APPT) or alternatively that the advertisements were likely to induce New Zealanders to gamble overseas.
In the first case of its kind, his Honor Justice David J Harvey has dismissed all of the charges. The lawyers for TVWorks, Mike Heron and Joe Edwards, from Russell McVeagh, identified the Court's key findings as follows:
- The pokerstars.net website is not promotion of a gambling operator, promotion of gambling overseas, or likely to induce New Zealanders to gamble overseas.
- The pokerstars.net website is not a gambling website nor is it synonymous with pokerstars.com.
- The APPT is not "gambling" in terms of the Act because it is a competition, with an entry fee, which has prize money at the end of it (as opposed to the payment of consideration, based on the outcome of the game).
In regard to .net advertising, the prosecution conceded that pokerstars.net is not a gambling operator. However, prosecutors argued that the use of “PokerStars” in both the .net and .com domain names meant the advertisements for pokerstars.net were de facto advertisements for pokerstars.com (hence advertising an overseas gambling operator).
Justice Harvey ruled that this argument must fail for three reasons:
“Firstly, the nature of the material in the advertisements made it clear that what was being advertised was free websites that do not involve gambling. Secondly, the .com website is not mentioned at any time. Unless the user knew of the existence of the .com website, no association could be made between PokerStars and that particular website. A third reason for rejecting the suggestion that .net and .com sites involve a distinction without a difference lies in the very internet itself....the navigational realties of the internet mean that there is a very significant difference between web addresses of any nature, be they .net .com and .org even although they may be associated with a similar domain name.”.
In relation to the APPT Poker Tournament ads, the defense argued that participants in poker tournaments are not gambling. As an analogy, the defense drew the distinction between a horse owner who pays an entry fee for his horse to participate in a race and who, when the horse crosses the line first, wins prize money, with someone who gambles upon the outcome of the race, the latter being gambling. Judge Harvey agreed with this argument adding:
“I do not agree that the way in which the APPT is structured amounts to gambling. 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. Although poker is usually associated with some form of gambling, because players do not make side bets on the outcome of each hand that element of wagering upon the outcome, or paying consideration or a stake, is not present”.
In reaching his conclusion Justice Harvey replied heavily upon the expert industry evidence presented by Damon Rasheed of PokerNews/iBus Media Consultancy and Professor Roger Marshall who provided expert evidence on the advertisements themself. Damon Rasheed said upon hearing the decision today that:
“Justice Harvey’s ruling was a common sense result for the industry that will have wide spread implications especially for those jurisdictions with similar legislation, such as Australia and the US, were the distinction between .net advertising and gambling has yet to be the subject of legal challenge”.
Joe Edwards of Russell McVeagh added:
“The impact of the Court's decision is that play for free .net websites can now be advertised in New Zealand and there is likely to be a sharp increase in the amount of .net websites promoted in advertising and as sponsors of various poker related events”.