Gambling With Your Friends And Neighbors — Social Gambling

Social gambling is, in common parlance, a game played primarily for fun or to socialize. It is typically among friends, family, neighbors, or co-workers and takes place in a private location (for example, in the house of one of the participants), not a public area or a commercial venue/business. (It would include gambling at a private club to which you belong IF the club does not sponsor or run the gambling–for example, if you and friends use the club’s card room.) Players must be the age of 18 (in some states, the legal age may be 21). The weekly or twice-monthly poker game that many people participate in is a good example.

Is it legal? The answer is “maybe.” Social gambling runs the gamut of legality: in some states it is legal, in some not, and others it is unclear or has restrictions.  (Specifically, 27 states make social gambling legal (sometimes with limitations on “pot” size) and two have ambiguous laws that likely (but not definitely) make it legal.) Given the variation, before you host and invite friends over for a hand or two, check how your state views social gaming.

When does playing in a social context end and gambling begin? 

There are typically two closely related criteria for when or whether an activity is social gambling:

(1) No one profits by organizing, setting up, or running the game. The “house” does not take a cut of the bets. There is no entry fee paid to the organizer.

(2) Everyone plays on equal footing. Neither the “house” nor any player has the odds shifted in his or her favor, but rather everyone has an equal chance to win (or lose).

Notwithstanding the above two-part test, not every state looks at social gambling with the same criteria. If it recognizes social gambling, the state may also supplement the above criteria with its own. For instance, Colorado requires “a bona fide social relationship” between the participants (basically, that you are friends or co-workers, etc. outside of gambling); Iowa requires a gambling license by any individual conducting gambling activities.

Why is it important whether something qualifies as “social gambling” or not?

Because you face risks under federal or state laws for participating or hosting a game, should it be illegal. As a practical matter, prosecuting home poker games (where players have a strictly social connection) are rare. However, to avoid being surprised, the best course of action is to contact the local authorities to determine the laws in your area.

Each state has its own laws regulating a nearly infinity number of gambling activities and they differ dramatically, especially regarding determining whether social gambling is legal or illegal. To illustrate, two states laws –New Jersey’s and New York’s — are examples of the most common approach among states legalizing the activity.

New Jersey laws: In New Jersey, social gambling per se is not specifically legal. However, it is also not criminal. Under N.J.S.A. 2C:37-1, a “player” is exempt from, and will not be prosecuted for, illegal gambling. The law defines a “player” as

“a person who engages in any form of gambling solely as

                 a contestant or bettor, without receiving or becoming

                 entitled to receive any profit therefrom other than personal

                 gambling winnings, and without otherwise rendering any

material assistance to the establishment, conduct or operation

of the particular gambling activity. 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. . . .”

(Emphasis added).

In New Jersey, if you’re playing on the same terms as everyone else and not receiving any advantage in odds or any compensation for setting up or hosting the game, you will not face criminal prosecution or liability for illegal gambling.

New York laws: New York, under Article 225 of its statutes, takes the same approach as New Jersey–mere “players” are not subject to criminal prosecution–and even uses the same definition of “player” as New Jersey. So, in New York, if you are just a player in a social game and who does not profit by running the game, you have done nothing criminal.

As stated, a common approach to social gambling is the NJ/NY approach of “decriminalization”. Many states do not specifically say that it is legal, but they don’t actually make it criminal. As long as you fall under the rubric to simply be playing, not running or organizing the game, you are ok.

What is the “But” factor?: You can’t play blackjack or run a craps or roulette table at home in states following this common regulatory pattern. Those games have a built-in percentage advantage in favor of the “house” (the one running the table or dealing), and so betting at those games is not “on equal terms.” Play poker, gin, bridge, or other non-dealer/non-banking games with your buddies–but don’t add variety to your card games by playing blackjack, or you’ll be breaking the law.

States’ varying positions on social gambling—more confusion

In contrast to the above approach, there are states which specifically define what constitutes legal social gambling. Florida, for example, specifically says that games where no more than $10 might be won at a time (e.g., per poker hand) are legal. Connecticut says that gambling is legal if it is “incidental to a bona fide social relationship”–that is, if you really are friends or family outside of gambling, you can gamble legally. It is vital to check your state’s specific laws on the subject.

But while we recommend checking the laws in your state, to summarize social gambling’s legality:

States that allow with some restrictions: Overall, the following states allow social gambling, at least to some degree or with some restrictions/limits on prizes or pots (e.g., such as Florida’s $10/hand limit): AL, AK, AZ, CA, CO, CT, DE, FL, HI (an exception to its general ban on all other gambling), IO, KY, LA, ME, MN, MT, NV, NJ, NM, NY, ND, OH, OR, SC, TX, VA, WA, & WY.

States with gaming laws that are not clearly written: Several states have laws which frankly make it unclear whether social gambling is allowed or not–which probably means it is, since prosecution is unlikely for small stakes neighborhood games in the face of unclear law: MA, PA; also the District of Columbia.

States that ban or criminalize social gambling: And finally, there are states which criminalize social gambling–or, to be more accurate, they don’t carve out any exceptions from their general prohibition of unlicensed (i.e., not at a licensed casino, tribal casino, racetrack, etc.) gambling. GA, ID, IL, IN, KA, MD, MI (with very limited legal exceptions), MS, MO, NB, NH, NC, OK, RI, SD, TN, UT, WV, WY.

Of course, even where social gambling is illegal, we all know it goes on. Busting up the $50/night poker game in somebody’s “man cave” is hardly a law enforcement priority. In that regard, you can view social gambling in states where it is illegal as being akin to speeding: many people do it frequently, and only a small percentage are caught or punished.

A word about poker

Possibly–maybe probably–the most common type of social gambling is poker, especially nowadays, with the popularity of Texas Hold’em and similar games. The basic rules about social gambling will apply to poker, but there is an added overlay to them: poker, because of the high degree of skill required, is not considered gambling at all in a few states where it takes a “predominance” (or more than 50%) chance to make something gambling. (Read our article on hosting a poker tournament or other regular game at home.)

What are the legal consequences if it is illegal gambling? 

Gambling is potentially a risky pursuit if it is technically illegal in your state. As with everything else gambling-related, you need to look to your state’s laws: states vary widely in whether they punish mere “players” or only the providers, and what penalties they impose. But those penalties can potentially include large fines, forfeiture of gambling proceeds (e.g. the “pot”), supplies, and furniture or equipment used in the gambling, and even jail time–especially if the authorities decide you were not just participating, but were providing or organizing the gambling. Should you be grabbed by local or state law enforcement, find a good criminal lawyer.

Also, if you are trying to enforce a gambling debt via your court system in a state where gambling is against the law, the chances of collecting are zero since the game was illegal in the first place. Courts will NOT enforce debts incurred in the course of illegal activities. So if you are in a “no social gambling” state, don’t let your “friends” gamble on credit or IOUs–if they choose to dishonor their debts, you’ll never collect.

Case Studies: Gambling With Your Friends And Neighbors

Case Study 1: John’s Regular Poker Night With Friends

John regularly hosts a poker night at his home, inviting a group of friends to enjoy an evening of friendly competition. They play Texas Hold’em for small stakes, with no profits taken by the host. John ensures that everyone plays on equal footing and strictly follows the social gambling guidelines of their state. The poker night serves as an opportunity for socializing and friendly camaraderie among friends, without violating any laws or risking legal consequences.

Case Study 2: Samantha’s Organized Casino Night Fundraiser

Samantha volunteers to organize a casino-themed fundraising event for her community organization. The event is held at a private venue and includes games like blackjack, roulette, and poker. However, Samantha seeks legal advice to ensure compliance with state regulations. She learns that organizing such an event may require obtaining proper licenses or permits, depending on the state’s specific laws. Samantha works closely with local authorities and follows all necessary procedures to host a successful and legal casino night fundraiser.

Case Study 3: Mike’s Unregulated Basement Card Game

Mike hosts a regular card game in his basement, where participants play various card games for substantial stakes. The game attracts players from different social circles, and Mike takes a percentage of the pot as compensation for hosting the game. Unbeknownst to Mike, his basement card game violates state gambling laws that prohibit unlicensed gambling and the profiting of the host. One evening, law enforcement authorities receive a tip about the game and raid the premises, resulting in legal consequences for Mike and the participants.