Breach of Contract...at the World Series of Poker?
Over the past fifteen or so years, poker has exploded in popularity. This can be attributed to any number of factors: greater social acceptance of gambling and the advent of online poker are a few which come to mind. However, the dramatic increase in television and media coverage of high-stakes poker events is perhaps the single biggest cause of the 'poker boom.' Of those high-stakes events, the best-known and most widely-covered is the World Series of Poker, held every year in (where else?) Las Vegas.
This year's World Series of Poker, which concluded earlier this summer, paid over One Million Dollars to each and every player who reached the "final table." A 21-year-old player from the U.K. was one of the nine players who had the combination of talent and luck to share that honor in 2019, but shortly after he pocketed over $1.5 Million for his seventh-place finish, his luck turned around in a hurry--he was sued by two of his "backers" for about $150,000. (In the poker world, backers are essentially investors. They purchase "shares" in a player's profits by contributing a portion of the poker player's "buy-in" (the poker term for an entry fee) and other expenses). The basic facts giving rise to this lawsuit are worthy of a first-year Contracts exam problem and are instructive to any Rhode Island small business owner--and, really, useful to just about everyone.
The backers claimed that they were entitled to 10% of the player's winnings ($152,500, to be precise) because they had contributed 10% the player's tournament buy-ins. This, as any Rhode Island business lawyer can tell you, contains the essential elements of a valid, binding, and legally-enforceable contract: an offer, acceptance, and "consideration" (meaning that both sides are giving something up in the deal). By the way: most contracts are not required to be in writing to be enforceable.
The player apparently refused to pay the backers their 10% because he claims that he returned the backers' investment after getting a better deal from another investor. From a legal standpoint, the important detail here is that the player claims that the backers agreed to accept the refund--that agreement, in and of itself, also probably forms a valid, binding, and legally-enforceable contract!
To complicate matters even further, the player didn't refund the original investors' money until after the first day of the tournament--when, presumably, he was already well-positioned to be successful and earn a profit by finishing "in the money." A very important factual detail if and when the case ever reaches trial is this: how many chips relative to the other remaining players did the player have after the end of the first day? The answer to that question could bring in a host of additional legal claims which would likely favor the backers: did the player unjustly benefit from having what amounted to an interest-free loan for the first day of the tournament? Did the value of the investors' investment increase before the refund was paid because the player was performing well after the first day?
The outcome of this case is almost immaterial, at least as far as you and I are concerned. What matters is that all of your contractual obligations should be documented in writing and prepared--or at the very least reviewed--by an attorney. In this case, if the player or the backers had a written and signed contract, they would each know exactly what their obligations to one another were, and would likely be able to save themselves tens of thousands of dollars in legal fees. They may have also included in their contract any number of other terms that would have made resolving any disagreements easier, faster, and/or less expensive for the parties: for example, a “right to cure” provision, a forum selection or choice of law clause, a provision requiring the loser to pay the winner’s attorneys’ fees, or a mediation or arbitration provision.
If you need a contract prepared or reviewed, or if you have a contract dispute in Rhode Island, contact a Rhode Island business lawyer for legal advice, and don’t find yourself “drawing dead” without a solid written contract!