Written Contracts in Poker

The 2006 World Series of Poker ended on August 10 and by August 21 the courts were involved in deciding how to distribute the $12 million first place money. According to the papers filed in Clark County district court, Crispin Leyser claims that he and Jamie Gold had a verbal agreement to split 50/50, any winnings at the main event, Leyser says he has not received a dime from Gold, and is concerned that he never will. The court has restrained the Rio All-Suites Hotel and Casino from distributing the money, until after the September 1 hearing date.

For years the use of verbal agreements has been the "industry standard" for the poker world, however the poker world has been changing rapidly over the past few years.

This rapid change means the old standards of conduct may not apply. This court case between two players is evidence as to how the poker industry changes have resulted in the need for players to get a written partnership agreement upfront.

Consider the following scenario Suppose you make a phone call to a friend that alerts him/her to claim the prize of a free roll in the $10,000 championship event, without your call, this free roll would have been lost to the friend. Your friend promises to "take care" of you, but won't commit to a solid percentage. You are a bit squeamish about the vague nature of the deal, but after all, you have been friends for a long time, and you have both been around poker for many years.

You both know there are certain standards of conduct that apply in a case such as this; you trust that things will work out so you don't push the issue. After he/she makes a large amount of cash, you are shocked when the friend offers a small tournament buy-in for your share of the win. Would you think this is a raw deal? How would you react? Would you take the offer? Would you go to court? Or would you let the "friend" know in no uncertain terms what to do with the offer? And it begs the question, what would be a fair percentage? The fact is that once the money is in the hands of the player, it belongs to them. Without your name on partnership paperwork, you have no claim to any part of the winnings. Entering into a partnership should be done in writing on the front end of the deal, before the tournament is played.

In working at the payout table at this year's WSOP, we used the IRS form 5754, to distribute monies in a partnership along with a W2G for U. S. players or 1042S for foreign players. Form 5754 would be a good starting point for players to write up partnerships; the date, event, names of the partners, tax ID numbers, and percentages can be filled in the blanks. All partners can sign on the bottom of the form.

How the courts view this is form is unknown, but at least two players can have a clear, written understanding of what to expect in the way of percentages of each other.

Form 5754 can be downloaded from the IRS website. Written contracts are the standard in business, and poker has become big business. Twelve millionaires were made at this year's WSOP Championship event. This kind of money requires agreements be in writing.

by: Louise Lea