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No. 12-3720
In the

United States Court of Appeals for the Second Circuit


UNITED STATES OF AMERICA, Appellant, v. LAWRENCE DICRISTINA, Defendant-Appellee, STEFANO LOMBARDO, AKA MITZIE, Defendant. On Appeal from the United States District Court for the Eastern District of New York

BRIEF OF AMICUS CURIAE ROBERT C. HANNUM, PH.D., IN SUPPORT OF DEFENDANT-APPELLEE AND AFFIRMANCE

PAUL D. CLEMENT D. ZACHARY HUDSON BANCROFT PLLC 1919 M Street NW, Suite 470 Washington, DC 20036 (202) 234-0090 pclement@bancroftpllc.com Counsel for Amicus Curiae March 28, 2013

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CORPORATE DISCLOSURE STATEMENT Pursuant to Federal Rule of Appellate Procedure 26.1, the undersigned states that amicus curiae is not a corporation that issues stock or has parent corporations that issue stock.

s/Paul D. Clement Paul D. Clement March 28, 2013

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TABLE OF CONTENTS CORPORATE DISCLOSURE STATEMENT ..........................................................i TABLE OF AUTHORITIES ....................................................................................iv INTEREST OF AMICUS CURIAE............................................................................ 1 INTRODUCTION AND SUMMARY OF ARGUMENT ........................................ 1 ARGUMENT .............................................................................................................4 I. Whether A Particular Game Constitutes Gambling Should Be Determined By Reference To Whether Skill Or Chance Predominates In Determining The Outcome Of The Game As It Is Typically Played ..........................................................................................4 A. For Many GamesIncluding PokerIt Is Possible To Assess The Effect Of Skill And Chance On Players Results ...................................................................................................4 An Accurate Assessment Of The Roles Of Skill And Chance Critically Depends On Evaluating The Game As It Is Typically Played, Which In The Case Of Poker Means Considering A Series Of Poker Hands Over Time.................... 5 Best Practices Require The Use Of Large Data Sets To Increase Accuracy, Eliminate Bias, And Minimize Error .................... 7

B.

C. II.

The District Court Correctly Adopted Dr. Heebs Conclusion That Skill Predominates Over Chance In Poker .............................................. 8 A. B. Dr. Heeb Applied Well-Accepted Statistical Principles To Conclude That Skill Predominates Over Chance ............................ 8 The District Courts Conclusion That Skill Predominates Over Chance In Poker Is Consistent With The Scholarly Consensus Regarding The Role Of Skill In Poker ..............................10

III.

A Strong Working Knowledge Of Probability, Statistics, And Strategy Is Necessary For Successful Poker Play .........................................18

ii

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A. B. IV.

Calculating Probabilities Plays a Key Role In Winning Poker ....................................................................................................18 In-Game Strategy Is Also Integral To Successful Poker Play ......................................................................................................21

Because Of The Degree And Type Of Skill Involved, Poker Is Easily Distinguishable From The Gambling Games Listed In IGBA..............................................................................................................23

CONCLUSION ........................................................................................................27 CERTIFICATE OF COMPLIANCE CERTIFICATE OF SERVICE ADDENDUM

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TABLE OF AUTHORITIES Cases United States v. Roselli, 432 F.2d 879 (9th Cir. 1970) ............................................23 United States v. Sacco, 491 F.2d 995 (9th Cir. 1974) .............................................23 Statute 18 U.S.C. 1955(a)(2) .............................................................................................23 Other Authorities Anthony Cabot & Robert Hannum, Poker: Public Policy, Law, Mathematics, and the Future of an American Tradition, 22 T.M. Cooley L. Rev. 443 (2005) ........................................................... passim Anthony N. Cabot et al., Alex Rodriguez, a Monkey and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383 (2009) .....................24 Basil Nestor, The Unofficial Guide to Casino Gambling (1999) ............................26 Christopher Grohman, Reconsidering Regulation: A Historical View of the Legality of Internet Poker and Discussion of the Internet Gambling Ban of 2006, 1 J. Legal Tech. Risk Mgmt. 34 (2006) .........................7 David Sklansky, The Theory of Poker (1999)..........................................................11 Gary Carson, The Complete Book of Hold Em Poker (2001).................................11 George Remennik, Mrs. Tschetschots Busted Hand, Poker, and Taxes: The Inconsistent Application of Tax Laws on a Game of Skill, 8 Cardozo Pub. L. Poly & Ethics 485 (2010) ..........................................25 John Scarne, Scarnes Guide to Modern Poker (1980) ...........................................11 Lawrence M. Salinger, 1 Encyclopedia of White-Collar & Corporate Crime (2005) .................................................................................23 Michael A. Dedonno & Douglas K. Detterman, Poker Is a Skill, 12 Gaming L. Rev. 31 (2008) .............................................................................16

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Michael A. Tselnik, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 36 Hofstra L. Rev. 1617 (2007) ..................................................................................................................22 Nate Silver, The Signal and the Noise: Why So Many Predictions FailBut Some Dont (2012) .................................................................. 6, 13, 22 Noga Alon, Poker, Chance, & Skill (2006), http://www.tau.ac.il/~ nogaa/PDFS/skill4.pdf ........................................................................... 11, 16, 19 Paco Hope & Sean McCulloch, Statistical Analysis of Texas Hold Em (2009), http://www.scribd.com/doc/13710664/Cigital-100M-HandAnalysis-Report ........................................................................................... 14, 15 Peter Borm & Ben van der Genugten, On a Measure of Skill for Games with Chance Elements, 9 Sociedad Espaola de Esadstica e Investigacin Operativa Top 91 (2001) ..............................................................16 Rachael Croson et al., Poker Superstars: Skills or Luck? 21 Chance 25 (2008) ...........................................................................................17 Robert A. Connolly & Richard J. Rendleman Jr., Skill, Luck, & Streaky Play on the PGA Tour, 103 J. Am. Stats. 74 (2008)................................4 Robert C. Hannum & Anthony N. Cabot, Toward Legalization of Poker: The Skill vs. Chance Debate, 13 UNLV Gaming Research & Rev. J. 1 (2009) ...............................................................................................26 Robert Hannum, Matthew Rutherford, & Teresa Dalton, Economics of Poker: The Effect of Systemic Chance, 6 J. Gambling Bus. & Econ. 42 (2012) .................................................. 11, 12, 14 Steven D. Levitt & Thomas J. Miles, The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker, NBER Working Paper Series No. 17023 (2011), http://pricetheory.uchicago.edu/ levitt/Papers/WSOP2011.pdf ................................................................. 11, 12, 17 Steven D. Levitt, Thomas J. Miles, & Andrew M. Rosenfield, Is Texas Hold Em A Game of Chance? A Legal and Economic Analysis (Sept. 2012), http://www.freakonomics.com/media/ LevittMilesRosenfield%20SkillChance%20091112.pdf............................. 11, 13

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INTEREST OF AMICUS CURIAE 1 Amicus curiae Robert C. Hannum, Ph.D., is a Professor of Risk Analysis & Gaming at the University of Denver. He has written extensively on the role of skill in gaming generally and poker in particular. See infra; Curriculum Vitae of Robert C. Hannum, Ph.D. (Addendum A). He has also offered expert testimony in several court cases on the issue of whether poker is a game predominantly of skill or chance. See id. Dr. Hannum strongly believes that when judicial decisions rely on statistical analysis that analysis must be rooted in sound scientific principles. In Dr. Hannums view, the decision below was based on such principles. Dr.

Hannum respectfully submits this brief to assist the Court in evaluating the empirical analysis on which the District Court relied, at least in part, in determining that skill predominates over chance in poker. INTRODUCTION AND SUMMARY OF ARGUMENT As the District Court recognized, ascertaining whether a game constitutes gambling under IGBA requires an assessment of whether skill or chance predominates in determining the games outcome as played in the normal course.

This brief is filed with the consent of all parties. Pursuant to Federal Rule of Appellate Procedure 29(c)(5), counsel for amicus states that no counsel for a party authored this brief in whole or in part, and that no person other than amicus or his counsel made a monetary contribution to the preparation or submission of this brief.

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That is not only the traditional approach in the law, but also the approach most consistent with sound scientific inquiry. Using large datasets and advanced empirical analysis, it is possible to separate out the skill and chance elements of a variety of activities, including poker. Indeed, the popularity of online poker has yielded a massive amount of data that can be used to quantify the roles of skill and chance. Through analyzing a series of poker hands drawn from a larger set of hands, which reflects how the game is actually played, an accurate and unbiased estimate of the skill and chance elements of success in poker can be calculated. That is exactly what Dr. Heeb did in concluding that skill predominates over chance in poker. Employing the same statistical techniques used in a wide variety of empirical endeavors, Dr. Heeb analyzed millions of poker hands played over a one year period. His conclusion was unequivocal: poker is predominantly a game of skill. Skilled players have higher win rates, are more successful than lessskilled players with every possible starting hand, and earn more profit than lessskilled players with every possible winning hand. And Dr. Heeb is not alone in recognizing that skill predominates in poker. Scholars approaching the problem from a variety of vantage pointse.g., regression analysis, computer simulation, mathematical modeling, and experimentationhave all reached the same conclusion.

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The uniform scientific finding that poker is predominantly a game of skill is unsurprising given the skillset required for successful play. If you play long enough, everyone gets the same number of good hands and bad hands. The reason why some players come out ahead and others behindand the reason professional poker players existis skill (or lack thereof). Skilled players leverage their

knowledge of probability and statistics to estimate the value of their cards and the likely value of their opponents cards. They consistently make positive expectedvalue decisions and strategic choices that put them in the best position to turn a profit. Unskilled players do none of these things, and it shows. The skill involved in successful poker play sets it apart from the gambling games enumerated in the Illegal Gambling Business Act (IGBA). The common thread running through IGBAs categories of games is that chance is more important than skill in each one. Not so with poker, at least when played by someone with skill. Unlike house-banked games such as slot machines, roulette, and dice, a skilled poker player can make positive expected-value bets and win over time. And unlike lotteries, a poker players skill impacts his odds of winning. After purchasing a lottery ticket, the lottery player can only hope for the best.

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ARGUMENT I. Whether A Particular Game Constitutes Gambling Should Be Determined By Reference To Whether Skill Or Chance Predominates In Determining The Outcome Of The Game As It Is Typically Played. A. For Many GamesIncluding PokerIt Is Possible To Assess The Effect Of Skill And Chance On Players Results.

Because of the availability of massive datasets and sophisticated empirical analytic techniques, analysts are able to distill the roles played by skill and chance in determining the outcomes of many activities. Golf is illustrative. Using a random effects model to analyze the play of 253 active PGA Tour golfers over a three year period, statisticians have concluded that [o]n average, it took 9.6 strokes of cumulative good luck to win a golf tournament. Robert A. Connolly & Richard J. Rendleman Jr., Skill, Luck, and Streaky Play on the PGA Tour, 103 J. Am. Stats. Assn 74, 74 (2008); see id. at 84 ([T]o have won these tournaments, . . . not only must one have played better than normal, but one must have also played sufficiently well (or with sufficient luck) to overcome the collective good luck of many other participants in the same event.). As such studies make clear, even games widely regarded as contests of skill contain a significant element of chance; andgiven sufficient data and statistical know-howthe roles played by skill and chance are quantifiable. Poker is ideally suited for such an analysis. The emergence of online poker has yielded a wealth of data about how players play and how that play affects 4

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outcomes. Utilizing the same statistical techniques employed in assessing the role of chance in golf (and scores of other activities), the parts that chance and skill play in determining outcomes in poker can be isolated. Such analysis is not just feasible, but essential to the legal question here. In the absence of an informed inquiry into whether chance predominates over skill in the poker context, courts will be without a reliable means for determining whether pokeror golf for that matterconstitutes gambling when played for a prize. B. An Accurate Assessment Of The Roles Of Skill And Chance Critically Depends On Evaluating The Game As It Is Typically Played, Which In The Case Of Poker Means Considering A Series Of Poker Hands Over Time.

The availability of large datasets and advanced statistical techniques does not ensure the success of empirical efforts to quantify skill and chance. Empirical analysis is only as good as the models used, and the efficacy of those models is constrained by the assumptions on which they are premised. A model that starts from the wrong premise is just as useless as a model that asks the wrong questions or relies on the wrong data. Accordingly, when assessing the roles played by chance and skill in a given game it is critical to evaluate that game as it is typically played. Considering the game in any other manner is akin to considering a

different game altogetherno reliable inference can be drawn from analysis that relies on an unrealistic or distorted set of assumptions.

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For poker, that means considering a series of poker hands over time. 2 The average poker session lasts several hours; usually four to five hours, but sessions of eight to ten hours are not uncommon. In a face-to-face game, the average rate of play is 30 hands per hour, and thus a single session consists of hundreds of hands. See, e.g., July 6, 2012 Daubert Hrg Tr. 78-79 [Govt Appx GA173-GA174]; Aug. 10, 2012 Daubert Hrg Tr. 36 [Govt Appx GA283]; Heeb Suppl Report 4 13, 9 29 [Govt Appx GA362, GA367]. And online, the pace of play is often at least double that of in-person play. See Christopher Grohman, Reconsidering

Regulation: A Historical View of the Legality of Internet Poker and Discussion of

The most common variant of poker, and the variant referred to herein, is Texas Hold Em. A Texas Hold Em hand proceeds as follows: The game begins when two personal cards (called down cards or hole cards) are dealt facedown to each player. A round of betting ensues at this stage. These personal cards then start to be combined with a series of community cards (also called the board) that are dealt faceup and shared between all players at the table. Each player seeks to formulate his best five-card poker hand between his down cards and the community cards. The community cards are revealed sequentially, with a round of betting separating each stage. The first three cards are revealed simultaneously and called the flop . . . . The fourth community card, called the turn, is revealed next. Finally, the last card, the river is exposed, and a final round of betting takes place. More often than not, all players but one will have folded at this point. If not, the players down cards are finally flipped faceup and the best hand at the showdown wins the pot. Nate Silver, The Signal and the Noise: Why So Many Predictions FailBut Some Dont 299 (2012). Hands are ranked as follows: straight flush, four-of-a-kind, full house, flush, straight, three-of-a-kind, two pair, one pair, high card. See id. 6

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the Internet Gambling Ban of 2006, 1 J. Legal Tech. Risk Mgmt. 34, 38-39 (2006).3 C. Best Practices Require The Use Of Large Data Sets To Increase Accuracy, Eliminate Bias, And Minimize Error.

What is more, a sufficiently broad swath of data must be evaluated for the results of an inquiry into the roles of skill and chance to be meaningful. One could mistakenly observe the same individual win the lottery more than once and wrongly conclude that the lottery is a game of skill. Or one could watch a chess match between two players of relatively equal skill and determine that chess is a game of chance because of the advantage enjoyed by the player who moves first. The same is true of any effort to quantify the skill and chance elements in golf or poker: data from one putt or one hand (or even a series of putts and hands) may not tell us much. Inferences about the real world must be drawn from large samples to ensure the accuracy of the conclusions drawn and guard against sampling error, observation bias, and the numerous other potential problems that result from using small samples.

The rate of play is higher online for two reasons. First, electronic actions are faster than physical onesa virtual deck of cards does not need to be shuffled, and it is faster to type the size of a bet or raise than it is to count and move physical poker chips. Second, many players online play at more than one poker table at a timesometimes four or five tables at once. This allows online players to play a much larger number of hands in the same amount of time. 7

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II.

The District Court Correctly Adopted Dr. Heebs Conclusion That Skill Predominates Over Chance In Poker. A. Dr. Heeb Applied Well-Accepted Statistical Principles To Conclude That Skill Predominates Over Chance.

The analysis conducted by Dr. Heeb and relied on by the District Court was grounded in sound scientific methodology and in keeping with the principles discussed supra. Employing statistical techniques that serve as the foundation of analysis by the Department of Justice or the FTC, for example, in any merger case, in any analysis of antitrust harm or damages, or monopolization case, Dr. Heeb analyzed millions of hands of Texas Hold Em played on the website PokerStars between April 2010 and March 2011, an extremely large dataset that enables highly accurate inferences. GA125]. July 6, 2012 Daubert Hrg Tr. 30 [Govt Appx

To enhance the robustness of his results, Dr. Heeb conducted two First, he examined whether a players success generally

separate analyses.

predicted his success when dealt a specific pair of starting down cardsfor example, a King and a Nine in different suits. To do this, Dr. Heeb calculated each players average success rate on all other possible pairs of starting down cards and grouped the players according to whether their averages fell above or below the sample median. He then compared whether players above the median won more (or lost less) when dealt King-Nine than players below the median. That

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comparison allowed Dr. Heeb to assess whether more skilled players perform better than less skilled players when dealt the same cards. Next, Dr. Heeb created a skill index to test whether skill correlated with a players win rate. He randomly divided the data on millions of poker hands into halves and used regression analysis on the first half to create an index of skill that pegged 240 statistics about how players played to their win rates. He then applied this index to players in the second half of the data and measured its correlation with a players actual win rate. By doing so, Dr. Heeb was able to observe whether a players win rate increased along with his skill, as measured by his index. Dr. Heebs analyses, employing best practices of informed statisticians and empiricists, yielded several conclusions supporting pokers status as a game predominated by skill. He concluded that players with higher predicted skill on average have higher win rates and correspondingly, over time, win more money. Heeb Report 36-37 [Govt Appx GA052-053]; see id. 11-17, 43-45 [Govt Appx GA027-GA033, GA059-GA061]; July 6, 2012 Daubert Hrg Tr. 30-33 [Govt Appx GA125-GA128]; Heeb Suppl Report 2-3 [Govt Appx GA360-GA361]. Skillful players are more successful than less skilled players with every possible starting hand and [s]killful players earn more profit than less skilled players with every possible winning hand type. Heeb Suppl Report 2-3 [Govt Appx

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GA362]. 4 The upshot of Dr. Heebs analysis: skilled play beats unskilled play and results in more profit. The importance of skill manifests itself relatively quickly. 88% of the most skilled players (the top 10%) will be ahead of the least skilled players (the bottom 30%) after just 240 hands and 90% will be ahead after just 300 hands. See Heeb Suppl Report 4 [Govt Appx GA362]. That finding is critical. As already noted, the average poker session lasts four to five hours, oftentimes more, and consists of hundreds of hands. Thus Dr. Heebs results stand for the proposition that at the end of a normal poker session the most skilled players will be ahead of the least skilled players 80%-90% of the time. B. The District Courts Conclusion That Skill Predominates Over Chance In Poker Is Consistent With The Scholarly Consensus Regarding The Role Of Skill In Poker.

Scholars appear to be in unanimous agreement with Dr. Heebs conclusion that skill predominates in poker. Indeed, the collective expert opinion is

unequivocal: poker is a game of skill, and in the long run, a skilled player will beat an unskilled player. Anthony Cabot & Robert Hannum, Poker: Public Policy, Law, Mathematics, and the Future of an American Tradition, 22 T.M. Cooley L. Rev. 443, 466 (2005) [hereinafter Cabot & Hannum]; see Robert Hannum, Thus, results of data analysis for poker are materially different from an analysis of data representing results of a game of pure chance, such as a coin toss, because the former can predict future performance. Heeb Suppl Report 4-6 [Govt Appx GA362-GA364]. 10
4

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Matthew Rutherford, & Teresa Dalton, Economics of Poker: The Effect of Systemic Chance, 6 J. Gambling Bus. & Econ. 25, 42 (2012) (clearly the driving force behind the economic outcome of Texas Holdem is skill rather than chance); Steven D. Levitt, Thomas J. Miles, & Andrew M. Rosenfield, Is Texas Hold Em A Game of Chance? A Legal and Economic Analysis 3 (Sept. 2012), http://www.freakonomics.com/media/LevittMilesRosenfield%20SkillChance%200 91112.pdf (skill is the primary factor determining the distribution of player returns); Steven D. Levitt & Thomas J. Miles, The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker NBER Working Paper Series No. 17023 (2011), http://pricetheory.uchicago.edu/levitt/Papers/WSOP2011.pdf

[hereinafter Levitt & Miles] (there is strong evidence in support of the idea that poker is a game of skill); Noga Alon, Poker, Chance, & Skill 1 (2006), http://www.tau.ac.il/~nogaa/PDFS/skill4.pdf predominantly a game of skill).5 The validity of this conclusion is underscored by the fact that it is has been arrived at by a host of scholars employing a wide variety of empirical approaches.
5

[hereinafter

Alon]

(poker

is

See also Gary Carson, The Complete Book of Hold Em Poker 4-5 (2001) (Poker is a game of skill. It requires a player to us[e] position, psychology, bluffing, and other methods to increase his chances to win the pot and increase the size of the pots he wins.); David Sklansky, The Theory of Poker 2 (1999) ([P]oker is not primarily a game of luck. It is a game of skill.); John Scarne, Scarnes Guide to Modern Poker 32 (1980) (Poker contains a greater skill element than any other card game . . . . [It] is the one and only game where a skilled player may hold bad cards for hours and still win money.). 11

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Several researchers have come to the conclusion that poker is predominantly a game of skill by analyzing data from actual hands played in a manner similar to Dr. Heeb. Using a database of more than one billion hands of real online poker involving 1.8 million players, Hannum et al. present a regression-based method for isolating and measuring the systemic chance and skill elements in Texas Holdem poker. The authors conclude that, though there is an element of systemic chance in poker, virtually all of the variation in players returns on investment (ROIs) from playing online Texas Holdem can be attributed to something other than systemic chance. Robert Hannum et al., Economics of Poker, supra, at 42. They go on to argue that this factor that accounts for most of the variation in player profits is skill. Id. (clearly the driving force behind the economic outcome of Texas

Holdem is skill rather than chance). Analyzing data from hands played during the World Series of Poker (WSOP), Levitt and Miles have concluded that highly skilled playersthose players who, for instance, were top money winners in the 2009 WSOPachieve an average return on investment of over 30 percent, compared to a -15 percent for all other players. Levitt & Miles, at 2, 6. In a separate study evaluating more than 12 million hands [of] no-limit Texas Hold Em played by 2,775 players, Levitt, Miles, and Rosenfield concluded that skill is a highly important factor in poker and that it is simply wrong to consider poker a game of chance if that is

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meant to mean anything more than the fact that in any single round of play, an element of chance is present. Levitt, Miles, & Rosenfield, Is Texas Hold Em A Game of Chance?, supra, at 2, 38-39. Indeed, [e]ven tiny differences in skill manifest themselves in near certain victory if the time horizon is long enough. Id. at 37. Along the same lines, evaluating a random sample of hands played online where a $10 bet was required to remain in the hand long enough to see the community cards, Silver concluded that there are real returns to skill in poker. See Nate Silver, The Signal and the Noise: Why So Many Predications FailBut Some Dont 315-317 (2012) [hereinafter Silver]. [T]he very best player at the table in one of these games is averaging a profit of about $110 per one hundred hands played over the long run. Id. at 316. At the same time, the worst players at the table are losing money much faster than even the best ones are making itthe worst player in the game loses at a rate of more than $400 per one hundred hands. Id. at 317. Analysis of actual hands played has also been used to assess the importance of chance on a hand-by-hand basis. Hannum et al., in their analysis of one billion hands of online Texas Hold em, found that 85.2% of all hands played were resolved without a showdown. The authors argue that since for so many hands the winner does not derive the win based on a show of the cards but rather from the

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decisions of the other players to fold their hands, skill, in the form of players betting decisions, is of overriding importance in determining the outcome in poker. They also found that of the 14.8% of hands that went to showdown nearly half were won by a player who did not hold the best hand, the winning player having induced opponents, including the player with the best hand, to fold. The authors further report that only 8% of all hands go to showdown and are won by the player with the best hand at the table; more than half (54.1%) of all showdown hands are won by a player who does not have the best hole cards at the table; more than three-quarters (76.4%) of all players who started a hand folded before seeing the flop; and only 5.7% of all players who started a hand participated in a showdown. Robert Hannum et al., Economics of Poker, supra, at 41-43 (It can be argued that folding may well be the most important skill in the game. Minimizing losses by appropriately folding is at least as important as the skill of maximizing winsextracting as much money as possible from opponentswhen playing hands that end up winning.). In another study that examined 103 million hands of Texas Hold Em poker played at PokerStars, Hope and McCulloch concluded that the outcomes of games are largely determined by players decisions rather than chance. Paco Hope & Sean McCulloch, Statistical Analysis of Texas Hold Em 5 (2009), http://www.scribd.com/doc/13710664/Cigital-100M-Hand-Analysis-Report. More

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than 75% of poker hands conclude when one player bets and induces his opponents to fold. In these hands, the cards are never revealed or compared and so skill aloneand not the chance draw of the cardsdetermines the outcome. See id. at 5, 16. Of the remaining 25% of hands, the player with the best hand wins less than half the time. That is because, more often than not, the player with the best cards has already folded. As a result, the player with the best cards wins just 12% of the time; in the other 88% of hands, the players decisions alter the result. See id. at 14 (the majority of games are determined by something other than the value of the cards). Of course, a players decision to fold may be influenced by his perception of the strength of his hand, and so it is true that the skill component is not entirely independent of the chance component. But that only underscores that skill is the dominant element. The deal of the cards never actually dictates a players

decisionsit is the players perceptions and strategies (as opposed to the cards themselves) that dictate the result. Scholars have come to the same conclusion about the role of skill in poker using computer simulations, mathematical models, and lab experiments. Based on the results of computer simulations of one million hands, Cabot and Hannum concluded that over the course of a large number of poker hands, the players with skill defeat the ones without skill, and that players with equal skill levels perform

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similarly to each other. Cabot & Hannum, at 480. While luck can play a more important role in the short term when skill levels are similar, skill is a dominant factor even after only 100 hands. Id. at 482. Relying on mathematical modeling, Alon has concluded that skill is the major component in deciding the results of poker over the long haul. Alon, at 1. Indeed, unskilled players do not stand a chance: across 90 hands, the probability that an unskilled player will do better than a skilled player is approximately .187%. Id. Over 140 hands, that chance drops to a miniscule .016%. Id.; see also Peter Borm & Ben van der Genugten, On a Relative Measure of Skill for Games with Chance Elements, 9 Sociedad Espaola de Esadstica e Investigacin Operativa Top 91 (2001) (concluding through mathematical modeling that the role of skill in even a highly simplified poker game is at least double the skill involved in black jack). And performing a lab

experiment with students where some participants received basic instruction in pokersuch as hand ranking strategy, the value of position, assessing whether to fold, call, or bet at various stages during the hand, and the probability of improving ones hand during the course of playwhile others did not, Dedonno and Detterman concluded unequivocal[ly] that poker is a game of skill. Michael A. Dedonno & Douglas K. Detterman, Poker Is a Skill, 12 Gaming L. Rev. 31, 36 (2008). Put simply, participants who were instructed outperformed those who were not instructed. Id.

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Scholars have also concluded that the skill involved in poker is comparable toand in some instances greater thanthe skill involved in other games and activities. Conducting regression analysis using data from poker tournaments that are a part of the World Series of Poker and 48 PGA tour events, Croson concluded that the skill differences among top poker players are similar to skill differences across top golfers. Rachael Croson et al., Poker Superstars: Skills or Luck? 21 Chance 25, 26-28 (2008). In both poker and golf, [p]revious finishes in tournaments predict current finishes. Id. at 28. Moreover, the observed

differences in return on investment between high-skill and low-skill poker players is highly statistically significant and far larger in magnitude than those observed between the most and least talented money managers. Levitt & Miles, at 7.6 The bottom line is [s]erious and skilled poker players tend to win consistently, while those relying on luck do not. Cabot & Hannum, at 466. Were skill not the predominant factor the collection of poker winners would resemble a random selection from the field of all players. Id. It does not.

In light of the favorable comparisons between skilled poker play and skill in other professions, it comes as no surprise that highly skilled players can make a living playing poker. See Heeb Report 11 38-39 [Govt Appx GA027]; July 6, 2012 Daubert Hrg Tr. 43, 75-78 [Govt Appx GA138, GA170-GA173]; Heeb Suppl Report 4 15 [Govt Appx GA362]. 17

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III.

A Strong Working Knowledge Of Probability, Statistics, And Strategy Is Necessary For Successful Poker Play. The uniform conclusion that skill predominates in poker is unsurprising.

Over the long run everybody gets the same proportion of good and bad cards, of winning and losing hands. Id. Skilled players use their knowledge of probability, statistics, and strategy to minimize their losses on bad hands and maximize their profits on good hands. Unskilled players rely on big hands and lucky draws and, in the end, lose. A. Calculating Probabilities Plays a Key Role In Winning Poker.

To win consistently a poker player must have a strong command of probability. See Heeb Report at 8 32 [Govt Appx GA024] (The ability to calculate probabilities and associated betting odds is one of the more notable skills of a successful poker player.). Indeed, skilled players rely on their knowledge of probability repeatedly during a single hand. The calculations begin as soon as a player receives his down cards. A skilled player will be able to assess the value of his hand based on its likelihood. He will, for example, know that he had a 5.9% chance of being dealt any pair and a 0.45% chance of being dealt a pair of Aces. A skilled player will then be able to make a probabilistic determination about how his hand stacks up against the hands of his opponents and how his hand value (and his opponents hand values) will improve as the community cards are dealt. If a skilled player is holding an Ace 18

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and a Ten, he will know that there is a 32% chance that he will have either a pair of Aces or a pair of Tens by the time the last card is dealt. If both his cards are of the same suit, he will know that there is a 6.5% chance that he will make a flush (five cards of the same suit) by the end of the hand. Moreover, a skilled player deploys his knowledge of probability and statistics to make positive expected-value decisions. Every action in pokera check, call, bet, raise, or foldhas an expected value. Making positive expected value plays is criticalby doing so, the skilled player ensures that he wins in the long run. See Heeb Report at 8 31 [Govt Appx GA024] (The ability to consistently interpret . . . possibilities and make profit maximizing decisions in each specific situation is one of the attributes that distinguishes more skillful players from less skillful players.); see also, e.g., Alon, at 5-6, 15-17 (explaining basic probabilities). The concept of expected value is easy enough to understand. Imagine a situation where two friends, A and B, bet on the outcome of a series of coin flips; B agrees to pay A $10 for every head and A agrees to pay B $5 for every tail. This wager has a positive expected value for A: A will win 50% of the flips and get paid $10 and lose the other 50% and pay $5, for an expected value per flip of $2.50. Conversely, the wager has a negative expected value for B: B will win 50% of the

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flips and get paid $5 and lose the other 50% and pay $10, for an expected value per flip of -$2.50. In other words, this is a good bet for A and a bad bet for B. Skilled players take the concept of expected value and apply it to substantially more complicated situations in real time where money is on the line. The following example is illustrative. As down cards are the Ace and Eight of Hearts. Three community cards have already been dealt: the Two of Hearts, Jack of Hearts, and Seven of Spades. There is already $8 in the pot and B bets $2, which is all the money he has left. All other players fold, so A is the only one left to call Bs bet. If A is a skilled player, he will calculate the odds that another Heart will be dealt and that he will have a flush. A knows that four Hearts have already been dealt (the two he holds and the two on the board), and so of the 47 cards he has not seen 9 of them will help and 38 will not. As odds, then, of getting his Heart on the next card are roughly 4-to-1. That does not mean, however, that A should not bet. That depends on what he must bet and what he stands to win. B bet $2 into an $8 pot, making the pot value $10. A must bet $2 to stand a chance of winning $10. Thus As pot odds are 5-to-1 and A, if he is skilled, will recognize that calling Bs bet is a positive expectation decision. The odds that A is getting from the pot are bigger than the odds that he will hit his flush on the next card.

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Unskilled players fail to comprehend these concepts.

They do not

understand the odds-based value of the cards they are dealt and tend to overvalue certain combinations of down cards, such as two suited cards. See July 6, 2012 Daubert Hrg Tr. at 36-38 [Govt Appx GA131-GA133] (explaining common traps for beginning players). As a result, beginning players inevitably bet too many hands. Id. They also make bets that in no way reflect the value of their hand, their odds of winning, or the amount of money at stakeunskilled players, to their detriment, are unconstrained by the principles of expected value. B. In-Game Strategy Is Also Integral To Successful Poker Play.

While skill in probability and statistics is necessary for successful poker play, it is not enough. A skilled player must adapt his strategy to account for a number of additional variables. The importance of table position is one example. The person who acts last in a round of betting has a distinct strategic advantage as he has observed the behavior of all those who have checked, called, raised, or folded before him. See July 6, 2012 Daubert Hrg Tr. at 37 [Govt Appx GA132]. If everyone else has checked or folded, the last to act may conclude that his opponents have weak hands and raise as a matter of strategy rather than because his cards warrant it. A skilled player will likely use this tactic and recognize it when it is used. A skilled player also assesses his opponents tendencies and continually updates his theory of what his opponents hold. [T]he best players

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always entertain numerous hypotheses, which they weigh and balance against the opponents actions. Silver, at 298. Unskilled players fail to account for these subjective elements. They do not recognize how to exploit table position or when someone else is doing so. They are unlikely to evolve their strategy based on the behavior of their opponents. To the extent unskilled players entertain any hypothesis at all, it is usually something along the lines of If I play these cards, then I might get lucky. The need for this subjective skill set distinguishes poker from games like chess, in which each player has complete information and for which, in principle, a computer can devise an optimal strategy given enough brute force processing power. However, researchers attempting to design a computer that can play poker have faced great difficulty because mere processing power alone is insufficient to render optimal solutions in poker. The subjective abilities of a skilled poker playerviz. the ability to read opponents, react to their tendencies, and adjust his behavior to prevent exploitationare far more difficult to program. See Cabot & Hannum, at 468 (noting failure of computer programs designed to play against humans); Michael A. Tselnik, Note, Check, Raise, or Fold: Poker and the Unlawful Internet Gambling Enforcement Act, 36 Hofstra L. Rev. 1617, 1655 (2007) (same).

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IV.

Because Of The Degree And Type Of Skill Involved, Poker Is Easily Distinguishable From The Gambling Games Listed In IGBA. IGBA provides that gambling includes but is not limited to pool-selling,

bookmaking, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein. 18 U.S.C. 1955(a)(2). Such games are not remotely similar to poker in terms of the amount of skill required for successful play. For the IGBAs enumerated games, the players are either attempting to beat the odds or get lucky, i.e., to achieve some result other than the expected outcome (an outcome over which the player has virtually no control) or are gambling on the skillful actions or interactions of others. The same simply is not true of poker. Poker players are not trying to beat the odds, nor are they gambling on the actions or interactions of othersthey are trying to beat their opponents. Poker players compete on a level field, and the data show beyond doubt that skilled players prevail in typical poker games. The same cannot be said of IGBAs enumerated games. 7

IGBAs enumerated games are distinguishable from poker for another important reason. IGBA was enacted to curtail[] syndicated gambling, the lifeline of organized crime. United States v. Sacco, 491 F.2d 995, 998 (9th Cir. 1974). House-banked casino games, and lotteries have long been associated with such crime. See Lawrence M. Salinger, 1 The Encyclopedia of White-Collar & Corporate Crime 345-47 (2005). Poker lacks this connection. See United States v. Roselli, 432 F.2d 879, 886 n.8 (9th Cir. 1970) (noting that poker is not traditionally associated with organized crime). 23

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Pool-selling and book-making involve gambling on the skillful actions or interactions of others. Poker players, however, bet on their own skills and directly influence outcomes by their betting behavior. Slot machines, roulette wheels, and dice tables are all classic house-banked games in which the player competes against the house. Both the rules and the odds are fixed. As a result, and in sharp contrast to poker, the skill of the players is all but irrelevantthe odds of winning are rigged by the rules of the game to provide the house with an edge, or advantage. Slot machines prove the point. Though there is an embarrassment of riches when it comes to slot machine offerings, none of those myriad options allows for the player to exercise any modicum of skill. All the player can do is pull a lever or push a button, which causes an electronic or mechanical device to churn through a pre-programmed formula to determine whether the player wins or loses. The result of that formula is carefully calibrated to ensure that, over time, the house wins and the players lose. See Anthony N. Cabot et al., Alex Rodriguez, a Monkey and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383, 404 (2009) (explaining that games such as slot machines with predetermined odds such that the payout is consistent over time, regardless of the player, are games of chance).

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Roulette is no different. Because of the composition of an American roulette wheel, which has 38 spaces (a 0, a 00, and the numbers 1-36), and the rules of the game, the house has an edge of 5.26% on almost every bet a player can make (the sole exception is a bet in which the house has a 7.89% edge). Over time, the rules and structure of the game ensure that the house always wins. A player will fare no better by employing a system than he will by simply choosing random bets. There is literally no opportunity to exercise skill. See Cabot & Hannum, at 466 (If you ask someone who plays poker to name the top five poker players in the world, you will receive a meaningful response because skill is a determining factor. But if you ask who are the top five roulette players in the world, the response is utterly meaningless: roulette is purely a game of chance.). In a certain sense, dice games are not quite as bad. Though there are some bets in dice games for which the house edge is greater than the edge in roulette, the overall house edge in these games is typically less than that of roulette, and the players have the option to choose the bets that are better than others. But all of the bets give the edge to the house, and the players therefore always lose. See George Remennik, Mrs. Tschetschots Busted Hand, Poker, and Taxes: The Inconsistent Application of Tax Laws on a Game of Skill, 8 Cardozo Pub. L. Poly & Ethics 485, 493 (2010) (explaining that roulette and dice games are structured in a manner that skews the odds in the casinos favor).

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Even house-banked casino games that permit players to exercise a miniscule amount of skill, like blackjack, involve a far narrower range of skills and are unlike poker. In poker, a player cannot simply, for instance, count cards to estimate the strength of his opponents hands; there are too many variables at play (e.g., 1,326 different possible combinations of down cards with 169 distinct starting hands, multiple rounds of betting, the significance of position, evaluating the probabilities for multiple players hands). And to the extent that one is able to exercise some skill in blackjack, the house-banked nature of the game is designed to preclude players from beating the odds. Thus, unlike in poker, the rules tend to discourage, rather than reward, skilled play. That is why casinos treat counting cards as a form of cheating, and ban anybody caught doing it from their premises. While [s]kill has a part to play in black jack, luck and the percentages still hold the greatest sway. Cabot & Hannum, at 465-66 (quoting Basil Nestor, The Unofficial Guide to Casino Gambling 173-74 (1999)). It is the other way around in poker [b]ad luck can hurt, but skill always beats luck over time. Id. Lotteries, policy, bolita, and numbers involve no skill whatsoever. See Robert C. Hannum & Anthony N. Cabot, Toward Legalization of Poker: The Skill vs. Chance Debate, 13 UNLV Gaming Research & Rev. J. 1, 4 (2009). In all of these games, a player chooses a number or receives a ticket, which is then compared to a randomly drawn number or series of numbers. The numbers drawn

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are beyond the players control and the odds are always (and often astronomically) against the players. CONCLUSION Skill predominates over chance in poker. It is thus unlike the gambling games listed in IGBA. Accordingly, the District Courts order dismissing the second superseding indictment and vacating the defendants conviction should be affirmed. Respectfully submitted, s/ Paul D. Clement PAUL D. CLEMENT D. ZACHARY HUDSON BANCROFT PLLC 1919 M Street NW, Suite 470 Washington, DC 20036 (202) 234-0090 pclement@bancroftpllc.com Counsel for Amicus Curiae March 28, 2013

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CERTIFICATE OF COMPLIANCE WITH TYPE-VOLUME LIMITATION I hereby certify that: 1. This brief complies with the type-volume limitation of Fed. R. App. P. 29(d) because it contains 6,856 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii). 2. This Brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the typestyle requirements of Fed. R. App. P. 32(a)(6) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2010 in 14-point font. s/Paul D. Clement Paul D. Clement March 28, 2013

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CERTIFICATE OF SERVICE I hereby certify that, on March 28th, 2013, an electronic copy of this Brief of Amicus Curiae Robert C. Hannum, Ph.D. in Support of Defendant-Appellee and Affirmance was filed with the Clerk of Court using the ECF system and thereby served on all parties via the CM/ECF system. s/Paul D. Clement Paul D. Clement

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ADDENDUM A

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ROBERT C. HANNUM, PH.D.


Reiman School of Finance Daniels College of Business University of Denver Denver, CO 80208 Phone: 303-871-2115 Email: rhannum@du.edu

ACADEMIC DEGREES Ph.D., Florida State University M.S., Florida State University B.S., University of Dayton (summa cum laude) PRIMARY RESEARCH INTERESTS Probability & Risk Mathematics of Games & Gambling Casino Gaming Operations PRIMARY TEACHING INTERESTS Probability & Statistics Data Mining Econometrics & Forecasting Calculus & Linear Algebra Mathematics of Gambling PROFESSIONAL EMPLOYMENT Professor of Risk Analysis & Gaming, University of Denver, 2010-present Professor of Statistics, University of Denver, 2004-2010 Associate Professor of Statistics, University of Denver, 1986-2003 Visiting Assistant Professor of Statistics, Temple University, 1985-1986 Assistant Professor of Statistics, University of Denver, 1979-1985 Visiting Assistant Professor of Mathematics, Bucknell University, 1977-1979 ADMINISTRATIVE EXPERIENCE Director, Data Mining Program, University of Denver, 2004-2005 Acting Chair, Department of Statistics & Operations Technology, 2002 Chair, Department of Statistics & Operations Technology, 1992-1996; 1987-1991 PROFESSIONAL AFFILIATIONS American Statistical Association American Mathematical Society Decision Sciences Institute International Masters of Gaming Law

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CURRICULUM DEVELOPMENT AND TEACHING INNOVATION


Programs and Initiatives

Master of Science (and affiliated programs) in Data Mining: Sole responsibility for development and implementation of new cross-disciplinary Master of Science, M.B.A. concentration, and Professional Business Certificate data mining programs, including SAS industry certification. Personally created and designed several new courses in data mining and statistical modeling. Statistical Computing Technology: Led the integration of modern statistical software and knowledge discovery technology into the business curriculum. Laptops in the Classroom: Coordinated integration of laptop technology in the classroom for core statistics courses.
New and Innovative Courses Developed & Taught

Data Mining I Concepts and basic techniques of data mining, the process of discovering useful knowledge by exploring and modeling relationships in very large data sets. Data Mining II A continuation of Data Mining II with a focus on predictive modeling. Statistical Computing The use of modern statistical software and programming with SAS for data analysis and modeling. Applied Statistical Modeling Categorical data analysis and generalized linear models with implementation of models using SAS and/or other statistical software. Financial Econometrics The application of statistical techniques to problems in finance. Chance Honors Seminar A university honors seminar on risk, probability, and uncertainty. Statistics and the Law Special topics offering on the interface of statistics and the law. The Theory of Gambling & Risk A special topics course. Probability Theory: The Mathematics of Gambling A course on the theory and applications of probability with an emphasis on casino gaming. The Science of Poker A special topics course covering the concepts, mathematics, theory, and history of poker. Risky Business: Introduction to Gambling & Commercial Gaming A unique travel course to Las Vegas, where students learn about the theory of gambling and the business of casino gaming. Publicity has included feature articles in the Denver Post and the Las Vegas Sun, and pieces in more than twenty campus newspapers nationwide. Casino Operations A special topics course on the many facets of casino operations. Economic and Social Impacts of Gaming in Colorado A special topics course combining on-campus lectures and off-campus research work in Colorado mountain towns. Gaming Law Developed and taught at the request of the D.U. Law School. Held in Las Vegas, with half-dozen world-class experts in gaming law, regulation, and operations addressing the class of 68 students. MBA Online Pre-course Wrote and developed the statistics pre-course used for several years as required course material for University of Denver MBA students.

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GRANTS, AWARDS, AND OTHER RECOGNITION


Grants

Center for Teaching & Learning Integrating Modern Software Technology into the Core Curriculum, 2005 (with T. Dalton) Incorporating Knowledge Technology into the Curriculum, 2003 (with T. Dalton) Software Technology, 2003 (with T. Dalton) Integrating Laptop Technology into the Classroom, 2000 (with T. Obremski) College Research Grants Economics of Poker, Summer Research Grant, 2012 Financial Econometrics Course Development Grant, Fall 2012 Statistical Comparison of Casino Comp Policies for Premium Players, 2003 Statistical Issues in Gaming Regulation, 2001 Casino Gaming in the Caribbean: Policies & Economic Impacts, 2001 Business Research Grant, 1994 Business Research Grant, 1990 University Internationalization Grants Internationalization of Gaming Curriculum & Research, 2003 Mathematics & International Economic Impact of Gaming, 2002 International Casino Gaming: Operations, Policies, and Impacts, 2001
Awards, Honors, Notables

Merit Awards for Teaching 2010, 2004, 2003, 2002, 2001, 2000 Merit Awards for Research & Publication 2005, 2004, 2003, 2002 Provost Merit Award 2010 Merit Award for Exemplary Service 2010 Mathematician in Residence Aria Resort & Casino, Las Vegas, December 2010 Mathematician in Residence MGM Grand Hotel & Casino, Las Vegas, December 2007 Expert faculty list, Gaming Studies Research Center, UNLV, 2004present Invited member, International Masters of Gaming Law, 2004present Disability Awareness Award Recognition, 2001 Best paper award Cases, workshops and special sessions, WDSI Annual Meetings, 2002 Cecil Puckett Award Outstanding Teacher, College of Business, 1988

Interviews/Quotes/Sources/Features

Source for expert analysis and opinion for articles in: o o o o o o o Mens Health Magazine Single best way to blow $100 in a casino (March 2013) Cleveland Plain Dealer Casino games betting limits how & why? (Nov. 2012) Pittsburgh Tribune-Review Impact of Ohio casinos on Pennsylvania (Aug. 2012) Cleveland Plain Dealer Ohio casino revenue in first two months (Aug. 2012) Science News China Charitable gaming; math of gaming; luck (July 2012) Press of Atlantic City Investigation $1 million scratch card promotion (July 2012) National Public Radio, This American Life with Ira Glass Blackjack (May 2012)

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o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o o

Akron Beacon Journal Rational gambling; odds of casino games (May 2012) Cleveland Plain Dealer New casino in Ohio; math/odds of games (Apr. 2012) Discovery Channel / MY Tupelo The Equalizer show; gambling math (Apr. 2012) Fort Worth Star-Telegram Lucky places to buy lottery tickets (Dec. 2011) Short Stacked Radio interview; math of gambling; poker & skill (Aug. 2011) Westword Magazine feature article; poker & skill; online poker (June 2011) NBC-TV Birmingham (WVTM) Math & chances of winning in casinos (Apr. 2011) Education-Portal Using gambling & casino games to teach statistics (Feb. 2011) 60 Minutes Slot Machines: The Big Gamble (Playing the Odds) (Jan. 2011) Portland Monthly Magazine Math & odds of casino games (Jan. 2011) Gambling Compliance (U.K.) Games of chance legislation in Colorado (Nov. 2010) Wired Magazine (U.K.) Advantage play in casino games (Oct. 2010) Gambling Compliance (U.K.) Poker; recent cases; internet gambling (July 2010) Forbes Gambling, math, technology (Apr. 2010) Los Angeles Times Skill vs. chance in poker; various legal cases (Sept. 2009) Delaware News Journal Sports betting, skill & chance (Aug. 2009) NBC-TV News Denver NCAA college basketball tournament odds (Mar. 2009) Fox News Radio (600KCOL) Skill vs. chance in poker (Mar. 2009) Wall Street Journal Skill vs. chance in poker (Mar. 2009) Denver Post Skill in poker (Mar. 2009) New Scientist Skill in poker (Mar. 2009) Pittsburg Post Gazette Skill in poker (Feb. 2009) The Economist Skill in poker (Feb. 2009) The Coloradoan Skill in poker (Jan. 2009) Newsweek The elderly & gambling (Nov. 2008) PressBox Sports Magazine Slot machine legislation in Maryland (Nov. 2008) USA Today Slot machines & proliferation of slots in U.S. (Jan. 2008) Las Vegas Review-Journal Poker/royal flush probabilities (Aug. 2007) Philadelphia Inquirer Slot machines (2007) U.S. News & World Report Casino gambling & gaming industry (2005) Investors Business Daily Mathematics of casino gambling (2005) Chicago Tribune Casino gambling, house advantage, table games (2005) South Florida Sun Sentinel Casino gambling & gaming industry (2005) San Diego Union-Tribune Multi-state lotteries (2005) Deseret News Casino gambling, house edge, Internet gambling, etc. (2005) British Broadcasting Corporation Blackjack & advantage play (2004) Pittsburgh Tribune Passing of slot legislation in Pennsylvania (2004) Pittsburgh Post Gazette Proposed slots in Pennsylvania (2004) Miami Herald Indian gaming (2004) Philadelphia Inquirer slot machine odds (2004) Sacramento Bee Casino math, Indian casinos reporting hold percentages (2004) CBS-TV Buffalo, NY (WIVB) Casino gambling (2003) CBS Market Watch Feature segment on Practical Casino Math book (2003) Baltimore Sun Proposed slots legislation in Maryland (2003) Canadian Broadcasting Corporation Video lottery terminals (2002) National Public Radio On the popular book Bringing Down the House (2002)

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o o o o o o o o

CBS-TV News Denver Mathematics of gambling ABC-TV News Denver Mathematics of Gambling class filmed & aired CBS-TV News Los Angeles Special segment featuring Practical Casino Math CBS National Radio Powerball Mens Health Magazine Gambling & casino gaming Denver Post Feature article on Risky Business course Las Vegas Sun Feature article on Risky Business course Feature articles on Risky Business course in more than forty campus newspapers

SELECTED PROFESSIONAL SERVICE, NATIONAL AND REGIONAL Reviewer, Beijing Law Review (2013) Reviewer, Gaming Research & Review Journal (2011) Session Chair, International Conference on Gambling & Risk Taking (2009) Referee (2 papers), Optimal Play: Mathematical Studies of Gambling (2007) Contributor SAS Global Academic Initiative Newsletter (2004) Session Chair, International Academy of Business & Economics Conference (2003) Session Chair, International Business & Economic Research Conference (2002) Session Chair, International Conference on Gambling & Risk Taking (2000) Session Chair, International Conference on Gambling & Risk Taking (1997) Chair, Workshop on Decision Sciences and the Law, DSI Annual Meetings (1993) Chair, Workshop on Decision Sciences and the Law, DSI Annual Meetings (1992) Invited session chair, Institute of Mathematical Statistics National Meetings (1981) Ad hoc Referee: J.A.S.A.; Decision Sciences; Comm. Statistics; Review of Policy Research Numerous textbook reviews Contributing author, Source Book for College Admissions Tests, Colorado Dept. Education GMAT, GRE, SAT/ACT courses, Continuing Education Program SELECTED PROFESSIONAL SERVICE, COLLEGE AND UNIVERSITY
Recent

Business Information & Analytics Department APT Committee (2012) Scholarship Enhancement Committee, Daniels College of Business (2010-present) Appointment, Promotion, & Tenure Committee, Daniels College of Business (2004-2010) Learning Enhancement Committee (2006-2009)

Previous

Statistics Department Search Committee (2006-2007); Department Chair Search Committee (2005-2006); College Undergraduate Core Design Committee (2003-2004); College Curriculum Committee (2002-2004); Scholarship of Discovery Committee (2000-2003); Acting Department Chair (2002); Department Chair (8 years); Faculty Senate, Faculty Research Committee; Faculty Development Committee; Daniels Undergraduate Programs Committee; College Appeals Committee; Case Center Mentor; Freshman Mentor Program; Graduate Student Advisor; MBA Foundations Course Committee; MBA Analytical Skills Course Design Committee; MBA Values Course Committee; MBA Design Committee; Graduate Business School Admissions

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Committee; Committee on Instruction & Teaching Evaluation; Faculty Advisory Committee to Dean; Faculty/Alumni Advisory Committee for Executive MBA Program; Honors Committee. CONSULTING AND RELATED WORK Consulting primarily in the areas of casino gaming, the mathematics of gambling, game analysis, statistical modeling, regression, and sampling design and analysis. Selected Consulting Work: o Parker v. Commissioner of I.R.S. (retained as expert; taxes on gambling wins) o DEQ Systems/Talisman Group (counting the Dragon 7 & Panda 8 in EZ Baccarat) o Sonnenschein Nath Rosenthal Denton (retained as expert; taxes on gambling wins) o McConnell Fleischner Houghtaling (background expert; medical malpractice) o Connecticut Dept. of Revenue (expert testimony; profit expectation in casino games) o Wisconsin Dept. of Revenue (expert testimony; profit expectation in casino games) o Poker Players Alliance (expert witness testimony; skill versus chance in poker) o International Game Technology (retained as expert; game analysis) o Casinos Austria Research & Development (retained as expert; game analysis) o MindPlay/Bally (retained as expert) o Aria Resort & Casino, Las Vegas (Mathematician in Residence, Dec. 2010) o MGM Grand, Las Vegas (Mathematician in Residence, Dec. 2007) o Casino Double-or-Nothing o Gaming VC (Casino Club), Germany o International Tournament Poker League o Last Resort Consulting o Ameristar Casino, Mississippi o ShuffleMaster o Cut N Shuffle o ProShuffle o Talisman Group (EZ Baccarat) o Terra Payments (FirePay) o Pari-Mutuel Poker & Billiards o Cyberview Technology o Spin & Win o Mirage, Las Vegas o Bellagio, Las Vegas o Iowa Racing & Gaming Commission o Casino Lugano, Switzerland o Loyal Commerce Systems, Board of Advisors o Data Mining Services o Comcast Communications o TCI/AT&T o Ford Motor Company o Credco o DAppolonia Engineers

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Expert Witness

Expert Witness Testimony Charlie Daniels d/b/a The Poker Palace v. City of Portsmouth, VA (2011) Trial: Expert testimony centered on whether Texas HoldEm poker is a game of predominately skill or chance. Testimony via affidavit (on behalf of Plaintiff). Three Kings Holdings & Cobra Crew v. Stephen Six, Kansas Attorney General, et al (2009) Trial: Expert testimony centered on whether Texas HoldEm poker is a game of predominately skill or chance. Testified on behalf of Plaintiff. Commonwealth of Pennsylvania v. Lawrence R. Burns (2009) Defendant charged with unlawful gambling by organizing Texas HoldEm tournaments at fire halls; expert witness testimony centered on whether Texas HoldEm poker is a game of predominately skill or chance. Testified on behalf of Defendant. Three Kings Holdings & Cobra Crew v. Stephen Six, Kansas Attorney General, et al (2009) Preliminary hearing: Plaintiffs sought injunction to enjoin defendants from prosecuting and/or taking administrative or civil action against plaintiffs in connection with the poker-based game Kandu; expert testimony centered on whether Texas HoldEm poker is a game of predominately skill or chance. Testified on behalf of Plaintiff. South Carolina v. Chimento et al (2009) Defendant charged with illegal gambling; expert witness testimony centered on the roles of skill and chance in poker and whether poker is a game of skill. Testified on behalf of Defendant. Colorado v. Raley (2009) Defendant charged with illegal gambling; expert witness testimony centered on the roles of skill and chance in poker and whether poker is a game of skill. Testified on behalf of Defendant. Commonwealth of Kentucky v. 141 Internet Domain Names (2008) Commonwealth of Kentucky filed to seize and compel forfeiture of 141 Internet gambling site domain names; whether poker is a game of skill. Testimony via affidavit (on behalf of PPA, Amicus Curiae, Defense). Peter B. Stone v. Commissioner of Revenue Services, State of Connecticut (2006) Whether or not: (1) the plaintiff is a professional gambler in the trade or business of gambling; (2) the Department of Revenue Services' income tax is discriminatory as applied to Plaintiff and other individuals categorized by the Commissioner as nonprofessional gamblers; (3) the State impermissibly discriminates against individuals based upon the type of gambling activity engaged in; and (4) the State selectively enforces income reporting requirements against those winning larger sums of money in gambling activities. Expert witness testimony centered on the mathematics of casino games, expectation, and profit objective.

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Testified on behalf of the Connecticut Commission of Revenue Services. Thomas Calaway v. Wisconsin Department of Revenue (2005) Whether or not the petitioner was engaged in a trade or business in playing slot machines in Las Vegas and Atlantic City. Expert witness testimony centered on the mathematics of casino games, expectation, and profit objective. Testified on behalf of the Wisconsin Department of Revenue. Retained as Expert Parker v. Commissioner of Internal Revenue (2013) Estimating gambling losses. Retained by Parker representatives. United States of America v. George Pitsilides (2011-2012) Skill versus chance in Texas HoldEm. Retained by Pitsilides representatives. Byrum v. Commissioner, United States Tax Court (2010) Estimating gambling losses. Retained by Byrum (Brittingham) representatives. Aristocrat v. IGT (2006-2007) Patent case; mathematical & statistical issues surrounding gaming devices. Retained by IGT representatives. ShuffleMaster v. MindPlay/Alliance/Bally Gaming (2005) Patent case; statistical issues surrounding gaming devices. Retained by Bally Gaming representatives. Casinos Austria Research & Development (CARD) v. ShuffleMaster (2004) Patent case; statistical (randomness) issues surrounding gaming devices. Retained by CARD representatives. VOLUNTEER WORK & COMMUNITY SERVICE Pro Bono: Weighted average baccarat hands, MGM Grand Las Vegas (2013) Pro Bono: Volatility of slot play, Aria Casino (2013) Pro Bono: Statistical analysis of baccarat sorts scam, first card knowledge, Aria Casino (2012) Pro Bono: Statistical analysis of suspected roulette cheater, MGM Grand Casino (2012) Pro Bono: Statistical analysis of blackjack scam, Aria Casino (2012) Pro Bono: Mathematical analysis of suspected blackjack cheater, Aria Casino (2010) Pro Bono: Casino math issues, MGM Grand Las Vegas (2010) Pro Bono: Casino math issues, Mirage Las Vegas, Bellagio Las Vegas (2009) Pro Bono: Lottery for Fisher Learning Center (2009) Pro Bono: Statistical analysis of $40,000 Casino War loss, MGM Grand (2008) Pro Bono: Probability analysis for Dragon Seven bet in EZ Baccarat, Talisman (2008) Pro Bono: Casino Metrics Win% vs Hold %, Banc of America Securities (2008) Pro Bono: Editing and fact checking on new casino business book (2007) Pro Bono: Mathematics & gaming regulations, Iowa Racing & Gaming Commission (2004)

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Pro Bono: Casino math issues, Casino Lugano, Switzerland (2003) Advisory Board Member: Loyal Commerce, Inc. (2006-2009) Guest lecture BSBA 1010 classes (2007, 2004, 2002) Guest lecture CORE 2639 class (2009, 2008, 2007) Guest speaker, Discover Daniels Weekend (2007) Marsico University Lecture (2004) Guest speaker, DU Residence Hall (2004) Guest speaker, UNLV School of Law (2003) Guest speaker, UNLV School of Law (2002) Guest speaker, various other college classes Workshops on mathematics and probability, Cherry Creek School District Youth soccer association coach Youth baseball coach Youth basketball coach Community swim team judge

SELECTED PRESENTATIONS Blended Learning: A Roadmap to Success. Society for Information Technology and Education (SITE) 24th International Conference, New Orleans, LA, March 26, 2013. Poker Today: SWAT Teams and Science (Keynote Address), Behavioral Decision Research in Management Conference, June 28, 2012. The Criminology of Poker, Academy of Criminal Justice Sciences Annual Meetings, New York City, March 15, 2012. The Business & Science of Gambling, University of Colorado at Denver Mathematical & Statistical Sciences Seminar, Nov. 1, 2011. The Science of Gambling: How Casinos Make Money, University of Denver Alumni Symposium, Oct. 1, 2011. Skill versus Chance in Poker: Key Arguments and New Evidence, Hawaii International Conference on Social Sciences, Honolulu, June 2011. Casino Math & Surveillance, Seminars for surveillance personnel, Aria Resort & Casino, December 2010. House Advantage and Volatility, Excellence in Table Games Management, Seminars for casino executives, Denver & Cripple Creek, Colorado, June 2009. Poker and Skill, 14th International Conference on Gambling & Risk Taking, Lake Tahoe, May 2009. Super Pan 9: Unraveling the Mystery of the 70% Banking Rule, 14th International Conference on Gambling & Risk Taking, Lake Tahoe, May 2009. Gaming Mathematics, Johns Hopkins University Conference for Educators, Las Vegas, NV, January, 2009. Poker and the Law, Gaming Law Symposium, Drake Law School, September 2008. Table Games and Profitability: Money, Math, & Myths, Gaming Operations Summit, Las Vegas, NV, April 2007. Knowing When to Hold Em & When to Fold Em: The Mathematics of Poker, NSF Program on Games of Chance, University of Utah, July 2005.

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A Graduate Data Mining Program Using SAS, SAS Data Mining Conference, Cary, NC, June 2005. Teaching Data Mining Using SAS Enterprise Miner, SAS Data Mining Conference, Cary, NC, July 2004. Developing a Data Mining Program at the University of Denver, SAS Data Mining Conference, Loma Linda, CA, June 2004. A Mathematical Analysis of Casino Dead Chip Programs, International Academy of Business & Economics Conference, October 2003. Mathematics & Gaming Regulation, University of Nevada School of Law, October 2003. Statistical Standards in Gaming Regulation: Fact & Fiction, International Masters of Gaming Law Symposium, September 2003. Effective House Advantage and Dead Chip Programs, International Conference on Gambling & Risk Taking, May 2003. Flaws & Fallacies in Casino Mathematics, International Conference on Gambling & Risk Taking, May 2003. Casino Gaming in the Caribbean, International Business & Economic Research Conference, October 2002. Gaming Law & Mathematics, University of Nevada School of Law, September 2002. How Casinos Make Money, Asia-Pacific Gaming & Casinos World Conference, Singapore, June 2002. Keeping Casino Games Fair and Honest: The Role of Statistical Evidence in Gaming Regulation, Western Decision Sciences Institute, April 2002. The Business of Casino Gaming, Western Decision Sciences Institute, April 2002 (Best paper award). Casino Mathematics, Seminar for casino executives, Aruba, March 2002. PUBLICATIONS
Books

[1] [2]

Hannum, R., & Cabot, A. (2005). Practical Casino Math, 2nd edition. Reno, NV: Institute for the Study of Gambling & Commercial Gaming, University of Nevada. Hannum, R. (1998). Introductory Statistics: A Self-Study Guide (Self-published).

Articles

[1] [2] [3] [4]

Hannum, R. (forthcoming). The Science & Economics of Poker. In L. Vaughan-Williams & D. Siegel (Eds.), Oxford Handbook of the Economics of Gambling. Hannum, R. (forthcoming). A Primer on the Mathematics of Gambling. In L. VaughanWilliams & D. Siegel (Eds.), Oxford Handbook of the Economics of Gambling. Hannum, R., Rutherford, M., & Dalton, T. (2012). Economics of Poker: The Effect of Systemic Chance. Journal of Gambling Business and Economics, Vol. 6, No. 1. Hannum, R. (2011). Mathematics and Surveillance: Unlikely Bedfellows? Catwalk, March, 2011.

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[5]

[6] [7] [8] [9] [10]

[11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21]

[22] [23]

Hannum, R. (2010). Casino Mathematics. In Casino Gaming Methods: Games, Probabilities, and Controls, Williams, D., & Hashimoto, K., eds. Upper Saddle River, NJ: Prentice Hall. Hannum, R. (2010). Surveillance and Casino Math, Atlantic City Surveillance News, Issue 9, Spring. Hannum, R., & Cabot A. (2009). Toward Legalization of Poker: The Skill vs. Chance Debate. Gaming Research & Review Journal, Vol. 13, No. 1. Hannum, R. (2008). Product: Games and Statistics. In Casino Management: A Strategic Approach, Hashimoto, K., ed. Upper Saddle River, NJ: Prentice Hall. Hannum, R. (2008). Crash and Burn: Casino Managements Response to an Improbable Win. Casino Enterprise Management, Vol. 6, No. 4. Hannum, R. (2007). The Partager Rule at Roulette: Analysis and Case of a Million Euro Win. In Optimal Play: Mathematical Studies of Games & Gambling, Ethier, S., & Eadington, W., eds. Reno, NV: Institute for the Study of Gambling & Commercial Gaming, University of Nevada. Hannum, R. (2006). Skill versus Chance: A Delicate Dance. Casino Lawyer, Vol. 2, No. 3. Cabot, A., & Hannum, R. (2005). Poker: Public Policy, Law, Mathematics and the Future of an American Tradition. Cooley Law Review, Vol. 22, No. 3. Cabot, A., & Hannum, R. (2005). Statistical Standards in Gaming Regulation: Fact and Fiction. Casino Lawyer, Vol. 1, No. 3. Hannum, R. (2005). Objective of Profit: A Taxing Concept for Gamblers. Casino Enterprise Management, Vol. 3, No. 8. Cabot, A., & Hannum, R. (2005). Advantage Play and Commercial Casinos. Mississippi Law Journal, Vol. 74, No. 3. Hannum, R. (2005). Risky Business: The Use and Misuse of Statistics in Casino Gaming. Chance, Vol. 18, No. 2. Hannum, R., & Kale, S. (2004). Dead Chip Programmes: Finding and Keeping the Edge. International Gambling Studies, Vol. 4, No. 1. Hannum, R. (2003). Percentages Never Lie. Global Gaming Business, Vol. 2, No. 5. Hannum, R. (2003). A Guide to Casino Mathematics. Gaming Studies Research Center, University of Nevada Las Vegas, http://gaming.unlv.edu/research/subject/. Hannum, R. (2003). A Mathematical Analysis of Casino Dead Chip Programs. Review of Business Research, Vol. 1, No. 1. Hannum, R., & Eadington, W. (2002). The Evolving Role of Casino Gaming in the Caribbean. Proceedings of the International Business & Economic Research Conference. Cabot, A., & Hannum, R. (2002). Gaming Regulation and Mathematics: A Marriage of Necessity. John Marshall Law Review, Vol. 35, No. 3. Hannum, R., & Cabot, A. (2002). Keeping Casino Games Fair & Honest: The Role of Statistical Evidence in Gaming Regulation. Proceedings of Western Decision Sciences Institute Annual Meetings.

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[24] Hannum, R.C. (2002). Special Session: The Business of Casino Gaming. Proceedings of Western Decision Sciences Institute Annual Meetings. (Best paper award). [25] Hannum, R. (2002). The Luck Myth. Global Gaming Business, Vol. 1, No. 3. [26] Hannum, R. (2000). Casino Card Shuffles: How Random Are They? In Finding the Edge: Mathematical Analysis of Casino Games, Vancura, O., Eadington, W., & Cornelius, J., eds. Reno, NV: Institute for the Study of Gambling & Commercial Gaming, University of Nevada. [27] Hannum, R., & Bien, D. (1996). Utility Vehicle Rollovers: A Case Study in Statistics, Public Policy, and Law. Case Study, Self-published (presented at 3rd International Conference on Forensic Statistics). [28] Hannum, R., Bien, D., & Dalton, T. (1993). Decision Sciences and the Law: Quantitative Methods in Litigation (workshop). Proceedings of the Decision Sciences Institute Annual Meetings. [29] Hannum, R., & Dalton, T. (1993). Using Litigation Research: A Bayesian Decision Model. Proceedings of the Business & Economic Statistics Section, American Statistical Association Annual Meetings. [30] Hannum, R., & Dalton, T. (1993). Market Surveys: Statistical vs. Legal Reliability. Proceedings of the 2nd International Conference on Forensic Statistics, Harnagel, W., & Kaye, D., eds., Arizona State University Center for the Study of Law, Science, and Technology. [31] Hannum, R. (1992). Using Decision Analysis to Assist Settlement Negotiations. Proceedings of the Business & Economic Statistics Section, American Statistical Association Annual Meetings. [32] Hannum, R., Bien, D., & Dalton, T. (1992). Decision Sciences and the Law: Quantitative Methods and Litigation (workshop). Proceedings of the Decision Sciences Institute Annual Meetings. [33] Hannum, R., & Grove, D. (1990). Trends in the Black-White Gap in America: 1967-1987. Unpublished Manuscript. [34] Hannum, R., & Longbotham, C. (1988). Measuring Inequality between Income Distributions. Quantity and Quality in Economic Research, Vol. II, Roy C. Brown, ed., University Press of America, Lanham, MD. [35] Hannum, R. (1987). Bayes Nonparametric Estimation of Economic Inequality. Proceedings of the Business & Economic Statistics Section, American Statistical Association Annual Meetings. [36] Hannum, R., & Grove, D. (1986). On Measuring Intergroup Inequality. Sociological Methods and Research, Vol. 15, 142-159. [37] Hannum, R., & Hollander, M. (1983). Robustness of Ferguson's Bayes Estimator of a Distribution Function. Annals of Statistics, Vol. 2, 632-639. [38] Hannum, R., Hollander, M., & Langberg, N. (1981). Distributional Results for Random Functionals of a Dirichlet Process. Annals of Probability, Vol. 9, 665-670.

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