I believe it has to do with the complex history of the breed. They originated as gundogs, but their popularity as companion dogs superseded their function as gundogs. In addition, versatility has been a major part of the evolution of the breed. For example, they were common circus performers. The non-sporting group is really a very poorly named group. It is called the utility group by the KC and is supposed to be for dogs that were bred for function that doesn't align with the other groups. I believe the rationale for poodles could be that at the time they were placed in a group, they were not only more than just gundogs, but their other functions were more well known.
By 1861, Poodles ceased to be used as Sporting Dogs. But Shows began to be held in England for all breeds. By 1873 when the Kennel Club(UK) first came into existence, Poodles were well established in breed type.
When the English Poodle Club was formed in 1886, it only mentioned black Poodles, despite white Poodles being recorded in the Kennel Club Stud Books. When perusing these early Stud Books, the following points are interesting:
Poodle - curly c 1876
The 4th 1878 Stud Book records that two dogs were imported from USA.
The 5th 1879 Stud Book records a first-prize winner that was disqualified for being dyed.
The 6th 1880 Stud Book records two dogs - one black and one white, being placed equal first.
The 6th 1880 Stud Book also records a dog that was imported from Egypt, had an unknown pedigree!
There were several dogs entered with no colour stated.
At Shows where there were no classes for Poodles, they were entered in the 'any other variety' or 'foreign dog' classes.
In these early classifications, the coat came in two separate types, corded and curly.
Poodle - corded c 1907
Back to 1886, when the Poodle Club of England was formed, it coincided with the Poodle Club of America in that same year. Then the modern Poodle went ahead by leaps and bounds. At that time England only recognized black Poodles while the Poodle Club of America recognized both black and white Poodles.
In 1907 the colours and varieties were born when 'the Points of the Perfect Poodle was published'. Here it was written that the Toy (Miniature) variety should 'not exceed 15 inches in height at the shoulder and in all respects should be a miniature of the full-sized dog, with the same points' and the colours 'all black, all white, all red and all blue' were listed.
By 1935, Poodles were put on the world stage when the Swiss bred Standard Ch Nunsoe Due de la Terrace of Blakeen, handled and owner prepared by a woman, won Best in Show at Westminster, USA[1a]. Today we recognize the sizes in the chart below as well as all solid colours as well as variations or dilutions of the four original colours.
Groups SPORTING: These are gun dogs that were developed to assist the hunter, and generally have high energy and stable temperaments. Pointers and Setters point and mark the game, Spaniels flush the bird, Retrievers recover the game from land or water.
HOUND: Hounds were originally classified as Sporting dogs but were assigned their own group in 1930. These dogs are hunters that can either bring down the game themselves, or hold it at bay until the hunter arrives, or locate game by tracking it by scent. Sighthounds hunt by sight. Scent hounds track with their superior olfactory senses.
WORKING: These dogs are generally intelligent and powerfully built, performing a variety of tasks, including guarding homes and livestock, serving as draft animals, and as police, military, and service dogs.
TERRIER: “Terrier” comes from the Latin word for terra (ground) as these determined and courageous dogs must be small enough and agile enough to “go to ground” to pursue their quarry (rats, foxes, and other vermin). All but the Australian Terrier and the Miniature Schnauzer were developed in the United Kingdom.
TOY: Toy dogs were bred to be companions for people. They are full of life and spirit and often resemble their larger cousins (e.g., Pomeranian is a Nordic breed, the Papillon a little Spaniel, and the Toy Poodle the smallest variety of the Poodle).
NON-SPORTING: The AKC originally registered dogs as either Sporting or Non-Sporting. Hounds and Terriers split off the Sporting Group, Toys and Working from the Non-Sporting, and later, Herding from the Working Group. The remaining dogs, with a great diversity of traits not fitting any of the above, comprise the Non-Sporting Group.
HERDING: This group split off from the Working Group in 1983. Herding is a natural instinct in dogs, and their purpose is to serve ranchers and farmers by moving livestock from one place to another.
On this page...A Bit of PCA HistoryThe Purposes of The Poodle Club of America National & Regional Shows The Poodle Club of America is a member of the American Kennel Club and, as such, is the only National Poodle Breed Club which is recognized and... Read more
The Dog Book by James Watson 1906 Volume 1 (there is a Volume 2 also, pdf downloads of both available on Google Books)
The Dog Book: A Popular History of the Dog, with Practical Information as to Care and Management of House, Kennel, and Exhibition Dogs; and Descriptions of All the Important Breeds, Volume 1 - Ebook written by James Watson. Read this book using Google Play Books app on your PC, android, iOS...
"...how did the poodle get lost as a waterfowl retriever? A fair amount of the blame, said Grace Blair, M.D., a poodle breeder from Diamond Springs, California and the person most responsible for the American Kennel Club's decision to include the standard poodle among the list of breeds eligible for AKC hunting tests, rests with the breeders themselves as well as a decision made in the late 19th century.
'The American Kennel Club followed the lead of the British Kennel Club and put standard poodles in the non-sporting group. No one seems to know what the rationale was for that particular decision," said Dr. Blair. "The Canadian Kennel Club, which started in 1888, had the standard poodle in the sporting group originally but moved them to non-sporting in 1938 when the CKC recognized miniature poodles. The United Kennel Club has always viewed poodles as a sporting breed. What this means, however, is that for roughly 150 years, poodles, for the most part, have not been selectively bred for their ability to hunt.'
Poodle folks who hunted with their dogs were unable to even begin addressing this prob~m [sic] until the mid 1980s when the Canadian Kennel Club permitted standard poodles to start participating in the retriever working certificate program. According to Dr. Blair, much of the credit for this move by the CKC must go to Jacqueline Harbour, a poodle breeder in Ontario. And because they had always been part of the UKC's sporting group, poodles were also automatically eligible for the UKC-affiliated Hunting Retriever Club's tests.
In 1993, the Poodle Club of America started a retriever working certificate program, which was a prerequisite for becoming eligible to participate in the AKC's retriever hunting tests. In 1996 the CKC started retriever hunting tests (which look very much like the AKC's tests) with standard poodles permitted to run. The final step came in September of last year when standard poodles became eligible to participate in the AKC's retrieverhunting tests."
Here is another POV about this situation. The sporting group is huge and already very diverse. Poodles would be highly unlikely winners in the sporting group but win readily in the non-sporting group. BTW it isn't as if American registries totally exclude poodle from the sporting group. They are in the Gun Dog group (aka sporting) in the UKC.
My understanding coincides with both @Raindrops and @lily cd re - Poodles fit into more than one group, so the Poodle Club chose the group where poodles were most likely to be competitive. So sayeth breeders, so accepteth me.
So, I was once talked a judge of non-sporting and sporting breeds, and she said that it was two factors, firstly that there are to many dogs in the sporting group already so the AKC does not want anymore in the group even though they are a sporting breed, and secondly that because of this big long haircut that the poodle club has for show it is impossible to have them compete in the field safely with it.
EVpoodle, you are quite right - the Sporting Group is very large and AKC feels that adding poodles is not a good move. Besides - there is just one breed standard for the poodle, so what should one do with the miniature poodle? As it is, poodles are already divided into two groups (Non-Sporting and Toy). The idea of adding standard poodles to the Sporting Group has been around for many years and has never gained sufficient traction for the reasons above. The joke used to be that other sporting breeds did not want poodles in their group because poodles win too much!