The word "Sabbath" is used interchangeably with "Sunday" (although they are actually different). The word "lull" means a sleepy, soothing calm. So "Sabbath lull" means the kind of sleepy, soothing quiet that reigns on Sunday morning, although this imagery and allusion are now out-dated. "Sabbath lull" occurs in the beginning of the story and sets the atmosphere of the story while establishing a sense of suspense and danger, because in Poker Flats quiet church-going is not natural and busy activity in the streets is natural.
The allusion to the atmosphere of town on a Sunday morning calls up imagery now out-dated and less well known in America. It calls up the image of the quiet that descends on a town when no work, no play, no visiting occurs because all citizens are preparing to go or are on their way to go or have gone to church and are either sitting half-dozing through a sermon or sitting eating Sunday dinner after the sermon. So the imagery evoked by the phrase "Sabbath lull" is one of quietude and of the absence of normal, hustle-bustle human activity.
What does the use of this phrase mean in the context of understanding the story? It means that, since there is an unnatural quiet in the air and in the streets, something threatening is going to happen. This is what the narrator means when he says this Sunday quiet is "ominous": "There was a Sabbath lull in the air, which ... looked ominous." He explains why the quietude looked "ominious" when he says that there was a different atmosphere in town the night before, "a change in its moral atmosphere [from] the preceding night" and that the people of Poker Flat were not noted as being church-going people: "a settlement unused to Sabbath influences."
In these turns of phrase, the narrator is telling us that (a) it isn't Sunday, (b) things were not unnaturally quiet the night before, (c) the settlement is not known for being quiet on Sunday, the "Sabbath," so there typically is not a "Sabbath lull," (d) the presence of a "Sabbath lull" means the presence of something threatening and unusual.
As Mr. John Oakhurst, gambler, stepped into the main street of Poker Flat ... he was conscious of a change in its moral atmosphere since the preceding night. Two or three men ... as he approached exchanged significant glances. There was a Sabbath lull in the air, which, in a settlement unused to Sabbath influences, looked ominous. ... "I reckon they're after somebody," he reflected; "likely it's me."
This quote is used in the very first paragraph of the story. It states,
“There was a Sabbath lull in the air, which, in a settlement unused to Sabbath influences, looked ominous.”
In this part of the story, the narrator is describing the setting and explaining how quiet the town was on this particular day. The term “Sabbath lull” refers to the fact that the Sabbath, usually a Sunday, would be a day of rest, when most people would be home with their families or at church and everything would be much quieter than on any other day.
This term is also significant because most of the people in Poker Flat would not be the type to go to church or keep the Sabbath day holy.