shakeup in the online poker world

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michaels
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shakeup in the online poker world

Postby michaels » Sat Apr 16, 2011 8:42 pm

When the United States legislature passed the Unlawful Internet Gambling Enforcement Act (UIGEA) a few years ago, some online poker rooms immediately began prohibiting access to American players, but others continued to permit Americans to play for real money on their sites. Their position is arcane and obscure to those unfamiliar with poker, but it boils down to the assertion that poker is a game of skill rather than luck and therefore not gambling.

The poker sites often used third-party payment processors such as Neteller, Moneybookers and InstaCash so that players could transfer funds from their bank account or credit card to the payment processor and then use their payment processor account to make deposits into their poker account. The owner of one payment processor, a man named Daniel Tzvetkoff, defrauded several poker sites of hundreds of thousands of dollars. The poker sites in turn seized a bunch of HIS funds and broke relations with him. He tried suing them but lost the lawsuit. It is also said that he tried to blackmail them. The online poker rooms tipped off the FBI about Tzvetkoff's involvement with American players, and when he landed in the United States he was arrested and charged. To save himself, he turned state's evidence and reverse engineered several other payment processor websites and software. This enabled American authorities to obtain proof that some online poker rooms had a long history of assisting American citizens in making poker deposits in violation of the UIGEA, and that this had been done by frequently misleading and sometimes bribing American banks. The government was also able to identify a number of poker site bank accounts in the United States.

On Friday, April 15, the United States Department of Justice went into action against the four largest online poker rooms in the world, namely Pokerstars, Full Tilt Poker, Ultimate Bet and Absolute Poker, all of whom permitted American real-money players. The DOJ seized their U.S.-based websites, charged 11 company principals and managers with money laundering and fraud and froze 75 bank accounts. The government seeks $2.5 billion in fines from EACH online poker room affected as well as control of the poker room.

The fallout has been quite dramatic. Ultimate Bet and Absolute Poker appear to have shut down completely. Pokerstars and Full Tilt immediately moved their online operations to European websites and banned further participation by American players. Thousands of online poker players, some of them professionals, have attempted to withdraw funds from the poker sites totalling in the millions of dollars. This group includes many players in Europe and Asia. The run on the poker sites is expected to bankrupt them because it's unlikely that they have that much liquidity. Some Vegas casinos have terminated their business relationships with the affected poker sites, live tournaments have been cancelled, ESPN has stopped broadcasting poker games, and there is a vague rumor that a number of American high-profile poker pros you've seen on television (such as Phil ivey) might face criminal charges.

The online poker rooms that stopped permitting Americans to play on their sites once the UIGEA was passed, such as Party Poker, stand to benefit greatly from all this as nervous players in Europe and Asia shift their money to them. Several are now offering new promotions, such as lucrative deposit bonuses, in order to preserve and increase market share.

More on this as developments occur if people are interested.

Michael

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KAGU143
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Re: shakeup in the online poker world

Postby KAGU143 » Sun Apr 17, 2011 8:06 am

I find it to be interesting, but only in the academic sense as a pointed commentary on human nature. Personally, I have nothing to do with gambling.
Mostly, I see it as an illustration of the way that greed can overpower rational thinking. I mean, seriously, did those online casinos think that they couldn't be caught?
Whether or not the law is right, it is still the law. They knew what they were doing.

Ya do the crime, ya do the time.

The ones that were smart and followed the rules should be the ones that "win" in the long run, and if that is what happens then I will be happy for them.
If you can't say something nice, don't say anything at all.

michaels
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Re: shakeup in the online poker world

Postby michaels » Sun Apr 17, 2011 1:27 pm

Hi,

As a Canadian, I am not personally involved in any of these events, either. I read the indictment carefully, and the only thing even remotely relating to me is that some of the bank accounts the DOJ is seeking seizure of _outside_ the United States are with my own (Canadian) bank. I have never had any dealings with those accounts.

It should be noted, however, that I do not think poker is gambling, nor is a poker room a casino (even if some poker rooms are located inside casinos). Casino games are negative expectation games. You play them against the house, and the rules of the game are such that the house has a greater probability of winning. Poker is a zero expectation game. The house collects a portion of the money invested by players, but the game is not played against the house; it is played against other players. In theory, every player has an equal chance to win at poker, because the rules of the game do no favor anyone. What makes a difference is the level of skill among various poker players. In a casino game, no amount of skill can make you a winner. In a poker game, skill DOES make you a winner--but only in the long term.

This is a point often missed by people unfamiliar with poker: any single poker hand is almost entirely random, but any 100,000 or 1 million hands follow the rules of probability. Those who say that poker is gambling often have experience with only a small number of poker hands or look at individual results. The best two-card hand in holdem, AA, is a winner about 80% of the time. Two times out of 10 it loses. This means that, in any single hand, AA can lose, and this misleads those who observe only that single hand into believing that poker is purely a game of chance. But if you play AA 10,000 times, you will win 8,000 times. And there are many other factors involved in poker play that depend on the player's knowledge, experience, toughness, resilience, patience, discipline and diligence.

I play poker online because it's legal for me to do so. Although I'm not a winning player, I have found the pursuit of good play to be character-building. To quote a well-known poker author: "Good poker players don't rely on luck. They are at war with luck." And being at war with luck is good for the soul.

Michael

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Dargon
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Re: shakeup in the online poker world

Postby Dargon » Sun Apr 17, 2011 3:06 pm

I find your definition of gambling quite interesting. Merriam-Webster has a much simpler definition, which I tend to go with:

1
a : to play a game for money or property
b : to bet on an uncertain outcome
2
: to stake something on a contingency : take a chance

This definition pretty much states that any game, no matter the opponent, odds, luck, or skill involved, where money or property is placed at stake is gambling. By this definition, poker is indeed gambling. Hell, if I waged money on a game of Mechwarrior, which I am quite skilled at and would likely win, it'd still be gambling.

That being said, there is a large distinction between gambling vs a casino and gambling vs other gamblers. If I were to play poker with friends (something I have done more than a few times, typically for very small amounts of money (as in walking away $3 richer meant you did damned good that night), then no matter what, the net money in and out for the lot of us is the same. No casino took any of our money; that risk was never there to being with.

Furthermore, I would agree that in poker, skill is a large factor. Knowing the probabilities of various hands is the major skill (as you said, knowing a pair of aces will win 80% of the time), as well as (depending on the size of the deck) knowing the probabilities of a desired card coming up. Things get really interesting when it comes to games like Texas Hold 'Em, where there is a community pool of known cards. Furthermore, the skill of knowing when and how to bluff, how to read other players and fool them into reading the wrong things from you, that's another skill.

It seems we are largely in agreement on the nature of the game itself, simply at odds over definitions.

michaels
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Re: shakeup in the online poker world

Postby michaels » Sun Apr 17, 2011 3:40 pm

Hi, Dargon,

Since you've played poker, you have an understanding of it. Much of the condemnation of poker as "gambling" is based on lack of understanding of how poker works, and, as a matter of fact, often on a knee-jerk lack of understanding of how casino gambling works. My last post (which did contain oversimplifications) was aimed at those who have no knowledge of either poker or games such as blackjack and reject both on the basis of no hard information.

Keep in mind that, in many people's minds, "gambling" is a cussword. They associate it with organized crime (sometimes true), cheating (rarely true) and addiction (true more often than I'd like). Some also associate it with passages in the Bible that instruct you to love thy neighbor and therefore not exploit his mistakes for financial gain. As someone living in the Bible Belt, I figure you'd be very familiar with those last. :) The U.S. federal government's condemnation of all gambling and lumping poker together with blackjack and slot machines is coarse and insufficiently well-considered. You know that, I know that, and I believe that everyone needs to know that, especially the less informed U.S. legislators.

Of course, there is one caveat: only about 30% of online poker players have sufficient skill and experience to make a profit in the long run. The other 70% are losing players, some of them devastatingly so. And this cannot change; in order for the winning players to find the game worthwhile, the ratio of winners to losers has to remain about 30:70 or better. From that viewpoint, the U.S. government is protecting the interests of the majority of its citizens, who are going to be losing players. But I'm not so sure that the government should be in the business of protecting people from themselves. If a businessman is permitted to open a new company despite a 95% chance that the company will fail within two years, why can't a poker player be permitted to lose money at the tables? It's a double standard and I don't agree with it.

Michael

Roy
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Re: shakeup in the online poker world

Postby Roy » Sun Apr 17, 2011 4:15 pm

What the government is doing is undoubtedly slimy and disgraceful. With their war on online file sharing as well, the U.S is looking like the worst possible place to host a website. North Korea comes a close second.