Barack Obama wins, will poker win too?

November 4 marked a historic day for the United States as Barack Obama won a landslide victory over John McCain in the 2008 Presidential Election. Scores of voters turned out to help Obama defeat McCain 349 electoral votes to 173; this ensured that Obama would become the nation’s first black president. And there may be no group of people happier about Obama’s election than poker players.

Obama is a person who’s played a fair amount of poker in his time. When he was a senator in Illinois Obama used to play a lot of Texas Hold’em and 7 Card Stud and developed a reputation among his opponents as a smart player who didn’t bluff much.

During 2008 Presidential Race, word got out about Obama’s poker playing background and many professional players started to support his candidacy. In being a fellow poker player, Obama also understands the game and has a softer stance on it than the man who ran against him in John McCain. The big question is though; will this be a difference make in lifting the UIGEA?

The government is already getting lots of pressure from groups like the Interactive Media Entertainment and Gaming Association (iMEGA) to lift the UIGEA since iMEGA recently appealed their lawsuit against the US Department of Justice. That probably won’t be enough to get the law lifted, but it’s definitely a help. And with Obama as the president, that’s just another plus in the quest to banish the UIGEA.

I don’t know how big of a part Obama will play in the future as far as getting rid of these ridiculous online gambling laws, but I do hope it’s a significant one since his stance towards poker is favorable.

Are your site's terms fair?

Internet poker players have a lot to cope with these days. First, there is the battle against the omnipresent cheating scams. Then, there is the US government’s current assault on online gaming in general via the ban on money transfers. If those things aren’t enough to chill you from playing poker online, let’s take a look at the terms under which players must agree to play!

If you are like most people, when the terms and conditions (T&C) for a software product come up on your computer screen, you just click on whatever version of “yes” they present to you and move on. For online poker players, it is no different. After a few conversations and interactions with other players online, it occurred to me that most people have very little idea just how much authority they grant to the gaming sites at which they play and place their money.

The typical T&C that poker players sign up to are outrageously one-sided and unfair in my opinion. We would never accept these terms from anyone else handling our money, but we do so from these guys. Why? Well, mostly it is because players do not take the time to understand them, and because together, the site providers form a united front. The various companies agree to non-compete on terms and only compete in other areas. The consumer has nowhere to go. Your choices are to play or not to play. All of this is fair to a large degree, because playing poker is not a necessity. Sites have the right to create unreasonable terms. Players, on the other hand, have the right to understand the terms and start fighting against them.

I have money deposited at online poker sites. However, I would never keep more money deposited online than I would want to be taken unfairly and without due process. My advice to you, the reader, is to follow my lead and keep your balances low.

Additionally, I understand that poker sites maintain a separation from what they can legally do and what they can reasonably do without losing their client base. After all, the online poker community is very vocal and spreads information quickly. If poker sites started screwing around with player’s money left and right, they would start losing clients.

Still, do you want to sign up for these T&C and trust poker sites to act ethically with your money? And how does the site become aware of your failure to comply? There are no poker police are there? Where is the Due Process? Where is the appeal process?

The only thing the gaming sites will respond to is decreased revenue. That’s all. So when you terminate an account for any reason, always state the T&C as the main cause. Complain about these terms frequently online in forums and when corresponding with the sites. All of this is necessary as we move forward toward regulation of online poker, a necessary step in legalizing online poker in the United States.

It’s a long battle, but it has to start somewhere.

Pokerstars terms & conditions

Other Considerations: Cheaters

Most poker players in the United States play the game over the Internet without any worries. After all, there is no specific law in the US which states that online poker is totally illegal; only the UIGEA which makes specific elements of online gambling illegal. You can say that online poker is illegal in certain states such as Washington where being caught playing over the Internet can yield the same punishment as raping someone. But once again, it can’t be said that online poker is illegal across America…unless you’re listening to 60 Minutes.

A recent 60 Minutes broadcast of a segment called “The Cheaters” focused on the cheating scandals which took place at Ultimate Bet and Absolute Poker (both have since been joined by the CEREUS network). In the segment, 60 Minutes did present some facts to their general audience who probably has no clue how online poker really operates. However, they also managed to botch several things within the show’s airing as well.

One thing they repeatedly said was that online poker is illegal which is not necessarily true. As mentioned before, in certain states like Washington, it can be a crime to play online poker. But if you’re talking about the US in general, then ‘no’ it is not illegal to play poker. There are just too many variables at work to simply label online poker as being illegal.

Another thing that 60 Minutes got wrong was that no legal action has been taken in the case involving UB and Absolute Poker. This is false due to the fact that the Kahnawake Gaming Commission is currently seeking legal action against Russ Hamilton. This is a very big fact to get wrong along with repeatedly saying that online poker is illegal. Hopefully, this misinformed segment on 60 Minutes doesn’t tarnish online poker much.

Completer Poker Scandal Story

Putting the UIGEA in Financial Perspective

One aspect of UIGEA that has really struck me the wrong way is the provision to keep state lotteries and horse races out of the act. This part of the act shows the real motives of the US government, and I can tell you that it has nothing to do with them looking out for our well being. One “fun” little fact that I have researched about the state lottery provisions shows exactly why the US government is fighting so hard to keep the UIGEA enforced with its special provisions.

State lotteries are funded completely by consumers and generate millions of dollars each year to the US government. The financial aspects of state lotteries are so lucrative for the government that it is easy to see why they are fighting to keep them intact as they are. Here is exactly how most state lotteries are run and why they are so profitable for the government. I will use $1 million awarded to the winner for this example:

• State lotteries are composed of all the money generated for that week in ticket sales, and then simple math is used to determine the “jackpot.” In this example, we will assume the state generated $2 million in ticket sales for the week. The jackpot is about 50% of total ticket sales, so $1 million is to be awarded to the winner. (About 1/3 of the ticket sales goes towards education and is included as profit to the government.)

  + $1 million to the US government
  
  

• One lucky person wins the jackpot worth “$1 million dollars,” so now it's time for the government to pay up 1/2 of their profits, right? Wrong. The winner is given two options for its winnings. Option A allows for the winner to take $1 million in fixed payments over a 20-year span. Option B allows the winner to take a lump sum worth about half of the jackpot. Fixed payment Option A actually costs the government around $625k, as they immediately purchase an annuity for this amount to be paid in 20 years. Since they have generated the money up front from consumers, they have just profited another $375k for this week of the lotto. If the winner chooses Option B, the US government only forks out $500k of the $1 million jackpot, giving them another cool $500K pay day.

  - Option A is + $1,375,000 already to the government

  - Option B is + $1,500,000 already to the government
  
  

• Next the winner of the “$1 million” jackpot has just moved into the highest tax rates of the state. In this example, we'll assume the winner chose Option B and has $500k sitting in his bank account, less any withholding taxes the government may have collected. (This is the best option if you are smart and decide to invest most of the money to get a better rate of return than with fixed payments.) Come tax time, the winner will owe roughly $200K more in taxes. Yes, that's right. As a regular consumer, the taxes would be as high as 40% of the total winnings. You are luckily not subject to paying income tax on top of all that. Well, only because the winner would end up with close to nothing left of the winnings.

  + $1,700,000 direct pure profit to the US government
  
  

• Now this “lucky” winner can use the $300K for whatever they choose. Hopefully most of it will be invested, but it will most likely be spent directly back into the US economy.

  + any taxable money spent indirectly to the US government

So as you can see, it is almost sickening to see how much money is made from state lotteries on a minimum bi-weekly basis. Remember how the example was for a $1 million jackpot? The lottery of California's jackpot is set right now at $27 million for December 10, 2008. If you don't have a weak stomach, go ahead and run the numbers for how much the US government is going to make in the next 2 days in this wonderful “regulated gaming industry.”

http://www.plan-investments.com/index.asp

So is poker really gambling?

There are very few people in my life that I have actually taken the time to explain why poker, if played properly, isn't gambling. Many people just wouldn't understand. A lot of people were raised to believe any games you play in a casino can't be beaten, period. After all, how are all those hotels in Las Vegas so big and glamorous? For the most part, that's all paid for with customers' money that was gambled away.

'The house' will be the only long-term winner, right? This is true when the person is playing against only 'the house.' However, poker is great because you're playing against other players and can capitalize on their mistakes. The casino always gets its cut from the games, regardless of who wins. It rakes a percentage of each pot in cash games and charges an entry fee to tournaments. The money that is won and lost by the players in poker comes down to those individual players' decisions. Poker is a game of skill. If I were to sit down with a complete novice and play 10 hands of no limit holdem, it is not unrealistic to think I could lose many of the chips. But if we were to play 100 hands, I would win the majority. And as the number of hands went up, the more talented player would subsequently win a higher percentage of chips. On any given hand, anyone at the table can win, but skill is the deciding factor in the long run.

There is a lot of variance in poker, both positive and negative. It is variance that truly makes the game fun and profitable for the more skilled players. Some new players experience positive variance when they start, making them think they are better than they truly are. Conversely, sometimes when strong players experience negative variance, they tilt and don't play up to their potential. Once variance can be understood and accepted, the peaks and valleys are minimized.

Emotional control is just one of many skill sets involved with poker. Computing pot-odds, recognizing betting patters, and understanding the intricacies of the game, such as positional power, hand strength, and the general ebb and flow of the game are also factors that make poker a skillful game. There are thousands of people that have made a living strictly from poker for their entire adult life. You can not say the same for games such as roulette and craps. While some may have tried, none have succeeded for any extended period of time.

Poker is a game that can be learned, studied, and improved upon. If this wasn't the case, then how can the continued success of players such as Phil Hellmuth be explained? This is a 42-year-old who has over $9 million in career tournament winnings and 11 World Series of Poker bracelets. Or, better yet, how did 19-year-old Annette Obrestad, the recent winner of the inaugural WSOP Europe on Sept. 16, win a 180-person online tournament while having her hole cards covered the entire time?

There are many smart, educated people in the world that are oblivious to poker being a game of skill. Perhaps if they took the time to understand the complexity of the game, they would have different opinions, and the government would not continue to hinder poker by classifying it with other casino games decided solely by chance.

So what next? Will I lose my job?

Scratching below the surface of player reactions on the forums does reveal a rather more worrying trend as it appears that a lot of US gamblers are turning to less scrupulous operators who have taken advantage of the situation to solidify a position in the US market. In the 21st Century, left largely to its own devices, the online gambling industry had slowly but surely started to push the illegal, poorly run or fraudulent gambling operators out of the picture. By 2006, the online gambling industry was a much safer place for punters with big brand names dominating the market. Following the UIGEA, perhaps unsurprisingly, the more established operators, those with shareholders and accountable business practices were the first to pull out of the US to avoid confronting US law. Almost overnight, many of the big names disappeared in the US, and with the benefit of hindsight, the path was left clear for some of those casinos, poker rooms and sportsbooks who were previously pushed out to return.

A number of the higher profile payment processors (e-wallets) left the market, like Neteller exiting amid major pressure from the DOJ. Of all the areas affected by the UIGEA, the payment processing market in the past 18 months has been the most turbulent. We’ve seen processors step into the US, then out again, a huge increase in the use of prepaid cards, followed by new payment processors being created specifically for the purpose of online gambling. For US punters, finding one you feel you can trust has been a fraught affair. There seems to be signs that it is settling down, but there is no doubt that the choices are severely limited, and more importantly that those choices now mean US punters often have to put up with long delays when receiving their money, and often when the payments do arrive, they are from anonymous benefactors making tracking a tedious and confusing task.

So what next for online gambling in the US? Clearly, the situation at present has to change. Even the most fervent supporter of banning online gambling would admit that US punters need clarity and a situation that avoids putting gamblers at risk. Prohibition would not be a popular solution, but it is an option and to stand a chance of working, it would have to avoid the exclusions built into the UIGEA. But then, does the USA really want to be a democratic nation that bans its citizens from playing poker? Probably not. Regulation is another option. This is being widely adopted in European countries where perhaps society is more open and trusting, not forgetting of course that anti-Monopoly laws and the WTO exert a large influence. In the USA, Senators Barnet Frank and Ron Paul have put together HR 5767 (http://www.govtrack.us/congress/bill.xpd?bill=h110-5767) garnering support to effectively repeal the UIGEA by ceasing the Treasury from implementing rules on banks to prevent gambling transactions.

http://www.youtube.com/watch?v=32cfWI008W0

UIGEA and latest efforts

In late 2006, the US introduced the Unlawful Internet Gaming Enforcement Act (”UIGEA” - HR4411 ), a watered-down Act based on its predecessor HR4777 (http://www.gambling-law-us.com/Federal-Laws/internet-gambling-ban.htm) designed originally to prohibit online gambling in the USA. The passage of the UIGEA has been well documented, but just how much of an effect has the Act had on online gambling in the USA since its introduction?

As soon as the UIGEA was passed into law, it caused ructions in the online gambling industry. While stopping short of prohibiting online gambling outright, it attempted to pass a responsibility onto banks and online payment processors to ensure that US account holders were prevented from depositing to and receiving funds from online gambling operators. Online casinos, poker rooms, sportsbooks and bingo sites were faced with a decision to make: did they continue to deal with US punters, or withdraw from the US and play the game?

The Act was shrouded in controversy, even before it was pushed through. Its supporters were championing “family values”, whilst its detractors were keen to point out that the Act excluded State run lotteries and horse racing and was clearly money related. Either way, the law was passed and a timescale was set for the banks to comply by mid 2007. At around the same time, the DOJ and the FBI started a targeted campaign of arrests in the online gambling industry, albeit that these were all sportsbook related, a form of gambling that is covered under a 1961 law entitled the Wire Act. The cleverly orchestrated campaign led to a flurry of reaction in the industry, with many operators, software providers and payment processors pulling out of the USA.So as we sit here in late-2008, what effect has the UIGEA had?

A scout around the popular gambling forums would quickly suggest two things: firstly, there are still a lot of US poker players and punters out there, and secondly these have had a lot of difficulty finding places to play. The latter is not only due to a reduction in gambling sites taking US players, but also largely down to a lack of efficient deposit and cashout processing options. On the face of it, this will clearly please the supporters of anti-gambling legislation, especially considering that the deadline for banks to meet the terms of the UIGEA has long passed and no visible headway has been made. It would appear from recent discussions in Congress that the lack of clarity in the Act coupled with the sheer size of the resources required for banks to monitor every customer transaction has prevented implementation at this point.

Becoming a Poker Player

One of the biggest decisions a lot of poker players have to make is whether or not to go “professional.” Online and live poker players contemplate the decision whether they should be "risking" or "rewarding" themselves. A lot of my friends have made this decision to stick to poker for the time being and concentrate on the reward. But what about the rest of us who don’t necessarily choose one option, but instead combine the two? I myself have always been pretty good at poker, but never considered making a jump to being a full time player. I had always wanted to go to college and get my degree, hoping while there I would continue to be successful at poker. For the last 4 years I have been successfully going to college and playing poker.

Like many online players, I quickly discovered that I could make more money playing poker than getting almost any part-time job. The freedom to “work” when I wanted, go where I wanted, and do what I wanted were all great reasons to play poker as a job instead of working. Even playing low limits, it was easy to maintain a higher income than almost anyone I knew. With a tough discipline and countless hours of hard work, I found myself consistently beating the games I was playing, and the thought of giving up school to play full-time.

Playing poker while being in school has both is pros and cons. One can help or hinder the other, depending on how you approach the situation. Balancing school and poker can be done, as proven by tons of current poker players. This means that you may not just have to choose whether you want to become a “professional” poker player, or give it up and go to school. Poker players probably have some of the best minds around, and make some of the best students. The key to it is to manage your priorities, be flexible, have a competitive advantage, be self-improving, and make sure you are ready for the life changes.