I attended a pretty interesting meeting yesterday about the UIGEA and strategies for legitimating the game of poker in general. It was an impressive crowd consisting of some prominent lobbyists and lawyers for the gaming industry, Poker Players Alliance president Michael Bolcerek, professional poker players Annie Duke, Howard Lederer, and Andy Bloch, some researchers and statisticians, some experts on gambling addiction, and some other academics from fields such as artificial intelligence, psychiatry, and psychology.
It was obviously kind of random that I ended up being there at all. The meeting was convened and moderated by Charles Nesson, a professor at Harvard Law School. A good friend of mine is a student of Professor Nesson’s and asked if he could share my blog with him. Later that day, I got an invitation to attend. I wasn’t really sure what to expect, but it looked to be an interesting crowd (Senator D’Amato was supposed to attend as well but had to cancel at the last minute), so I decided to come to the morning sessions and go from there.
Introduction and Welcome
Professor Nesson kicked things off with an anecdote about a previous case of his, the one on which the John Travolta movie “A Civil Action” was based. Although the fines leveled against a two large corporations for dumping carcinogens barely ended up covering the legal fees, the court of public opinion ended up driving the companies to take further action. The point was that poker has a lot of work to do in the court of public opinion if it wants to separate itself from other forms of gambling, and that this work may prove to be as or more important than carving out legal loopholes.
Briefing on the Demands of Specificity in Formulating Useful Database Queries
Professor Jay Kadane, a statistician from Carnegie Mellon University who is currently designing a research project to test the preponderance of skill over chance in poker discussed the limitations of currently existing data and cautioned against overly optimistic predictions of what research such as his could accomplish.
Fears Surrounding Poker
Howard Shaffer and Richard LaBrie, both of Harvard Medical School’s Division on Addictions, took over to say that they actually had done some of the research Jay was asking about, though they hadn’t yet published it. But they have data on nearly 50,000 players on a British internet sports book (ie not poker players) and have studied historical data on gambling addiction.
Basically, 1-2% of the population suffers from clinical gambling dependence, and this number has not really increased with increased access to gambling. This can be compared to the roughly 7% of the population with alcohol dependence.
There are occasional spikes in problem gambling with increased access, but these tend to level off clearly. It seems to be the case that many people lose and quit or in some cases seek help. As Shaffer put it, there seems to be a “rational man model at work among gamblers…. People are more rational than we give them credit for.”
However, gambling dependence is not well-defind. The DSM-IV literally defines it by taking the definition for alcohol dependence and swapping ‘gambling’ for all instances of ‘alcohol.’ Keith Whyte of the National Council on Problem Gambling agreed that this was unfortunate.
Not surprisingly, college students who gamble online (remember this meeting was organized by Harvard University, so there was some interest in the role of a university) are more likely to have low GPA, smoke cigarettes and marijuana, binge drink, have unprotected sex, etc. Yeah, you know who you are.
Colleges and especially high schools do not respond well to gambling problems. Although 80% of colleges have gambling policies, most are overly punitive and broadly ignored. Few schools provide education or treatment programs in the same way that they do for alcohol. High schools are even less prepared to deal with such problems. The activists advocate a response of Prevent, Educate, Treat, Enforce, Research (PETER).
Duke and Lederer argued that online poker sites uniquely have strong financial incentives to prevent problem and underage gamblers from playing, as they often end up eating losses that these individuals can’t cover. Unlike with other forms of gambling, where the players lose their money to the house, poker sites can’t confiscate legitimately won funds and so pay out of pocket when there’s a credit card chargeback or disputed charge, which often happens when kids play with their parents’ cards.
Apparently using technology called Ioration or something like that, which can mark a computer and account used for illegal play in like 15 ways and then block any computer on which a player tries to use that account or any account that’s transferred funds to/from that account, Ultimate Bet was able to get chargebacks down to .4%. By comparison, Party Poker, which has among the weakest protections, sees rates as high as 10%.
The goal eventually is to develop a pattern of behavior that precedes problem gambling and use data kept by sites to intervene before people spiral out of control, but this is a long ways off.
There was some speculation as to whether the predominance of skill in poker increases or decreases the prevalence of problem gambling. Apparently kids are more likely to gamble on games whether they think their skill plays a role, and extent to which they believe themselves skillful correlates to the extent of which they show symptoms of problem gambling. According to Shaffer, “the fact that you [professional players] can step away from the table is one of the few things distinguishing you from a problem gambler.”
Looking over a list of questions about problem gambling, Lederer remarked, “I’ve gambled my last dollar…. Pros do that.” Uhm….
There’s also a need to study the effect of legality on problem gambling, though evidence does suggest that legalizing gambling does lead more people to gamble illegally, where payouts are often better. This is another situation where poker may differ, as legal cardrooms tend to offer fairer games and better rakes relative to illegal ones.
The bottom line from this session that I found most interesting was that any step to legalize or legitimize poker will uniquely result in more people losing money and/or becoming problem gamblers. This isn’t necessarily a reason not to do it, but because it’s a predictable result, it’s something that ought to be planned and accounted for. As a society, we need better means of responding to problem gambling, even in the status quo the government seems much more concerned about prohibiting it than about helping people with problems. In states (Iowa primarily, I think), where there is free access, the number of people who seek treatment is higher, but most insurance plans don’t cover it.
This also suggests current prevalence estimates may be low, as physicians may deliberately diagnose depression or something instead so that insurance will pay for treatment.
Life Skills Derived From Poker
Senator D’Amato was supposed to start this discussion off, but in his absence a Harvard Law student Andrew Woods talked about the two years he played professionally between college and law school and how he felt the game helped him. Then Duke spoke about an Oregon non-profit organization on whose Board she sits that is looking to design poker curricula to teach decision-making to middle schoolers. Some valuable skills learned from poker:
-concept of a sunk cost (as when people stay in bad relationships because they have already invested so much time in them)
-detect when others are lying
-negotiation and positional advantage
-good results don’t mean good decisions and vice versa
-focus on the long term, the goal is always to make good decisions
-sometimes bad things happen and that’s ok
-employing a mixed strategy to hide information
-identify and learn from mistakes
-minimize impact from mistakes, learn to use them for future gain
One downside to poker as is that one tends not to learn win-win conflict resolution and negotiation strategies.
One of the non-poker players at this point asked a killer question: “Is there really proof that the top 100 poker players today have good life skills?” Hahahahahahaha.
Lederer had a good and diplomatic response. His argument is that the top players come from two schools. There are the gamers, who were good at chess, backgammon, bridge, etc. and decided to take on poker, and there are the gamblers, who found the poker tables after a bad night in the pit and stumbled upon good strategies for one or two games. The latter group tend not to have good life skills nor poker skills that are transferrable to more than a few games. The big mixed games are weeding them out, and they will soon be gone, since the next generation of players come heavily from the games sector.
There was some question as to whether poker wasn’t primarily training people to be good liars and if that was really such a good thing. Duke first defended the value of this skill, challenging her interlocutor to “tell me one day you went through life without lying.”
She went on to claim that he was overstating the importance of lying in poker, claiming that often, “I want [my opponents] to know that I’m telling the truth about the strength of my hand.”
Lederer subtly clarified a minute later that his sister meant she wanted to charge her opponents the right price to keep playing against her hand, and that poker is really a pricing game moreso than a lying game. These two really act like siblings, and there were more than a few occasions where one would interrupt the other to disagree or nitpick about something.
Is Poker a Game of Skill?
This was kind of the centerpiece of the meeting, which was a mistake, in my opinion. I was somewhat persuaded that there are some legal strategies that could hinge on proving that skill predominates over chance in poker, but it seems to me that what really needs to be answered is the public policy question of whether the potential harms of poker are worth the freedom and whether they can’t be addressed better under a regulatory scheme. There are plenty of inconsistencies in gambling law now that don’t seem to bother poker’s opponents, and it doesn’t seem to me that they actually care all that much whether or not it’s a game of chance.
Lederer did have an interesting argument to make on this point, however, and the fact that he hinted at it over lunch is what persuaded me to stay for the second half of the day. It’s often been argued that skill predominates over chance in the long run, but he opened the session with a claim that it predominates in a single hand.
Imagine a robot that knows the rules of poker but nothing else. It plays completely without skill, meaning that at any given decision point it is equally likely to bet, raise, or fold without regard to the strength of its hand. Lederer claimed that even a moderately skilled player could beat this robot 96.5% of the time in any given hand. He didn’t demonstrate where this number came from, but I’m assuming it’s the odds that the robot eventually folds if you keep betting, raising, and re-raising.
Poker can be distinguished from other gambling in a variety of ways. For one, most of the betting takes place after players see their cards, unlike in Blackjack or Baccarat. For another, players bet against each other rather than against the house, which means the game is not intrinsically rigged against them. Because poker rooms and sites cannot operate without a large player base, they have financial incentives to offer a fair game and treat their clients well. You can offer blackjack or roulette to a single customer, but if a recreational player signs onto a site and cannot find the game he wants to play, he wont’ be back for an average of six months.
Internet sites are better positioned to handle cheating than brick and mortar card rooms because they have access to players’ hand histories and accounts.
Duke presented some pretty generic arguments about Prohibition, and while I’m not completely unpersuaded by them, I find it kind of intellectually sloppy when people say, “Prohibition of alcohol failed so we should never prohibit anything ever.” Obviously alcohol and poker occupy different places in American culture and society, which is going to influence the results of prohibition.
Professor Nesson tried to direct the discussion towards concrete legal strategies. He suggested a “Ben and Jerry’s strategy” of associating the product with something unrelated but good. In particular, he thought there was a lot of synergy between online poker and the Net Neutrality/Internet Democracy movement.
Dan Walsh, a lobbyist for the Interactive Gaming Council, took over to talk about some recent developments with the Antigua WTO case. Apparently Antigua is allowed to bring retaliatory tariffs against the US since the US in not in compliance with the WTO’s ruling, but they are pushing instead to be allowed to violate TRIPS (an international IPR agreement) to the extent of their damages against the US. This would be bad for the US IPR community and may make them allies in pushing for compliance with the WTO.
Also, the US wants to bring a major IPR case against China, which is basically ignoring the bootlegging of US CD’s and DVD’s. However, the US will have some difficulty winning a big WTO case when it is itself in non-compliance with an earlier ruling.
He also pointed out that although people in general oppose this kind of internet regulation, the perception is that only the far right who strongly support it care enough to vote on it. However, internet poker is most popular among 18-35 year old males, which is a key demographic for both Democrats and Republicans.
Lederer had an interesting theory on why exactly poker is so unpopular with the religious right. Only God is supposed to know the future, so betting on the outcome of a die roll is like playing God. He thinks poker can avoid this contradiction with Christian theology because players don’t really bet on outcomes. In fact, most hands in No Limit Texas Hold ‘Em never go to showdown.
I was disappointed that Michael Bolcerek contributed virtually nothing to this conversation. In fact, while Andrew Bradt, an expert on declaratory relief, was speaking to the possibility of pursuing this strategy at the state level, Michael left the room to take a phone call.
The idea here was that many state statutes and/or constitutions outlaw games where chance predominates over skill. Different state courts have interpreted this in different ways, some even saying that the presence of any randomizing element such as dice or cards automatically disqualifies even a game like backgammon. But that’s the beauty of the strategy: there are fifty states and so fifty chances to get a favorable ruling. I’m not sure the exact implications of this in the short term, but as part of a larger strategy, state and even federal courts tend to look to the courts of other states when issuing their own rulings. Hand-picking the right forum (possibly Massachusetts) and plaintiff gives the trial lawyers a lot of control over the process.
We had a reception after the meeting, but that was not explicitly ‘on the record’ as the day’s sessions had been, so I’m going to stop here. I know this is long, but hopefully it’s as interesting to you as it was to me. I don’t know that I contributed much to the conversation, but I definitely enjoyed sharing it with a small group of bright, dedicated people who shared my goal of legitimizing the game of poker.