Online Poker, or "Why didnt the sites attempt to fight the UIGA"?

[ifti99]

Lets say you own a business that generates a considerable amount of income. Lets even say that you are a publicly traded mulit national company, with a valuation in the billions. Although you have customers in many countries, the vast majority reside in the US. Now the US govt is proposing legislation that would severely impact your business to the point that 3/4 of your customer base would disappear. What would you do?

If you're Party Poker, a site that was earning almost $2000/minute, one would think that they would hire some expensive Washington lobbyists to fight this. Perhaps you would donate money to politicians that favor legalization of online gaming. Maybe you would sponser ads in the press.

In fact, none of this happened. Not only that, but Party voluntarily barred US customers even b4 the law took effect!

The question is, does this make any sort of business sense?

I believe I know the answer. First, a little backround. I am an investment banker who has worked on Wall Street for about 25 years. I currently own my own firm. And I play a lot of poker, both online and live.

What a lot of people tend to gloss over is that poker is essentially a game that rewards deception. In fact, the whole purpose of the game is to take other people's money. Think of that for a second. If you are a poker pro, what you essentially do for a living is deceive others in order to take their money. While I'm NOT making a value judgement here, I think it's important to remember this.

Cheating has always been rampant in poker. All you have do is to read stories of guys like Canada Bill or Ty Thompson to grasp this. Everyone knoes that Johny Moss ran a poker room in Vegas in the 1970's where the rake ran as high as 50% a pot! Lets move to online poker. I think anyone with their eyes open realizes that cheating occurs there as well, whether it be BOTS, online collusion, or non-random flops. Does anyone really monitor these sites? Of course not. Do you really think these sites want scrutiny? Do you think they want outside agenciers looking into the integrity of their software? Don't make me laugh.

This, I believe, is the true reason why these sites never opposed the legislation. They really didn't want anyone looking too closely at what they do. They are very happy being in Gibraltor or the Isle of Man, away from prying eyes. I know some of these people. Their attitude is, make as much money as you can, because it could all ened tomm. I predict that if online poker was ever legalized and taxed, these sites would eventually fade away. Think of this for a second. Would you rather play at some site in Gibraltor, or on a Hilton or Mirage site that is accountable to US gaming authorities, as well as the SEC? In my mind, there is no choice.

Intelligent replies are always welcome.

[Grasshopp3r]

Without any sort of proof, your speculation is just that.

[meleader2]

Party is publicly traded. the players are taxed in some countries. what makes you think there are no regulations in foreign markets as opposed to our own?

If they had rigged decks, what have you, a simple software change would fix that. how in the hell does this have anything to do with UIGEA? even if the US wanted their financial info, there are a LOT smarter 2p2ers with much bigger databases than party would provide/US officials would pour over to find "riggedness". they don't have to give their software.

not only that, but people STILL PLAY THERE. it's not rigged.

while your post probably wasn't geared toward their games being crooked, u seem to think that's y they pulled out.

[ifti99]

Anyone who thinks online poker is totally random has major problems. Let me give an example (anecdotal, but still realistic). I play online about 3-4 hours/day. I probably see about 500 hands/day. Ever see a flop with 3 of a kind in it (like QQQ)? Hardly a day goes by where I DONT see this flop at least once. I've played in casinos for about 6 years. Want to know how many times I've seen this flop live?

How about never?

I'm not a conspiracy theorist. And I've heard all these explanations (it only seems that way, you just see more hands online, etc etc.)

But forget what I think. Please give me a reasonable explanation as to why these sites made absolutely no effort to combat this law. And why is that even today, these sites do not contribute to the PPA, nor to Barney Frank.

Anyone?

[ZBTHorton]

[ QUOTE ]
Anyone who thinks online poker is totally random has major problems. Let me give an example (anecdotal, but still realistic). I play online about 3-4 hours/day. I probably see about 500 hands/day. Ever see a flop with 3 of a kind in it (like QQQ)? Hardly a day goes by where I DONT see this flop at least once. I've played in casinos for about 6 years. Want to know how many times I've seen this flop live?

How about never?

I'm not a conspiracy theorist. And I've heard all these explanations (it only seems that way, you just see more hands online, etc etc.)

But forget what I think. Please give me a reasonable explanation as to why these sites made absolutely no effort to combat this law. And why is that even today, these sites do not contribute to the PPA, nor to Barney Frank.

Anyone?

[/ QUOTE ]

Well first of all. PokerStars has run a ton of events and raised a ton of money for the PPA. FTP and Party have as well, how do you think their membership got to 500K? I'm not sure how you missed all of the deposit bonuses, freerolls, and e-mails directly from the sites talking about the PPA, asking us to support it, and giving away money to it.

Secondly, if you think online poker is rigged. Buy pokertracker and prove it. I've had several 250K+ hand databased, and analyzed(not extensively...but enough for my own peace of mind) the hand distributions, etc. They were pretty much spot on, or well within a small standard deviation of where they should be.

Third, the sites did combat this law. I know several PokerStars executives personally, and they spent a ton of time and money worrying about it. Unfortunately, nobody really thought the law would come about in the way that it did, nor in the speed that it did. Once it was introduced as a rider, there wasn't much left to be done. Obviously if we could all go back in time, we could do more. But nobody on 2p2, P5's, or anywhere else really took the threat that seriously until doomsday just because it was such a longshot.

[UF_Gators]

You would have to ask the companies directly, but I think they were caught off guard by the speed at which the law was passed. There was no period of debate in the Congress nor time for public comment as is common with other controversial issues. They also have limited political weight since they are offshore companies taking away American money tax free and not providing jobs to Americans.

As for why they stopped doing business with US players, it's because they are publically traded. Though the legal issues are murkey, the company is subject to laws similar to our Foreign Corrupt Practices Act...barring them from committing illegal activities in foreign jurisdictions. As a public company, there is more legal risk to the management in taking a risky legal position with respect to the law, so they chose the conservative approach of pulling out of the US.

[MiltonFriedman]

"First, a little backround. I am an investment banker who has worked on Wall Street for about 25 years. I currently own my own firm."

First of all, congratulations. After 25 years on Wall Street, you must have a little background and intimate knowledge of insider trading, deception and price fixing, among other laudable credentials.

Is that a little harsh, perhaps ? I do not think it is. You then go on to equate practices by unscrupulous cheaters in the GAME of poker with the businesses providing of the services for the games. Is that a fair characterization of the poker business ?

For someone who says he spent 25 years in the capital markets, why do you think the unregulated market for poker enjoyed such spectacular success pre-UIGE ? Could it be that the sites provided an excellent service to a market they created from scratch, while established firms with Wall Street access did not recognize the demand or services ?

In contrast, as someone who spent 25 years in the regulated, self-protecting capital markets, why would the Pre-UIGE price of Party shares not have reflected the very real, and ultimately enacted legislative risk ? Could it be because Wall Street advisors were more interested in the next Big Deal, than is sounding alarms about the price levels acheived by their investments in the last big deal ?

It was the public capital markets which held Party shares, appointed Party's myopic management (in your view), and bore the risk and brunt of the UIGE Act.

As someone with 25 years on Wall Street, you must be proud of your industry.

"I know some of these people. "

I doubt very highly this is accurate. You may know some of the market manipulative, boiler-room pumping, deceptive, insider-trading sleaze-bags who corrupt the working of free markets, but I doubt you know anyone who started or ran Party, PStars, UB, or other pre-UIGE US facing industry leaders.

I am calling you out. Name someone you know who ran a poker company pre-UIGE and had the atttitude you voiced.

[JavaNut]

Gibralta or Malta or other places aren't hide-outs. All companies with a government licence in the EU will be under scrutiny from those governments and what is more important the governments are under scrutiny from the EU.

a) you can not get a licence unless you can prove that your card dealer software is sufficiently random, and does not contain any "spike the action" features, and that your servers are secure.

b) you will have to put up guarantees that the funds in your possesion are safe, more or less like a bank has to.

c) you will be required to process the data from play to detect cheating in any form.

[MiltonFriedman]

"why is that even today, these sites do not contribute to the PPA, nor to Barney Frank.'

Your ignorance is showing big-time. A direct contribution would likely violate federal law. The sites clearly are working to promote the PPA, which ANY serious reviewer of these forums would know, Stranger.

Whether they SHOULD contribute to the PPA or support a Frank bill benefitting only US Brick & Mortar operators and cut-and-run players like Party is a different matter.

(Is this Gabooonviper under a new name ?)

[WhiteWolf]

[ QUOTE ]
Anyone who thinks online poker is totally random has major problems. Let me give an example (anecdotal, but still realistic). I play online about 3-4 hours/day. I probably see about 500 hands/day. Ever see a flop with 3 of a kind in it (like QQQ)?

[/ QUOTE ]
No comment on the rest of your post, but I guess you don't realize the chance of a 3-card flop being all of the same rank is about 424-1? If you're seeing 500 hands a day, I'd be concerned if I *wasn't* seeing a flop of trips about once a day.