Zero-tabling: My thoughts on Black Friday

We all knew something like this could happen. Online poker has existed in a murky legal environment in the U.S. since its inception, and there was always the possibility that it would eventually disappear. Still, the events of Black Friday (and for those of you who’ve been hiding under your desks, here is a good account of what took place three days ago) caught everyone by surprise. Four months ago we seemed to be pretty close to getting online poker legalized on the floor of the U.S. Congress. Now it’s completely gone. What gives?

Actually, if you remember back to December, one of the main sticking points of the Harry Reid Bill (which would’ve legalized poker, and which never got passed) was that sites that had been in violation of the UIGEA (aka, Stars and Full Tilt) would be left out of the newly legal poker environment, at least for a while. Even when the government was about to grant us our wish, it was still going to take away our Stars and our Tilt. A lot of poker players didn’t support the Reid Bill because of the short-term fallout of losing those sites. After Black Friday, we’re stuck with the short-term fallout, without the long-term guarantee of legal, regulated poker that would’ve come with the Reid Bill.

Also, it’s not that the government suddenly hates poker (although they still don’t like it). The Department of Justice has accused Stars and FTP and Absolute of committing fraud, of money laundering, and of bribing U.S. banks to process their payments. Sending cash to players and disguising its source is a serious crime irrespective of poker, or of the UIGEA. To be fair, the alleged fraud and money-laundering would never have taken place if the UIGEA hadn’t been enacted. But isn’t that the way? Isn’t it always the cover-up that gets you? The DOJ believes that playing poker online is illegal, but that’s hard to enforce. So they enact UIGEA, which is also hard to enforce. Stars and Tilt (again, allegedly) get around UIGEA, but in so doing they violate laws that have been around forever and that the DOJ is already good at enforcing. Thus they were finally able to nab Stars and FTP on these fraud and money-laundering charges. It’s sort of like how the government was only able to bust Al Capone for tax evasion–except that Al Capone killed a bunch of people, and Stars and FTP provided a respectable and secure way for Americans to play poker online.

As sad as Black Friday was, the banishing of the biggest online cardrooms from the US market has opened up an enormous potential revenue stream for the future version of U.S. online poker. Everyone–players, sites, the government itself–should be scrambling to get in on it. Forbes recently estimated PokerStars’s annual profits at $1.4 billion, and some think the figure is much higher. Whatever that outrageously big number was, more than half of it came from U.S. customers. Such an incredible sum should spur the government and the private sector to come together on a new version of online poker for Americans, and soon. This is probably why my boss over at Cardrunners has announced that he’s hiring.

Still, “soon” can be quite a while in a bureaucratic context. What are poker players to do in the meantime? I don’t know–maybe we should all get jobs! In all seriousness, the players aren’t the ones most hurt by this. The vast majority of Americans online were recreational players losing money to the rake and to more skilled opposition. It’s unfortunate that they’ve been deprived this form of entertainment, but it’s hardly the end of the world. As for professional players, there are always options. Move to another country. Become a live pro. Get another job (really!) until online poker comes back. The internet professionals I know are an extremely talented group who were playing poker by choice, not because society had locked them out of other occupations. If online pros had been running Wall Street, I sincerely doubt the economy would’ve crashed.

While I’m not crying for the players, my heart really goes out to the members of the poker media who will be crushed by this. Without FTP and Poker Stars at their backs, there probably isn’t much of a short-term future for poker reporting, or for televised poker in general. This really stinks for all the people who are about to be out of a job. I do think, however, that those jobs will eventually return along with everything else. This is little consolation to those looking for work.

If you’re a poker pro who’s decided to stick it out in the United States, my advice mirrors that of Cardrunners coach Nicolak. Take this time to learn some new games. Think about coaching. Brush up on your live game. All of these things will help you as a poker professional in the long-run anyway. As I alluded to earlier, players who want to continue earning their living at this game should be positioning themselves to take maximum advantage of the new online poker environment in the U.S. the day it arrives.

Personally, I’m going to start hunting around for a gig in the academic arena while I continue to play events on the circuit (I’d already made five live tournament trips this year, before Black Friday). And yes, I’m going to try to finally learn these stud games where you have to, like, memorize folded cards and stuff. Memorization in poker has always been anathema to me, but I’ve recently fallen in love with bridge where memorization is a must. I guess I don’t find memorization quite so odious anymore. It’s these kinds of adjustments we’ll all have to make.

That’s all I’ve got for now. Best of luck wherever you are in dealing with the effects of Black Friday. Maybe there will be a new spirit of solidarity among poker players this summer at WSOP after going through all this together. Maybe.

UIGEA Finalized, But the Story’s Far From Over

For those who missed it, the Unlawful Internet Gambling Enforcement Act (UIGEA) regulations have become law. As I stated in my last post regarding this issue, the UIGEA does not make playing poker online a crime. What is does do is make it illegal for banks and other financial institutions to allow transfers to and from online cardrooms. The regulations state that all banks must comply with this law by December 1 of this year.

Although the UIGEA is not supposed to apply to lotteries, horse racing, and other legal forms of gambling, it appears that the reaction from many banks and credit card companies has been to simply flag any transaction related to gambling, legal or otherwise, and prevent such a transaction from going through. I guess it’s just not worth the banks’ time and effort to figure out which gambling transactions involve legal gambling, and which involve illegal gambling. This has already proven to be a problem in New Hampshire, where people can no longer buy lottery tickets online with credit cards. The state lottery director said this problem could end up costing the state a million dollars in revenue, much of which would’ve gone towards education spending. I’m sure that’s what Frist had in mind when he drew up the UIGEA!

Poker players have started to feel the effects as well, as it’s become harder to get deposits onto Poker Stars through a bank transfer. Expect things to get worse before they get better.

There are, fortunately, some reasonable ways this whole thing could be turned around. The two most plausible seem to be a passage of Barney Frank’s bill–the one that got through committee last fall–or a bill called The Midnight Rule Act, recently introduced by Jerrold Nadler (D-NY), which would undo all the new rules put into place in the final 90 days of the previous administration. Another option is for Congress to make use of the Congressional Review Act that I mentioned in the last post on this issue, but observers deem it very unlikely for that to happen, for whatever reason.

The upshot for us is the same. Call your representative. Tell him or her that you want to see UIGEA reversed, and online gambling legal and regulated. Urge your rep to co-sponsor Nadler’s bill, or to get Barney Frank’s bill up for a vote. Just tell them what you want, and then let them figure out how to do it. It may not happen right away, but with a new administration in power, we should be able to start reversing the trend on this issue sooner rather than later.

OK, enough legal stuff. I recently made a six-day trip to Atlantic City. In my next post, I’ll tell you all about it.

Good News for Online Poker

I interrupt my WSOP recap to make sure everyone knows about the legislative victory for online poker that happened yesterday. After failing in its first attempt a few months back, Barney Frank’s Payments System Protection Act–a bill that severely weakens the Unlawful Internet Gambling Enforcement Act (UIGEA) passed two years ago–passed a committee vote by a count of 30-19.

Now I’m no lawyer, but the bill is written in English and my interpretation seems to be the same as the one that’s been floating around the internet. The bill basically revokes the UIGEA for everything other than sports betting (which is specifically illegal outside of Vegas), at least until the legality of other forms of gambling is made clear. In other words, until someone declares poker illegal, this bill would make it so that U.S. banks allow transfers to online poker sites.

There is a long way to go. The bill has to get debated and passed in the House and Senate, and then signed into law by the President, before any of this takes effect. The process could last years. Or, like Bill “Douchebag” Frist did with the UIGEA, a legislator could tack this bill onto another bill and get it passed and signed into law much, much sooner.

Even if the bill becomes law, there’s no way of knowing whether Party, Paradise, et al will reopen their doors to U.S. customers. And even if the bill becomes law, poker would not suddenly be seen as 100 percent legal in the eyes of the U.S. government. But getting this bill out of committee is a great start, and marks a sharp contrast from where we were two years ago, when the complete shutdown of online poker seemed a distinct possibility.

Are you excited about the development? Or do you perhaps have a different interpretation or additional information? Feel free to comment. I’ll return everyone to their regularly scheduled WSOP recap soon.