I recently had the privilege of writing a guest piece for pokerfuse regarding the recently-published Department of Justice document related to the federal case against former online poker payment processors Campos and Elie.
Check it out here: DOJ’s Response to Campos and Elie: Summary and Analysis.
I do hope to be back to semi-regular writing here soon once I can start finding time for it again. I have some ideas in the pipeline that I may be able to get to in the near future. Thanks for all of your support so far.
Showing posts with label not quantitative. Show all posts
Showing posts with label not quantitative. Show all posts
Tuesday, November 8, 2011
Wednesday, April 20, 2011
Apocalypse
Last Friday, the webpages at PokerStars.com and FullTiltPoker.com were replaced with the following image. Shortly after that, Americans were no longer able to play poker on these sites. Regardless of the immediate outcomes of this event, and regardless of the eventual future that online poker will have in the U.S. and in the rest of the world, this destructive change marked the sudden and immediate end of the first era of online poker.
After my dozens of hours of wading through online discussions over the past several days, I have been at a loss for what to say regarding what the poker world is calling "Black Friday". I don't have anything valuable to add to the ongoing community conversation for now, so I've erred on the side of staying quiet so as not to add to the chaos.
Nonetheless, I wanted to at least provide a brief summary and a few thoughts, mostly for the benefit of my personal acquaintances who may not be familiar with poker, or who may not have followed this particular issue closely. Since I have this blog, I might as well put it here. It won't be anything new for anyone who has been following the forums.
This is the biggest news in poker history, and the biggest damage ever done to the entire game's economy. It may even be the single highest-impact adverse event in the history of any competitive game.
In as few words as I can:
What happened?
Friday afternoon, the Department of Justice unsealed indictments against individuals associated with the largest U.S.-facing online poker sites, including PokerStars and Full Tilt Poker. These sites served only as a venue for players to play poker against each other, and they did not offer any casino gambling. The charges against the sites include both illegal gambling charges and bank fraud charges. In response to the indictment, these sites blocked U.S. players from depositing, withdrawing, or playing in their games.
Since 2006, there was a reasonable probability that the DOJ would take an action like this at some point. It was more of a matter of when it would happen, rather than if it would happen.
No federal law addresses online poker, though some outdated laws cover sports betting or general gambling games played against the house (rather than between players). The DOJ has felt for years that online poker is illegal under these existing laws, and they have been alone in this assessment.
The UIGEA, passed in 2006, did not change the legality of any form of gambling and failed to provide a framework with which the DOJ could actually prosecute poker sites. However, this law, which targeted banks and other financial intermediaries that dealt with illegal gambling websites, allowed the DOJ to go after the processing of deposits and withdrawals for poker sites. For most major banks, the threat that poker sites might be considered "unlawful online gambling" and that servicing them might attract the costly attention of the DOJ was enough to make it a bad business decision to accept such transactions.
Thus poker sites that continued to serve the U.S. were inevitably destined to work with increasingly less reputable banking partners. At some point, the DOJ was bound to have enough information to make some claim against the poker sites under the broad classifications of money laundering and/or bank fraud. That is the nature of the bank fraud charges in this indictment.
Aside from the alleged bank fraud, which presumably became necessary in order to continue to serve the largest poker market in the world, PokerStars and Full Tilt Poker are reputable, legitimate, global companies. They are explicitly licensed in every country which provides licensing for online poker; the sites would be happy to pay U.S. taxes in exchange for the benefits of U.S. licensing, but the U.S. still has not established a licensing framework. The sites operated in the U.S. under strong legal opinions that peer-to-peer strategy games like online poker do not constitute illegal online gambling. If they can demonstrate that the business of offering online poker to Americans does not constitute illegal online gambling, the bank fraud charges may not apply. It's complicated.
While I generally trust in PokerStars and Full Tilt Poker, I do not support their misrepresentation of their transactions to banks, if the allegations are true.
What are the immediate effects?
Nothing has changed with regard to the legality of online poker for the player. American players are not targeted in any way in this indictment, nor under any federal laws. Even the DOJ agrees that playing online poker does not violate any federal law. All of the laws at play here are those which target only businesses that operate or profit from "illegal gambling".
Despite the fact that the players have broken no laws, their account balances with these sites are currently inaccessible. The sites will attempt to return U.S. players' funds as soon as they are able, but presumably, with an ongoing investigation into allegations of bank fraud in the U.S., the sites are having trouble initiating any further financial transactions in the U.S.
PokerStars and Full Tilt Poker were the only licensed and reputable online poker sites that were willing to accept American players amid the country's ambiguous legal landscape. Other smaller sites continue to serve the U.S., but are neither safe nor liquid enough for the consideration of serious poker players, especially as moving money to and from international poker sites will continue to become more and more difficult until the U.S. changes its laws.
Even if the indicted sites go on to win in court and to clear themselves of all charges, which would allow them to resume their U.S.-facing business, this will take years.
So, basically, for now and for the immediate future, online poker no longer exists in America.
What happens next?
Americans will continue to be unable to access their balances with these sites for some time. While historical precedent and most of the informed legal opinions I've read say that the players will get their money back eventually (possibly years), there's some chance that these funds are permanently seized by the DOJ due to the nature of the fraud charges or otherwise lost due to a future bankruptcy of these one-time giant global poker companies. Having read many different perspectives on this complex legal situation, I think there's at least a 95% chance that U.S. players will eventually get back their money. edit: Just now, a DOJ press release confirmed that the DOJ is looking to allow the sites to return players' money in an expedient manner, so upgrade this to 99%.
Tens of thousands of American online poker pros are essentially out of a job (I do not expect the general public to sympathize with this). Millions more American gamers have lost the opportunity to conveniently and efficiently play the game that they love and responsibly enjoy. Those few that are addicted to gambling on poker will continue to play at the remaining unsafe sites. For both professional and recreational players, replacing online poker with live, brick-and-mortar poker at U.S. casinos is rarely an option, due geographical concerns as well as a variety of economic and efficiency reasons. Serious players will have few options for practicing and improving their game, and the rest of the world will pull ahead of America at competitive poker.
The entire modern global poker industry of the past several years has been built upon PokerStars and Full Tilt Poker, and the damage done to these two big online sites will have effects on the entire world of poker. Some poker tournament circuits and televised poker programs have already been cancelled, and countless more industry and media jobs will be disappearing as the poker economy contracts. I expect that this amounts to thousands of "real-life" jobs lost for Americans. The same negative effects will also carry over into other countries to some extent, as international players will have lost the ability to compete in a fully global player pool.
When the indictments are resolved, hopefully the illegal gambling charges are addressed in a way that leads to a court case that definitively establishes that poker is not unlawful gambling under U.S. law. Depending on who you ask, the illegal gambling charges are somewhere in between a real stretch legally and purely frivolous or just for show. However, the bank fraud charges are severe, and while not necessarily an unwinnable battle for the poker sites, it looks pretty bad for them — though, as I noted earlier, some say that the nature of whether or not fraud was committed does depend in some way upon whether or not the underlying operations were illegal gambling. Nonetheless, because of the severity of the bank fraud charges, the full set of indictments may be settled out-of-court, which would be a tremendous loss for the game of poker.
The silver lining in this catastrophe is the opportunity for poker to finally get its day in court, and I hope that those associated with PokerStars and Full Tilt Poker will push for this.
The other possible silver lining would be if this indictment sped up the process of passing U.S. legislation to allow for domestic licensing of online poker. Some speculate that it will help compel U.S. interests to work towards it faster, as domestic casino companies will no longer need to worry about competing with established international sites for the U.S. player base. Others expect the controversy of this event to dissuade our elected representatives from embracing anything related to online poker. There does not seem to be a consensus.
Personal impact and thoughts
While I knew this day was likely to come at any moment in the past 4.5 years, and while I managed my money and planned my poker career accordingly, that hasn't made it easy to handle.
I play the vast majority of my poker online and will not be able to replace it with live poker to any meaningful degree. Moving to another country to play online poker would be incompatible with the rest of my life. This affects not only my finances, but also my happiness and life balance. Poker has been invaluable to me over the years as a unique outlet for mental exercise, strategic competition, and social interaction, all while being an excellent complement to my academic lifestyle. Over the past few days, it has really sunk in that I truly do value the game on these merits, rather than solely as an income source.
The entire premise of the government's various aggressive actions against online poker as "gambling", as well as society's refusal to properly treat poker the way identically-structured strategy games are treated, is something I have always taken serious issue with. This event is the culmination of a decade of ignorant and misguided policy towards my game, and it really hurts.
I was prepared for this and I'll be okay, but this is life-changing for me — and not in any good ways.
What to do?
If you have any interest in supporting the game of poker, the rights of competitive strategy gamers, or even just in supporting this because it is important to me, I would encourage you to take a look at the PPA's action plan and contact some of our elected representatives. While the charges against these particular poker sites may be legitimate, now that the perceived "bad actors" would be out of the picture anyway, this is an opportunity to gather support for U.S. legislation that will license and domestically regulate online poker. The government needs to hear that millions of its citizens are being negatively impacted by its policies towards online poker, and that its citizens deserve the consumer protections of a safe and explicitly-legal online poker landscape.
The poker world will never be the same as it was prior to Friday, but it will inevitably be rebuilt sometime in the next few years. The second, permanent era of online poker will emerge in a way that suits the interests of U.S. politicians and powerful domestic casino interests. This is discouraging at best, but it's the way laws get changed. As far as the health of poker and its players are concerned: the sooner it happens, the better. Every day in which well-minded, law-abiding, tax-paying Americans don't have access to compete at online poker is an undue intrusion into personal liberties and an insult to the integrity of this great game.
Links to more information
Ongoing 2+2 sticky thread with links to all relevant documents, press releases, and media coverage
Active Twitter folks on the issue and its aftermath: CKrafcik, GaryWise1, Karak2p2, Kevmath, Pokerati, taxdood
PPA's action plan
That's it for now. In general, this blog will continue, as most of my planned future topics were not entirely confined to online poker.
After my dozens of hours of wading through online discussions over the past several days, I have been at a loss for what to say regarding what the poker world is calling "Black Friday". I don't have anything valuable to add to the ongoing community conversation for now, so I've erred on the side of staying quiet so as not to add to the chaos.
Nonetheless, I wanted to at least provide a brief summary and a few thoughts, mostly for the benefit of my personal acquaintances who may not be familiar with poker, or who may not have followed this particular issue closely. Since I have this blog, I might as well put it here. It won't be anything new for anyone who has been following the forums.
This is the biggest news in poker history, and the biggest damage ever done to the entire game's economy. It may even be the single highest-impact adverse event in the history of any competitive game.
In as few words as I can:
What happened?
Friday afternoon, the Department of Justice unsealed indictments against individuals associated with the largest U.S.-facing online poker sites, including PokerStars and Full Tilt Poker. These sites served only as a venue for players to play poker against each other, and they did not offer any casino gambling. The charges against the sites include both illegal gambling charges and bank fraud charges. In response to the indictment, these sites blocked U.S. players from depositing, withdrawing, or playing in their games.
Since 2006, there was a reasonable probability that the DOJ would take an action like this at some point. It was more of a matter of when it would happen, rather than if it would happen.
No federal law addresses online poker, though some outdated laws cover sports betting or general gambling games played against the house (rather than between players). The DOJ has felt for years that online poker is illegal under these existing laws, and they have been alone in this assessment.
The UIGEA, passed in 2006, did not change the legality of any form of gambling and failed to provide a framework with which the DOJ could actually prosecute poker sites. However, this law, which targeted banks and other financial intermediaries that dealt with illegal gambling websites, allowed the DOJ to go after the processing of deposits and withdrawals for poker sites. For most major banks, the threat that poker sites might be considered "unlawful online gambling" and that servicing them might attract the costly attention of the DOJ was enough to make it a bad business decision to accept such transactions.
Thus poker sites that continued to serve the U.S. were inevitably destined to work with increasingly less reputable banking partners. At some point, the DOJ was bound to have enough information to make some claim against the poker sites under the broad classifications of money laundering and/or bank fraud. That is the nature of the bank fraud charges in this indictment.
Aside from the alleged bank fraud, which presumably became necessary in order to continue to serve the largest poker market in the world, PokerStars and Full Tilt Poker are reputable, legitimate, global companies. They are explicitly licensed in every country which provides licensing for online poker; the sites would be happy to pay U.S. taxes in exchange for the benefits of U.S. licensing, but the U.S. still has not established a licensing framework. The sites operated in the U.S. under strong legal opinions that peer-to-peer strategy games like online poker do not constitute illegal online gambling. If they can demonstrate that the business of offering online poker to Americans does not constitute illegal online gambling, the bank fraud charges may not apply. It's complicated.
While I generally trust in PokerStars and Full Tilt Poker, I do not support their misrepresentation of their transactions to banks, if the allegations are true.
What are the immediate effects?
Nothing has changed with regard to the legality of online poker for the player. American players are not targeted in any way in this indictment, nor under any federal laws. Even the DOJ agrees that playing online poker does not violate any federal law. All of the laws at play here are those which target only businesses that operate or profit from "illegal gambling".
Despite the fact that the players have broken no laws, their account balances with these sites are currently inaccessible. The sites will attempt to return U.S. players' funds as soon as they are able, but presumably, with an ongoing investigation into allegations of bank fraud in the U.S., the sites are having trouble initiating any further financial transactions in the U.S.
PokerStars and Full Tilt Poker were the only licensed and reputable online poker sites that were willing to accept American players amid the country's ambiguous legal landscape. Other smaller sites continue to serve the U.S., but are neither safe nor liquid enough for the consideration of serious poker players, especially as moving money to and from international poker sites will continue to become more and more difficult until the U.S. changes its laws.
Even if the indicted sites go on to win in court and to clear themselves of all charges, which would allow them to resume their U.S.-facing business, this will take years.
So, basically, for now and for the immediate future, online poker no longer exists in America.
What happens next?
Americans will continue to be unable to access their balances with these sites for some time. While historical precedent and most of the informed legal opinions I've read say that the players will get their money back eventually (possibly years), there's some chance that these funds are permanently seized by the DOJ due to the nature of the fraud charges or otherwise lost due to a future bankruptcy of these one-time giant global poker companies. Having read many different perspectives on this complex legal situation, I think there's at least a 95% chance that U.S. players will eventually get back their money. edit: Just now, a DOJ press release confirmed that the DOJ is looking to allow the sites to return players' money in an expedient manner, so upgrade this to 99%.
Tens of thousands of American online poker pros are essentially out of a job (I do not expect the general public to sympathize with this). Millions more American gamers have lost the opportunity to conveniently and efficiently play the game that they love and responsibly enjoy. Those few that are addicted to gambling on poker will continue to play at the remaining unsafe sites. For both professional and recreational players, replacing online poker with live, brick-and-mortar poker at U.S. casinos is rarely an option, due geographical concerns as well as a variety of economic and efficiency reasons. Serious players will have few options for practicing and improving their game, and the rest of the world will pull ahead of America at competitive poker.
The entire modern global poker industry of the past several years has been built upon PokerStars and Full Tilt Poker, and the damage done to these two big online sites will have effects on the entire world of poker. Some poker tournament circuits and televised poker programs have already been cancelled, and countless more industry and media jobs will be disappearing as the poker economy contracts. I expect that this amounts to thousands of "real-life" jobs lost for Americans. The same negative effects will also carry over into other countries to some extent, as international players will have lost the ability to compete in a fully global player pool.
When the indictments are resolved, hopefully the illegal gambling charges are addressed in a way that leads to a court case that definitively establishes that poker is not unlawful gambling under U.S. law. Depending on who you ask, the illegal gambling charges are somewhere in between a real stretch legally and purely frivolous or just for show. However, the bank fraud charges are severe, and while not necessarily an unwinnable battle for the poker sites, it looks pretty bad for them — though, as I noted earlier, some say that the nature of whether or not fraud was committed does depend in some way upon whether or not the underlying operations were illegal gambling. Nonetheless, because of the severity of the bank fraud charges, the full set of indictments may be settled out-of-court, which would be a tremendous loss for the game of poker.
The silver lining in this catastrophe is the opportunity for poker to finally get its day in court, and I hope that those associated with PokerStars and Full Tilt Poker will push for this.
The other possible silver lining would be if this indictment sped up the process of passing U.S. legislation to allow for domestic licensing of online poker. Some speculate that it will help compel U.S. interests to work towards it faster, as domestic casino companies will no longer need to worry about competing with established international sites for the U.S. player base. Others expect the controversy of this event to dissuade our elected representatives from embracing anything related to online poker. There does not seem to be a consensus.
Personal impact and thoughts
While I knew this day was likely to come at any moment in the past 4.5 years, and while I managed my money and planned my poker career accordingly, that hasn't made it easy to handle.
I play the vast majority of my poker online and will not be able to replace it with live poker to any meaningful degree. Moving to another country to play online poker would be incompatible with the rest of my life. This affects not only my finances, but also my happiness and life balance. Poker has been invaluable to me over the years as a unique outlet for mental exercise, strategic competition, and social interaction, all while being an excellent complement to my academic lifestyle. Over the past few days, it has really sunk in that I truly do value the game on these merits, rather than solely as an income source.
The entire premise of the government's various aggressive actions against online poker as "gambling", as well as society's refusal to properly treat poker the way identically-structured strategy games are treated, is something I have always taken serious issue with. This event is the culmination of a decade of ignorant and misguided policy towards my game, and it really hurts.
I was prepared for this and I'll be okay, but this is life-changing for me — and not in any good ways.
What to do?
If you have any interest in supporting the game of poker, the rights of competitive strategy gamers, or even just in supporting this because it is important to me, I would encourage you to take a look at the PPA's action plan and contact some of our elected representatives. While the charges against these particular poker sites may be legitimate, now that the perceived "bad actors" would be out of the picture anyway, this is an opportunity to gather support for U.S. legislation that will license and domestically regulate online poker. The government needs to hear that millions of its citizens are being negatively impacted by its policies towards online poker, and that its citizens deserve the consumer protections of a safe and explicitly-legal online poker landscape.
The poker world will never be the same as it was prior to Friday, but it will inevitably be rebuilt sometime in the next few years. The second, permanent era of online poker will emerge in a way that suits the interests of U.S. politicians and powerful domestic casino interests. This is discouraging at best, but it's the way laws get changed. As far as the health of poker and its players are concerned: the sooner it happens, the better. Every day in which well-minded, law-abiding, tax-paying Americans don't have access to compete at online poker is an undue intrusion into personal liberties and an insult to the integrity of this great game.
Links to more information
Ongoing 2+2 sticky thread with links to all relevant documents, press releases, and media coverage
Active Twitter folks on the issue and its aftermath: CKrafcik, GaryWise1, Karak2p2, Kevmath, Pokerati, taxdood
PPA's action plan
That's it for now. In general, this blog will continue, as most of my planned future topics were not entirely confined to online poker.
Saturday, April 9, 2011
A logical approach to the skill vs. luck structure of cash games vs. tournaments
In a ruling that, from a practical standpoint, is completely backwards, the Supreme Court in Sweden essentially decided that tournament poker is skill and cash game poker is luck.
Now, there may be more nuance in the ruling than that one article provides. But, if I recall correctly, this is not the first jurisdiction or court ruling that has found tournament poker to be "predominantly skill" or "not gambling" while finding the opposite for cash game poker.
I've even encountered poker players who believe either of these.
After all, the structure of tournament poker strongly resembles that of tournaments in other games that are commonly-accepted as games of skill and are rarely treated as gambling, while cash game poker looks a lot like "table games" in a casino, to the untrained eye.
Perhaps we can even sympathize with those who have made these decisions; perhaps they recognize that skill will always predominate over chance in the long run in any game, and that tournament poker "locks players in" to playing multiple hands of poker. Meanwhile, cash game poker lets players leave after one hand, which might give some gamblers the opportunity to take a quick risk on a hand of poker, just as they might do on the spin of a roulette wheel.
I have a reasoned argument as to why it cannot be the case that all tournaments "are skill" ("are not gambling") while cash games "are luck" ("are gambling").
A logical argument
Assume that it is somehow sensible or consistent that all tournaments are skill while all cash games are luck.
Then a 6-handed, winner-take-all tournament with a $200 entry fee, $200 in starting chips, and fixed (nonincreasing) $1/$2 blinds is skill.
Consider the following modifications to the rules of the tournament:
1) Players can buy in for less than the full amount if they wish, and they receive a proportional amount of chips; since the tournament is winner-take-all, and since each player's winning chances are equal to the ratio of their chips to total chips in play when all players are equally skilled, no inherent strategic advantage is given by this option (modulo short-stack advantages).
2) Players can rebuy when they lose all their chips or whenever they want to add on back up to the maximum.
3) If a player leaves the game by going broke or cashing out, a different player can take the seat and buy in just as the previous player could have rebought.
4) Players can "buy out" of the tournament at any time for their fair share of chip equity, equal to the ratio of their stack to the remaining prize pool. Ignoring the position of the button, again, since the tournament is winner-take-all, this is equal to the expected payoff for the player when he or she is at an equal skill level to his or her opponents, therefore this modification affords no in-game strategic advantage.
So, which of these extra rules changed the fundamental "skill" or "gambling" nature of the game?
Do any of these changes make the game less skillful, or more luck-based?
#1 doesn't reduce skill. While shorter-stacked poker involves less complicated decisions, the level of stack-depth skill at work in any poker game with varying stack sizes will always be at least that of the same poker game if all stack sizes were at the minimum. An appropriate minimum buyin requirement can ensure that this level of skill is suitable.
#2 doesn't reduce skill. It's just a way for players to reenter the game. Notably, it allows a skilled player to continue to participate in the game, even if some bit of "bad luck" caused him to lose a big hand. In the right context, this would only increase skill relative to luck.
#3 doesn't reduce skill, same as above.
#4 doesn't reduce skill. It's just a way for players to leave the game early on any given night. The skill is still exercised over whatever number of hands they chose to play. I get that #4 is the one that Sweden and others might feel does change the skill vs. luck nature of the game, but even if the luck doesn't "even out" until a "long run" is reached, it's important to recognize:
So, with all due respect to naïve judges' attempts to implement an approach to skill vs. luck that recognizes that the duration of play affects the influence of luck on outcomes, a duration-based legal classification has logical as well as practical issues.
Classifying cash game poker as "luck" because it is possible to play it for a very short amount of time per day would be the same as deeming chess as "skill" under normal conditions, but "luck" when the same game of chess is broken up over several days and played a few moves at a time.
Do any of these changes make the game more "gambling"?
#1 doesn't introduce any "gambling". Certainly, giving players the option to play for less than the nominal amount can only reduce the amount of "gambling", by any definition.
#2 doesn't introduce any "gambling". In an environment where all tournaments are "not gambling", a player who has lost in a tournament could very easily enter a new tournament right away, if he were inclined. There's no difference between letting him do that on some table across the room and letting him do that at the same table he started at.
#3 doesn't introduce any "gambling", it just changes the particular players that might be participating at any time.
#4 doesn't introduce any "gambling". Again, this option can only reduce the amount of "gambling", and it does so in an incredibly significant way, especially in big tournaments.
In fact, the effects of #4 are so huge that I would argue that, from any sensible perspective, tournament poker has to be more "gambling" than the equivalent cash game. The primary difference between the two is that tournament poker forces its players to continue taking risks with their money rather than giving them the option to leave when they would like to, and certainly most tournaments will end with the remaining players taking on much more risk than they would be comfortable with, or rationally interested in.
For example, in a $1/$2 cash game, a player can leave if he triples up his stack and doesn't want to risk losing $600. In the equivalent $200-buyin tournament (think the Sunday Million), he can't leave with his $600-equivalent stack, nor any higher stack. If he makes the final table, he will be effectively taking risks for tens of thousands of dollars on every hand.
In almost any multi-table tournament with a reasonable field size, very few of the players who choose to play the tournament are actually well-equipped to rationally tolerate the financial risk they will have to endure if they make it to the end of the tournament and no deal is made. Utility annihilation, etc.
Conclusions
It cannot be logically consistent for all tournaments to be "skill" or "not gambling" while all cash games are otherwise. The differences between the two types of poker are largely practical, in that cash game poker accommodates players' personal schedules and personal risk tolerances much better than tournament poker. As far as game design goes, the additional game flexibility options of the cash game allow for a broader audience to participate, spending time on the game as it is convenient for them. This effect has to be an economic benefit to society from any perspective.
Any factor of cash games that might intuitively seem like enabling "luck" or "gambling" would also exist in tournaments of a certain blind structure, or a series of such tournaments.
Would Sweden really hope to provide regulations over tournament stack/blind structure? After all, it would be easy to define a tournament structure with very large blinds that would be over in fewer hands than any cash game.
Would Sweden also hope to regulate over deal-making in tournaments? After all, if a group of players join a winner-take-all tournament with the intent of chopping the prize pool with a chip-proportional deal after a certain amount of time, that's identical to a cash game.
There's an analogy to finance and investing here. Perhaps a government might decide that it doesn't want its citizens taking any short-term financial risk (a la playing only a few hands of a cash game), and thus only allows long-term investment by letting individuals only deal in instruments whose payoffs are far enough into the future. Consider a bond that pays out $100 in 365 days. Perhaps the current interest rates are such that the value of that bond today is $95. But if somebody buys that bond now, and the interest rates change such that the value increases to $98 the next day, he can't really be stopped from selling that bond to another person and locking up his quick $3 win -- the exact same $3 short-term payoff he could have had by speculating in interest rate futures. Generally, any short-term payoff can be derived synthetically by trading in longer-term payoffs, and settling tournaments early via deal-making achieves the exact same result in poker.
Would Sweden presumably approve of a cash game variant where players were artificially "locked in" to playing a certain number of hours or hands before they could leave? If so, then we're back to the silliness of the example of a game of chess being "skill", but the same game of chess being "luck" when played a few moves at a time and over the course of several days.
From a practical standpoint, looking at the ruling from any of these three natural conclusions should highlight the logical absurdity of the ruling in a manner which I would hope and expect to be apparent to everybody, regardless of knowledge or experience with poker.
Now, there may be more nuance in the ruling than that one article provides. But, if I recall correctly, this is not the first jurisdiction or court ruling that has found tournament poker to be "predominantly skill" or "not gambling" while finding the opposite for cash game poker.
I've even encountered poker players who believe either of these.
After all, the structure of tournament poker strongly resembles that of tournaments in other games that are commonly-accepted as games of skill and are rarely treated as gambling, while cash game poker looks a lot like "table games" in a casino, to the untrained eye.
Perhaps we can even sympathize with those who have made these decisions; perhaps they recognize that skill will always predominate over chance in the long run in any game, and that tournament poker "locks players in" to playing multiple hands of poker. Meanwhile, cash game poker lets players leave after one hand, which might give some gamblers the opportunity to take a quick risk on a hand of poker, just as they might do on the spin of a roulette wheel.
I have a reasoned argument as to why it cannot be the case that all tournaments "are skill" ("are not gambling") while cash games "are luck" ("are gambling").
A logical argument
Assume that it is somehow sensible or consistent that all tournaments are skill while all cash games are luck.
Then a 6-handed, winner-take-all tournament with a $200 entry fee, $200 in starting chips, and fixed (nonincreasing) $1/$2 blinds is skill.
Consider the following modifications to the rules of the tournament:
1) Players can buy in for less than the full amount if they wish, and they receive a proportional amount of chips; since the tournament is winner-take-all, and since each player's winning chances are equal to the ratio of their chips to total chips in play when all players are equally skilled, no inherent strategic advantage is given by this option (modulo short-stack advantages).
2) Players can rebuy when they lose all their chips or whenever they want to add on back up to the maximum.
3) If a player leaves the game by going broke or cashing out, a different player can take the seat and buy in just as the previous player could have rebought.
4) Players can "buy out" of the tournament at any time for their fair share of chip equity, equal to the ratio of their stack to the remaining prize pool. Ignoring the position of the button, again, since the tournament is winner-take-all, this is equal to the expected payoff for the player when he or she is at an equal skill level to his or her opponents, therefore this modification affords no in-game strategic advantage.
Making all four of these changes to the tournament makes it equivalent to a $1/$2 cash game.
So, which of these extra rules changed the fundamental "skill" or "gambling" nature of the game?
Do any of these changes make the game less skillful, or more luck-based?
#1 doesn't reduce skill. While shorter-stacked poker involves less complicated decisions, the level of stack-depth skill at work in any poker game with varying stack sizes will always be at least that of the same poker game if all stack sizes were at the minimum. An appropriate minimum buyin requirement can ensure that this level of skill is suitable.
#2 doesn't reduce skill. It's just a way for players to reenter the game. Notably, it allows a skilled player to continue to participate in the game, even if some bit of "bad luck" caused him to lose a big hand. In the right context, this would only increase skill relative to luck.
#3 doesn't reduce skill, same as above.
#4 doesn't reduce skill. It's just a way for players to leave the game early on any given night. The skill is still exercised over whatever number of hands they chose to play. I get that #4 is the one that Sweden and others might feel does change the skill vs. luck nature of the game, but even if the luck doesn't "even out" until a "long run" is reached, it's important to recognize:
- If, say, we determine that 1,000 hands is the point where "skill predominates" in a certain poker game, there's no logical or practical difference between that player playing 1,000 hands in one night, or by playing those 1,000 hands in several sessions over the course of his life.
- Almost every type of poker player will play sufficiently many hands in their life, even casual players.
So, with all due respect to naïve judges' attempts to implement an approach to skill vs. luck that recognizes that the duration of play affects the influence of luck on outcomes, a duration-based legal classification has logical as well as practical issues.
Classifying cash game poker as "luck" because it is possible to play it for a very short amount of time per day would be the same as deeming chess as "skill" under normal conditions, but "luck" when the same game of chess is broken up over several days and played a few moves at a time.
Do any of these changes make the game more "gambling"?
#1 doesn't introduce any "gambling". Certainly, giving players the option to play for less than the nominal amount can only reduce the amount of "gambling", by any definition.
#2 doesn't introduce any "gambling". In an environment where all tournaments are "not gambling", a player who has lost in a tournament could very easily enter a new tournament right away, if he were inclined. There's no difference between letting him do that on some table across the room and letting him do that at the same table he started at.
#3 doesn't introduce any "gambling", it just changes the particular players that might be participating at any time.
#4 doesn't introduce any "gambling". Again, this option can only reduce the amount of "gambling", and it does so in an incredibly significant way, especially in big tournaments.
In fact, the effects of #4 are so huge that I would argue that, from any sensible perspective, tournament poker has to be more "gambling" than the equivalent cash game. The primary difference between the two is that tournament poker forces its players to continue taking risks with their money rather than giving them the option to leave when they would like to, and certainly most tournaments will end with the remaining players taking on much more risk than they would be comfortable with, or rationally interested in.
For example, in a $1/$2 cash game, a player can leave if he triples up his stack and doesn't want to risk losing $600. In the equivalent $200-buyin tournament (think the Sunday Million), he can't leave with his $600-equivalent stack, nor any higher stack. If he makes the final table, he will be effectively taking risks for tens of thousands of dollars on every hand.
In almost any multi-table tournament with a reasonable field size, very few of the players who choose to play the tournament are actually well-equipped to rationally tolerate the financial risk they will have to endure if they make it to the end of the tournament and no deal is made. Utility annihilation, etc.
Conclusions
It cannot be logically consistent for all tournaments to be "skill" or "not gambling" while all cash games are otherwise. The differences between the two types of poker are largely practical, in that cash game poker accommodates players' personal schedules and personal risk tolerances much better than tournament poker. As far as game design goes, the additional game flexibility options of the cash game allow for a broader audience to participate, spending time on the game as it is convenient for them. This effect has to be an economic benefit to society from any perspective.
Any factor of cash games that might intuitively seem like enabling "luck" or "gambling" would also exist in tournaments of a certain blind structure, or a series of such tournaments.
Would Sweden really hope to provide regulations over tournament stack/blind structure? After all, it would be easy to define a tournament structure with very large blinds that would be over in fewer hands than any cash game.
Would Sweden also hope to regulate over deal-making in tournaments? After all, if a group of players join a winner-take-all tournament with the intent of chopping the prize pool with a chip-proportional deal after a certain amount of time, that's identical to a cash game.
There's an analogy to finance and investing here. Perhaps a government might decide that it doesn't want its citizens taking any short-term financial risk (a la playing only a few hands of a cash game), and thus only allows long-term investment by letting individuals only deal in instruments whose payoffs are far enough into the future. Consider a bond that pays out $100 in 365 days. Perhaps the current interest rates are such that the value of that bond today is $95. But if somebody buys that bond now, and the interest rates change such that the value increases to $98 the next day, he can't really be stopped from selling that bond to another person and locking up his quick $3 win -- the exact same $3 short-term payoff he could have had by speculating in interest rate futures. Generally, any short-term payoff can be derived synthetically by trading in longer-term payoffs, and settling tournaments early via deal-making achieves the exact same result in poker.
Would Sweden presumably approve of a cash game variant where players were artificially "locked in" to playing a certain number of hours or hands before they could leave? If so, then we're back to the silliness of the example of a game of chess being "skill", but the same game of chess being "luck" when played a few moves at a time and over the course of several days.
From a practical standpoint, looking at the ruling from any of these three natural conclusions should highlight the logical absurdity of the ruling in a manner which I would hope and expect to be apparent to everybody, regardless of knowledge or experience with poker.
Thursday, March 3, 2011
Christie vetoes NJ internet gambling bill — my summary and thoughts
It's been a long time since the New Jersey internet gambling bill S490 passed with a 85% majority through its final legislative committee. In fact, it's been the maximum amount of time. Governor Chris Christie had 45 days to act on the bill by signing or vetoing it, which meant he had until February 24th to decide... or so we thought. After what felt like an eternity of waiting, shortly before February 24th, we all learned that some weird exception surrounding the congressional calendar actually gave him until March 3rd to make his move on the bill.
Earlier today, Christie vetoed the bill. His press release, linking to his official statement to the NJ Senate on this matter, is available here.
Originally, the veto was reported as a conditional veto, and is still recorded as such on the website of the NJ legislature, but the more recent reports are saying that it was upgraded to an absolute veto. This article captures the drama surrounding the nature of this veto.
Christie's decision
It's hard to blame Christie for running his time bank all the way down on this decision. He had many factors to consider, all of which were the topic of much speculation and discussion while we waited for his decision.
Reasons for Christie to sign:
Reasons for Christie to veto:
Reasons which were, at best, taking a backseat to all of the above, and at worst, not even under consideration:
What's next?
A conditional veto of this bill was expected to likely be only a temporary setback, perhaps enough to make NJ lose the race to be the first state to license internet gambling, but still only a short delay of the inevitable. The most recent news surrounding this absolute veto, however, makes it seem probable that there might be nothing happening with this bill for a while.
Though the NJ legislature is able to override a governor's veto with a 2/3 majority, Senator Raymond Lesniak, the sponsor of the bill, has said that he will not attempt to do so. Despite its original passage with a sufficiently-large majority, in light of Christie's veto, New Jersey Republicans are no longer expected to support the bill. Lesniak also seems pessimistic about the chances of any new "fixed" legislation for NJ internet gambling, given the Governor's attitude. His quotes in this article make it seem like any second attempt at getting this bill into law is not likely to come to fruition anytime soon.
Though the conflicting reports of today seem to be settling on the above, I can't help but observe that all of the incentives which compelled this bill in the first place are still there. New Jersey badly needs revenue, and it does not seem that Christie is fundamentally opposed to the notion of licensed internet gambling in NJ. If the positive incentives for such a bill were able to economically overcome the opposing forces of Caesar's and the NFL, it seems that a compromise could be reached and a few legal tweaks could be quickly made to the bill to make it palatable to the governor.
Most likely, though, we're looking at no action for a while. If a public referendum is indeed needed, I believe that can't occur until November at the earliest.
My Thoughts
As all of the information surrounding the bill developed, I was pretty close to indifferent between the bill's passage or failure, which is sad for what would have let my own state create the first explicitly legal online poker in the country. If the bill didn't criminalize unlicensed operators in a manner that might have forced international poker-only sites to stop serving NJ residents, I would have been a strong supporter of this bill. As it was, where passage of the bill would possibly mean that I'd have to move out of state to play online poker with a reasonably-sized pool of players, I had to personally lean towards opposing the bill.
S490 would have been a great bill for gamblers, but potentially a bad-to-terrible bill for serious poker players. I feel that the considerations of poker players were dwarfed by the considerations of gambling, and I can't help but feel disregarded in the wake of the political mess surrounding its veto.
The bill impeded on the rights of competitive strategy gamers by explicitly including poker in the scope of its protectionist regulations at the expense of global competition. No gambling game is negatively impacted by only being able to serve residents of a small region, but limiting poker to only New Jerseyans would possibly mean the end of the availability of sufficiently liquid online games for competitive players. This is the cost of using the public's perception of poker as "gambling" as a vehicle to attempt to secure rights for our game. Granted, the poker-only federal Reid bill also limited the player pool to U.S. players only, but it at least had ambitions to expand to global markets within several years, which is a relatively short amount of time in the world of government.
Also discouraging to me was that the discourse and incentives surrounding Christie's decision on the bill included so many different political factors that the rights of poker players likely held little to no value in his decision. This is the cost of selling legislatures on licensing and regulating internet poker through arguments primarily focused on tax revenues. Poker does not have nearly enough political allies who legitimately care about the rights of adults to participate in competitive games.
I'm also worried about the result if an eventual NJ internet gambling bill were to go to a public referendum.
Even if the bill were poker-only, I would worry that the majority of the public would vote against poker based on misguided moral beliefs or misinformation/ignorance about the game of poker. For example, to be generous, if 10% of citizens play poker at least semi-seriously, and another 20% are close enough to such people to even partially understand why poker is good, that leaves 70% of people whose perception of poker may be based off of indoctrinations that "gambling" is an unbeatable, degenerate, or sinful. Each person in this 70% gets a vote worth just as much as those in the 10%, regardless of how incorrect their beliefs are or, more unfortunately, how irrelevant the outcome of the vote is to their personal lives. I guess this might be a failure of the democratic process in general, but it seems particularly dangerous with something as widely and fiercely misunderstood as the game of poker.
Add in the fact that any future NJ internet gambling bill is still likely to treat all "gambling" instead of only poker and it becomes a lot easier to lose that vote.
I would be passionate in lobbying the public for voting for a good poker-only bill, but I honestly might not even bother asking my friends and family to support a broader bill. While I personally side with the rights of well-minded adults to annihilate their wealth through the methods of their choosing, I don't feel strongly enough about this to try to change the mind of somebody who wants to limit the existence of any form of slot machines at all costs, and I would not be comfortable conflating these issues with the game of poker.
So while I'm glad that I get to continue enjoying the long-term-unstable status quo of online poker for the time being, the stress of this long wait and its overly-politicized result makes me even more eager and desperate for the time when internet poker will be treated in a logical and rational manner by the U.S.
Might be a while.
Earlier today, Christie vetoed the bill. His press release, linking to his official statement to the NJ Senate on this matter, is available here.
Originally, the veto was reported as a conditional veto, and is still recorded as such on the website of the NJ legislature, but the more recent reports are saying that it was upgraded to an absolute veto. This article captures the drama surrounding the nature of this veto.
Christie's decision
It's hard to blame Christie for running his time bank all the way down on this decision. He had many factors to consider, all of which were the topic of much speculation and discussion while we waited for his decision.
Reasons for Christie to sign:
- The tax and job creation of internet gambling would generate revenue for the state, and quite a bit of it (a BIG reason for NJ right now).
- Internet gambling would lead to additional revitalization of Atlantic City in general.
- Domestic licenses on internet gambling would provide repatriation of revenues currently going to perceived "evil offshore operators".
- Winning the "race" by getting NJ's internet gambling network established before a future federal internet gambling bill could work out better for the state's coffers than simply waiting to opt into a federal scheme.
Reasons for Christie to veto:
- Caesar's Entertainment lobbied heavily against this bill, presumably believing that its own interests are better-served by an eventual federal bill.
- Many citizens oppose internet gambling, perhaps as many as 67% of them, according to a recent poll, which I thought was rather surprising. While other polls show overall support for internet gambling, I think it's fair to say that even those people who support gambling in general may not always support internet gambling, especially when concerned with a potential proliferation of gambling in public areas, such as non-casino businesses using internet cafes as effective gambling devices.
- There are various complex legal concerns over whether or not the intrastate framework of S490 would be acceptable under federal gambling laws. In particular, Christie has ties to the federal Department of Justice, the entity which goes against court rulings by insisting that online poker is covered by the ancient anti-sports-betting Wire Act and attacking payment processors accordingly. If the DOJ doesn't want there to be any internet gambling anywhere, for whatever reason, Christie might side with them.
- The NFL doesn't want it to pass and Christie may have owed them a favor... a little conspiratorial, but it is definitely the case that the NFL is inconceivably powerful and that the NFL is inconceivably opposed to all internet gambling, even poker-only initiatives.
- "Competition" from online gambling could reduce the business of brick-and-mortar Atlantic City casinos. I would be shocked if the net effect of AC-based internet gambling wasn't positive for all of Atlantic City, but I think this idea was out there.
- There are rumors that Christie may want to run for president soon. The official Republican Party platform opposes internet gambling in all of its forms, so it might hurt his chances at the nomination to be known as the first U.S. political figure to "legalize" internet gambling.
- Finally, the reason that I didn't consider until Christie gave it as a reason in his veto: there is a potential legal conflict between this bill and the state constitution. The NJ Constitution allows for casino gambling to take place only in Atlantic City. The internet gambling bill treated this by defining that play between a player anywhere and a business with servers in Atlantic City was play that "took place in Atlantic City". Christie found this to be dubious and suggests that a public referendum might be necessary to modify the state constitution to allow for statewide internet gambling.
Reasons which were, at best, taking a backseat to all of the above, and at worst, not even under consideration:
- Whether or not adults should have the right to be able to use the internet to engage in the same financial activities and/or gambling games that they can legally partake in through brick-and-mortar establishments
- Effects on competitive poker players, that silly little bunch... don't they realize that their activity is "just gambling" and exists only for producing corporate and government revenue?
What's next?
A conditional veto of this bill was expected to likely be only a temporary setback, perhaps enough to make NJ lose the race to be the first state to license internet gambling, but still only a short delay of the inevitable. The most recent news surrounding this absolute veto, however, makes it seem probable that there might be nothing happening with this bill for a while.
Though the NJ legislature is able to override a governor's veto with a 2/3 majority, Senator Raymond Lesniak, the sponsor of the bill, has said that he will not attempt to do so. Despite its original passage with a sufficiently-large majority, in light of Christie's veto, New Jersey Republicans are no longer expected to support the bill. Lesniak also seems pessimistic about the chances of any new "fixed" legislation for NJ internet gambling, given the Governor's attitude. His quotes in this article make it seem like any second attempt at getting this bill into law is not likely to come to fruition anytime soon.
Though the conflicting reports of today seem to be settling on the above, I can't help but observe that all of the incentives which compelled this bill in the first place are still there. New Jersey badly needs revenue, and it does not seem that Christie is fundamentally opposed to the notion of licensed internet gambling in NJ. If the positive incentives for such a bill were able to economically overcome the opposing forces of Caesar's and the NFL, it seems that a compromise could be reached and a few legal tweaks could be quickly made to the bill to make it palatable to the governor.
Most likely, though, we're looking at no action for a while. If a public referendum is indeed needed, I believe that can't occur until November at the earliest.
My Thoughts
As all of the information surrounding the bill developed, I was pretty close to indifferent between the bill's passage or failure, which is sad for what would have let my own state create the first explicitly legal online poker in the country. If the bill didn't criminalize unlicensed operators in a manner that might have forced international poker-only sites to stop serving NJ residents, I would have been a strong supporter of this bill. As it was, where passage of the bill would possibly mean that I'd have to move out of state to play online poker with a reasonably-sized pool of players, I had to personally lean towards opposing the bill.
S490 would have been a great bill for gamblers, but potentially a bad-to-terrible bill for serious poker players. I feel that the considerations of poker players were dwarfed by the considerations of gambling, and I can't help but feel disregarded in the wake of the political mess surrounding its veto.
The bill impeded on the rights of competitive strategy gamers by explicitly including poker in the scope of its protectionist regulations at the expense of global competition. No gambling game is negatively impacted by only being able to serve residents of a small region, but limiting poker to only New Jerseyans would possibly mean the end of the availability of sufficiently liquid online games for competitive players. This is the cost of using the public's perception of poker as "gambling" as a vehicle to attempt to secure rights for our game. Granted, the poker-only federal Reid bill also limited the player pool to U.S. players only, but it at least had ambitions to expand to global markets within several years, which is a relatively short amount of time in the world of government.
Also discouraging to me was that the discourse and incentives surrounding Christie's decision on the bill included so many different political factors that the rights of poker players likely held little to no value in his decision. This is the cost of selling legislatures on licensing and regulating internet poker through arguments primarily focused on tax revenues. Poker does not have nearly enough political allies who legitimately care about the rights of adults to participate in competitive games.
I'm also worried about the result if an eventual NJ internet gambling bill were to go to a public referendum.
Even if the bill were poker-only, I would worry that the majority of the public would vote against poker based on misguided moral beliefs or misinformation/ignorance about the game of poker. For example, to be generous, if 10% of citizens play poker at least semi-seriously, and another 20% are close enough to such people to even partially understand why poker is good, that leaves 70% of people whose perception of poker may be based off of indoctrinations that "gambling" is an unbeatable, degenerate, or sinful. Each person in this 70% gets a vote worth just as much as those in the 10%, regardless of how incorrect their beliefs are or, more unfortunately, how irrelevant the outcome of the vote is to their personal lives. I guess this might be a failure of the democratic process in general, but it seems particularly dangerous with something as widely and fiercely misunderstood as the game of poker.
Add in the fact that any future NJ internet gambling bill is still likely to treat all "gambling" instead of only poker and it becomes a lot easier to lose that vote.
I would be passionate in lobbying the public for voting for a good poker-only bill, but I honestly might not even bother asking my friends and family to support a broader bill. While I personally side with the rights of well-minded adults to annihilate their wealth through the methods of their choosing, I don't feel strongly enough about this to try to change the mind of somebody who wants to limit the existence of any form of slot machines at all costs, and I would not be comfortable conflating these issues with the game of poker.
So while I'm glad that I get to continue enjoying the long-term-unstable status quo of online poker for the time being, the stress of this long wait and its overly-politicized result makes me even more eager and desperate for the time when internet poker will be treated in a logical and rational manner by the U.S.
Might be a while.
Monday, January 10, 2011
NJ internet gambling bill passes Assembly, awaits governor's signature
I would have liked to have been able to dedicate the first few entries of this blog to some of the ideas I've been working on, but the timing didn't quite work out for that. Major events moving towards the potential annihilation of the global online poker environment come first.
I will be the first to admit I don't have a great knowledge of politics or of how various legislative processes work. So I settled in to live-blog the all-but-certain passage of the NJ internet gambling bill from its final committee, not sure whether or not the bill would be debated or just voted on. Turns out, just voted on. Also, as it turns out, not the most entertaining session to watch.
January 10, 2011, NJ Assembly Session
2:55 — The session, scheduled to begin at 1:00, actually begins.
3:28 — Voting begins on "consent bills", those which have been agreed to by both majority and minority sides of the aisles. There is no debate on consent bills." ... [then they vote on debate bills]
3:56 — Voting begins on nonconsent bills
4:13 — What was supposed to be a brief "time out" break is taken
6:00ish — brief "time out" ends
6:42 — A2570/S490, the NJ internet gambling bill, is brought up as a nonconsent bill, but voted on with no debate. Passes 63-11-3.
All that remains now is for Governor Christie to sign it, which could happen tomorrow or within up to 45 days. The general vibe seems to be that he is very likely to sign it.
In the meantime, no newer or final version of the bill has been uploaded to the bill's page. So either it hasn't been released yet, or this draft is the final version. edit: The very knowledgeable PokerXanadu on 2+2 seems confident that this means that the above draft is indeed the final version.
In summary, the bill:
Potential Implications
The signing of this bill into law will be a historic moment in the history of the online gambling industry. That's super for everyone who cares about online gambling.
For competitive poker players, however, there are a number of potential issues. If NJ players have the option of playing on NJ-only poker sites with NJ-only player pools as well as existing trusted international poker sites against global player pools, then everything should be great. If, however, PokerStars and Full Tilt decide that this law makes it illegal for them to serve NJ, then I have a big problem with this law.
It's also unclear from the current language of the bill which New Jerseyans would be affected here. If international poker sites are compelled to stop serving NJ residents, will they cease service to those whose permanent residence is in NJ? What if they have a secondary address in another state? What if they reside in NJ but log on and play from another state? What about the converse? The current language of the bill requires that a customer of an NJ-licensed internet gambling site must have a principal residence in NJ, but the criminal provision makes no mention of residency versus location, so it's not clear to me how international sites might react.
However, at least the current draft of the bill does not put any penalty on players for playing on international sites. There should also be several potentially-valid legal arguments as to why the criminal provision in this law does not apply to the operations of PokerStars and Full Tilt Poker.
What will PokerStars and Full Tilt Poker do?
While these international sites did pull out of WA after their state supreme court ruling, the nature of the NJ law is entirely different; WA criminalized ANY online poker play in their state and made it a felony for the player, so PokerStars and Full Tilt would have been facilitating crime by serving Washingtonians. On the other hand, there is no such provision in the NJ law, and indeed, since the NJ law makes it legal to play online poker with the intended Atlantic City monopoly, I believe there are international trade arguments as to why it HAS to be legal to do the same with international operators. And if the NJ bill defines that play on NJ sites takes place "in" Atlantic City, then wouldn't play with an international poker site take place "in" that country?
That all assumes that this law even applies to poker sites which do not offer casino games. Saying nothing about the rest of its merits, the failed federal Reid bill last month at least made an attempt to treat poker properly, while this NJ bill literally treats it the same as casino gambling. Regardless of whether or not a NJ-only site is able to draw in enough players and sustain enough games to be fun or profitable, the effective-prohibition against NJ players participating in international competition is a tremendous blow to poker as a strategy game.
I sincerely hope that this misguided law will not eliminate international poker sites from the NJ marketplace. Whatever happens, other states will inevitably follow NJ's lead, and while state-only poker sites should eventually find federally-legal ways to pool their player pools, that could be several years away. The very integrity of poker as a modern global competition could be at stake.
I can't help but wonder what this law would look like if anybody involved in it actually understood why poker should be treated differently than mindless, nonstrategic gambling "games" against a house. In a world that routinely mistreats poker by ignorantly classifying it as "gambling", it is perhaps not too much of a twisted surprise that the historic first legal effort by a US state to license and expressly legalize internet gambling is one that could end up really harming the game of poker.
All of the details and implications should fall together over the coming weeks. In the meantime, I have included a scientific diagram as to why it is bad if NJ residents cannot play with the rest of the world:
Note that the player in NJ is sad and lonely. His faceless opponents in the rest of the world seem to express no sympathy or concern, but it might be only a matter of time before they are alone as well.
I will be the first to admit I don't have a great knowledge of politics or of how various legislative processes work. So I settled in to live-blog the all-but-certain passage of the NJ internet gambling bill from its final committee, not sure whether or not the bill would be debated or just voted on. Turns out, just voted on. Also, as it turns out, not the most entertaining session to watch.
January 10, 2011, NJ Assembly Session
2:55 — The session, scheduled to begin at 1:00, actually begins.
3:28 — Voting begins on "consent bills", those which have been agreed to by both majority and minority sides of the aisles. There is no debate on consent bills." ... [then they vote on debate bills]
3:56 — Voting begins on nonconsent bills
4:13 — What was supposed to be a brief "time out" break is taken
6:00ish — brief "time out" ends
6:42 — A2570/S490, the NJ internet gambling bill, is brought up as a nonconsent bill, but voted on with no debate. Passes 63-11-3.
All that remains now is for Governor Christie to sign it, which could happen tomorrow or within up to 45 days. The general vibe seems to be that he is very likely to sign it.
In the meantime, no newer or final version of the bill has been uploaded to the bill's page. So either it hasn't been released yet, or this draft is the final version. edit: The very knowledgeable PokerXanadu on 2+2 seems confident that this means that the above draft is indeed the final version.
In summary, the bill:
- authorizes casino games and poker to be offered to NJ residents only, and only by companies in Atlantic City.
- establishes that the wagers are deemed to take place in Atlantic City, regardless of where in NJ the player is located.
- sets the minimum age for having an account with one of these businesses to 21, despite the fact that the internet gambling sites will presumably not serve alcohol, and despite the fact that NJ's minimum gambling age is 18.
- makes it a crime for "any person [to offer] games into play or [display] such games through Internet wagering without approval of the commission to do".
- makes no distinctions between poker and casino gambling other than special provisions for dealer tips, which historically are not very common in online poker.
Potential Implications
The signing of this bill into law will be a historic moment in the history of the online gambling industry. That's super for everyone who cares about online gambling.
For competitive poker players, however, there are a number of potential issues. If NJ players have the option of playing on NJ-only poker sites with NJ-only player pools as well as existing trusted international poker sites against global player pools, then everything should be great. If, however, PokerStars and Full Tilt decide that this law makes it illegal for them to serve NJ, then I have a big problem with this law.
It's also unclear from the current language of the bill which New Jerseyans would be affected here. If international poker sites are compelled to stop serving NJ residents, will they cease service to those whose permanent residence is in NJ? What if they have a secondary address in another state? What if they reside in NJ but log on and play from another state? What about the converse? The current language of the bill requires that a customer of an NJ-licensed internet gambling site must have a principal residence in NJ, but the criminal provision makes no mention of residency versus location, so it's not clear to me how international sites might react.
However, at least the current draft of the bill does not put any penalty on players for playing on international sites. There should also be several potentially-valid legal arguments as to why the criminal provision in this law does not apply to the operations of PokerStars and Full Tilt Poker.
What will PokerStars and Full Tilt Poker do?
While these international sites did pull out of WA after their state supreme court ruling, the nature of the NJ law is entirely different; WA criminalized ANY online poker play in their state and made it a felony for the player, so PokerStars and Full Tilt would have been facilitating crime by serving Washingtonians. On the other hand, there is no such provision in the NJ law, and indeed, since the NJ law makes it legal to play online poker with the intended Atlantic City monopoly, I believe there are international trade arguments as to why it HAS to be legal to do the same with international operators. And if the NJ bill defines that play on NJ sites takes place "in" Atlantic City, then wouldn't play with an international poker site take place "in" that country?
That all assumes that this law even applies to poker sites which do not offer casino games. Saying nothing about the rest of its merits, the failed federal Reid bill last month at least made an attempt to treat poker properly, while this NJ bill literally treats it the same as casino gambling. Regardless of whether or not a NJ-only site is able to draw in enough players and sustain enough games to be fun or profitable, the effective-prohibition against NJ players participating in international competition is a tremendous blow to poker as a strategy game.
I sincerely hope that this misguided law will not eliminate international poker sites from the NJ marketplace. Whatever happens, other states will inevitably follow NJ's lead, and while state-only poker sites should eventually find federally-legal ways to pool their player pools, that could be several years away. The very integrity of poker as a modern global competition could be at stake.
I can't help but wonder what this law would look like if anybody involved in it actually understood why poker should be treated differently than mindless, nonstrategic gambling "games" against a house. In a world that routinely mistreats poker by ignorantly classifying it as "gambling", it is perhaps not too much of a twisted surprise that the historic first legal effort by a US state to license and expressly legalize internet gambling is one that could end up really harming the game of poker.
All of the details and implications should fall together over the coming weeks. In the meantime, I have included a scientific diagram as to why it is bad if NJ residents cannot play with the rest of the world:
Note that the player in NJ is sad and lonely. His faceless opponents in the rest of the world seem to express no sympathy or concern, but it might be only a matter of time before they are alone as well.
Sunday, January 9, 2011
Introductions and Intentions
I'm a student of Mathematics, Statistics, and Economics and am currently working on my PhD in Applied Probability. For the past six years of my life, I've played poker part-time alongside my full-time studies. I became involved in poker because I found it to be an excellent and compelling competitive game with immense strategic depth. I reject the notion that I am a "gambler" in any relevant sense.
As my actual PhD research has become more narrow, focused, and slow-moving, I've found my mind wandering more and more to possible applications of my knowledge and experience to problems that I find more interesting and fun. Unsurprisingly, most of these ideas are related to poker.
Sweating the details of the failed recent and potentially forthcoming (at least temporary) annihilations of online poker in NJ or the US have also jarred me into no longer taking the great game of poker and my freedoms to compete in it online for granted. Though online poker is unlikely to become completely dead anytime soon, if it ever did, I'd like to be able to look back on more than just a graph from years of mediocre grinding. I've got some ideas floating around in my head, they might be good, and I want to get them out there.
So I want to start actively contributing to the poker community, and I've been looking for new outlets to keep my writing skills sharp. While I've entertained the idea of someday writing a poker book, I don't think I could offer anything new strategically right now. The ideas that I do feel like writing about are too varied and would lack mainstream appeal. However, these ideas should be perfect for someday becoming a few dozen potential articles, so blogging seems like the way to go for now. I'll be putting some rough sketches of my ideas out there, and we'll see where they develop.
I'm not totally sure precisely what the scope of this blog will be, just sure that I want to get started. It won't all be quantitative, and it probably won't all be poker.
Topics I am planning to discuss on this blog:
Topics I might discuss:
Topics I am not planning on discussing:
As my actual PhD research has become more narrow, focused, and slow-moving, I've found my mind wandering more and more to possible applications of my knowledge and experience to problems that I find more interesting and fun. Unsurprisingly, most of these ideas are related to poker.
Sweating the details of the failed recent and potentially forthcoming (at least temporary) annihilations of online poker in NJ or the US have also jarred me into no longer taking the great game of poker and my freedoms to compete in it online for granted. Though online poker is unlikely to become completely dead anytime soon, if it ever did, I'd like to be able to look back on more than just a graph from years of mediocre grinding. I've got some ideas floating around in my head, they might be good, and I want to get them out there.
So I want to start actively contributing to the poker community, and I've been looking for new outlets to keep my writing skills sharp. While I've entertained the idea of someday writing a poker book, I don't think I could offer anything new strategically right now. The ideas that I do feel like writing about are too varied and would lack mainstream appeal. However, these ideas should be perfect for someday becoming a few dozen potential articles, so blogging seems like the way to go for now. I'll be putting some rough sketches of my ideas out there, and we'll see where they develop.
I'm not totally sure precisely what the scope of this blog will be, just sure that I want to get started. It won't all be quantitative, and it probably won't all be poker.
Topics I am planning to discuss on this blog:
- quantifying poker and macropoker situations that perhaps are not always quantified
- game theory and applications
- economic approaches to game structures and rules and their role in the poker ecosystem
- quantitative risk management models accounting for mean-variance tradeoffs in personal utility and tax considerations, beyond simple bankroll rules of thumb
- my take on legislative, legal, and political developments in poker
- scientific and logical approaches to the philosophical and legal questions of whether poker "is gambling" or "is mostly luck"
Topics I might discuss:
- psychology and behavioral economics as they relate to poker
- poker news (beyond legal developments)
- book reviews
- poker tax issues
- non-poker life situations where poker thinking or the lessons of poker are valuable
Topics I am not planning on discussing:
- personal details of my own poker career
- specific game strategy or hand histories
- minutia from my life
So if this sounds interesting, stay tuned. If you like poker and aren't completely allergic to mathematical thinking, there should be plenty here for you to think about (or at least disagree with), and I'll try to keep it entertaining when I can.
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