FWIW, This website has been setup to help people who disapprove of the actions of the DoJ last week. And want to take action.
Thanks. NFM.
ESPN2 preempted a broadcast of a poker tournament from the Bahamas tonight.
I wonder why?
Guessing they didn’t get advertisers in time to replace the missing tilt/stars ads?
I caught some repeats of GSN’s poker shows over the weekend. I know I saw Full Tilt ads and probably saw PS ads as well.
New episodes of Poker After Dark this week. I wonder how far the domino effect reaches.
How big of a story is this in the mainstream media?
ESPN is suspending all poker programming indefinitely.
That seems… unnecesary.
Until one can pay a visit to DC once their game(s) get going.
Can anyone tell me why the Feds are so hot on this issue? Why do they care so much about online poker, or gambling generally, which is usually legislated at the state level? The most likely answer seems to be taxes–but if the winners have to pay then don’t the losers get to deduct their losses, at least to a point? If so it seems more or less a wash.
It’s not only the winners who pay tax. The casinos pay tax on their profits, the casinos pay property tax, the casinos deduct income tax for all their employees, the companies who supply the gambling equipment play tax on their profits, and so on. Offshore online gambling sites don’t provide the US government with any of this tax revenue.
The losers don’t get to deduct their losses. This is a general misconception. You can deduct losses from winnings - which just means you end up paying taxes on the net gain. If you couldn’t deduct your losses from your winnings, and you made 100 $1000 bets and won 50 and lost 50 and broke even, you’d owe taxes on winnings of $50,000 even though you broke even. No one gets to deduct net losses. Which is one reason that taxes on gambling winnings are pure bullshit, but that’s another discussion…
Anyway, it’s very common for winning players to dodge taxes, and the more important tax is the one paid by the house. These sites make an absurd amount of money. Absolutely absurd. They collude and refuse to price compete, so the rake is roughly the same across the internet. It varies by stakes and game type, but it’s not uncommon for online sites to rake $2 or $3 per hand, dealing 60+ hands per hour, with many people playing multiple tables.
I would estimate it costs those sites roughly a penny a day to run a virtual table, in terms of bandwidth and servers and such, yet that virtual table if taking $3/hand for 60 hands per hour for 24 hours can take in over $4000 in real money. Per day. A virtual table, costing almost nothing to run. These businesses are absolutely ass raping in terms of profit, it’s just obscene. Their rake is half or more as much as an actual casino charges, but the casino has to pay for the table space, the dealer, floor staff, security, air conditioning, lights, drinks, etc. These sites could cut their rake by 99% and still make a hug profit, which makes them just absurd.
And people end up paying crazy amounts. Let’s say an online professional plays 8 6-handed tables with a $2 max rake where the average hands/hr is 60. There is nothing at all atypical about this scenario - if anything it’s a conservative estimate. Assume he wins 1/6th of the pots, and plays 40 hours per week. That person is paying $160 in real money per hour to a virtual site. $6400 per week. $332,800 per year. To a virtual poker site that’s not doing much more than what yahoo games is when it runs scrabble or pictionary for free. Compare to say a World of Warcraft subscription that requires far more support/server power/bandwidth/etc where Blizzard can make a ton of profit off a $180 per year subscription. The online site in this scenario requires a $332,800 per year subscription.
That number seems so absurd that you must think I’m making it up, but plug in the numbers yourself and see what you get. Why do people pay that? Well, the good players can make money despite paying this high cost, and the bad players don’t realize how much of the money they’re losing is because it’s being raked away instead of losing to other players. But even the winners only get their net profits after that fee is subtracted - so if someone is good enough to net $50,000 per year, they’re actually making almost $400,000 a year from the game nad paying $332,800 of it to the online site. The site that moves a few bits around in cyberspace for them.
It’s a big part of the reason I hate playing online, it just bothers me philosophically. I’ve paid tens of thousands or more of online rake and the whole thing just strikes me as absurd. It makes me feel not at all sorry for these businesses because they’re a bunch of price-colluding assholes who’ve taken tens of thousand+ of my dollars (I mean I’m a net winner online, by far, but I’ve paid them absurd amounts to do it).
My concern is primarily that it’s going to be bad for poker in general. I play in casinos almost exclusively but now all of the displaced online grinders are going to need a place to keep earning their money, which may mean they come into my games, and they’re a hell of a lot tougher than the recreational players you aim for. And fewer people will get into poker now - there will be fewer poker shows with no online sponsors, fewer people that test the waters by learning online for small stakes and then decide to come to Vegas, etc. This is bad for the entire poker community, reducing the incoming amount of bad players and concentrating the good players.
One likely reason is that online poker makes money-laundering (domestic & international) very easy to do.
Of course, if it were properly regulated and taxed, this would become much less of a concern.
I am by no means a professional gambler. But in the good old (pre-UIGEA) days, I would invest a dollar each into three $.01/.02 games and play until I had doubled-up or tripled-up in all of them.
[Sigh] No longer since UIGEA, and certainly not now.
Play money for the foreseeable future.
Broadly speaking of course you’re correct, **Beef **-- the rake is totally absurd and most non-professionals don’t appreciate that fact – but you do exaggerate a little, even assuming a $3 max rake and more than 60 hands per hour. Playing 6-max NLHE you’re getting roughly 95 hands per table/hour, but a large percentage of hands (those without a flop) aren’t raked at all, and below stakes of, say, 3/6, most of the hands that *are *raked aren’t raked for the maximum.
Using my own stats from $2/$4 back when I was beating that game (which aren’t *totally *applicable to all cases due to differing styles of play, win rates, etc., but are close enough for government work), your hypothetical 8-tabling grinder would be paying $12.40 per table/hour, which means $100 per actual hour, $4000 a week, and $208,000 per year. (And if he’s only netting $50,000 after that, he’s right on the razor’s edge and about to graduate from “poker pro” to “losing player” if he doesn’t improve his game.) As you go up in stakes from 2/4 your rake per table/hour will go up (I’ve got $14 per table/hour at 3/6) but then plateau pretty quickly (since almost every raked pot will be for the max). But if you go down to 1/2 (where a *winning *full-timer should definitely be making a living) the rake per table/hour drops by about 30% (now our guy is at $68/$2700/$142,000). It keeps dropping from there, though of course as you go down in stakes the rake constitutes a larger and larger percentage of the money wagered, and is thus a bigger obstacle to winning.
A lot of players seem to be speculating that it’s about money – either the Feds want to seize the poker sites’ sizable assets, or collect on their huge lawsuit for money laundering, or simply clear the field for state-run lotto, horse racing, or even state-run poker. Personally, I think the answer is a lot simpler than that: There’s a law on the books, and these guys have been breaking it in brazen, sustained way. The scope and persistence of the offense is pretty remarkable, so of course law enforcement is going to come after them – that’s what law enforcement does. You don’t think there are guys in the Justice Department who want to get their names in the paper and advance their careers?
I don’t know how long you’ve been playing poker but I’ve read several of your posts on the subject and I have little doubt that if you make the effort to spot the (former) online players in your game and spend some quality time thinking about how they are likely to play that you will do just fine against them.
But yeah, poker is going to shrink. It’s been a phenomenal 13 years for those of us who were playing before the internet / TV boom, and with the wealth of good books available now and the number of players who have at least some clue from internet play, the live games are going to … change … again. I think those who adapt will continue to do well, as they always have, but a lot of players, particularly those who profited solely by playing super tight in multiple games will (hopefully) lose much of their bankrolls before they decide that live poker is not for them.
I left Vegas when internet poker became available and probably won’t be returning – I’m old now, and have adapted to a slower life in my home town. For you, there will be an influx of former online players over the next several months. Your experience in live games will give you a significant advantage over them until they either give up or adapt – take advantage of it … and learn from it.
If this were IMHO, I would say this idea is just silly; since we are not in that section of the forums, I will ask you to provide a cite (one that does not simply make the statement, but one that provides some sort of reasoning for making it) please … or at least provide some of your own reasoning.
I would like to add, for the benefit of SenorBeef and any others in his position, that Tom Dwan is stuck $2.5 million online this year. If you are foolish enough to sit in a live game with him, keep that in mind.
And no, I can’t provide a cite for that … you’re gonna have to either take my word for it or ignore it. (Those who choose to ignore it will be wrong.)
Well, you’re right. You could plug in a multitude of numbers that would be reasonable. Some people go crazy and 20+ table, some only play 4. Limit games tend to hit the cap more often, especially shorthanded. Hands/hour ranges anywhere from like 40 to 120. I also didn’t factor in rakeback. So even if were to hypothetisize a professional player that only pays a mere 100k a year in rake, it’s silly crazy. I mean in 2 or 3 years that’s a decent house!
But people are really stupid when it comes to it. I think if you were to offer a poker site where there was a subscription cost of $100 per month but no rake, most idiots wouldn’t take it even if they’re paying $500+ rake a month easily. In fact they’d scoff at the idea. They simply aren’t aware enough to think about what’s going on.
There are already quite a few who play online and come to Vegas, and I can usually spot them pretty easily. Even simple casual use of the lingo is a pretty clear giveaway. I was discussing a hand with someone who was telling me they couldn’t make a big call on the turn with a marginal top pair on a wet board because the reverse implied odds wrecked them, to which I replied “I hate playing in games with people who know what reverse implied odds are”
A lot of those guys that just play standard ABC supertight tag stuff on 12 tables won’t be too much of a threat. It’s a pretty huge adjustment from that style, and they don’t necesarily have to develop real poker skill to grind out a small living that way. Just not going nuts and playing badly from the sheer boredom of the speed of live would be a big adjustment, let alone lack of hud, needing to vary more, etc.
But there are a ton of really knowledgable people out there now even at the lower levels. I’ve been in games as low as 2-5nl that were probably as tough as any game at any stakes that existed 10 years ago. There’s just so much knowledge out there now it’s crazy.
I can adjust, but even if I adjust optimally, with more players that make fewer fundamental mistakes my win rate will go way down. And poker games can be a delicate ecosystem where a shift in the ratio of bad to good players can have a snowballing effect as bad players bust faster, don’t consider their loss rate sustainable, leave, and make the games even tougher, which then causes the next tier of bad players to lose too fast, etc. Soon enough the only people left are pretty good. And there’s no TV and no microstakes online to bring in the new players.
This could be very, very bad.
First of all, the part of my post you quoted must be put into context with the part of my post that you didn’t quote. And if I were feeling snarky enough to simply call what you said “silly”, then I would probably just cite common sense.
Instead, I will provide this relevant cite, while noting that it is from 2002, which is pre-UIGEA. (start reading from page 34) UIGEA had the effect of driving the (U.S.) business further underground, and indeed apparently/allegedly forced the poker sites themselves to engage in money laundering simply to be able to process payments to their U.S. customers.
At the time of this pre-UIGEA report, law enforcement and regulatory agencies were concerned about money laundering, but representatives of online gaming were (obviously) somewhat dismissive of those concerns based on the oversight and limits imposed by the credit card and banking industry. But to quote the final relevant (and quite prescient sounding) part of the report, this is what they had to say:
(I wrote this response to your post in the Pit thread, and then realized it was more appropriate here so I just copied it before hitting submit.)
I agree with you about a high rake being terrible for poker in general, but for me this is why I find playing in live casinos/card rooms discouraging – if you’re playing limit, for example, the rake is usually a flat $4/hand plus a tip to the dealer, so $5-$6/hand. At any limit below $8-$16, this is a disaster. The house is sucking money out of the table so fast you need a steady influx of players to replace those who go broke.
And yeah, it’s crazy how much money online poker sites make for doing something incredibly simple. (Which is why I don’t believe any of the majors tamper with the odds/cards – why risk disrupting a river of money?) But as long as their brick and mortar counterparts are charging so much more, they have little incentive to charge less.
What I’m surprised by is that no one has started a site with a smaller rake. I’m guessing it’s because most casual players don’t realize how significant it is to their win rates so it’s not enough of a draw to suck a critical mass of people away from the major sites compared w. “I saw that one one the TEEVEE!” and “OMG deposit bonus!” The heaviest players would move over once you hit something like critical mass, but rakeback lets them pay a discounted rake, so you’d have to severely undercut the current rakes to attract them.
From page 1 of the GAO report (My emphasis added):
“Representatives of law enforcement agencies told us that Internet gambling could be used to launder money, but others viewed the threat as less serious. Law enforcement representatives said that the anonymity and jurisdictional issues characteristic of Internet gambling make on-line gaming a potentially powerful tool for money launderers. They noted that few money laundering cases involving Internet gambling had been prosecuted but attributed the small number of cases primarily to a lack of regulation and oversight. **However, regulatory agencies and officials from the credit card **and gaming industries did not believe that Internet gambling was any more susceptible to money laundering than other forms of e-commerce.”
It was not a case of everybody thought it was bad except for the gaming companies, it was law enforcement agencies saying it was bad and everybody else saying it ain’t so bad but if you drive it underground there could be some problems … as your quoted portion clearly points out.
I’ve been playing online poker for a living since it first began, so I am somewhat knowledgeable about it. As far as I am aware, there have been no real problems with money laundering except for the current situation.
This article from Bluff Magazine says the dot com domains have been given back to PS, FT, etc.
As of 1:30 pm cdt, pokerstars dot com still has the legal notice of seizure.