Tectonic shift for gaming in the Business Press

Mulling over two seemingly contradictory bits of news–that the Justice Department had labeled Full Tilt Poker a “global Ponzi scheme” and that the AGA was launching a renewed push for the legalization of online poker–I got to thinking. It’s a dangerous pastime, I know, but in this case it led me to my latest column for the Las Vegas Business Press:

Gambling online and by mobile devices seems to be on the march. Despite a still-simmering online poker scandal, it now appears that its only a matter of when Internet poker is legalized, and last week the Nevada Gaming Commission approved two expansions of sports betting. To some, this is a surprise, but it shouldnt be: Smart players are just adapting to the latest technology, as they have been for millennia.

Gambling shifts to suit the times arent just inevitable — theyre a smart response to changing conditions.

via Las Vegas Business Press :: David G. Schwartz : Tectonic shift for gaming seems poised to come.

The Nevada legislature–which doesn’t exactly have a sterling reputation as a forward-thinking, pro-active body–first addressed online gaming ten years ago. I wonder how much longer it will take for Congress to do the same.

Poker, the Great Survivor in Vegas Seven

If you missed it last week, here’s my latest Green Felt Journal, a look at why poker isn’t going anywhere:

A lot of folks are surprised that the World Series of Poker isn’t doing so badly this year. So far, about one-third of tournament events have had record numbers of participants. Back in April, many thought the Black Friday indictments would translate into a bummer of a summer for Caesars Entertainment’s flagship poker asset, but the tournament—like the game of poker itself—has proved to be quite resilient.

via Poker, the Great Survivor | Vegas Seven.

I haven’t tied my historical studies to current events in a column like that in a little while. I think I’ll be doing it more often. Hopefully without making people’s eyes glaze over when they see history. I find that sort of thing fascinating, but book sales tell me that I’m in the minority.

Updated 2004-2011 poker study up

While answering questions about the impact of the Black Friday indictments on Nevada poker, I thought I’d take a look at what impact previous interdiction attempts (the passage of UIGEA, the implementation of UIGEA) had on Nevada poker. So I compiled a month-by-month summary of Nevada’s poker results for the past seven years. Because I didn’t want to keep all of the fun to myself, I turned my table into a little Center for Gaming Research report that you can now enjoy:

From 2003-06, Nevada poker saw an unprecedented boom, with revenues nearly tripling. From roughly the summer of 2006 to the summer of 2007, revenues then stabilized, showing continued small increases. Following a major jump in June 2007 (coinciding with an earlier start for the World Series of Poker), revenues then declined steadily. Since July 2007, poker revenues have increased year-to-year only five months out of forty-three.
In general, poker has, since 2006, become steadily less profitable for Nevada casinos. The win per table has fallen dramatically to early 1990s levels. The large number of tables, however, indicates that it is still an amenity that many choose to provide, though it does not produce significant revenues on its own.

Nevada Poker, 2004-2011

If you want to read my analysis based on the report, check out this Two Way Hard Three post.

Day 1A WSOP 2010

As those of you who follow my Twitter stream know, I spent a good chunk of yesterday down at the Rio, cruising around Day 1A of the World Series of Poker.

Oskar Garcia has the action cover here. I thought I’d share a few of my thoughts.

The story I was looking for at the WSOP was to profile the first person to bust out of the main event for next week’s Green Felt Journal in Vegas Seven. Luckily I’ve got a great deal of latitude with my subject material there. I thought that it would be interesting to share the experience of someone who came to Las Vegas, plunked down $10,000, and left the game quickly.

I’ve been seriously planning this column for over a month, and it never occurred to me that there might be a logistical problem or two. After all, it’s not like I was planning to interview the winner, who’s readily accessible to the media and usually in a mood to talk. Instead, I had to patrol somewhere around 150 tables, look for an all-in and a call, and quickly grab the unlucky one.

It sounds a lot easier than it is.

After about 20 minutes, I settled into one of the quads of the Amazon ballroom, loosely shadowing a poker supervisor who promised to let me know if he heard anything from one of the other quads.

By 20 minutes, my mouth was dry, and I was noticing how hot it was, with the lights and the excitement. It felt about 10 degrees cooler by the rail than it did at the tables.

I got a heads-up that a player was down to 200 dollars, and sped over. Turns out it was Greg Raymer, who kicked off the action with the official “Shuffle up and deal.” He bounced, and didn’t look anywhere close to being eliminated by the time I got to him.

32 minutes in, I felt like an undertaker waiting for a customer, circling the tables, looking for short stacks, or any inkling that someone might go all-in. This is around the time I started collecting a few statistics. In my section, about 10% of the players wore sunglasses; 25% wore baseball caps, mostly with the bill forward; 3.5% were women.

(someone busts out in another quad 35 minutes in, but I’m not there, and he wasn’t talking, anyway)

41 minutes in, I swear that the players know what I’m here for, and I can’t even look them in the eye. It’s like I’m a poker angel of death or something.

53 minutes in, I’m convinced that this is the worst story idea I’ve ever had. It’s the same feeling that I usually get around mile 22 of a marathon.

62 minutes in, I start to consider that I’ve crossed over into the Twilight Zone. No one will ever bust out, and I’ll spend eternity circling the tables, waiting for an interview that never comes, while a thousand players continue to push chips around the table without ever losing or winning.

68 minutes in, someone goes all in, but made the right call: he doubles up, and lives on.

70 minutes in, this is the idea from hell. Why did I ever think it was a good idea to write a column about failure?

71 minutes in, another all-in call, and this one wasn’t the right call. The player, who looks vaguely like Oliver Stone, busts out. I ask him if he wants to talk, and he says no before scooting out the door. Maybe he’s staying ahead of the snipers on the grassy knoll.

74 minutes in, another all-in call, right in front of me, and it’s another unhappy outcome. This time, the player is shell-shocked, but personable, and we find a few chairs in the media section to do a quick interview.

Turns out his name is Peter Turmezey, he hails from Budapest, Hungary, and he’s a professional poker player. Nice guy, too.

You’ll be able to read all about it in next week’s Vegas Seven.

Vegas Seven double shot

It’s Thursday, and if you like my writing for Vegas Seven, it’s a lucky Thursday, since I’ve got my usual Green Felt Journal column and a more in-depth Latest Word.

The Latest Word piece takes a philosophical and even theological look at poker, winning, and losing:

In other words, poker isn’t always fair. Of course, it’s all about perspective. The best hand at the showdown wins the pot. It doesn’t matter that it wasn’t the best hand pre-flop, or that someone with a better hand folded on the turn, or that your opponent made a miracle draw to fill his inside straight and won a pot he had no business playing for. That, as they say, is the luck of the draw. And it has absolutely nothing to do with whether you’re a better friend, lover or parent than your opponent, or whether you need the money to save a life and he’s just going to blow it at the craps table. The cards have no conscience.

The Winning Hand is Not to the Swift …

For the Green Felt Journal, I took a look at the business and organization behind the World Series of Poker. It’s considerable.

If you’ve watched the World Series of Poker on ESPN, you might think that it’s a pretty laid-back event. Sure, there’s plenty of tension at the final table, but it’s basically just a bunch of guys and gals getting together to play cards, right?

Actually, the two-month tournament at the Rio is all about the cards, but it is orders of magnitude more complicated than your Tuesday night home game. With 57 bracelet events, daily satellites and nearly 80 cash games going on over the course of the tournament, the World Series of Poker is more than an event.

“It’s an organization, not an event,’ says Jack Effel, vice president of international poker operations and director of the World Series of Poker for Harrah’s Entertainment. “It’s got to be that way to be successful.”

Inside the WSOP

Two very interesting columns to write. Enjoy.

Bad beat profitable in AC

The Trump Taj Mahal’s bad beat jackpot has finally paid off, in record fashion. Thanks to 84 year-old John Bazela’s four sevens getting beaten by by four aces, everyone at the table is quite a bit wealthier this morning. From the AC Press:

Tom Gitto, the casino’s director of poker, said the jackpot usually hits every 92,000 hands. Sunday’s bad beat came after more than 670,000 hands. For each hand, a dollar is added to the pot.

Bazela took home 50 percent of the pot Sunday, or $336,057. The actual winning hand takes home $168,028, or 25 percent. The remaining seven players at the Texas Hold ;Em table take home the rest, each collecting about $24,000.

News of the much-anticipated win attracted dozens of players and passers-by to get in on the commotion. Taj officials soon summoned two video cameras to film the aftermath of the jackpot, served the winners (or losers) Champagne and wheeled out a large cake congratulating the winner of “the largest bad-beat jackpot ever.”

Bazela said his hefty share will go to his 55-year-old daughter.

“What am I going to do with it?” he asked. “I just come down here to break up the monotony.”

via Trump Taj Mahal awards $336,000 to bad-beat poker winner for “losing” hand – pressofAtlanticCity.com.

I love that quote there–guys who live, breathe, and sleep poker and never see anything close to this money must be steaming.

This is exactly the kind of stuff that AC casinos should be doing. If you had a choice between driving to Foxwoods or AC to play poker, and you knew you could get $24,000 just for sitting at the table when someone else gets a bad beat, would that help tip the scales?

“Socialized poker” coming to South Carolina

I think someone’s got their semantics wrong in this Card Player article about legalizing at-home poker in South Carolina:

This week, after a hearing that included testimony from the Poker Players Alliance, a local businessman and poker player, and a number of elected officials, a South Carolina House sub-committee voted 4-1 to change the state’s 1802 law, which currently bans “any game with cards or dice.”

Under the new proposal, socialized gambling would be allowed. That means friendly poker games would no longer be subject to random police raids and prosecution. The new proposal would also allow state-certified non-profit groups to conduct raffles, as long as 90 percent of the money goes to charity.


Hank Sitton, one man who was at such a raid, also testified before the sub-committee, saying a rifle was pointed at his head by authorities when he was just trying to enjoy himself with some poker.

“I am the face of socialized poker,” said Hitton, a local car dealer. “They’re not a bunch of seedy gamblers. We’re Joe Six-Pack.”

via Friendly Poker Games Might Finally Get Legalized in South Carolina – Poker News – CardPlayer.com.

According to the author, “socialized gambling” will now be legal. What is “socialized gambling?” If we’re reasoning outward from “socialized medicine,” it’s a system of gambling of unknown quality guaranteed to all citizens and paid for by the government. So I guess you have the right to play whatever game you want, and the government gives you money to do it?

“Social gambling,” on the other hand, has long referred to gambling among peers with no house edge and no single, continuous banker. The average poker game is the perfect example, as contrasted with a game like blackjack or roulette. You can check your copy of Roll the Bones if you want a more thorough definition.

It’s just a few letters, but they make a big difference. Kind of like the difference between a socialist and a socialite.

It is particularly ironic that someone would proclaim themselves “the face of socialized poker” because poker is really the essence of capitalism–investment, risk-taking, and profit or loss. I have a hard time even imagining what socialized poker would look like. A bunch of guys sitting around a green felt table singing the Internationale as they play? Do they redistribute hole cards before the flop to make for a more equitable outcome? To play the cards as they’re dealt would be, to borrow phrase from Vladimir Voinich’s Moscow 2042, “volunteerism.”

Total American poker revenue guestimate

I’ve heard many projections out there about the potential size of an American online poker market. I’ve yet to see a peer-review study that addresses the question, and most of them are mysterious when it comes to their methodology. Earlier this week while talking to a reporter, I gave my own attempt at finding the potential size of the national market for poker. I’ll run through my calculations here with complete transparency. I don’t have an ideological axe to grind either way–I’m just curious to see if it’s possible to arrive at a credible estimate using publicly-available figures.

First, I’m going to make a big assumption: that people nationwide will play poker in roughly the same proportion as Nevada gamblers. Nevada doesn’t have legal online poker, but it does have 915 poker tables, about enough for anyone who’s looking for a game. This is going to be a conservative estimate that assumes that legalizing online poker wouldn’t exponentially increase the number of poker players, but would instead attract players in the same ratio to the overall number of gamblers as Nevada casinos. That’s a big leap, and it may be completely wrong.

To find what percentage of Nevada gaming revenues are poker-derived, I divide the 2008 Nevada poker win, $115.7 million, by the total 2008 Nevada gambling win, $11.6 billion. I get .99655%, which I’ll around up to 1%.

That gives me the working hypothesis that we can expect legal poker to generate about 1 percent of the total revenue of legal casino gaming.

According to the American Gaming Association’s State of the States 2009 (pdf), commercial casinos brought in $32.54 billion in revenues in 2008 (this includes the Nevada totals).

According to Casino City Press’s 2008-09 Indian Gaming Industry Report (this isn’t available online), Class III (Vegas-style) Indian gaming facilities brought in $24.72 billion in revenue in 2007 (the latest year I can get my hands on).

Add them up and you get a total casino estimated annual American casino win of $57.26 billion.

One percent of that is $572.6 million.

Of course, that number could assumes that online players follow the same patterns as terrestrial poker players, and that people won’t alter their gambling behaviors too much with the addition of online poker. If Americans stopped playing the lottery instead and flocked to online poker, that number would be much, much higher. But then (if you are just legalizing poker to maximize tax revenues) you have the problem of propping up state lotteries, which often are instrumental in funding education. You could divert online poker taxes to pay for education instead, but then you haven’t really created any new revenue streams, you’ve just shifted the burden from lottery players to poker players.

I’d have to guess that the actual market is bigger, perhaps as much as a single order of magnitude, although again, if that is true, the money being spent on poker would have to come from somewhere, and other gambling expenditures seems the most likely place. I doubt that it would be much smaller. There are too many variables to say for sure what the market is, such as the extent to which those playing illegally today would move to legal sites, or how many home or club poker players would move online, or how many new players legal sites would create.

So as usual I’ve started with a question, worked at finding an answer, and end up with more questions. If anyone has a better estimate, or a better idea for getting the real estimate, let’s have a conversation about it.

Net gambling rundown

This piece in the LA Times mentions the current pressure to legalize some forms of Internet gambling, with a hint of the real story:

Rep. Barney Frank (D-Mass.) and Sen. Robert Menendez (D-N.J.) have both introduced bills in Congress to lift a federal ban on much online play and clarify the law, which is even murkier than it is for physical casinos, if that's possible. Their goals include taking a piece of the action for the U.S. Treasury, on the political principle that sins always seem less deadly when there's money to be squeezed from them. The consulting firm PricewaterhouseCoopers estimated in 2007 that legalization could yield as much as $43 billion in tax revenue over 10 years if it includes sports betting, $34 billion even if it doesn't.

Another impetus is that new Federal Reserve and Treasury Department rules requiring banks and other financial institutions to block gambling transfers will go into effect Dec. 1, and the banks are screaming bloody murder about the added regulatory burden.

Internet gambling is one of those issues that shines a light on the distribution of juice in Washington.

The repeal bills delight casino companies such as Harrah’s Entertainment, which is hankering to expand its thriving poker business online and has spent about $1 million this year alone to lobby Congress for legalization. But they also leave intact a ban on Internet sports betting, which pleases outfits like the National Football League, no slouch in the Washington lobbying game.

via Calling America’s bluff on Internet gambling — latimes.com.

Here are few things to think about. I’ve read a lot about what Harrah’s thinks, what the Poker Players Alliance thinks, and what the NFL thinks. How about what the American people think? If you allow people to gamble online in one form, is there really any logical reason not to let them bet on anything they want? It’s like saying you can buy books but not DVDs online.

Naturally, if a form of gambling is completely banned, like betting on dog-fighting, you wouldn’t be able to offer that. Outside of that restriction, I don’t see the legal or ethical rationale behind championing poker at the expense of sports betting.

In fact, the reason is right up there in the last paragraph that I quoted–there is big money behind poker, and not much against, and big money against sports betting. Again, the actual desires of the people don’t seem to come into play. This isn’t good, because either way you look at it a populace eager to gamble is being held hostage to special interests, or a pernicious new form of gambling is about to be foisted on an unwilling nation.

Book Review: Tap City

Ron Abell. Tap City. Boston: Little, Brown, and Company, 1985. 274 pages.

This is hardly a new release, but I just read this book for a class I might be teaching about gambling and media. And it’s a book I should have read a long time ago.

Tap City is about a fictional Seven-Card Stud Tournament (definitely not the World Series of Poker) hosted by fictional celebrity poker player Stretch Jackson (definitely not Amarillo Slim) in a fictional Reno casino, the Taj Mahal. The first part of the book sets the scene, describing several of the eventual participants in the game at various points over the previous few months, and the second half is the telling of what happens during the three-day tournament.

Instead of setting the tournament in sweltering Las Vegas, where the unrelenting heat would be an apt metaphor for the growing pressure of the tournament, Abell sets his first (and to my knowledge, only) novel in Reno. In January. He’s a skilled enough writer that he makes the reader (or at least this reader) pine for Reno in January. If you’ve ever been in Reno in January, you know that’s quite a feat. His description is so pitch-perfect and unvarnished that the reader is absolutely drawn in.

Abell creates memorable characters, like Lee Sherman Tobias, an aging poker warrior who might be a synthesis of Johnny Moss and Nick Dandalos; William “the Owl Avery,” who seems to have a touch of a more academic Puggy Pearson; Vic Houston, who might be based on Doyle Brunson;and several characters based on no obvious real world counterparts, like the embittered former dealer Shayna, a cross-dressing down-on-his-luck actor named Jerry Corbett, Doug McGowan, cursed with beginner’s luck, and insecure body builder and real estate scammer Brian Bates.

But the characters (and indeed the action) take a back seat to Abell’s prose, which passably advances the story while setting up some of the greatest prose about gambling, poker, and Reno that I’ve read yet. The opening description of Stretch Jackson sets the tone. I’ll excerpt a few sentences that don’t do it justice:

He was called Stretch Jackson and his markers were honored from London to Las Vegas. He weighed a hundred and fifty-five pounds and would have stood six and a half feet tall if he ever straightened up, but he had a lazy man’s posture. He never stood if he could sit and he never sat if he could slouch. He had a hollow chest and no waist and when he walked he went slowly, like a man moving through water….He had good teeth and an easy smile and his blue-gray eyes were every bit as compassionate as a wolf’s.

Here’s some more:

Poker had almost nothing to do with cards. It has to do with people. (p.7)

She learned that the losers in Vegas weren’t beaten as much as they were pulverized. The mills of the casino grind slow, but they grind relentlessly. (p. 28)

That was Reno for you. It was a tank town compared to Vegas, but it had a heart sometimes. (p.48)

As a group, the players bore up under the weight of enough rings, wristwatches, cuff links, bracelets, pendants, and neckchains to founder a galleon (p. 61)

“Playing Vic Houston’s like trying to nail Jelly to the wall.” (p.112)

That’s just a small sampling. You’ve got to read the book to really appreciate Abell’s turn of a phrase–it’s remarkable.

But pretty language isn’t all that distinguishes Tap City. Through the device of the tournament, Abell distills, into a single event that must produce dozens of losers and one winner, all the drama of poker and gambling. There are real insights here into psychology–maybe stressed a bit too much by having a psychologist as an ancillary character, but interesting nonetheless. Tap City explores not just the dramatic nuts and bolts of poker playing–to raise or fold, bluff or check–but the soul behind the game, and by extension Reno.

It’s a shame that this is the only novel Abell published. I definitely would read more from him. As it is, Tap City has both literary and historic value. It’s funny to hear a character comment that next year, the World Series of Poker might have 200 players, and that it’s gotten far too big. The mid-1980s also saw the beginning of the changing of the poker guard, as the road gamblers started to fade away, supplanted by a new rank of champions.

In short, Abell’s novel is an engaging read (I got through it in just about one sitting) that also sheds light on the nature of gambling, the game of poker, and the city of Reno in a way that few other novels do. It’s a highly recommended read.