Earlier this month, thousands of Americans, without any warning and without doing anything wrong, suddenly lost their jobs. In the course of a few hours on the afternoon of April 15, potentially billions of dollars were frozen and an entire industry was wiped away. But unlike other recent economic casualties, this one had nothing to do with the recession.
I’m one of the people whose world was upended. That’s because I’m a professional poker player. For the last year, I’ve made a living playing No Limit Texas Hold’em tournaments, mostly online. But on Black Friday, as it is now known in my world, federal prosecutors in Manhattan indicted the chief executives of the three largest poker web sites open to American players. Full Tilt Poker, PokerStars and Absolute Poker, along with payment-processing companies that allowed players to move their money on and off those sites, are charged with wide-ranging bank fraud and money laundering. In one alleged scam, poker executives are said to have bribed the head of a bank in Utah. The various crimes were all part of an effort to evade a federal crackdown on financial transactions related to gambling.
As they issued the charges, prosecutors seized the poker sites’ Internet domains and froze money in 76 bank accounts used by the companies. Within hours, online poker was essentially shut down in the United States, squashing an eight-year poker boom. During that boom, poker sites (generally located offshore) operated mostly with impunity in the U.S., and millions of Americans played online poker for real money. The vast majority played recreationally, but some of us devoted ourselves to the game and made it our profession.
In poker, unlike other casino games, players compete against each other, not against the house. For that reason, the most talented players earn the most money in the long run. Poker contains an element of luck – what doesn’t in life? – but the game rewards creativity, curiosity and psychological discipline; long-term success in poker, also as in life, requires strong analytical skills to make sound decisions based on incomplete information. Some people get their kicks day-trading stocks. For me, poker was a fulfilling way to make money.
Or at least it was until Black Friday. Those of us in the poker economy must now find a new way to earn a living. Some of us will shift our play to live casinos. Some will quit poker and try to get a “real” job. Some of my peers are considering moving out of the country so they can continue to play online, and one poker web site is rumored to be offering relocation money to high-profile players in order to help them move. (As for me, I’m starting law school in the fall.) Many players are panicking because they (perhaps unwisely) kept huge sums of money in their online accounts, and although all that money will probably be returned to the players eventually, it could be frozen for months.
This apocalyptic reality is the price we pay for choosing an industry that has operated in a legal gray zone for years. No federal law criminalizes poker, and no federal court has ever ruled that online poker is illegal. The Department of Justice cites a 1961 law that targeted Mafia-run sports-betting operations, and the government maintains that the law should apply to the operation of online poker rooms, too. But the U.S. Fifth Circuit Court of Appeals has ruled to the contrary.
In any event, few people argue that the mere act of playing online poker – as distinct from running an online poker business – is anything but legal. (The one exception is in the state of Washington, which has a draconian anti-poker law.)
Still, for law-abiding poker players, the apparently rampant fraud and money laundering described in this month’s federal indictment are appalling. I always knew that the poker sites I did business with were not paragons of upright transparency. But, assuming the charges are true, the egregiousness of the corruption shocks me.
There is no inherent reason that the online poker world should be controlled by dubious foreign operators: It happened only because the government drove it underground. If online poker were explicitly legalized, it could be properly regulated, taxed and dominated by the same publicly-traded casino companies that cleaned up Vegas, like Harrah’s and MGM. They would certainly have strict controls built into their software to keep minors from playing and to prevent addictive gambling. And our public coffers would benefit from an estimated $3.3 billion in annual revenue.
This would all require a policy shift in which politicians acknowledge that online poker is not the scourge it’s been made out to be. It would require adoption of the libertarian view that adults should be free to play a game with their own money, in their own homes. Some of my neighbors buy lottery tickets. Others bet on horses. In fact, some form of gambling is legal in nearly every state. Yet scarce public resources are being mustered to prevent me from playing poker.
A few state legislatures have realized the hypocrisy of this situation and have begun to embrace poker. New Jersey came close to passing a law this year that would create an intrastate online poker network, and the District of Columbia, just a few days before this month’s indictment was unsealed, announced a plan to establish online poker in the district. Even the World Trade Organization has condemned our nation’s inconsistent approach to gambling (seeing in it a discrimination against foreign gambling sites that should have access to the American market).
But in Congress, efforts to pass a law that would explicitly legalize and regulate online poker nationwide have failed so far, and prospects for such a law appear dim. Its opponents are divided into two main factions: members of the religious right, who morally oppose all gambling, and a certain strain of Democrats who believe they need to protect people from themselves.
There’s a recurring theme in American history of prohibitionist zeal allowing unsavory elements to fulfill the demand for goods or services driven underground. This is especially tragic in the case of poker, because it is a quintessential American game. Like baseball, poker is a game ingrained in our culture. It is famously played by presidents and Supreme Court justices, and poker nights remain a staple of bonding among friends and families across the country.
As for its online iteration, you wouldn’t know it from reading the federal indictment, but the tools of technology have actually brought much-needed sunlight to the game. Players have used sophisticated computer algorithms to catch cheaters and keep the games fair. By analyzing thousands of hands they’ve played (all stored digitally and easily accessed for review), players can hone their strategy and see exactly how much they are winning (or losing).
Indeed, the hyper-rational approach of the young generation of online players has transformed poker in a way that is just as dramatic as baseball’s home run boom in the 1920s, when Babe Ruth and other sluggers saved that sport from the “Black Sox” scandal. Poker today is no longer controlled by cowboys and hustlers running from the law. Instead, it has become a methodical pursuit in which many of the world’s best players are 20-something whiz kids who tackle every conceivable situation with logic, mathematics and game theory.
This noble version of poker is still young. I hope I get the chance to see it grow up.
James Romoser is a professional poker player and freelance writer. He lives in Washington, D.C.
*Photo courtesy of Wear Your Armor.