Saturday, April 16, 2011

Government Intervention and The Online Poker Industry

Just as Full Tilt Poker reached a new partnership, Full Tilt, Poker Stars, and Absolute Poker web sites are all down! If you don't believe me, try clicking here. Nope, your eyes are not playing tricks on you. These domains have been taken over by the United States government. It doesn't stop there. The executive officers have been arrested and threatened with 30 years in prison if indicted!

What happened? Our story begins in 2006 during the Bush regime. That year the Unlawful Internet Gambling Enforcement Act (UIGEA) was among the many controversial bills passed through Congress and signed into law. Bush stated that the Freedom of Information Act would not ensure the release of the UIGEA documents because of "national security" concerns. Seriously?!! Ever since then some lawmakers, especially Barney Frank and Ron Paul, have been trying to revoke the UIGEA. Internet poker pros became fearful of the possibility that their means of cash flow could be shut down. Well, thankfully no case could be proven against the giants of online poker and all appeared to be safe... until now.

A case has now been brought by a Manhattan attorney against the online poker giants for supposedly "tricking" banks into accepting money for "illegal gambling" and "bank fraud". These are some pretty serious charges if they are true. But considering the fact that online poker is in itself now "illegal" means that all these new charges could be built on that fact alone. The banning of online poker is even more ridiculous than the prohibition of alcohol because online poker is an investment and an asset, not an expense. Now ESPN is considering scrapping its poker coverage involving Poker Stars and Full Tilt players. I wonder what will happen to the hit TV show High Stakes Poker now that it has partnered with Poker Stars?

Why is online poker so dangerous that it has to be illegal in the US? Ever since the turn of the century, poker (and especially online poker) has skyrocketed in popularity with stars like Daniel Negreanu, Tom "Durrr" Dwan, and Phil Ivey as spokespeople. TV programs have emerged that show the Average Joe winning against these poker pros. Online poker sites facilitate the money transaction between poker players wishing to become wealthy pros themselves. One by one these new internet players have popped up on the radar. More and more Americans began forming their own poker dreams and monetary ambitions. If a person invests in learning the basics in poker like poker hands, poker psychology, reading body language, pot odds, outs and percentages, and how to bluff effectively, then that person can make money as a grinder (a relatively safe poker player), a reader (someone who bets on what they think others have as opposed to their own hand), or a gambler (someone who bets based their hand instead even if the odds are stacked against them). Although gamblers win more money in the short run, they can lose it just as easily. Most online poker pros fall in that category. There are a growing number of grinders who MAKE A LIVING through ONLINE POKER. These players are the ones who will lose the from this new controversy. I think poker grinders are the real risk to the US government, or rather, to the non-federal Federal Reserve. Financial independence is not profitable for debt investors, especially the Fed who makes a profit from printing debt.

What options are there for online poker players? Well, if you are a poker player who can read your opponents well, you will probably do well in live cash games and live tournaments. For those who have never played live and do not yet have the bank roll to try, you are safe... for now. If you already have an account with Ultimate Bet (UB) or Absolute Poker (AP), your cash account has not been closed. You can continue to play for money even though you are an American; however, they will not allow you to withdraw or start a new account due to the massive uncertainty. I think after all this mess, online play will continue in America and the sites that are temporarily not allowing US players will once again pursue American clients. Until then, Carbon Poker is allowing US players to start new accounts. I'm sure there are others who are too.

There is no way the government can win this case. If they do, that will be the end of online poker and maybe eventually an end to all forms of "gambling". Where is the line drawn? Online wager transfer could include, in theory, online horse racing, fantasy sports, and lotteries. This is protectionism at its very worst! As a result of this law, the US government is in conflict with the World Trade Organization (WTO). Now Europe is considering doing the same to American companies. Wow, what a great way to get out of a global recession... by limiting global trade and commerce! This is why taxing them (also known as a tariff) is a bad idea: it will cause retaliation against American companies from any, and all, industries. Casinos based in other countries do not (and should not) pay American taxes, nor do Las Vegas casinos pay foreign taxes. So why should Full Tilt or Poker Stars who also have American customers? Online casinos are NOT FROM AMERICA, but they DO pay taxes... in their HOME COUNTRY. Americans who win the lottery, the slot machines, or a poker game all have to pay taxes on their winnings... so why should the Fed care? Some individuals fail to report their winnings but that should not be an excuse to close down the whole online poker industry. Instead those who lied should be the ones held accountable. Shouldn't individuals have the right to choose how they invest their money? Hell, I think investing in poker (once you know the basics) is safer than investing in retirement and long-term stocks. As you can tell, I am steaming. But don't try to steal my pot, the government doesn't like competition.

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