Online Poker and Texas Holdem

Last week, the White House announced that former U.S. Trade Representative and Goldman Sachs executive Robert Zoellick has been chosen to succeed Paul Wolfowitz as World Bank Group president, officially putting to rest speculation that former Senate majority leader Bill Frist might be tapped for the position.

Frist’s return to the public eye caught the attention of the poker world, for whom the conservative Republican will always be remembered for having successfully appended the Unlawful Internet Gambling Enforcement Act to must-pass legislation on national security last fall. It is possible Frist’s pro-UIGEA stance could have negatively affected his candidacy to head the World Bank.

Frist’s endorsement of the UIGEA might have factored into officials’ thinking regarding his suitability to serve as World Bank president. In a dispute brought against the U.S. by the island nation of Antigua and Barbuda, the World Trade Organization ruled earlier this month that the UIGEA in fact placed the U.S. in violation of preexisting trade agreements. The U.S. responded to the WTO ruling by announcing its intention to redefine its international trade commitments to exclude offshore gambling. As the WTO dispute continues, Antigua and Barbuda are meanwhile planning a claim for financial compensation from the U.S. in exchange for their compliance with a ban on online gambling.

Over the past decade, online gambling has emerged as an important boost to the Antigua and Barbuda’s economy, representing as much as one-sixth of the country’s annual revenue. Since the UIGEA became law, some reports have estimated Antigua and Barbuda to have lost over $100 million in expected revenue, a direct consequence of several online gambling sites’ decision to pull out of the American market.

Antigua and Barbuda is part of the Organization of Eastern Caribbean States, a group of islands with limited natural resources and a high vulnerability to natural disasters. As such, the World Bank frequently oversees the granting of aid to countries of the OECS, including Antigua and Barbuda. Naming Frist to head the World Bank would therefore have created a curious, perhaps untenable situation — the man largely held responsible for legislation damaging to the economy of countries like Antigua and Barbuda would have been placed in charge of overseeing developmental assistance for those same countries.

If you are a poker fan who believes the poker craze will continue then you may want to consider investing in poker related stocks. Here are five stocks that you may want to check out.

Cryptologic (CRYP) - makes the software that fuels many of the online poker sites out there. Cryptologic has an excellent balance sheet, equipped to handle any slowdown with $126 million in cash in the bank and no debt.

Optimal Group (OPMR) - The stock took almost a 50% hit when the online gambling law took affect. Their Firepay subsidiary runs online poker rooms and 80% of its revenues came from US customers. OPMR has the most to gain from any repeal of the law.

The World Poker Store (WPKS) - serves the rapidly growing consumer market for poker products and services. The Company is a premier retailer of poker accessories; everything from chipsets to top of the line tables for poker enthusiasts. Along with our retail stores they also created “The Bar Poker League” which conducts weekly Texas Hold ‘Em tournaments at over 100 bars and restaurants. The company recently expanded to Florida and announced that it will soon begin operations in Europe.

WPT Enterprises (WPTE) - This is the stock of the World Poker Tour. In addition to the television show and tournaments, WPT Enterprises is planning various online sites for poker should the U.S. online gambling ban get repealed.

Gigamedia LTD. (GIGM) - 43% of GIGM’s revenue comes from their poker portal, however, the asian based company is not as affected by the lack of US customers. The company has shown 300% year over year earnings growth last year.

In a decision entered on May 1st, the North Carolina Court of Appeals upheld the decision of a lower court regarding poker in North Carolina, stating that “while skillful players can reduce the chance factor, they cannot control the turn of a card.” Thus, poker will remain illegal in North Carolina unless situations arise to potentially change it.

The case stems from the 2004 efforts of businessman Howard Fierman, who wanted to open up a poker club in Raleigh. He questioned the former District Attorney for the area, James Hardin, as to the legality of such an operation and was informed by the D. A. that it was a misdemeanor to play poker in the state by the statutes on the books. This led to

Fierman losing the lease to the building he had hoped to open up “The Joker Club” (as he wanted to call his establishment) in and led him to file an injunction against Hardin.

In 2005, the Durham County Superior Court heard the case between Fierman and Hardin. Fierman staunchly supported that poker was a game of skill, not chance, and thus wasn’t bound by the statutes in place in the North Carolina legal system. He also sought an injunction to allow him to open the club over the blockage of Hardin. The Durham County Superior Court didn’t agree, however, and on May 23rd of 2005, found in favor of the former District Attorney on the case.

This didn’t slow down Fierman, however. He vowed to appeal the ruling and, in August of 2006, the case was heard before the North Carolina Court of Appeals. Noted poker writer and player Roy Cooke, Florida poker tournament operator Frank Martin and several others testified to the fact that poker is a game of skill over luck. While luck may prevail in a short term aspect, they stated, over long term expectations the skill of players will overtake luck.

Only one person testified on behalf of the State. Richard Thornell, an officer in the state’s Alcohol Law Enforcement division, stated he had played poker for almost four decades. In that time, he testified, while skill did have some effect on the game, luck was the ultimate prevailing factor. He additionally pointed out watching “a televised poker tournament” where a player with a 9% chance of winning a hand was able to achieve the feat.

In the decision rendered by Judge Ann Calabria and agreed to by fellow Judges Martha Geer and Barbara Jackson, the Court of Appeals pointed out that Fierman had not met the proof necessary to challenge the standing statutes on several points. As to the skill/luck question, the Appellate Court judges found that the ascertains of Fierman and his fellow testifiers didn’t stand up.

In the decision of the Appellate Court, Jackson stated, “During oral arguments, counsel for plaintiff analogized poker to golf, arguing that while a weekend golfer might, by luck, beat a professional golfer such as Tiger Woods on one hole, over the span of eighteen holes, Woods’ superior skill would prevail. The same would be true for a poker game, plaintiff contended, making poker, like golf, a game of skill.”

“This analogy, while creative, is false. In golf, as in bowling or billiards, the players are presented with an equal challenge, with each determining his fortune by his own skill. Although chance inevitably intervenes, it is not inherent in the game and does not overcome skill, and the player maintains the opportunity to defeat chance with superior skill. Whereas in poker, a skilled player may give himself a statistical advantage but is always subject to defeat at the turn of a card, an instrumentality beyond his control. We think that is the critical difference.”

“For the reasons stated above, we determine that chance predominates over skill in the game of poker, making that game a game of chance under N.C. General Statute 14-292 (2005). Accordingly, the decision of the trial court should remain undisturbed.”

It now seems that the state of North Carolina, at least, has weighed in on this factor. The Harrah’s property near Charlotte has been in discussions with the Governor of North Carolina for over two years to bring live gaming, including poker, to the Cherokee Indian casino located there. With this decision and that quagmire, it doesn’t appear that there will be legalized live poker in North Carolina for some years to come.

The maximum betting limits at a poker table in the state of Florida has been $2, with players being able to raise three times in a given playing round, but that will soon all change as a bill has passed through both the Senate and the House, leaving only the Governor, Charlie Crist to veto the bill.

It is not expected that the Governor would take the veto action, which would mean the new law would go into affect the first day of July, 2007.

The new law seems to coincide with a progressive movement being made in the state towards building a mecca for gamblers, much like in Las Vegas and Atlantic City. Many believe this law is just the next step toward the ultimate goal of having complete gambling freedom, with full access to table games such as craps, blackjack, and roulette, which are currently still illegal in the state.

The ongoing negotiations between Crist and the Seminole Indians must come to a close before a lawsuit already filed reaches Federal court. The pressure is on Crist to come to an agreement allowing the Seminoles to run the same Vegas style slots that are now found in the state’s other casinos, however, the key to that deal getting done could hinge on Crist allowing the Seminoles to also provide table games.

For Crist, he is in favor of using Gambling money for the state’s school system, and might give in to the Seminoles if they agree to be taxed on their operation, something right now that does not happen.

This latest law will have current casinos scrambling to provide table games with these new maximum limits at their poker tables. The most likely scenario is having many $1-$2 no limit tables, in addition to $5 buy in and $5 betting max limit games. Although that does not sound like much, a player could conceivably have $20 around in per round per hand, which means players could be in for $65 a hand(including their buy-in).

With some of the wording vague in the new bill, and room for wiggling within the law, stay tuned for how this hand of poker plays out in the sunshine state.

Harvard Law Professor Charles Nelson recently held an all day Harvard Faculty Club strategy session bringing together poker pros like Howard “The Professor” Lederer, game theorists, statisticians, law students and gambling lobbyists to analyze whether poker is a game of luck or one of skill. The skill debate has been a preoccupation in poker circles since September, when Congress barred the use of credit cards for online wagers. Horse racing and stock trading were exempt, but otherwise the new law hit any “game predominantly subject to chance.”

In a decision entered on May 1st, the North Carolina Court of Appeals upheld the decision of a lower court regarding poker in North Carolina, stating that “while skillful players can reduce the chance factor, they cannot control the turn of a card.” Thus, poker will remain illegal in North Carolina unless situations arise to potentially change it.

Most of the legal wrangling centered on determining the preponderance of skill or luck in poker. In my opinion, determining skill versus luck is not a function of looking at any given hand, but one of bounding the issue. In other words, how long does a game of poker take?

If you were to conclude that each hand constitutes a “game,” then poker is surely a game where luck predominates. But if a “game” is construed as lasting a year, or five years, or ten years, or even a lifetime, then skill prevails. In the long run, a player’s results tend to mirror his or her expectation — for better or for worse.

In other words, if you play poker long enough, you figure to reap what you sow. In the short run, anything can happen.

The World Trade Organization (WTO) ruled against the United States stating that the US is not in compliance with the case brought against it by Antigua. The US was found to be in compliance except for allowing interstate horse race betting. The WTO ruled, either allow all interstate gambling, including from foreign countries or it must be outlawed for all entities foreign or domestic. There was no response from the United States.

At this point the United States government has several options. First, they could appeal the ruling. This is the most likely scenario and would result in a delay of several months. 2. They could change the law to comply with the ruling by either: banning interstate horse race betting outright or The Department of Justice or the United States could allow offshore Internet gambling. 3. The United States could flaunt the authority of the WTO and ignore it. It is unlikely that Antigua relies on the U.S. for inbound trade, so sanctions aren’t going to happen. It will be interesting to see how this plays out over the months to come.

World Series of Poker main event winner Jamie Gold has agreed to settle a dispute over half of the tournament’s $12 million grand prize, The Associated Press has learned.

In a joint, signed statement released Tuesday to the AP, Gold and Los Angeles-based TV producer Bruce Crispin Leyser agreed the matter should be resolved “without litigation.”

“Jamie always intended on sharing his winnings with Crispin,” the statement says. “Jamie and Crispin are happy to report they have fully settled this matter. They are pleased to be closing this chapter and look forward to continued success.”

Gold, a former Hollywood agent before he turned poker pro, defeated 8,772 players to win the World Series of Poker tournament last summer in Las Vegas.

The two did not make clear how much money Leyser would receive. Gold already withdrew $6 million, half of his take from winning the world’s largest poker tournament. The rest was frozen by court order after Leyser sued in August, claiming they had agreed to split the winnings.

Leyser said Gold agreed to the split in exchange for Leyser helping him find celebrities to play in the main event while wearing the “Bodog” label of an offshore Internet gambling site.

Leyser even kept what he said was a voicemail Gold left on his phone on the final day of the tournament in which Gold promised to pay Leyser “your half.”

At a December court hearing, U.S. District Court Judge Roger L. Hunt rejected a motion by Gold’s lawyers to lift an injunction set in September on the $6 million still at the tournament host, the Rio casino-hotel, and ordered the frozen funds be moved into an interest-bearing account. Hunt also indicated Leyser likely would win his claim to the $6 million.

The war on online gambling is hitting would-be bettors where it hurts the most - in the wallet.

According to wire reports, the FBI has seized the funds from tens of thousands of individual customer accounts from Neteller, a money transfer system popular among online gamblers.

Federal officials arrested Neteller founders Stephen Lawrence and John Lefebvre in January as part of a crackdown on Web-based betting.

Popular gambling hubs like BetOnSports, which accepts wagers on sporting events, and Neteller, which transferred funds between customers and gambling Web sites, stopped accepting wagers from U.S. customers. But those who still had funds in active Neteller accounts cannot recover those monies after the federal seizure.

According to the USA Today, about two-thirds of Neteller’s business came from transferring funds from U.S.-based bettors to gambling companies based outside America. That amounted to $7 billion dollars of business in 2005.

Nevertheless, Neteller did serve as a money-transfer service between financial institutions and online merchants that had nothing to do with betting. In addition, some Web sites used Neteller to pay freelance writers and other contract employees for their services.

In the USA Today, FBI agent Neil Donovan told the USA Today that “funds from Neteller are being held in court as potential evidence. Some customers may get their money back.”

On its Web site, Neteller declared that it had stopped transferring funds to and from online gambling sites for US customers as of Jan. 17. An FAQ on the same page as the notice said that the value of all customer funds was being held in independent trust accounts until withdrawal issues were resolved.

According to The Online Wire, attempts to reach Neteller spokespersons were unsuccessful.

The federal government has been trying for years to get a handle on online gambling, which revolutionized the sports betting industry as the Internet became an everyday tool for most Americans.

In 2002, a United State federal court ruled that the Federal Wire Act prohibits the transmission of electronic funds across state lines for the purpose of betting on sports, though it excluded games of chance such as poker.

For awhile, betting sites persisted by operating from offshore locales such as Costa Rica. But in October, 2006, the government closed this loophole by prohibiting transactions between banks and similar institutions and online gambling companies. This legislation, signed by President Bush on Oct. 13, 2006, was supported by the National Football League.

Source: Poker Players Alliance
by Michael Bolcerek

Tonight, in an annual tradition, the President of the United States will address the Congress, his cabinet and our country on the “state of the union” and the goals of the government for 2007. It is not likely the president will include the “state of poker” among his crucial national issues. Thus, I would like to take this moment to provide an update on where poker sits today and examine how you and the Poker Players Alliance (PPA) can continue to work together to preserve and protect the game we love.

As we know painfully well, poker has come under vicious attack over the past year. We continue to learn on a regular basis about home and tavern poker games being raided by law enforcement and how charitable Texas Hold ‘Em tournaments are being shut down. Perhaps even worse, we have seen the federal government’s full force efforts to curb this American tradition from the Internet. Legislation aimed at prohibiting you from funding your online poker accounts passed the U.S. House this summer, then was quietly slipped into a port security bill, literally in the dark of night, which was signed into law on October 13. During these troubling times, the PPA has given you a voice to express your opposition to the government’s intrusive actions and to rally in a united fashion against these constitutional incursions.

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Interesting post on Lou Krieger’s Blog regarding the difficulties in withdrawing funds from Neteller:

Today it got personal. I tried to move some money from my Neteller account to my Neteller debit card but I was prevented from doing so. Funny thing is, this was not money from a gambling site, but money I earned from some overseas publications I wrote for. An email to Neteller brought the following response:

Thank you for your email. Unfortunately, we are unable to provide time estimates for withdrawal options at this time. We would not want to provide even a rough time estimate, because we are unable to do so with any accuracy. We apologize for the inconvenience you have experienced. If you prefer, we may be able to cancel your withdrawal request. Please be aware that doing so, and withdrawing by check may take as long, or longer than the EFT withdrawal option. Currently we are experiencing unprecedented volumes through our withdrawals department. Due to this volume we are experiencing difficulties with withdrawal requests. We are not able to process EFT withdrawals at this time. Please be assured that we are doing our best to restore our withdrawal options as quickly as possible. In the meantime, any balance in your Neteller account is completely secure. We apologize for any inconvenience. If you have any further questions, please visit http://updates.neteller.com.