Online Poker and Texas Holdem

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and tournaments, WPT Enterprises is planning various online sites for poker should the U.S. online gambling ban get repealed.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.