Click a Mouse, Lose Your House: Combating and Redefining Gambling Stereotypes

Inside a Harvard Law School lecture hall, thirty-four poker players from all over Boston gather to brainstorm ideas to combat Governor Deval Patrick’s Casino Expansion Bill. The bill would construct three new casinos throughout Massachusetts, generating an estimated $400 million dollars in licensing fees over a ten-year period, but a provision on the bill would serve to criminalize online gambling with a punishment of up to two years in prison.

The inside of the lecture hall was painted white and the seats were situated on three different levels wrapping around the semi-circular room. On the bottom level, seated at the podium in the center of the room was a dark-skinned, bald man wearing a navy blue polo and khaki pants. He introduces himself as Vin Narayan. A reporter at CNN for the past fifteen years, Narayan has followed all the significant pieces of antigambling legislation since their inception.

Standing next to Narayan is Charles Nesson, Weld Professor of Law at Harvard University. Nesson is in his mid-sixties, sporting a black turtleneck sweater and a pair of khakis. He’s looking around the room and smirking; perhaps at the seemingly rag-tag group of citizens crammed into this small auditorium in an effort to protest a bill serving to criminalize online gambling.

Everyone takes turns introducing themselves. Young and old, tall and short, hardened and softened; the room runs the whole gamut of poker players. Everyone in the room is faced with the same challenges in combating poker legislation that would be detrimental to their way of life.

Many real world poker players make their living playing online poker; Patrick’s Casino Expansion Bill would take away that ability from people. Some argue that there’s a quick fix: head out to the brick-and-mortar casinos and play there, but executive director of the Poker Players Alliance John Papas points out a flaw in that argument: “Some people can’t make it to the regular casinos,” Pappas says. Online poker clients provide a quick, convenient way to play poker from your living room and offer a potentially lower risk of emptying your wallet in a single night. “You can play at a rate that’s economical to you,” Pappas says. “You can spend ten to twenty dollars a week – the cost of a movie ticket. It makes it a more global game.” According to statistics gathered by MSN Money contributor Jennifer Mulrean, over two million people in the United States play poker online in any given month.

Sidebar: Betting Techniques and Variables

Several variables in poker come into play with each hand that’s dealt. To better understand what those variables are, some overview of the game is needed. The object of Hold’em is to make the best five-card hand with the two cards in your hand and the five community cards on the table. Each player is dealt two cards face down, called your hole cards. Forced bets, or “blinds,” are put into the pot, and the first round of betting begins. After everyone has made their bets, the first three community cards, or the “flop” are revealed. Another round of betting occurs, then the fourth card, or the “turn” is flipped up. Another round of betting, and the last card, the “river,” is turned face up. One last round of betting occurs, then each player in the pot turns over his or her cards. The player with the best five-card hand wins and takes the pot.

Here are some variables to keep in mind:

• The size of your chip stack — Are you short stacked? Do you have to wait for a big hand before putting his chips in or can you afford to push the other players around and raise with more mediocre hands?
• The size of yours opponent’s chip stack — Is the other player still in the hand the chip leader at the table? If so, you’re at a big disadvantage. You’d be the one at risk of going home if you decided to push all in at some point, not him.
• Your “position” in the hand — Are you betting first or last after the flop? Somewhere in between? In Hold’em, generally the best position to be in is what’s called being “on the button.” This means you act last in a round of betting, giving you the advantage of seeing what the players acting before you will do.
• How many players are in the pot – The more people in the pot, the greater the possibility your mediocre Jack-three is going to be beaten. If there are four other people in the pot with you, and three of them start betting big on the flop, chances are you’re beat. Conversely, if you’re heads up with someone and you’re not sure where you stand, make a “feeler bet” and see how your opponent reacts. If he raises you, consider the board and your hand, ask yourself what he might have raised with and if he raised before the flop or not, and make your decision accordingly.
• Your hole cards – The worst hand in poker you can be dealt is seven-deuce, for the reason that no straight possibilities using any three of the five community cards on the table exist. If you find yourself trapped at the river between two players betting three times the amount of chips you have, and the board reads two kings, two queens, and an ace, you should ask yourself what you were doing in that pot.
• Your opponent’s table image – Is the guy sitting two seats to your left playing almost every pot? Chances are good he doesn’t have a hand every time he raises, so pick a spot to go in and reraise him. He would be categorized as a “loose aggressive” player. The more pots he splashes around in, the less likely he’s hitting hands over and over. Just be careful if you pick the wrong spot when he actually does have a hand; most poker players eventually pay off loose aggressive players big because eventually the aggressive player stops being believable. Unfortunately, that point is usually when the aggressive player has a hand.

All these variables are processed at once. “You look for people’s betting patterns and what kind of cards they play,” Pappas says. “A good poker player is able to process a slew of variables at once and make a decision based on his analysis or intuition.”

Texas Hold’em remains the most popular among online poker clients. In a study by Poker Pro Labs, 78 percent of online poker players play Texas Hold’em. Other variations on poker garner much less popularity, with only 17 percent engaging in Omaha/HI-LO, 3 percent in 7-Card Stud, and 2 percent in 5-Card Draw.

While Texas Hold’em is overwhelmingly more popular, many poker pros take advantage of all the variations available to them. Professional poker player and native Massachusetts resident Joe Miranda says, “It’s important to be knowledgeable about each kind of poker game. You can’t specialize in one specific area. Being one-dimensional like that is never to your advantage. You have to study Razz, you have to study seven card stud, you have to study eights or better. You need more than one way to make money. That’s true in any profession.”

However, with the passage of the Unlawful Internet Gambling Enforcement Act, making money playing online poker has become increasingly difficult and has hurt the U.S. economy and the poker industry. Passed in 2006, the UIGEA prohibits the exchange of funds between a financial institution and any Internet gambling site. “The UIGEA is an intrusion on free-flowing internet,” says Randall Castonguay, president of the Massachusetts PPA branch. “Playing poker is being placed in the same category as child pornography.”

Prior to the UIGEA, online poker clients like PartyPoker, Full Tilt Poker, and Absolute Poker held tournaments to give away seats in that year’s World Series of Poker Main Event (a real-life poker tournament). These tournaments were called “satellites” and offered the winners of these tournaments the chance to go to the Main Event for considerably less money. Entering satellite tournaments usually costs around $300 to $500, while enrolling in the Main Event cost an even $10,000. With the passage of the UIGEA, all the online poker clients could not give out seats to the Main Event since the exchange of money for satellite tournaments constitutes an exchange of funds between a financial institution and a gambling site. The UIGEA’s effect on the poker industry was seen immediately. From 2006 to 2007, the World Series of Poker Main Event alone went from 8,733 participants to 6,358 participants. The player loss in 2007 marked the first year since 1992 that Main Event participation decreased. The 2,415-player deficit indicates the amount of tournament seats actually given away by online poker clients.

In addition to alienating poker players, the UIGEA prevents the United States from cashing in on a $12 billion industry. It isn’t just online poker contributing to that total, either; in fact, according to CNN correspondent and gambling legislation expert Vin Narayan, online poker is the smallest portion of online gambling that makes up that $12 billion. Online casinos and slots make up the largest portion of the online gambling industry, with sports betting as the second largest. The result is that online poker clients are moving offshore, creating a need for new online services called “e-wallets.” You transfer money into an e-wallet and then transfer money from the e-wallet to the offshore poker client for use. “There’s a huge loss of opportunity here. It’s slipping through our fingers,” Castonguay says. “Billions of dollars are going overseas.”

A month after the UIGEA was passed, online gambling websites watched as their stocks plummeted. PartyGaming.com, which owns PartyPoker, saw a 60 percent decrease in its stock, bottoming out at just $51.06 per share in December 2006. The industry has since recovered and the United States is beginning to feel the effects of its decision. “We already had treaties in place we were supposed to abide by,” Castonguay says. “We broke those treaties when we passed the UIGEA. The U.S. government is now forced to pay compensation to twelve different countries for forcing money overseas.”

In an effort to combat the UIGEA, the Poker Players Alliance has started lobbying on behalf of poker players across the country. The PPA is made up of over 950,000 American poker players. “Our goal is to function as one voice – to promote and defend the game,” Pappas says. “We operate mainly using grassroots, lobbying, and member-to-member advocacy.” Founded in 2006, the PPA has branches in all fifty states and continues to grow each year. The PPA also set a goal to regulate poker, allowing the U.S. to get in on the industry and poker players to play online without fear of being criminalized. “Under a regulated regime, you can’t hop on PokerStars and spend five hundred dollars in an hour,” Pappas says. “There’s an ability to set limits you can’t do in real casinos.” Castonguay agrees. “I’ve never seen a pit boss in a brick-and-mortar casino stop me from spending too much money. Online, there’s self-imposed limits. Under a government-regulated system, you’d be able to monitor spending,” he says. Most often, online poker players fail to report their expenses when it comes time for taxes. Castonguay proposes one solution: “a W2 form on the website that you’d be required to fill out before you can start gambling.”

In order to regulate online poker, poker must be viewed as a skill game, not a game of chance. The UIGEA prohibits gambling on games of chance, such as craps or roulette. While an element of chance is present, poker revolves almost entirely around skill. “Our job as poker players is to ground poker and wrench it free from this term ‘gambling’ that has this stranglehold on it. Poker is more than a game. It’s a way of thinking. You actually feel your brain working and dealing with all sorts of variables,” Nesson says. While chance may appear to play a large part in poker, the best hands don’t always necessarily win. A skilled player may be able to bluff his opponent and win a pot with the worst hand.

The challenges in defining poker as a skill game are twofold, Narayan believes. “The moral crusaders and the legislators are the people we need to convince right now. The first question is how do we throw the moral crusaders a bone?” he says. Narayan suggests: “Try and create a virtual monopoly here in Massachusetts. Want to gamble? You have to go to these specific casinos. This helps blunt the argument against compulsive gamblers – the ‘click the mouse, lose the house’ stereotype,” he says.

Within these two types of people, there exist three subtypes: those who think poker is gambling, those who think poker is skilled gambling, and those who think poker is a game of skill. “You guys already have the third group on your side. The second hurdle now, after the moral crusaders, is getting group number three to believe that this issue is within their political interest to take on,” Narayan says. “The opposition’s argument, the moral crusaders’ and legislators’ argument is that online gambling is an addiction. Ex-congressman Jim Leach, who headed up the UIGEA, spoke at Harvard a few weeks ago and made completely unsubstantiated statements, saying that ‘most people who play poker online will lose their house or their job. It’s 10 to 100 times more addictive than brick-and-mortar gambling.’ These are the kind of people we’re up against.”

Many legislators and moral crusaders often appeal to human emotion in an attempt to strike down online gambling. “They’ll tell you ‘don’t go down this path because ‘this’ is going to happen to you.’ We’re up against the basic emotional instincts of the American public,” Narayan says. “We have to convince enough legislators who are not pre-disposed to believing poker is a skill game that poker is a skill game.” Nesson stressed the urgency in reaching this goal, saying once something becomes law it becomes difficult to undo it. The sheer external force required to undo law becomes far too great. “The reason we poker players are willing to vote this provision down is because we understand the effect it would have on online poker,” Nesson says.

Another problem poker players face in convincing legislators that poker is a skill game are the high barriers of entry required to player poker. With poker, you have to be willing to lose money or to learn the game. “Poker is a game that introduces elements of uncertainty,” Nesson says. “Poker is a skill game that operates in an environment of chance. So there’s a complication involved in looking at game theory.”

“The casinos are behind this provision on this bill,” Narayan says. “They wrote it. But that’s just their self interest, that’s not their argument.” Casinos are largely afraid that online poker would cannibalize their profits. Most legislators don’t see a valid reason to move poker out of the casino environment. With the moral crusaders, they’re going to oppose the Casino Expansion Bill either way, with or without the provision. Narayan says the provision on the Casino Expansion Bill is purely for economic purposes, stating the sole purpose of Patrick’s proposal is to eliminate a $1.3 billion structural deficit and generating the most amount of money by monopolizing. “The state is saying, ‘Okay, we’re going to legalize gambling as much as we need to in order to get enough money.’ Online gambling would take away from state revenues,” he says.

Nesson’s view is that if we’re going to sell Massachuetts to the casinos, we’re going to sell it the best possible way we can. Nesson, along with Narayan, the PPA, and the Global Poker Strategic Thinking Society (GPSTS) at Harvard, developed a three-point plan to combat the provision on this bill. Nesson and colleagues first propose a loyal opposition plan, to be executed by Nesson and a team of students. This team would approach the AFL-CIO, a labor union organization, and present the issue from an educational standpoint. “Battling legislation is about pulling and pushing the right levels of power,” Nesson says. “We have to persuade unions that online poker as an educational tool is beneficial for them and their kids.”

Nesson also hopes to start a letter-writing campaign to politicians and legislators. Find a level of interest, extrapolate public stances on the issue and present it to the community. “Within one week of the Casino Expansion Bill announcement, two thousand letters were sent to Congress from the Poker Players Alliance,” Pappas says.

The last step is to hold forums, symposiums, and stage debates. “Gather academics to investigate this provision in regards to Massachusetts and in the bigger picture of the U.S.,” Nesson says. Whatever the outcome of his plan, Nesson remains clear about one thing: “We have to lift online poker out of the realm of gambling and skill and chance, and put it into other elements and realms that people have a better grasp of.”

Nesson’s and the GPSTS’ efforts paid off; The Casino Expasion Bill failed to pass as of Friday, March 21, 2008. Although one hurdle is cleared, there’s still another challenge left for poker players to overcome: defining poker as a skill game. Two pieces of legislation in Congress will be critical in accomplishing that game: the Skill Game Protection Act (SGPA) and the Internet Gambling Regulation and Enforcement Act (IGREA). Proposed by Democratic Florida Senator Robert Wexler, the SGPA asserts three main points: success is predominantly determined by a player’s skill, competition exists only among and between participants (in other words no “house advantage” exists), and competition is not against the person operating the game (such as the dealer).

The IGREA serves to regulate online gambling and puts forth requirements for licensing Internet gambling. If the IGREA is passed into law, people living in the United States could bet on the outcome of sports such as MLB baseball, NBA basketball, NFL football, boxing, rugby, and motocross.

The IGREA and the SGPA are two huge strides in the right direction, Nesson believes. “The most fundamental reason of law is you look for a meaning behind something,” Nesson says. “If the law has the people’s best interests at heart, then they’ll want to encourage games of skill and discourage games of chance. There’s a principle at stake in this legal bill. I find when I talk to people and ask then if it makes sense to criminalize poker online, no one has come out and said, ‘yes.’ They’ve given me reasons other people have come up with but never make their own.”

In all the fear mongering over gambling addiction and losing all your possessions, people rarely ever stop to think how far an addiction has to go for you just click a mouse and lose your house. When you refuse to set limits for yourself, it’s dangerous. Many poker players only hope the struggle to define poker as a game of skill is in its final throes.