Tuesday, October 03, 2006

Black Sunday for Online Poker

“Bye Bye Miss American Pie, drove the Chevy to the levy but the levy was dry. Those good old boys were drinking whiskey and rye and singing this will be the day that I die”

Don MacClean

Late Saturday night, the US Government may have sounded the death knell for the poker boom. That insider trading, goat fucker, Bill Frist attached language to the Port Security Bill that outlaws financial institutions from letting their customers send money to online gaming sites. It will become a law when President Bush signs it in a week or two. The banks have 270 days from that time, to figure out how to code transactions so they can prevent the unauthorized transactions.

To quote Roman Moroni from the classic movie Johnny Dangerously, “I would like to direct this to the distinguished members of the panel. You lousy cork suckers. You have violated my farking rights. Dis somanumbatching country was founded so that the liberties of common patriotic citizens, like me, could not be taken away by a bunch of fargin iceholes…like yourselves.”

Today when the stock market opened in London, all the publicly traded poker room sites got hammered. I cashed out my 2600 shares of Partygaming at $0.85 a share after buying some at $2 and my original purchase at $3.

So far, Party Poker and 888 holdings have released statements saying when Bush signs the bill that they will freeze all US players’ accounts and they will not be allowed to play on their sites. As far as I can tell, you are still free to withdraw your funds and not face any penalties by US law. I am sure the other poker sites will follow suit.

I did see one post on 2+2 where the site True Poker said they will continue to accept US customers. Since they only have poker on their site and they believe that “poker” does not fall under this new law, that they will be exempt. I sincerely hope that’s true, but I really don’t believe it.

I don’t think True Poker has the financial resources to fight, but Full Tilt might. I sincerely hope that somebody stands up and says, “Please try to arrest us, we would love to fight this battle in court!” That might be the only way to settle the debate on whether Poker is a skill game in the eyes of the US Government.

The other slim chance is that the lobbying efforts of the Poker Player Alliance and others can get a carve out for Poker attached before the 270 days are up or during a vacation session before the Congress officially ends it’s session for the year.

So in addition to the $500 of my bankroll that I lost in September due to learning No Limit Hold’em, I have now lost over $4,800 in the stock market. I figured it was a good hedge since if I lost playing poker, that at least the stock should make money for me. Obviously the legislative piece was not considered in my sophisticated hedging formula.

Just for fun, I am going to make a few predictions and see if any of them come true one year from now. This assumes that I will still be writing in this blog or even playing much poker. That is a big assumption.

1. The World Series of Poker will have its participation cut by at least 60%.
a. The vast majority of the players in the Main Event satellite in online
b. Since no US citizens can satellite in via online poker rooms, the field will be less than 4000

2. A Foreign citizen will win since they will outnumber the US citizens

3. Online poker will still be alive in the US, but just barely

4. The largest online companies like Pokerstars, Partygaming, and 888 will survive and make money in the burgeoning international markets and possibly China.

5. The stock of these companies will not recover to their previous highs.

6. I will only be playing poker in a weekly home game or in Las Vegas
a. My son is being born soon, taking up a lot of my poker playing time
b. I won’t be able to play online and feel my money is safe.
c. The rake in low limit casino poker is so bad, that it is near impossible

to make money in the long term.

I once saw the disintegration of the Internet industry in the stock market in 2000 and 2001. There were a lot of people with rosy predictions that their company would never go away. I often heard the quote of, "The internet is not going away". That took 2 -3 years to unwind.

This past weekend is the same thing, except it is all happening overnight. I would not be surprised to hear of a suicide of a top player who loses his sponsorship, players moving out of the country, or small poker sites taking off with their client's money.

1 comment:

Poker Paul said...

I realy feel for the gamblers in the US. I cant beleive your Congress banned all banks and credit card companies from accepting transactions from online gambling sites which makes you unable to play online poker. What a bunch of hypocrites your state government are. They have the largest gambling operations with lotto, keno, etc. If they truly believed their rhetoric about internet gambling they would cut out the state operations also. And now they are bringing in a law to legalise slot machines. Personally I would have a big grudge against any party that stopped me from playing on a online poker site. I think there must be some way for you guys to get around this problem. Must make you wonder if you are living in the land of the free when it seems the government has full control on what it will and wont let you do.