I've heard there is an ancient Chinese curse that states: "May you live in interesting times." Well, the game of poker is surely in an interesting time! Thanks to U.S. Senate Majority Leader and 2008 presidential candidate Bill Frist (R-Tenn.), we have the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which has shaken up the poker world.
The legal implications have and will be analyzed by experts like
Card Player's Allyn Jaffrey Shulman. Folks like Sue Schneider and Mark Balestra of River City Group are hard at work at business issues and solutions. Many grass-roots player organizations are considering political action; the largest and, thus far, most effective has been the Poker Players Alliance.
Things change! Sometimes things change slowly; over time, the change is so gradual that we barely if ever even notice it. The change that has struck the poker world is more like an earthquake than erosion. It has been sudden, powerful, frightening, and destructive. It is now our task to assess the damage, consider the consequences, and perhaps plan some kind of reconstruction.
The poker world has gone through many changes in the last 20 years. New venues opened, the most important of which was California, which flooded the poker world with California money. Then came the Internet and TV, which brought poker to mainstream America and the world. Millions worldwide were introduced to poker and took up the game, flooding the poker economy with money. Experienced players and those who learned the game quickly had large edges over the new influx of players, and some got very rich very quickly. Live tournaments were fueled by TV creating "rock stars" out of tournament winners, putting them in positions to acquire lucrative Internet promotional contracts. New magazines were created to take advantage of the lucrative Internet advertising available. Entrepreneurs who entered the Internet business suddenly found themselves on the
Forbes list of wealthiest people. The poker boom was on, and countless people got their piece of the pie, and many got rich, some very rich.
Nobody is sure how the whole issue will play out, but the ramifications will likely be severe for poker. Publicly traded Internet gaming sites have ceased to allow American players to play. While some players have jumped to other non-publicly traded offshore sites, many players did not make the switch and have just quit playing on the Internet. The total number of poker players on the Internet is down dramatically. The economic flow from those sites and players will impact the poker industry greatly.
Alas, for those of us who depend on playing poker as a way to make or supplement a living, the news isn't good.
The primary impact of UIGEA is to make financial transactions into and out of poker sites more difficult. It also has created potential criminal liability for the owners of Internet gaming sites, causing some to withdraw from the American market, which made up significantly more than half of the games. It created in many players' minds the mistaken idea that playing on the Internet is illegal. And it has, for these and other reasons, caused many players to leave the Internet game.
Those who have left are the marginal players, to whom poker isn't that important; among other things, these players are not students of the game. They're recreational players. They're definitely not the players who are significantly beating the game - as those players have and always will find a way to stay in action. Those who have left and are leaving are the softer players, those who provide much of the profit to the better players.
Internet games are thus much, much tougher, and trending to even tougher yet. This will put more pressure on players who look to the Internet for economic upside. Those who play for a living will require longer hours to make the same amount of money. Those who were about break-even players will find that they need to play better to break even or they will become losers. There will not only be less money in circulation to be won, but the average skill level of your opponents will be higher, and your edge lower. Many players who had a small positive expectation will find themselves playing in negative-expectation games, a lot - and maybe all the time. The skill level required to win will rise, making for fewer winners, lower edge, and leaner economic times.
I have often written of the compounding effect, and it certainly is in play here. The opportunity to win money and climb the poker ladder of success will be significantly reduced. Bigger live games will not have the benefit of loose Internet money flowing into them. The tournament circuit will not have the benefit of Internet qualifiers in the field. As a rule, they are not the most proficient players in the field and contribute greatly to the edge of the better players. Good tourney players will find the road to riches much more difficult to travel. Some will have to play live action in order to make a living, putting more pressure on the live action. The promotional opportunities for poker "rock stars" will decline, and there may be legal implications for the promotional player. The poker magazine industry will no longer have the lucrative Internet advertising revenue, and many will simply go out of business.
The cycle of economic evolution of the poker world takes hold. More bad players go broke, and fewer players can "feed" off the situation. The available money to win is just not there. It's like a food chain, and we have just taken the plankton out of the sea, the recreational Internet player. And it affects all of the chain above it.
Many players who have been making a few bucks off poker will have to reassess their situations. Some will change their games and make it. Some will settle for a lower hourly rate. Others will go broke against the tougher fields, and have to leave the game. Of course, this will result in the games being even tougher yet.
Many have stated that live poker will flourish because of this. While initially the rake may go up for some cardrooms, the long-run implications for live poker are damaging. Sure, some Internet players will convert to live play. But many live far away from viable live poker arenas, while others may not want to leave home, travel the distances, leave their families for the evening, and so on. That said, underground poker clubs like those in New York City that were featured in the movie
Rounders will flourish, and so will illegal underground games like my buddy John used to run. And home games will grow. (In anticipation of what is happening now, John and I wrote
The Home Poker Handbook, scheduled to be released from ConJelCo in December.) Whenever you force individuals into making changes, you lose some of your mass.
The news is not all bad though. The game's economy is historically cyclical. We have just experienced the biggest boom in the history of the game. I have written of my belief that more money has poured into the poker economy since 2001 than in the entire history of the game from the Civil War to the end of the 20th century. Regardless of Sen. Frist's legislative legerdemain, that growth could not continue forever. There will be a contraction, and eventually there will again be a growth cycle. We live in an era in which everything seems to happen amazingly quickly. Poker in general and Internet poker in particular will recover from this earthquake, and what we reconstruct from the rubble will very likely be bigger and better than it was before. It won't be today or tomorrow, but it will happen. Poker will grow, and even boom again. Personally, I think that the keys to our game's future will be lobbying, the growth of the game outside the U.S., especially in China and India, and the integration of the U.S. game into the international game. This will occur soon, but not real soon.
The Chinese ideogram for crisis is made up of two characters, the symbol for danger and the symbol for opportunity. More exactly translated it means precarious moment. Our game and our industry are indeed at a moment of danger and opportunity. If you'd like to have some input into what happens to poker, you might want to consider joining the Poker Players Alliance, the most politically active organization for poker players, at www.PokerPlayersAlliance.com.
Roy Cooke has played winning professional poker since 1972, and has been a Card Player columnist since 1992. he serves as a freelance consultant to the I-poker industry and has a successful Las Vegas real estate brokerage firm. He has written six poker books, which are available from www.conjelco.com/cooke. His website is www.roycooke.com His longtime collaborator, John Bond, is a freelance writer in South Florida.
