Poker is the only casino game I’m interested in because you don’t play against the House.  You compete against other players and rent a seat (either a tournament fee, cash game fee per hour, or the House takes a percentage of each pot.)  All other casino games involve players competing against the House, where the odds always favor the House.

I think of poker as a math test + psychology.  A game that requires a combination of intellectual and social intelligence.  In other words, a game of skill.  A game of imperfect information (as opposed to the perfect information available in chess), but a game of skill nonetheless.

This study seems to back my opinion.

It’s an interesting question, considering the government recently sued the major poker websites.  The Department of Justice charged the sites with money laundering (of which they’re probably guilty- it’s illegal for banks to conduct transactions with poker websites so the poker websites misrepresented their business).  But the motivation for the banking restrictions is the opinion that poker is not a game of skill, it’s a game of chance, and is therefore subject to gambling laws.

The authors of the study concluded…

The differences [results of top poker professionals compared to amateurs] are “far larger in magnitude than those observed in financial markets, where fees charged by the money managers viewed as being most talented can run as high as 3 percent of assets under management and 30 percent of annual returns.”

The results of the top poker professionals are more consistently positive than the top financial advisors on Wall Street.  In other words, Wall Street is more of a casino than PokerStars.  And yet the DOJ is pursuing the online poker sites, not the guys on Wall Street who wrecked our economy.

I had some money in my PokerStars account when the DOJ seized the domain name.  I requested a cashout a week ago per an agreement between PokerStars and the DOJ.  The money was deposited in my checking account yesterday.  And when will Wall Street return our money?

This is not a rant so much as me expressing amusement at the alternate universe in which Wall Street resides.

I read online that Jack Ury died recently.  He is the oldest person ever to compete in the World Series of Poker.  He played the main event the last four years but never cashed.  He did, however, provide some inspiration and moments of humor.  You can't help but smile when watching this clip. 

Normal Chad speaks for the audience:  "I can't wait until I'm ninety six years old, have the best hand, and slow roll some punk half my age.  You go Jack!"

"It's unconstitutional!" is among their favorites.

[Occassionally I'll read the Poker Grump. I find his misanthropic take on the poker world amusing. And it's always interesting to read about people who live very different lives from mine. Recently the Grump discussed the Unlawful Internet Gambling Enforcement Act and betrayed his conservative, almost paranoid anti-government politics. Anti-government diatribes really make my blood boil so I had to say something. (I improved some grammar in my comments.)]

The Poker Grump's Other Side Of The Coin

I say:

"Online poker is not a legitimate concern of the federal government, which has neither constitutional authority nor any reason to be involved in the field at all."

That's patently absurd. We can argue the wisdom of government regulation of this particular industry, but you can't just pretend the Constitution doesn't exist or wish away relevant clauses. Have you read article 1, section 8? 

Clearly constitutional.

The Grump responds:

Glad constitutional law comes so effortlessly to you. You should get appointed to the Supreme Court.

Did you click the link to read my earlier post where I addressed this? I'm guessing not.

Have you done any reading into the history of what the words "regulate" and "commerce" meant to the writers of the Constitution? I'm guessing not.

I respond:

"First is the general principle. We should be free to play poker (or blackjack or anything else) with our own money from the privacy of our own homes. Period."

I don't know where this "should be" comes from. The whole thing seems reminiscent of the Napster argument a few years back. I don't see much of an justification beyond a) it's cool and b) it benefits me personally. I guess that pretending financial transactions between players and online casinos is not commerce is a necessary prerequisite to buy into your unconstitutional argument. Are you really banking your argument on the notion that the writers of the Constitution could not have envisioned the Internet? If the document cannot be applied to new technology and new social dilemmas then the whole thing is of no use.

Though I not convinced you're really interested in discussing the issue. Starting by quoting the Bible and declaring "I am the voice of one crying in the wilderness" suggests that readers just back the hell off and let you suffer under your burden of wisdom.

Conan776 says:

Erik, so by your logic, what's to stop the Feds from tacking on an extra X% tax on software engineers, or roofers, or plumbers. Maybe every time I need to fix my roof, Uncle Sam has the right to tax off 10% right away based on the estimate? That's the current understanding vis a vis poker per the current bills floating around Congress -- poker players are sinful, immoral people, so Congress must skim off the top to discourage such horrid immoral behavior. And the so-called "Poker Player's Alliance", et al., are happy to go along with such a farce. Meh!

I respond:

@Conan

Democracy. If we don't like our government's priorities we should look in the mirror. Because we're responsible.

I agree with you that we need to take a good look at how the proposed legislation would affect the industry should it become law. My point is that this examination must begin with a recognition of the powers granted to Congress in the Constitution.

I mean we still could be answering to the British Monarchy. All of us could've had the misfortune of being born in a land ruled by a military junta. We weren't. We were born in the oldest democracy on the planet where we have the good fortune and responsibility of self-governance.

So denying the laws of the land as a starting point for your argument- I don't get it. What you're facing here is the fact that other people don't share your priorities. Their livelihoods are taxed and they're wondering why this industry- online poker, your livelihood- is exempt. It's a question of priorities that the people, through their representation in Congress, need to answer. It's not a Constitutional question.

I give the Grump credit for allowing my comments to stand. In the past they've been deleted by bloggers who dislike publishing dissenting opinion.

[I posted this comment on a poker blog and thought I'd reprint it here. The author made a tortured analogy between tennis and poker and I called it a stretch.]

Hard Boiled Poker

It's a limited analogy. Really, poker is a very simple game. It doesn't take long to become a competent player. One of the most important aspects of being a successful professional card player is to overcome one's boredom and remain calm and analytical. Comparing this skill (personality?) to the skills required to master tennis or soccer or chess... I don't know. It seems an empty comparison to me. Those professional athletes and chess players are competing at a level so much higher than pro poker players- who are just marginally better than than rest of us.

Sorry, I don't mean to direct this criticism of poker at you. I really enjoy your blog mainly because you make it about more than just poker. My criticism is directed at the young poker players who tie so much of their manhood to the game. But that's just me- 34 years old and amused by 20 year olds beating their chest over their skill in a game that doesn't really allow much distinction between great and good.

My real money poker experiment came to a sudden end last night. I had played a couple hours of cash games each of the last few evenings with pitiful results. At the end of each night I would import the hand histories into Poker Tracker and review my play. Solid. Yet not winning. I guess the frustration got to me the last two evenings. I moved up from a $0.05/$0.10 game to a $0.10/$0.25 game and continued to watch my bankroll dwindle despite solid play. At the very end of the night I played a $0.50/$1 game in an effort to recoop my losses and... all gone.

After the emotional response wore off and my analytical mind reengaged I realized the loss of money only confirmed what I already knew: Real money adds little enjoyment to low stakes online poker. It has a calming effect on the game- less maniacs when real money is involved- but this also dampens the profit and the enjoyment.

Here's what I experienced:

• It is possible to win big. Back in October I won a 20-table no limit hold 'em tournament. Outlasted 179 other players to win $388 on an $8 investment.
• Poker sites will mail you a check. Banks will accept that check. Real money appears in your bank account.
• It is much more common to win small. And lose small. And get bored with the tight play that is required to win at cash games.
• The only players having fun, after all, are the losers. Because they're in on more of the action. The winning players fold, fold, fold, to get that 10% ROI.

So, after playing online poker for real money for half a year, I've reached these conclusions:

• Poker is too simple of a game to gain much of an edge. After a few thousand hands online, everyone is good.
• The hourly wage possible with a small edge, small investment, and disciplined bankroll management is not compelling. Consider what it takes just to make minimum wage, $6.55 per hour. One hour to win a single table tourny. An ROI of 15% (good) = $44 invested per hour. Buying in at 4% = $1,092 bankroll. With an ROI of 8% your bankroll must be $2,047 to make minimum wage. Too much for too little!

I like the game though. Poker is a fun and intellectually rewarding contest. So, in order to get some enjoyment out of it, I will make these adjustments:

• I play chess for fun without involving money. I can do the same with poker. All of the major sites offer play money tables and tournaments for a variety of poker games.
• I can still track my progress using Excel and Poker Tracker. I've written a program that converts play money hand histories into real money histories, allowing import into Poker Tracker.
• I have written the beginnings of a Windows poker client- simulation software, if you will. I should pursue this project for the amusement it may provide. (Can I write a poker bot that's a stronger player than I? Isn't this how all sci-fi movies begin? The humans loose control over the robots.) Also, I should pursue the project as a chance to sharpen my professional programming skills.

Now it's time to beat up on some nitwits at the play money tables...