Online Poker: Where Were the Regulators?

online poker

The poker world was rocked by the news last week that Amaya CEO David Baazov was charged with insider trading. Amaya has been under investigation by Quebec’s securities regulator the Autorite des Marches Financiers (AMF) since 2014 when the company acquired the Rational Group, the parent company of PokerStars and Full Tilt, for $4.9 billion.

The Era of Unregulated Online Poker

Full Tilt

This is yet another black eye for online poker. From January 1, 1998, when Planet Poker, the first real-money online poker site, dealt its first hand of Texas hold’em, to Black Friday on April 15, 2011, when the United States Department of Justice unsealed an indictment against the three largest online poker sites in the country, scandal after scandal has shaken the public’s and players’ faith in the industry.

I can’t help but ask, “Where were the regulators?”

I remember the late Terry Lanni, CEO of MGM Mirage, set up an off-shore Internet gaming site in 2001, which quickly folded. In an article in Las Vegas Review Journal dated Nov. 15, 2007, titled “Gaming Officials Say They’re Ready to Bet on the Web,” Lanni explained that though the site was unsuccessful, “the endeavor helped the company work out problems that will be useful when relaunching.” At the time of the article, Lanni predicted online poker would be legalized in 12 to 18 months.

This article was written nearly a decade ago, and not much has changed regarding the regulation of online poker. From the time the first hand of poker was dealt online in 1998 to the superuser cheating scandal at UltimateBet in 2008 when players were cheated out of millions by Ultimate Bet insiders, the Nevada Gaming Control Board had a decade to be at the forefront of regulating online poker; instead, they did nothing.

When the state should have been the leader for the worldwide online gaming industry, Nevada adopted a wait-and-see stance. The gambling capital of the world lost the opportunity to shape the future of gaming. Because the state choose not to be a leader in the emerging online poker industry, Nevada will forever be in catch-up mode, and it’s the players who have paid the ultimate price.

Whatever the politics are behind Nevada’s decision not to regulate online poker at the dawn of the industry, the Nevada Gaming Control Board’s responsibility should always be to protect the consumers. They failed.

What has bothered me most about unregulated online gambling is the hundreds of millions of dollars the regulatory agencies allowed to be stolen on their watch. People from all walks of life–blue collar workers, professionals, retirees and students—who all shared a love of poker were cheated out of millions, and many never recovered anything.

Nobody from the Ultimate Bets, Full Tilts or Lock Pokers has paid for what was done. No one has suffered except the innocent small players who just wanted to play their favorite game online.

It is the players who paid for the legal defense teams that defended the crooks at Full Tilt, and the small fines they were levied were nothing in comparison to the hundreds of millions they stole.

And the fact that disgraced former Full Tilt CEO Ray Bitar is reported to have recently thrown himself a million-dollar wedding is another slap in the face to these players.

Russ Hamilton plays golf every day in Las Vegas with no remorse. Howard Lederer has the gall to show his face at the Poker Hall of Fame induction ceremony in 2014 after running Full Tilt into the ground, and none of them has ever issued an apology.

This is a disgrace to the gaming industry that I love.

The Need to Legalize and Regulate Online Poker

UB-Absolute-Poker-Closed

There is always going to be greed in any industry where there is so much money, but it is the job of oversight and regulatory agencies to put consumer protections in place and regulate the owners and operators.

New Jersey also waited too long to regulate online poker. Instead players had to put their faith in regulatory bodies based on islands or territories they have never heard of like the Kahnawake Gaming Commission.

We now have Daily Fantasy Sports following the same path as online poker with hundreds of small sites popping up again with no oversight.

We as a gaming industry can do much better.

It was the players who uncovered the cheating at Ultimate Bet, and it was the players who lost when Full Tilt folded.

And now it seems PokerStars’ players will be footing David Baazov’s legal bills. In a twist of irony, PokerStars announced they were raising the rake the same week their CEO was charged with insider trading.

As Dave Gadhia, Amaya’s Lead Director and independent board member said in a statement, “”David Baazov has the full support of the independent members of the board.”

Amaya will stand by their man. Guess who’s paying?

Robert Turner is a legendary poker player and casino/billiard marketing expert. Robert is most well-known for creating the game of Omaha poker and introducing it to Nevada in 1982 and to California in 1986. He created Legends of Poker for the Bicycle Casino in 1995. He also helped create Live at the Bike, the first live gaming site broadcast on the Internet in 2002.

He has spent over 30 years in casino marketing and player development. He has served as an executive host at the Bicycle Casino and MGM. He is currently working as a casino consultant.

Robert can be reached at robertturnerpoker@gmail.com for consulting, marketing and coaching. Find Robert on Facebook at https://www.facebook.com/thechipburner and on Twitter @thechipburner. Subscribe to Robert’s blog “Beyond the Numbers” to receive notifications of new posts by email.

Advertisements

Daily Fantasy Sports: Where Are the Regulators?

DFS2

The daily fantasy sports (DFS) industry was rocked by a scandal last week when it was revealed that Ethan Haskell, DraftKings’ written content manager, had mistakenly leaked player ownership percentages for his site’s Millionaire Maker prior to the start of some of that week’s NFL games. Haskell then went on to win second place and $350,000 in the NFL Sunday Million at rival site FanDuel that same week.

This incident has led to speculation that Haskell’s success may be attributed to his improper use of insider information. Though DraftKings bans employees from playing on their own site, there were no prohibitions from playing on rival sites—until the scandal broke.

As of Monday, October 5, both DraftKings and rival FanDuel released a joint statement which says in part, “We are temporarily restricting employees from participating in DFS contests as an interim measure while we work with the fantasy industry to develop and implement a more formal policy.” The key words here are “fantasy industry,” which points to the glaring fact that there is no outside oversight of this fledgling industry.

Even before this story broke, many were asking, “Where are the regulators?”

Fantasy sports benefitted from a special carve-out in the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which essentially sounded the death knell for online poker. Unlike online poker, fantasy sports holds a special status as the UIGEA classifies it as a game of skill stating, “All winning outcomes reflect the relative knowledge and skill of the participants.”

Launched only in 2012 during Major League Baseball’s opening day, DraftKings seems omnipresent now due to the fact that you can’t miss being bombarded by ads every time you turn on your television. The massive marketing budget is funded by the money flowing to the site from investors and players alike.

According to an article on Fortune.com called “Fantasy Sports Site DraftKings Takes Bets from More Big Name Investors” dated July 27, 2015, DraftKings announced a new round of funding worth $300 million lead by FOX Sports and the Kraft Group, owners of the New England Patriots. This round also included investment from the National Hockey League (NHL) and Major League Soccer (MLS) as well as the Madison Square Garden Company. Major League Baseball (MLB) also increased their stake in the company after investing an undisclosed amount in April 2013, becoming the first US professional sports organization to invest in DFS.

In addition to the funding, DraftKings has also benefitted from valuable partnering agreements. In April, DraftKings and Major League Baseball announced a multi-year deal making DraftKings the league’s “Official Daily Fantasy Game.” The agreement allowed individual teams to offer in-stadium fantasy-related experiences. And in July, DraftKings entered into a three-year advertising deal with ESPN Inc. valued at $250 million.

DraftKings seemed to be on top of the world claiming to have over 1 million registered players, the same position online poker held in 2006 at the peak of the poker boom. And in one fell swoop, the government seized the domain names of the three biggest names in online poker on April 15, 2011, the day dubbed “Black Friday,” and the poker industry has never been the same.

As I write this article, “a federal grand jury focused on DFS has been convened in Florida,” according to legalsportsreport.com. The US Attorney’s office in Tampa, Florida, is investigating whether DFS operators are acting in violation of the Illegal Gambling Business Act (IGBA). And the New York State Attorney General Eric Schneiderman has sent a letter to both DraftKings and FanDuel requesting the names of employees who had access to data that could have been used gain a personal advantage. The parallels to “Black Friday” are eerily similar.

This story is evolving with new developments seemingly every day. I have no idea how it’s going to end, but I do know one thing: It’s time for the gaming regulators finally to step up and regulate this new industry.

Regulators have a duty of care to protect the industry and public alike. It seems in this case they were asleep at the wheel. DFS is hindered by a lack of regulation and transparency. Players deserve a fair game. Like anything else in life, without trust, you have nothing.

Robert Turner is a legendary poker player and casino/billiard marketing expert. Robert is most well-known for creating the game of Omaha poker and introducing it to Nevada in 1982 and to California in 1986. He created Legends of Poker for the Bicycle Casino in 1995. He also helped create Live at the Bike, the first live gaming site broadcast on the Internet in 2002.

He has spent over 30 years in casino marketing and player development. He has served as an executive host at the Bicycle Casino and MGM. He is currently working as a casino consultant.

Robert can be reached at robertturnerpoker@gmail.com for consulting, marketing and coaching. Find Robert on Facebook at https://www.facebook.com/thechipburner and on Twitter @thechipburner. Subscribe to receive Robert’s articles as soon as they are published.

The Life of a Gambler: Easy Come, Easy Go

Poker Legends Doyle Brunson and Stu Ungar

Poker Legends Doyle Brunson and Stu Ungar

Las Vegas is a town defined by big gambles, spectacular successes and lost opportunities. A dealer once told me he had taken out a loan on his house to play a progressive slot machine at the Hilton. He and his wife, a cocktail waitress, had worked so hard for years to pay off the mortgage.

He said, “Robert, it has to hit.” It did hit, but it only got them even for the month they played. What if it hadn’t hit? Did he have a back-up plan? Was the long-shot of hitting a jackpot worth the very real risk of losing his home? I had a difficult time understanding his reasoning. Then I realized, there was no logic involved.

In my years of visiting and living in Las Vegas, I have seen how gambling can conquer even those who seem to be in control. The truth is a town like Las Vegas offers so many ways to knock you off your center and provide you with adrenalin rushes 24/7 that few gamblers are able to resist.

This is a perfect example. I remember the first time I ever laid eyes on Stu Ungar. He was walking from the Dune’s poker room with three women to the craps table, and I followed them. Stu bought in for $10,000 and placed his bets.

I watched in amazement as this kid with such a great reputation as a gambler began to shoot the dice. Stu lost it all, except for about $1,500 dollars. I will never forget what happened next. He took the last $1,500 from the tray and said, “This is for the boys,” and pitched the money across the dice table.

My thought was he is not a great gambler but a sucker with no regard for money. It is this “no- regard-for-money” attitude that makes or breaks great gamblers. How many gamblers really master self-control? In gambling, money can lose its value. In that regard, Stu was no different from your average gambler.

Another legendary gambler I have seen in action is Archie Karas, who is famous for turning $50 into $40 million, then losing it all. When Archie won all that money at the craps table, I begged him to invest in something for his future, but I could see in his eyes that it wasn’t his future he was thinking about during “the Run.”

Archie called me at the Bicycle Casino one Saturday morning and said he was going to play a $500,000 Razz freeze out with Johnny Chan. Archie beat Johnny, a player I consider to be in the top three of all time. Archie once told me, “Robert, look at all these players that have their pictures on Binion’s Hall of Fame. It should say Hall of Shame because I beat them all.” And he did; he beat Doyle Brunson, Chip Reese and Johnny Moss, all considered some of the best players ever to play the game. Archie is considered to be one of the greatest gamblers of all time—there certainly will never be another like him.

When I first started coming to Las Vegas in the 70s, I was playing poker at the Golden Nugget when an older gentleman dressed in a suit sat down. Different people kept coming up to him and congratulating him, so I assumed he was an employee of the casino.

He was playing very aggressively and drinking heavily. After playing for about an hour, he was approached by security and a couple of suits. They asked him to come with them. I was curious about what had just happened, so I asked about it the next day.

I was told the gentleman was a pit boss who retired after 25 years. The casino had a retirement party for him earlier that day. The problem was he had already lost $25,000 at dice that night, and rumor was he had not gambled in 25 years. Management intervened because it appeared he had fallen off the wagon.

I have been in the gambling business for over 50 years both as a player and as a marketing executive. I have seen it all. What drives most gamblers is the desire to make that score that will change their lives, so why then do they keep gambling even after they win life-changing money?

You can be successful in the professional world of gambling if you can master the art of staying in control of your bankroll and yourself. Like everything in life, it’s all about moderation. Know your limits before you start.

If you or someone you know may have a gambling problem, call the National Council on Problem Gambling’s toll-free helpline at 1-800-522-4700.

Robert Turner is a legendary poker player and billiards/casino marketing expert. Robert is most well known for introducing the game of Omaha poker to Nevada in 1982 and to California in 1986. He created Legends of Poker for the Bicycle Casino in 1995 and Live at the Bike, the first live gaming site broadcast on the Internet in 2002.

He has over 30 years experience in casino marketing and player development. Find Robert on Facebook at https://www.facebook.com/thechipburner and on Twitter @thechipburner. He can also be reached at robertturnerpoker@gmail.com for consulting and teaching.

The Man Who Lost $127 Million: Responsible Gambling and the Duty of Care

ProblemGambling

Putting a 24-hour casino in every home comes with great responsibility. Ensuring a safe, responsible gambling experience should be of paramount importance. Online gambling companies talk incessantly about revenue, but it is everyone’s responsibility from regulatory bodies to operators, from governments to the citizens themselves to require that all proper consumer protections and safeguards are in place before online gambling can go live. It is imperative that all stakeholders in online gambling be well versed not just in its benefits but its pitfalls as well.

Perhaps one of the most dramatic illustrations of what happens when a gaming company puts revenue before responsibility is the case of Terrance Watanabe who is reported to have lost most of his personal fortune recklessly gambling in Las Vegas. According to an article in the Wall Street Journal published December 5, 2009, “During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managed to lose nearly $127 million. The run is believed to be one of the biggest losing streaks by an individual in Las Vegas history.” While Steve Wynn is reported to have barred Watanabe from his casino for compulsive gambling, Harrah’s Entertainment Inc. welcomed him and derived 5.6% of its Las Vegas gambling revenue from him that year.

This case showed such an egregious lack of sound business judgment on the part of Harrah’s, now Caesars Entertainment, that the company was fined $225,000 by New Jersey regulators in March of this year. Gary Thompson, Director of Corporate Communications for Caesars Entertainment said, “Because of the confidential settlement agreement we reached with Watanabe, neither he nor we can make any official comment.” However, he points out that Caesars hired an outside agency to investigate the situation and made procedural changes deemed necessary to prevent recurrences.

New Jersey Governor Chris Christie has taken a more proactive approach to responsible gaming and has expressed great concern over the potential spread of excessive gambling in his state. When he conditionally vetoed that state’s online gambling bill in February of this year, one of his main recommendations was to increase funding of compulsive gambling programs.

In a statement released with his veto, Gov. Christie said his recommendations are intended to continue “the tradition in New Jersey of a fine, careful, and well-regulated implementation of gaming.” The operative word here is “careful.” In the rush to reap the financial windfall online gambling companies promise, oftentimes the need for consumer safeguards is overlooked. Gov. Christie signed the bill into law once the Legislature agreed to his changes. It is the duty of all jurisdictions considering introducing gambling to its citizens, whether in brick-and-mortar or online casinos, to take such a thoughtful, measured approach to the issue. Doing any less could have devastating effects. Today, November 21, Internet gambling begins a five-day trial run in New Jersey.  This will put Gov. Christie’s promise to the test.

As Keith Whyte, Executive Director of the National Council on Problem Gambling (NCPG), states, “We are concerned that as jurisdictions race to legalize internet gambling, often in an attempt to boost their gaming tax revenues, they are neglecting serious problem gambling concerns. Without comprehensive responsible gaming policies, the massive expansion of internet and social gaming may exacerbate gambling addiction. Our IRG (Internet Responsible Gaming) standards incorporate best practices from around the world, and we strongly urge they be incorporated into online gaming legislation and regulation.” There is no question problem gambling destroys lives. Organizations such as NCPG propose that a comprehensive public health strategy is the most ethical and cost-effective response to the gambling addiction issues raised by internet gambling. The universal adoption of responsible gaming standards by operators and regulators alike, in tangent with well-informed consumers, is an important aspect of this approach. Legislation and regulation of online gambling must keep up with the rapid pace of technology.

While I was marketing director for The Bicycle Casino in Los Angeles, I produced many successful events that created enormous revenue for the casino. The morning after one such event I drove into the parking lot of the casino and noticed an elderly woman crying into her hands. This image has haunted me to this day. I thought to myself, “Did I do this to her?” This is the question all the stakeholders in online gambling should ask themselves. Let’s not forget there is a human face in front of that computer screen.

Resources for Problem Gambling:

National Council on Problem Gambling, http://www.ncpgambling.org, 1-800-522-4700

Gamblers Anonymous, http://www.gamblersanonymous.org, 1-855-222-5542

Robert Turner is a legendary poker player and marketing expert.  Robert is most well-known for introducing the game of Omaha poker to Nevada in 1982 and to California in 1986.  He also created the Legends of Poker for the Bicycle Casino in 1995. He helped create Live at the Bike, the first live gaming site broadcast on the Internet in 2002.

He has spent over 30 years in casino marketing and player development and has served as an executive host at the Bicycle Casino and MGM Grand.  He is currently working with his new companies Crown Digital Games developing mobile apps and Vision Poker, a poker marketing group.

Find Robert on Facebook at www.facebook.com/thechipburner and on Twitter @thechipburner.  Contact Robert at robertturnerpoker@gmail.com for consulting, marketing or teaching.