From February 2011 to February 2012, according to the the latest Nevada Gaming Control Board report, the state’s total gaming revenues (excluding sports books) increased by 5.6 percent, while revenues from poker dropped 1.4 percent. Las Vegas’ Clark County grew gaming revenues by 6.6 percent, while poker revenues slipped 1.1 percent.

Atlantic City has struggled with competition from new slot parlors in Pennsylvania. But even here, the toll on poker was larger. The latest report from New Jersey’s Division of Gaming Enforecement, Atlantic City’s total gaming revenue fell 5.0 percent from March 2011 to March 2012. Poker revenues fell 6.9 percent.

One poker room in Atlantic City handily beat the trend. Revenues at the Borgata’s poker room rose 28 percent. The Borgata played host to a number of major tournaments in the past year. The poker room staff is also very active on online poker forums such as 2+2.

For years, casino operators fought the legalization and regulation of online poker. Although their objections were couched in the language of protection and oversight, as in this American Gaming Association’s (AGA) May 2001 press release, the real issue was revenue. Casinos believed that online poker might cut into the take of their brick and mortar poker business.

The data, however, suggests that online poker did not cannibalize brick and mortar poker rooms. In fact, it may have been a de facto farm system for casino poker rooms.

By the time the American Gaming Association (AGA) officially changed its stance in December 2010 supporting the legalizing and regulation of internet poker, the UIGEA was a done deal. Black Friday was just the icing on the cake that the casinos helped bake.

Totally coincidental, I happened upon this keyless keyring while cleaning out one of my poker closets last week and couldn’t help but lol-chuckle that none of these three operations made it to a second birthday despite significant hype and promotional spends.

The key take-away is that poker losses are now deductible for professional gamblers beyond your profits, so you can carry them forward and backward to offset income in other years. You can file on Schedule C instead of Schedule A, which limits deductibility.

Of course, none of you probably have any losses to deduct, but it’s nice to know that you have the right anyway.

Wow. You know taxes and finance aren’t really my game, but if David’s correct, this reversal of interpretation seems nearly as big as the DOJ’s December flip on the Wire Act — microeconomic change poker players can believe in!? Even if my attachment of significance is a bit of a stretch, it probably was about time for the Feds to acknowledge that yes, they know now (after years of investigation), playing poker even semi-professionally comes with legitimate business expenses beyond your buy-in …but bummer for Dan personally, as losses suffered in the Pokerati game apparently are not deductible as marketing write-offs. (Crap, there goes my equity.)

Kinda a big step for poker players seeking a certain legitimacy for their profession. And who knew … “Tax Court,” it turns out, is a real place, not some reality show on Bravo or The Learning Channel.

A quick-and-dirty excerpt from the new issue of the (always-sexy) Journal of Accountancy that jumps right to the end for stuff that matters for poker players who at least occasionally find themselves reporting net-positive results is below:

CONCLUSION

Under the holding in Mayo and the IRS’ acquiescence to it, professional gamblers are allowed to fully deduct their nonwagering business expenses beyond wagering gains. Nonwagering business expenses may include transportation, meals and entertainment, admission, subscriptions and other fees. In addition, if nonwagering expenses exceed wagering gains and other income, they may give rise to a net operating loss that may be carried back to previous-year returns or carried forward to future-year returns. Professional gamblers still must substantiate the amount and the business purpose of the expenses to secure their deductibility (Presley, T.C. Memo. 1979-339).

EXECUTIVE SUMMARY

The IRS acquiesced to the Tax Court’s recent holding that a professional gambler in the trade or business of gambling could deduct nonwagering expenses in excess of gambling winnings under Sec. 162(a).

Historically, such costs in excess of gambling winnings have been disallowed under Sec. 165(d) and previous Tax Court precedent. Now, however, such deductions may offset other income and even result in a net operating loss that may be carried back or forward to other tax years.

To be considered a professional gambler, taxpayers generally must demonstrate to the satisfaction of the IRS that they are engaged in gambling as a trade or business rather than casually. The IRS and courts apply nine factors in regulations under Sec. 183, as well as all relevant facts and circumstances, in making the determination.

Nonwagering business expenses may include transportation, meals and entertainment, admission, subscriptions and other fees. Wagering gains include wagering winnings and “comps” (the fair market value of complimentary goods and services) but not additional income to casino personnel in the form of “take-offs” and “tokes,” which are likely to be considered compensation or other, nonwagering income.

I haven’t quite yet figured out if and how this is different from an IPO. But I do know these sorta things don’t happen in a vacuum. And considering the last time Caesars — soon to be better known on NASDAQ as CZR — looked serious about going public was the last time they had reason to believe passage of online poker legalization was imminent (Dec 2010) … uh, um, gahhh! So much going on, so many old docs to look at, so much for Kevmath to hopefully fact-check … my head is spinning with the possibilities! (And I can only wonder who Barack Obama met with on the side when he visited Las Vegas long enough to stay the night in the suburbs a couple weeks ago,)

Probably not a bad time to remember that Caesars was a public corporation (called Harrah’s) that went private almost immediately after passage of the UIGEA, controversial legislation that leveled the impact of the biggest online poker sites in the world (at the time).

Read below for an official press release.

Caesars Entertainment Corporation Publicly Lists Its Shares

LAS VEGAS, Feb. 7, 2012 /PRNewswire/ — Caesars Entertainment Corporation (“Caesars” or the “Company”) announced today that its common stock was approved for listing on the Nasdaq Global Select Market under the symbol “CZR” and its offering of 1,811,313 shares of its common stock was priced at $9.00. Gross proceeds from this offering will be approximately $16 million before deducting the underwriting discounts and commissions and expenses.

Caesars also granted to the underwriters a 30-day option to purchase up to 271,697 additional shares of its common stock at the initial price less underwriting discounts and commissions.

In addition to the shares to be sold by Caesars in this offering, shares held by certain existing investors representing approximately 27.8 percent of the Company’s issued and outstanding capital stock have also been registered for resale, of which approximately 18.8 percent are now freely tradable, with the remainder becoming freely tradable 180 days after completion of the offering described above.

Credit Suisse and Citigroup are acting as joint book-running managers and representatives for the offering, BofA Merrill Lynch and Deutsche Bank Securities are acting as joint book-running managers for the offering and KeyBanc Capital Markets, Lebenthal & Co., LLC, and Ramirez & Co.,Inc. are acting as co-managers for the offering. The offering will be made only by means of a prospectus. Copies of the prospectus related to the offering may be obtained, when available, from: Credit Suisse, Attention: Prospectus Department, One Madison Avenue, New York, New York, 10010, or by telephone at 1-800-221-1037, or by email at newyork.prospectus@credit-suisse.com; or Citigroup, Attention: Prospectus Department, Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220, or by telephone at 800 831-9146 , or by email at batprospectusdept@citi.com.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission (the “SEC”). A copy of the registration statement can be accessed through the SEC’s website. This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

About Caesars Entertainment

Caesars Entertainment Corporation is the world’s most diversified casino-entertainment provider and the most geographically diverse U.S. casino-entertainment company. Since its beginning in Reno, Nevada, more than 73 years ago, Caesars has grown through development of new resorts, expansions and acquisitions and now operates casinos on four continents. The company’s resorts operate primarily under the Caesars(R), Harrah’s(R) and Horseshoe(R) brand names. Caesars also owns the World Series of Poker(R) and the London Clubs International family of casinos. Caesars is focused on building loyalty and value with its guests through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. Caesars is committed to environmental sustainability and energy conservation and recognizes the importance of being a responsible steward of the environment. For more information, please visit www.caesars.com.

This release includes “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as “may,” “will,” “project,” “might,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative or other variations thereof or comparable terminology. In particular, they include statements relating to, among other things, future actions, new projects, strategies, future performance, the outcomes of contingencies and future financial results of Caesars. These forward-looking statements are based on current expectations and projections about future events.

Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, the actual performance of Caesars may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in the Company’s reports filed with the SEC (including the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained therein):

the impact of the Company’s significant indebtedness;
the impact, if any, of unfunded pension benefits under multi-employer pension plans;
the effects of local and national economic, credit and capital market conditions on the economy in general, and on the gaming industry in particular;
construction factors, including delays, increased costs of labor and materials, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters and building permit issues;
the effects of environmental and structural building conditions relating to the Company’s properties;
the ability to timely and cost-effectively integrate companies that the Company acquires into its operations;
the ability to realize the expense reductions from the Company’s cost savings programs;
access to available and reasonable financing on a timely basis;
changes in laws, including increased tax rates, smoking bans, regulations or accounting standards, third-party relations and approvals, and decisions, disciplines and fines of courts, regulators and governmental bodies;
litigation outcomes and judicial and governmental body actions, including gaming legislative action, referenda, regulatory disciplinary actions and fines and taxation;
the ability of the Company’s customer-tracking, customer loyalty and yield-management programs to continue to increase customer loyalty and same store sales or hotel sales;
the Company’s ability to recoup costs of capital investments through higher revenues;
acts of war or terrorist incidents, severe weather conditions, political uprisings or natural disasters;
access to insurance on reasonable terms for the Company’s assets;
abnormal gaming holds;
the potential difficulties in employee retention and recruitment as a result of the Company’s substantial indebtedness, the ongoing downturn in the gaming industry, or any other factor; and
the effects of competition, including locations of competitors and operating and market competition.
Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. Caesars disclaims any obligation to update the forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.

PokerStars may be without a CEO for the time being, as Gabi Campos, who assumed the chief executive position in 2010, reportedly is no longer big boss of the largest real-money online poker site in the world. While it’s not quite clear who told whom to eff off (and Stars has yet to put out a press release insisting all is hunky-dory) … if confirmed, Campos’ ouster/skeedaddling marks the fourth major executive departure at PokerStars since Black Friday.

First to be disappeared (amid some controversy) was veteran EPT Tournament Director Thomas Kremser in May; then last month, EPT founder John Duthie left. And now supposedly Jeffrey Haas, top dog at Global Poker Tours Limited (parent company for PokerStars live events) has been, er … moved on. (Haas’s LinkedIn page lists GPTL as “Past” … and “Director of New Platforms, Mobile & Social Gaming for Pokerstars.com” as current — sounds like “big-money suit demoted to glorified blogger” to me, but hey!)

UPDATE: Interestingly, Campos’ LinkedIn-from-Israel doesn’t list PokerStars as a past or present employer … says he his now working for 888-subsidiary Dragonfish, which we know, of course, in 2010 became an online partner to the WSOP.

What if anything might be behind this extended shakeup on the international live tournament poker scene is hard to say. Read Wendeen Eolis’ report in Poker Player Newspaper here.

Despite Black Friday, PokerStars has maintained its position as the world’s biggest, arguably most important, and possibly most highly regulated and therefore internationally legitimate online poker site. (And they set a Guinness World Record to boot!)

The US Department of Justice, meanwhile, maintains that PokerStars’ success was built on the ill-gotten gains of an illegal enterprise with ties to organized crime … and their founder is still, according to the DOJ, the #1 most wanted online poker criminal.

It feels like we’ve been talking about Caesars going public since before they were Caesars (we have) … but their latest S1/A filing with the SEC suggests not only that CZR really is might be ready to kick it Zynga-style with a big fat IPO … but also that any public offering from the worldwide gambling empire may be in preparation for imminent legalization of US online poker.

While such hefty levels of high finance are still probably a little beyond my ken … you can read the nearly 300 pages of Big Casino corporate speak and decide for yourself. Somewhere in here, I’m pretty sure, is a blueprint for the future of poker and/or online gambling.

At a minimum, I found this snippet on page 7 suggesting that Caesars is getting ready for something big related to online gambling poker:

We believe that additional jurisdictions will legalize online gaming due to consumer demand, a broader understanding of the need to regulate the industry and to generate income through taxes on gaming revenue. As such, we support efforts to regulate the online gaming industry to ensure that consumers are protected. We believe that the potential for online gaming is substantial and believe that we will command, at a minimum, our fair share in any legal jurisdiction. An H2 Gaming Capital study conducted in 2010 projects that the global online gaming market will grow to $36 billion in revenues by 2012. We believe that the largest opportunity in online gaming in the near term is the legalization of online poker in the United States. [emphasis added]

There’s tons more in this document worthy of perusal … some of which I’ve already skimmed. And it doesn’t take much to see how an actual Caesars IPO — not just talk of it — could-well coincide with legalized American online poker hubbub (finally!) reaching critical mass.

Caesars, after all, formerly known as Harrah’s, was a publicly traded company until going private shortly after passage of the UIGEA in 2006. Changed their name to Caesars in November 2010 — the last time they prepped seriously for an IPO (right after their boy Harry Reid won re-election and owed them a favor) only to withdraw plans for a public offering of stock shares right after someone told them the lame-duck online poker Reid bill was just a farce for other political purposes a couple weeks later.

Wall Street is buzzing about a coming Zynga IPO — set for December 15, according to the Huffington Post — and what it may or may not say about social gaming industry valuations and overall US economic health in a more-global internet age. Expected to raise at least $10 billion, this hotly anticipated initial public offering (one born of poker, mind you) could well be the biggest financial news in the history of our beloved little game.

Big Casinos are paying close attention, of course. It’s a fine line these days between social gaming and online gambling, particularly in a multinational economy built on virtual currency. I spoke with Zynga Poker General Manager Lo Toney a couple weeks ago … he wouldn’t make “forward-looking statements” about the IPO, and as per usual denied any interest in the future of legalized real-money online gambling … even as the company announced further steps into the casino world.

Toney had just two big developments to push — Zynga’s second live tournament event (he was really excited about Zynga players getting to compete against newly crowned WSOP champ Pius Heinz) and the opening of the new Zynga Casino … starting with Bingo, remade to appeal to grandmothers and the “younger generation” alike, he says.

But beyond the promo that usually would have little appeal to a grizzled old Poker blog like Pokerati, we did at least get to touch on the recent removal of tobacco (and water bongs) from the Zynga gift shop, my personal addiction to the Zynga Poker iPhone app, and the advantages, challenges, and social responsibilities that come with being able to market your poker (and now casino) games to 13-year-olds.

Have a listen …

Pokerati Interviews Lo Toney
November 16, 2011

download

Even if Toney is totally sincere about Zynga’s indifference to the possibility of legalized online gambling in the future, brick-and-mortar casinos are still actively trying to emulate Zynga’s social gaming success. No wonder the company appears so well-suited for such a big investment in the next generation of poker player and casino patrons as they come of age.

Oh yeah, and now Donald Trump wants in on online poker … should the Feds re-legalize it anytime soon. He’s apparently partnered with New York hedge fund manager Marc Lasry with the intent of entering into the online gambling space as soon as the US opens the hatch.

Not a surprise. Trump got in, then out, of poker early in the boom (remember the US Poker Championships in Atlantic City?). That was a few years before Joan Rivers beat Annie Duke heads-up on Celebrity Apprentice. Trump’s 29-year-old daughter, Ivanka, explains the partnership as Trump Entertainment contributing the gambling licenses, Lasry putting up the capital, and The Donald offering his name and likeness to recruit future players.

“In terms of the Internet, brand is essential toward attracting players,” Ivanka told Business Week. “The Trump brand would be the most powerful one in this space.”

(h/t @TheWookieWay. NOTE: DonaldPoker.com is available should anyone wanna gamble $8 that such a URL might become the most powerful domain in poker.)

Sucks for the Dubliners, but for the rest of us, that means 200 or more employees with insight into FTP operations over in Ireland, no real reason to necessarily protect certain information anymore, and access to 2+2.

Sure enough, at least two former employees from two different departments are posting away and answering questions. Check it out … worth the skim.

Nothing earth-shattering (yet … gotta figure anyone with the uber-goody dirt probably would go to the DOJ requesting immunity before turning informant) but the virtual deposition one former employee goes through provides plenty of color to paint a decent picture of what life was like in the middle of a corporate collapse … not to mention how the nouvea-poker-riche behave without the cash (and TV shows) that previously formed the foundation of their power.

For example, I learned:

• Ray Bitar drives a Range Rover.
• For the past couple months much of the staff literally clocked in to work with nothing to do; literal thumb-twiddling ensued.
• The staff cafeteria — long the envy of Irish workplaces — began cutting back the high-end goodies, though Bitar did supposedly ship in lobster recently, which was carted past the cafeteria, which that day was serving employees spaghetti and gruel.
• Much of the buzz is still just rumour and heresay, but still …
• The big-money parties back in the day were indeed legendary … some might even say “Epic”.
• Full Tilt once supposedly flew in Cubans (from Cuba) to roll cigars.
• The fight against bots and cheating rings was more active than most knew.
• Full Tilt took game security very seriously (except for that part about protecting player funds, lol), despite claims to the contrary.
• Full Tilt overlords supposedly kept a very close eye on what the blogs and forums were saying.
• Full Tilt did supposedly turn down offers to buy the company, apparently believing it was worth more money and/or because principals such as Bitar and Lederer wanted stock in the new company.

Much more, obv … but its a good start for some 200+ potential witnesses. If you have reason to care about how things looked at Ground Zero for the once venerable online poker site, it makes for one of those 2+2 trips that’s worth wading through all the 2+2.

Supposedly, Presentable Productions were waiting on a second installment of funds from Full Tilt subsidiary Pocket Kings that had been promised by today, and at 4pm GMT, after recording the 3rd heat, they sent the camera crew and players home, with no plans for return. (The show is an 8-heat event featuring $20k sit-n-gos with seven players at each table.)

It remains to be seen whether this was just reactionary angst over a technical blip that could normally be resolved with little problem, or indicative of cash-flow and money-transfer issues that have far more severe implications. But either way, it does confirm a certain unease in the UK after problems in the US.

Presentable has been producing poker television shows since 1999, when their show, Late Night Poker, debuted in England.

Could be interesting to see what the advertisements during the broadcast are. If the network’s a bit slow in reacting it might be one of the last times we ever see a FullTilt or PokerStars advertisements on American airwaves. With the exception of a few WPT episodes in production or already in the can, it will almost certainly be one of the last times we see so many patches from the companies involved in Friday’s indictments on players.

The most troubling possibility is that it would not air at all. Sound ridiculous? Consider the following: Kevmath had a retweet late Saturday night in which @buckwild33 noted that a scheduled WSOP Main Event 2007 marathon was not airing and boxing was shown in its place.

While it would certainly be a stretch to try and correlate this change in broadcast schedule on ESPN in some way with the upcoming NHUPC broadcaston NBC, it certainly should not be dismissed outright. There will be several small milestones that come up periodically in the coming days, weeks, and months, and we who are most affected might want to pay attention to their outcomes.

The information that we may be able to get from these indicators could provide a significant portion of the information that comes our way as things progress. Both the sites and the DOJ are likely headed for a process that is going to go very slowly, and information will trickle out slowly.

Again, this is just the direction that my thought process brought me in, and I don’t claim to have any information that is unavailable to everyone else. I think the NHUPC is at least an interesting talking point and the first small event in a series of events that will eventually have effects on millions of people around the world. Now is the time to keep your eyes open.

On a side note, it’s interesting to see how the title sponsor of the NHUPC, GoDaddy, could be the least toxic element at this point in time. Who would have thought two weeks ago that Godaddy’s CEO’s elephant hunting fiasco would become old news so quickly.

Zynga should soon be well aware of my sick rungood in their $5/$10 “cash” games.

Continuing its rollout as serious new kid on the online poker block that is simply too big to be ignored … Zynga has acquired Poker Table Ratings, a Texas-based web-op that challenges current online poker Terms of Service with what technology and a legally enforceable free flow of information allow them to do.

PTR has also proved a key player in issues of online poker security for what their database can reveal not just about individual players, but site trends overall. According to Zynga:

The team’s experience and deep knowledge of the online poker industry will be invaluable as we work together to build out cutting-edge features and further enhance Zynga Poker.

However, Zynga goes on to specify that this acquisition of PTR parent company, MarketZero, a 16-person company in Austin, is not about taking over PTR, but rather about hiring their talent, who apparently will still own and operate MarketZero’s main website, PokerTableRatings.com.

Zynga has been on a hiring and acquisition spree of late — 11 acquisitions in the past 11 months — having obtained massive financing for expansion in the social media and gaming sectors, with estimates ranging from $180 million to $500 million.

Meanwhile, in presumably unrelated political news that may well someday be very related … a California state senator unveiled a “Do Not Track” bill yesterday — which would require all internet companies doing business in that state to allow users to opt out of any tracking or datamining capabilities.

A lot of things have changed in the poker world since the Zynga PokerCon ended here in Las Vegas last Saturday. Partnerships have been approved (Caesars/888), announced (PokerStars/Wynn) and speculated upon (Full Tilt/Station Casinos). Legislation surrounding the legalization of online poker has been introduced and debated in various jurisdictions around the country and, I’m pretty sure that Erik Seidel won another high-stakes tournament somewhere in the world.

In short, it’s been a pretty busy week. And yet, with everything going on – or perhaps, because of it – I still find myself puzzling over Zynga’s potential role as a player in the post-regulation poker economy.

For those of you still unfamiliar with Zynga, they bill themselves as the largest online poker room in the world with a database of approximately 38 million players who compete for chips and tokens that have value only within the confines of Zynga’s proprietary system. In other words, Zynga is a play money site in the truest definition of the word. And yet, they came to Las Vegas last weekend to hold a live event for their fans and players.

Zynga has something every major real money site is looking for: players who have yet to make an initial deposit online. Would Zynga really stay out of real money gaming if someone came along with a partnership offer they couldn’t refuse? I don’t think so.

Populated by attendees who either won or bought their way into the event through Zynga’s site, the two-day conference was an interesting mix of Zynga players and industry insiders who were looking for information on this most mysterious of potential competitors or, perhaps, partners. I can’t speak for anyone else at the conference, but I have to admit that I walked away from the event with no clear answers.

As a fan event, I have to say the PokerCon was a success. For the cost of a $125 entry, Zynga’s players received professional instruction from Annie Duke and a plethora of other name pros, the chance to meet legends like Doyle Brunson and Mike Sexton, free food and drink at a Zynga-sponsored party, and a seat in a $100K tournament with a guaranteed payout of $26,000 to the winner. Not a bad deal, if you ask me.

As a “coming out party” for Zynga Poker, however, I can’t say I was as impressed.

In all honesty, Day 1 felt more like an Annie Duke poker school sponsored by Zynga Poker, rather than a Zynga event. Sure, they had branding scattered around the room and some very attractive women walking around in branded T-shirts, but other than that, there was no real sense that Zynga was announcing itself as any kind of player in the online poker game. That lack of conviction was compounded by the poker room’s General Manager, Lo Toney, who gave two very brief speeches (2-3 minutes each) thanking everyone for turning out, but lacking in any kind of detail about what the future might hold for his brand.

When asked directly about plans to enter the real-money market, Toney made it clear that Zynga is a social gaming company that is very happy with its current business plan of selling virtual goods to its millions of players. And, on the surface, that’s not a surprising answer, considering that game plan has earned them billions in revenue in just a few short years. Still, companies exist to make money and everybody in the poker world knows there can be huge value in pulling off a well-timed bluff.

Does that mean I think Toney is lying about the company’s intentions? Not necessarily. Do I think he’s playing his cards close to the vest? Without a doubt.

The fact is, Zynga Poker has something that every major real money site is looking for – tons of players who have yet to make an initial deposit online. That’s a whole lot of new fish for more established players to feast on and hundreds of millions in extra rake for the sites to add to their bottom lines. So, would Zynga really stay out of real money gaming if someone came along with a partnership offer they couldn’t refuse? I don’t think so.

With the increasing amount of legal and strategic maneuvering going on in the poker world these days, it seems unlikely to me that Zynga will remain happy to sit on the sidelines while all of the other players pick teammates for the big games that are yet to come. I guess only time will tell. Until then, can someone please send me a virtual drink on FaceBook?

I’m pretty sure you’re gonna be hearing about Zynga for awhile … not just because I still have lots of pictures and audio to unload from Zynga’s inaugural PokerCon at the Palms last weekend … but because, imho, as plenty of industry stalwarts seemed to recognize, this company that didn’t even exist in 2006 (that oh-so-glorious year of Jamie-Gold-boom-and-UIGEA-bust) has something that every other big-idea “revolutionary” poker undertaking has lacked since, well, PartyPoker.

Have a listen to Hall-of-Famer Mike Sexton, invited to simply share his brand of poker lore while mingling with Zynga players, give his quick take on the relevance of this relatively small little event and the booming company behind it:

Mike Sexton at Zynga Pokercon 2011

pic by Michele Lewis

Hellmuth: Party crasher?

Phil Hellmuth musta seen something more than just a $100k freeroll going on, too. Whether delivering a “bonus” to Pokercon attendees out of the kindness of his heart or just because his feelings were hurt for not being asked to take part in Zynga festivities, the “poker brat” slipped in as an uninvited (but presumably still welcome?) guest and revealed his presence at the Pokercon final table to a smattering of gasps and boos. When poker’s self-proclaimed badboy tried to educate the fans that they were supposed to boo him, the nice Zynga people didn’t exactly oblige — giving him instead a polite round of applause. You can tell, however, at least a few in the crowd understood the subtext of his unscripted exchange with host Ali Nejad — effectively trying to put PokerStars back in its (2nd) place.

Phil Hellmuth at Zynga Pokercon 2011

Laurence Toney didn’t make the Bluff Power 20 even though he runs the largest online poker site in the world. (38 million active players, they say, 7.5 million a day!) I know I know … I didn’t vote for him either … but spoiler alert: probably will next year.

Lo, as he’s known, Zynga Poker’s General Manager, aka @lo_toney, is quite the new mystery man in poker. He doesn’t come from a poker background, he comes from YoVille … one of the original Zynga games (and before that art.com, and before that eBay-Collectibles). While YoVille in and of itself is rather fascinating — seriously, they actually have a YoVille media, and do real-life biz with companies the WSOP could only dream about some day seeing on its felts — what that understanding of true social gaming brings to poker remains to be seen.

Check out the RawVegas interview with Lo …

… via Wicked Chops

But soon to be announced and official, the hapless poker multimillionaire from western Maryland has apparently caved — signing a deal with the Heartland Poker Tour to serve as their “ambassador” and wear HPT gear in all tourneys, including the WSOP.

This comes from a plenty reliable source; however, said source would not confirm (nor deny!) that Darvin Moon is near-broke and thus rethinking his aversion to wearing poker-related patches … but did confirm that no poker agents were involved in signing the agreement.

Moon, of course, was the unsignable runner-up at the 2009 WSOP … making him pretty much the opposite of Dennis Phillips, and the only November Niner ever not to be patched up at the main event final table. He also snubbed the WSOP this past November by turning down repeated invitations to be part of 2010 November Nine festivities in Las Vegas, opting instead to play a $1k HPT event at the Meskwaki Casino Bingo Hotel in Tama, Iowa.

One of my favorite fights with Katkin is on the value of Darvin Moon as a sponsored player. I dig the dude as a character … and consider him good for … nay, great extra=solid for poker — while Katkin (clearly stuck in his ’06-’07ish glory-days poker-world mindset) I think believes his donk play and non-pro, non-online nature make him the wrong guy for the WSOP to celebrate in their commercials. To which I say … hater.

Anyhow, “facts” shmacts … Variety is reporting that Jeffrey Pollack’s new Federated poker league may have found itself a TV partner in CBS — as in the venerable broadcast network.

A few months ago, he called me up and wanted to talk about moving his (then-current) show to a new venue, broadcast medium, and sponsor. Specifically, he wanted to know if he could take the name of his show with him to his new broadcast home. For purposes of the discussion, let’s call the show “Big Slick.” Was Big Slick his property?

Truthfully, but unhelpfully, I told him: “It depends.” To try to start to figure it out, I asked him a number of questions about Big Slick. (I was a fan of the show, but didn’t know how the name came about. I also hadn’t been his attorney when he started it, so I didn’t know how the show itself began and developed.)

Not all of the questions and the follow-ups are here, but below are a few of the initial and critical ones if you have intellectual property that you want to protect and carry with you through your poker career. Poker players and personalities know the value of branding, personalities, and trade names. Often, they just need to make better up-front efforts to safeguard that value.

1. What does the agreement say?

What did the written agreement between my guy and his promoter/broadcaster say? It turns out it didn’t say anything; there was no written agreement. Not having a written agreement doesn’t necessarily mean there’s no contract between the parties. Some important contracts can be verbal. But some laws specifically prohibit verbal contracts (for example, many jurisdictions prohibit verbal real estate contracts selling real estate has to be done by written agreement). More important, verbal contracts are invariably tougher to enforce than written contracts. Their terms often aren’t clear and, even when they are, there’s often a disagreement about whether the parties agreed to commit themselves to a contract, as such. A clearly drafted and properly executed written agreement solves both of these problems.

Anyway, back to my pal. When he and the promoter decided to collaborate, it was agreed that an advertising sponsor would pay a certain amount to broadcast the show (this wasn’t committed to writing, either). My friend hosted and produced the show. He came up with the name Big Slick and owned the corresponding web domain name. Some help was provided gratis by the promoter in putting together the Big Slick logo for the show. There was no term on the agreement between my friend and the promoter.

2. Who had trademark rights in Big Slick?

While I was on the phone with my friend, I did a quick search of the trademarks databases in the US Patent and Trademark Office and the Canadian Intellectual Property Office. Neither showed a registration for the Big Slick trademark. (Remember that Big Slick is a pseudonym; you’ll have to take my word that the real mark was and is not descriptive and otherwise fully registrable.) Which meant that neither my guy nor his promoter had a registered trademark in the name.

What about common law trademark rights? Common law trademark rights are rights obtained through use of a non-registered mark. To the extent that there is a paramount issue in trademarks, it’s this notion of use, and not just use in any manner, but use as a trademark. Both my buddy and the broadcaster had been promoting the name through marketing for the show. However, had they been using Big Slick as a trademark? The promoter had listed Big Slick on its website as a member of a family of shows that it broadcast and promoted. This wasn’t use as a trademark; this was arguably an indication that it had a licence from the trademark owner to call attention to the fact that it broadcast the show. My friend’s usage was much more consistent and compelling. He used Big Slick as a brand and a trademark. His website or service wasn’t just broadcasting Big Slick; his show was The Big Slick.

While my friend came up with the name, the logo was a collaboration. This highlights the difference between word marks and design marks. Word marks are trademarks that are bare words in any font, style, or size. “PartyPoker” is trademarked as a word mark around the world (confined to the wares and services set out in the particular mark) however it is written or it appears. Design marks are trademarked logos or words written in a specific font or style (or both); “PartyPoker” in the stylized lettering with which we’re all familiar is also trademarked as a design mark in several jurisdictions.

There was no registered design mark for Big Slick. My friend indicated that both he and his promoter had worked on it “together” and that both had used it in marketing the show. A key question here (for copyright purposes) was “who actually put pen to paper and designed the logo?” Often, there’s one person that did it, and here it was my guy. My buddy should have had the copyright and the better set of trademark rights because the logo had been used by him as a trademark.

3. Other Issues

As briefly mentioned above, copyright also came into our discussion, but this post is already getting long enough without drilling down into that. I asked my friend whether Big Slick had any value separate and apart from his involvement. That is, if he left and the promoter still had a show called Big Slick, what would it be worth, either as a show or as a bare name or design mark containing Big Slick? Setting aside the IP aspects of who owns what, there was a practical question of whether the parties were about to start fighting over something that might not be worth a fight.

At the end of the day, the promoter suggested that it had some rights in Big Slick and would need to have those rights bought out. I disagreed, based fundamentally on my guy’s use of the word and design marks as trademarks (see above). My friend - ever the serial entrepreneur - decided to create a whole new name and go forward with his new promoter. I told him that he still had considerable rights in Big Slick and that simply walking away wasn’t his only option, but I respected his decision. (A potential public fight about the name between the parties wasn’t without risk for either of them.)

The bottom line, of course, is that the parties are always well-advised to turn their minds to these questions when they’re establishing their relationship so that there’s little room for argument later on. My friend went with a new promoter on a new site, but this time we insisted on a written agreement. (A written contract doesn’t have to be anyone’s magnum opus or cost an arm and a leg. My friend’s agreement was three pages and my review took a few minutes.) In it, I specified that my friend was to retain all intellectual property rights in his new show, inclusive of the name and all trademarks. The promoter would have an unlimited and non-exclusive right to broadcast and host the show on its website. Both parties are happy with the arrangement.

My friend also owns the new associated Internet domain name and is considering a trademark application.

The moral of the story is: write it down in advance and think the issues through so that, when poker-related property that has been developed is valuable and people are parting ways, there’s less to fight about and fewer fees wasted on lawyers. As another like-minded lawyer friend of mine puts it: Tough contractual negotiations are always easier than tough settlement negotiations.

(Thanks to Michael Hilliard (my best friend, an eminent IP lawyer, and counsel to Microsoft) and to Jamie Bashtanyk (@TCTrademarks on Twitter and my go-to trademark agent), for correcting this blog post for me. However, any errors in this post are mine alone.)

Toronto-based Stu Hoegner writes a darn good disclaimer as a gaming attorney and legal advisor. You can follow him on Twitter @GamingCounsel.

We’re a month into 2011 and already, the poker season has revved itself into high gear. Since January 1, we’ve seen major multi-tournament events in the Bahamas, Melbourne, and now LA. If that’s not enough poker for you, then head to Vegas where you can play in a couple of smaller, but still notable, tournament series; the Caesars Winter Classic (running now) and Venetian’s venerable Deep Stack series, starting on the 28th.

And while I’m as big a fan of a good tournament – or tournament series – as the next guy, I have to ask has poker gone too far?

For a moment, let’s forget about all the money it would cost an average player to follow the circuit around the world and just look at sheer number of events that a tourney player has to choose from. I mean, if you want to become a professional hobo, there are probably worse ways to see the world than by joining the poker circus. Los Angeles, Vegas, Atlantic City, Biloxi, Paradise Island, Prague, Sao Paulo, Melbourne, London…. The world’s your oyster if you can pay the freight and handle the jet lag and inevitable food poisoning you’ll pick up somewhere along the way.

There’s too much poker to be played in too many places. All of these tournament options are slowly cannibalizing each other by stretching the player base – and the players’ bankrolls – too thin.

The fact is, there’s barely a week left on the calendar where there’s not some kind of tournament begging to be played. Even if you just confine yourself to the continental US, you can easily go months without ever sleeping in your own bed or seeing the family you used to have. Decide to play internationally and you could easily find yourself classified as a missing person unless you can regularly Skype with your loved ones to prove that you’re still alive.

Unlike real sports that have clearly defined off seasons, poker is now a year-round pursuit. You don’t get weather delays or rain outs and no one cares if it’s 10 degrees or 110 degrees outside, so long as the poker room is a comfortable 72 and the structure is good. Throw it and they will come.

So, you might ask, what’s the problem?

To put it simply, there’s just too much poker to be played in too many places and all of these tournament options are slowly cannibalizing each other by stretching the player base – and the players’ bankrolls – too thin.

Let’s look at the LAPC and the Aussie Millions, for example. Right now, many of the world’s best – and best known – pros are soaking up the summer sun down under in Australia while they compete for the Aussie Millions title. It’s a premier event and there’s no reason not to play if you can afford the time and tournament entries.

At the same time, however, another premier has just kicked off at the Commerce Casino in LA. And while the LAPC certainly won’t be lacking players, it also won’t have anywhere near the star power (at least in the poker sense) that it should have. Sure, you’ll see plenty of Hollywood celebrities at the Commerce over the coming weeks, but don’t hold your breath looking for poker luminaries like Phil Ivey, Tom Dwan or Patrik Antonius. The commute from Melbourne is just too far.

As a second-tier player, the absence of the game’s best players from tournaments like the LAPC is surely welcome. Who wants to play against tougher competition when there are hundreds of thousands of dollars on the line? But for the casual players – and for the tournament officials – the absence of these players is sorely missed.

To run a successful series, you need to attract players. And while the promise of big money is always a fine lure, the fact is, being able to advertise that you can share a table with the likes of Daniel Negreanu, Annie Duke or Howard Lederer is as much – if not more – of a draw than the money is.

Craziness, you say? No. The fact is, most casual players are never going to make a big score in a major tournament no matter how often they play. The fields are too big and the competition is too tough for them to have anything approaching a real chance to make a final table or pose for the winner’s photo. But, if they have $1,000, $2,000 or $5,000, they can easily find themselves sharing a table and playing pots with the likes of Dan Harrington or Barry Greenstein. And for most players, that opportunity – and the potential stories it can provide – is worth the money they dump into the prize pools.

Speaking of money, let’s look at what it costs to play in the biggest live tournaments these days. If you want to play a Main Event at any kind of “name” tournament series, you have to count on having an extra $10,000 burning a hole in your pocket. Barring that, you can always try to satellite into the big tourney for anywhere between $500 and $2,000 per shot. Assuming you don’t win your seat on the first try, multiple buy ins can quickly run into big money as well.

Of course, today’s big tournament series all feature plenty of side events with buy ins ranging from $500 to $5,000 for the player on a budget. Like their more expensive counterparts, these events offer some amazing ROI, provided you can work your way through the huge fields without making any catastrophic mistakes.

Now, let’s say you’re an average player who decides to take a few shots at some of these side events. Assuming you play three tourneys with an average buy-in of $1,000 each, you’ll have to finish somewhere in the top 20 of at least one event in order to break even on your investment.

Oh, and that’s without counting all of the money you’ll have to spend on travel, hotels, food, liquor, strippers and the like. Unless you can make the money on a regular basis – or have an unlimited trust fund – be prepared to watch your bankroll melt away faster than an Antarctic iceberg.

I know, I know. It looks like I’m really down on the whole tournament circuit, but the fact is, I’m really not. Like I said earlier, I like tournaments and well run tournament series. But in moderation.

He’s founded a new California company — Federated Sports+Gaming — with Annie Duke on the executive team and serving as commissioner of the poker league, which promises to be a professionals-only set-up. Duke resigned from the WSOP’s event-steering Players Advisory Committee two months ago and last month renounced her relationship with UB, the most notoriously beleaguered online poker site in history.

According to @OskarGarcia from the Associated Press:

The yet-to-be-named league is planning four televised regular-season events plus a $1 million championship freeroll at the Palms Casino Resort in Las Vegas this year, league executives said.

“This is incredibly pro-centric,” Duke told The Associated Press. “This is the one piece that’s kind of missing from the poker landscape right now, which is something for the best players in the world to compete against the best players in the world.”

Should be interesting to see who, by Federated’ new definition, qualify as pros … with one obvious litmus test being will @donkeybomber be able to secure his card?

Corporately, Duke is an executive vice president of Federated Sports+Gaming’s, though not a member of its board of directors. The others on Pollack’s team come from YouBet.com, the biggest legal online gaming company based in the US, which was recently acquired by Churchill Downs, the publicly traded online gaming outpost for Kentucky’s horse-race industry. Others on Pollack’s executive team share varying degrees from Northwestern University, to which I say, um … Go Cats!

Pollack, serving as chairman of Federated, maintains his position as executive chairman of PBR, which real cowboys will tell you is very different from traditional “rodeo”. Read below for his full statement announcing his reburstage onto the poker scene:

Tue, 01/18/2011
Welcome Message from Jeffrey Pollack

We may be a new company, but Federated Sports + Gaming is built on a timeless value: putting people first.

Our ground-breaking poker league will put professional players first and celebrate the stars of this great game like never before. As in any other endeavor, the world’s best talent deserves the spotlight and poker is no different. Federated Sports + Gaming will provide a custom-tailored tournament experience that clearly demonstrates how poker professionals lead the industry and are skilled in a way that is rare and worthy of special attention.

The television and media coverage of our tournaments will focus on poker professionals — making them the rule, not the exception — and it will put viewers and fans first with great story telling and a level of production that elevates the game of poker and honors its most talented and compelling personalities. Led by highly acclaimed and Emmy® Award winning creative talent, our programming will provide an ideal showcase for the world’s best poker players and carry forward a tradition of excellence shared among established, elite sporting events.

Federated social media games will also break new ground and put online players first with a superior experience that is fun and simplified. And, we will provide great customer service every step of the way and build an online gaming environment that is safe and secure.

Along the way, we will partner with companies that share our passion and values and also put people first – both their customers and employees. For our own part, I know that we have assembled an executive team at Federated that is replete with experience, insight, perspective and a fierce desire to work as we live – with integrity, honesty, transparency and a keen sense of humor. Our people rock and have a wealth of experience in sports management and media, entertainment, e-commerce, entrepreneurship, and legal online gaming.

When I took the helm of the World Series of Poker in 2005, a smart media executive said to me, “Always remember, it’s just poker” and suggested that the game never be taken too seriously. Well, we are serious about treating poker professionals with the respect they deserve and we are serious about our mission. But, we’re going to have a lot of fun along the way and I invite you to join us.

Welcome to a new way of doing business in the sports and gaming industry, and to a company that puts people first.

Welcome to Federated!

Jeffrey N. Pollack

Co-Founder and Chairman