Want a sense of the new world we’re seeing here in Nevada, thanks to licensed and regulated online poker? Game-wise, the combo of WSOP.com and Ultimate Poker is still hardly a shell of the glory days of PokerStars and Full Tilt. But what is different is the way online poker is showing up around town … on billboards, TV, radio … in snail mail, on top of slot machines … I’m kinda waiting to see it show up at the 50-yard-line at Sam Boyd Stadium — because really, shouldn’t there be a WSOP.com Silver Bowl?

(Note: technically a Texas-based maker of industrial lubricants has that game locked down for three years.)

Outside the Box? WSOP.com apparently thinks real money online poker might appeal to people inclined to sit around waiting for good stuff to just show up at their door. [pic: @RobertGoldfarb]

Until then, however, the WSOP is left to consider other means to present their brand (and an entire industry!) with newfound legitimacy. According to the presumably reliable delivery driver from Noble Pie Parlor in Reno, WSOP.com provided some 500 of these boxes for their handmade “New York Street”-style ‘zas.

UNLV’s Center for Gaming Research put out some data collected from NGCB’s Gaming Revenue Reports that paints a rather interesting picture of the poker world over the past 20 years. The chart you can see here — showing the number of poker rooms, the number of tables, and total rake — pretty much tells the story of poker … and I couldn’t help but want to graph it!

What I’m not sure of is whether or not these numbers include tournament entry fees or represent only cash game collections. But either way, even with the WSOP finding creative ways to report definitive growth year over year, I’m fairly certain the shape of both graphs would look pretty much the same.

The World Poker Tour made its Chinese debut this weekend at the MGM Grand in Sanya. That’s some 400 miles down shore from Macau, where PokerStars recently hosted the inaugural “Asia Championship of Poker”, and next month will hold something similar called the Red Dragon. These events come just as Caesars, unable to get properly licensed in China, is officially retreating from the Communist gamblers’ promised land.

Meanwhile, Stars is apparently trying to  get (back?) into North America by buying a distressed brick-and-mortar casino in storm-ravaged New Jersey — this according to an announcement that may or may not have been conveniently timed to steal buzz from a WSOP circuit event going on in Atlantic City.

Game of Risk: Live Poker in an Online Age
Redrawing the Battle Lines

Check out how the three biggest brands in poker (and the online gaming sites behind them) stack up against each other. I make no claims of these maps being to scale nor anything more than “pretty accurate, I think,” but look past my amateur cartography to see how three Poker World superpowers — the biggest American casino corporation, the biggest European internet gaming company, and the biggest “offshore” online poker operator — have been competing fiercely to corner your neighborhood tournament market.

 WSOP / Caesars / 888
 WPT / BwinParty / MGM Resorts
 PokerStars.net / PokerStars.com

See below to for some historical perspective on how the current live-tourney landscape took shape over the first decade of the 21st century.

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It’s been interesting seeing different industry people come and go as the poker world continues to churn over into something new. Good riddance for some, greener pastures and/or potential prison time for others … either way, it’s good to see poker people thriving in different places.

So check it out … Jeffrey Pollack, one of the more controversial figures in poker (c. 2005-2011) seems to have found his way back to the NBA. The exiled WSOP Commissioner, who partnered with Annie Duke in an effort to save the game (or at least rebrand it) before an Epic flop, apparently has been working closely with Robert Pera and Jason Levien, new owners of the Vancouver Memphis Grizzlies. Best I can tell it will now cost Pera $100 million to properly dick over a city, and maybe there’ll be a party with Justin Timberlake.

The skill set required for poker and investing are similar. Success at either requires an ability to minimize losses, maximize gains and manage a bankroll. Trading firms and hedge funds often recruit from the professional poker ranks, as this LA Times article, featuring Chris Fargis, explains.

So it should be no surprise that a number of the players in this year’s WSOP million dollar buy-in One Drop Tournament hail from the investment world. Two of the most notable investors that may(?) play in this year’s One Drop are Andy Beal and David Einhorn.

2006 picture of Andy Beal at the Wynn (taken by Amy Calistri)

Andy Beal
Investment Style: Buy Low, Sell High

Dallas Banker Andy Beal was one of the first to sign up for the million dollar charity event. Although a recent post by Gary Wise suggests that Beal could be a no show.

Beal made his first fortune investing in multi-family residential properties, bought for a song at HUD auctions. Beal Bank made another fortune buying up distressed debt in the wake of the S&L crisis. In 2009, Beal moved up to #52 from #321 on the Forbes list of the 400 Richest Americans. He made roughly $4 billion buying up toxic assets after the financial meltdown.|

Beal is no stranger to the poker world. In 2001, Beal took on some of the world’s best poker players in a series of heads-up limit hold’em matches chronicled in Michael Craig’s book, “The Professor, The Banker and the Suicide King.” He reprised those matches in 2006, covered in this Bluff Magazine article.

Beal is a patient investor who always knows how to invest 1000 dollars to turn it into more. But he likes his poker like he likes his cars (Beal owns a number of race cars). He finds nine-handed play tedious. And he likes to push the stakes up into scared money territory. If Beal opts out of One Drop at the last minute, as Gary Wise reports, I blame the slow action of tournament play.

Einhorn at the 2006 WSOP

David Einhorn
Investment Style: Sell High, Buy Low

According to this Bloomberg article, the hedge fund manager David Einhorn is planning to ante up for One Drop.  The manager of Greenlight Capital has made a name for himself by shorting stocks — betting that their price will fall. In 2007, he shorted the investment bank Lehman Brothers. The 150-year old financial services company went bankrupt in September 2008. Lately, Einhorn is raking it in on his Green Mountain Coffee Roaster short.

Einhorn finished 18th in the 2006 WSOP Championship, donating his $600K+ to the Michael J. Fox Foundation. When it comes to poker charity events, Einhorn’s recent track record may be hard to beat. In May, he won the 7th annual Hillel Texas Hold’em Tournament and in March he won the 5th annual Michael J. Fox Foundation Poker Tournament. If you plan on playing against Einhorn, he discusses  his playing style here.

Las Vegas casino gambling revenues have been on a notable rebound. But in the year following online poker’s Black Friday, brick and mortar poker room revenues haven’t necessarily kept pace.

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.

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Mark Cuban wrote that a sure sign of failure for any start-up is too much promotional gear. I’ve always kinda agreed … believing too many pokerpreneur types come with all the hype but not an actual product (let alone value proposition). But who am I to complain? Everyone knows Pokerati’s business model: to run a haphazard media empire and someday retire by collecting poker swag for future sale on eBay.

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.

David in Dallas sends an FYI about a big ruling in Tax Court that should prove rather beneficial to poker players:

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:

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Buckle up … the news (we care about) has been moving too fast for Pokerati be the lone source keeping up with it all. And with this latest — Caesars has made it official … the Empire is going public (again)! — don’t be surprised if February/March 2012 turns out to be the biggest news month in poker since April 2011.

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.

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Too Soon? PokerStars is proud to announce that this has never happened on any PokerStars Caribbean Adventure.

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.

CZR FTW?
“Poker Poker!”

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.

 

POKER CON? Lo Toney plays his cards close to the vest when questioned about Zynga’s entrée into casinoville and supposed disinterest in the future of real-money online play.

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 in regards to bingo games to play for free 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

[audio: /Pokerati Interview/lo-toney-zynga-interview.mp3]

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.

Joan Rivers’ nemesis’ brother’s online poker company could learn a lot from Trump about how to run a company into the ground and still be rich.

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.)

Full Tilt laid off some 200 people on the Pocket Kings staff in Dublin last week — leaving pretty much just the head honchos, who apparently believe that ole Chris Ferguson bit about “a chip and a chair” too much and somehow still think they can salvage the company something.

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:

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A Full Tilt-supported televised poker game in Cardiff, UK — The Poker Lounge — was canceled mid-event today, when the TV production company walked off the set after an expected wire-transfer from Ireland did not arrive, reliable sources say.

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.