Online Poker: Hold 'Em and Hide 'Em
By IAN URBINA Published: March 19, 2004
Ben sleeps five hours a night; the rest of the time he sits at his desk in his Brooklyn apartment playing online poker. He won $55,000 one recent evening, but in his tireless ambition for the $2.5 million world championship, this mild-mannered college graduate has become an outlaw in hiding and a twisting thorn in the side of Eliot Spitzer, the New York attorney general.
Ben quit his teaching job five months ago and now makes around $100 an hour. Five days a week, he clocks 10-hour shifts of Texas Hold 'Em on his Dell laptop computer. With reggae in the background and coffee mug in hand, he studies his competitors who sit in London, Copenhagen, Los Angeles and elsewhere, while the dealer in Costa Rica tosses cards.
A couple of blocks away, a slightly less-skilled friend of Ben's named Jimmy also works busily. While Ben plays high-stakes tournaments with pots topping $70,000, Jimmy is what is known as a "grinder" - he works the smaller virtual tables, specializing in cheaper and less risky play, but keeping three games going at all times, nickel and diming his way to decent earnings. In the past four months, Jimmy says that he made $30,000.
Ben and Jimmy would only speak to a reporter if their last names stayed out of the newspaper. That's not surprising, because they are the human faces on the wrong end of Mr. Spitzer's public campaign to shut down the hugely profitable online gambling industry.
Although they asked for anonymity, the two men say they are not hugely worried about Mr. Spitzer's campaign, despite the attorney general's relative success.
To spend the afternoon with these players is to enter a world where, at any hour and with a little luck and a touch of skill, decent wages can be had without ever changing out of one's pajamas or leaving the comfort of one's own couch. But to get there means venturing just across the border of legality. Since 2002, Mr. Spitzer has succeeded in getting more than 10 major financial institutions, including Citibank and PayPal, one of the largest Internet money transfer companies, to stop processing gambling transactions. But he has been unable to prosecute the Web site operators, most of whom are offshore, and hard pressed to arrest online gamblers because they are dispersed all over. Instead, he has tried to seal off the financial pipeline connecting the two.
In recent months, federal prosecutors from around the country have joined the effort by threatening to prosecute on charges of aiding and abetting any businesses in the United States that provide advertising and financial services to illegal Internet casinos. As a result of the pressure, several large media operations - including Infinity Broadcasting, Clear Channel Communications and the Discovery Networks - have stopped running advertisements for offshore Internet casinos.
Jimmy said the attorney general's efforts have made his life a tiny bit more complicated. "It used to take me one mouse click; now it takes two," he said. He simply shifted to Net Teller, a Canadian equivalent of PayPal, to buy chips. Ben mails a cashier's check to his poker Web site in Antigua.
Lee Jones, online manager of one of the most popular sites, Pokerstars .com, says 10,000 players can be found on the site at any given time. "Our players tend to be a pretty loyal bunch," he said.
Some are more addicted than loyal. Steve, a Long Island lawyer who like the others did not want to give his last name, said he still owed a $15,000 credit-card debt to an online poker site. Having already kicked a 10-year gambling habit, Steve fell back into poker after his wife bought a computer.
"It's not a temptation you want in my living room," he said.
Willie J., a Manhattan businessman, began attending Gamblers Anonymous meetings two years ago, after finding himself $45,000 in the red. "I had 12 credit cards and had memorized all their numbers and expiration dates," he said. "That's when I knew I was in serious trouble."
As an industry, online gambling has obvious profit potential. While casinos in Las Vegas pour hundreds of millions of dollars into show-stopping hotels, Web sites require not a drop of mortar nor one cent for lounge acts and cheap buffets. What Web sites lack in pizazz, they make up in convenience, as customers can play a quick round of $100 blackjack seconds after rolling out of bed.
Mr. Spitzer decided to clamp down on the industry in 1999 after his office won a precedent-setting case involving an Internet casino. The Web site's operators, World Interactive Gaming Corporation, based in Suffolk County, claimed they should not be subject to New York gambling laws, since their Internet servers were licensed in Antigua. However, the State Supreme Court ruled that the Caribbean location was irrelevant, since the actual transmission of information from New York via the Internet constituted gambling activity within the state.
This ruling may, in the long run, doom New York online bettors, said Ken Dreifach, chief of the state attorney general's Internet bureau.
On the federal level, online gambling remains uncharted legal territory. Many legal scholars point to the 1961 Wire Act, which makes it a crime to use a wire for transmitting betting information across state or national boundaries. But it makes no mention of the Internet and is typically viewed as being limited to sports betting. Legislation pending before Congress could amend the Wire Act to include restrictions on Internet gambling, said I. Nelson Rose, a law professor at Whittier Law School in California.
Historically, gambling regulation has fallen to the states, but few besides New York have aggressively confronted its online form, perhaps because of enforcement difficulties. Bradley J. Gibbs, a lawyer with Heller Erhman, a law firm that has handled online gambling litigation, said "arresting grandmothers and 12-year-old computer users is a sure public-relations disaster."
Mr. Dreifach says his office found an effective weak spot when it focused on the flow of online funds. The tactic also made sense, he said, because most credit-card companies processing these transactions are in New York City.
By reprogramming a couple of lines of software, Mr. Dreifach said, the code corresponding to these sites was blocked. But the effectiveness of such blocks remains to be seen. "If money is flowing, tunnels dig themselves," Professor Rose said.
Mr. Dreifach is confident his work has made its mark. In 1999 profits from online gambling were estimated at $3 billion, with indications that the number would double within three years, Mr. Dreifach said. The estimate still lingers around $3 billion, he said.
"I think we had a big part in cutting off the growth," he said.
Some poker players actually support the idea of making online gambling illegal. But they do not believe poker is a form of gambling.
"It's a game of skill, not of chance," Jimmy said.But in the eyes of the law, Mr. Dreifach said, gambling includes all games in which chance outweighs skill. "I don't know about you," he said, "but for most of us, poker is certainly a game of chance."
Posted by iang at March 19, 2004 01:13 PM | TrackBack