If you haven't heard, our broke government wants to get its hands on the online poker industry's potentially US$6 billion dollar annual revenue pie. They've frozen bank accounts linked with Full Tilt Poker, Poker Stars, and Absolute Poker and have indicted 11 founding executives of the companies. All totaled, the government wants US$3 billion in fines and restitution!
As you may know, I enjoy the game of poker. I don't think it's gambling because you are playing against opponents, not the house. This is the crux of the argument as to why the online poker industry should live or die. The government thinks poker is gambling, but online poker executives obviously think otherwise.
If poker was gambling, why is it that we always see familiar faces win big tournaments. Names such as Phil Hellmuth, Phil Ivey, Chris Ferguson and John Juwanda are everywhere! You only win 49% of the time in gambling, but these guys win much more, that's why they are so wealthy. One interesting thing Phil Hellmuth told me at a charity event last year is that Full Tilt Poker player/shareholder Phil Ivey makes some US$2 million a month from his site!
DUMB PLAYERS ARE GAMBLERS
You either play poker recreationaly and quit after you lose a little money, or you keep playing and continuously lose a lot of money. If you follow option number two, you are a gambler, because you are an idiot.
Poker is a zero sum game. You either win, or you lose. There is nothing in between. In a recent AP article highlighting the crack down, they profile a couple players trying to make a living through online poker:
For Michael Borg, the loss of online poker has meant he's already started sending resumes for 9-to-5 jobs just three months after deciding to try to make it as a full-time pro. Like Fellner and many others, he is more frustrated with the U.S. government than the companies that hold his $3,000 bankroll.
“It's like we're collateral damage in a war,” he said. “What it comes down to is the government wants a piece of that money.”
Fellner, The 25-year-old Sacramento, Calif., community college student said he planned to use poker income to put himself through college without debt, but now he thinks he'll have to find another way.
“It's been stripped away from me,” he said. “It's actually really frustrating because I'm pretty good at it.”
The first thing that came to me was, WOW, the government has literally saved the futures of these two young chaps! Michael Borg has a whopping $3,000 bankroll, and plans to make a living off of online poker? Give me a break. I bet if Michael kept going at his pace, he'd go broke faster than I can call an all-in bet with my quad Aces! Meanwhile, this Fellner guy plans to put himself through community college with his winnings. It's more likely he'll go into massive debt and drop out because he'll go on poker credit and lose it all.
The government's crackdown is good for thousands, and perhaps millions of Americans. These aspiring poker pros who decided to skip college and shun entrepreneurship or real jobs will be forced to get an education and focus on their finances. Yes it sucks if you have a couple hundred thousand locked up in a shady account that's used as your bankroll. You'll get it back from the government, maybe. Despite all the continued carnage the government leaves behind after everything it touches, this shutdown is actually good for our future!
Related: Inside The Mind Of A Gambling Addict
To subscribe to my free newsletter, click here. Check out my Top Financial Products page to help you achieve financial freedom sooner as well.
Readers, any online poker players out there who have thoughts on the shutdown? Do you think poker is gambling or not?
I LOVE poker, but don’t have the testicular fortitude for hard core games…the question I have is, who cares if it is gambling? Why is gambling a 4 letter word? Someone brought up lotteries before, but I can easily lose more by just going to one of the 12 casinos within 3 hours of my home.
Because big government knows what’s right and wrong for us all forever!
sounds like an opportunity. tax it, regulate it and make it win win for all.
the government has done the right thing by taking the first step, but whether it is the right step i don’t know.
and yes poker is gambling, whether you are playing against each other, or the house. one makes money at the expense of someone else, either singularly or collectively
that said, i love poker. heading to vegas next weekend! NBA / NHL finals, blackjack, poker, the wheel – can’t wait~
I am totally clueless when it comes to gambling in general. However, for some reason, many of the soccer coaches in my area are absolutely hooked on it. As a matter of fact, one guy is training to be a house dealer of some sort, which gambling constantly along the way. Talking to these coaches taught me how some people really are hooked.
This is obviously all about money. If it was about addiction or the good of the people, then smoking would be outlawed too, along with the lotteries as mentioned above. Instead, the government gets tons of money from lottery and cigarette taxes.
It’s just another money grab. The government already endorses gambling with HORRIFIC odds which targets the poor – Lotteries. It’s really quite ridiculous the amount of advertising and availability of lottery tickets when it’s purely a government operation.
Totally hypocritical.
That’s right! Lotteries are such a money making scam! Good point there mate! Furthermore, it’s generally the middle to lower income folks who play the lottery. What an insult!
Isn’t that gonna be Obama’s new slogan for ’12? Since Hope and Change is totally hackneyed, the new slogan will be:
Obama ’12
All you need is a dollar and a dream.
Good point about lotteries! They really do advertise like crazy and the odds are ridiculous. So many people throw away hundreds if not thousands of dollars on tickets and scratchers each year when they’d be so much better off putting that money towards paying off debt.
Is the crackdown due to the depressed economy? Are they just looking for revenue? In this difficult economy, I notice the cities raise all their fees. I think it is purely an extension of insufficient tax dollars. Next they will institute sales tax on Internet purchases.
Sales tax on internet purchases is definitely coming. I can’t believe it’s not here already!
I think poker can be fun, but you have to treat is as a recreational activity – like going to the movies. I like going out to the Indian Casinos now and then, and I take about $100, and when it is gone, its gone. I sometimes come out ahead, sometimes I don’t. But I do always get a nice afternoon of entertainment, and usually a free buffet!
Free buffet? Nice! Yeah, it’s really a zero sum game, so just go have fun. The majority of people who think they can make a living being a poker pro are so misinformed.
Er, uhm, last time I opened a brokerage account, there were several regulations that had to be met. For instance, if you have less than $25k in the account, then the SEC can freeze it should you exhibit a “day trading pattern”. If I’m a securities/financial professional, then the SEC has a whole bunch of other regulations to meet.
I’m sure they’ll come to a deal at some point and the poker actions will go back to normal once the government get a slice of the pie. Make the casino pay fine and back taxes in installments and then any forward earning will be taxed. They’ll still make plenty of money so I’m sure a deal can be had.
I think poker is gambling because, while skill is huge, it still comes down to chance a lot of the time.
I am not a fan of the government’s actions here, but I see the reasoning behind it. I think there is a better way to do it than freeze the sites, but the government does deserve its share of tax revenue.
@JT McGee My understanding was that the companies in question WERE offshore (I heard Ireland as the location for at least one of them.) Maybe Sam could correct me on that point, but I thought the issue the US government was arguing was that they have the ability to regulate gambling done by US citizens, regardless of where the physical location of the casino is. It’s an interesting look into international law at a time when the internet can effectively erase many borders, in any event.
Sam,
It’s not totally zero sum because the house takes a small rake of every pot.
It’s a zero sum game at your buddy’s house (minus chipping in for beer and pizza of course) but not at a casino, online or brick.
-Mike
That’s zero sum game. If you chop the pot, you players still lose b/c a rake goes to the house.
Ok, I agree. Zero sum including the take for the house.
As far as the players go, it’s less than a zero sum.
When playing a $1/2 no limit Holdem game at the casinos unless there is new money coming in (and hopefully you are deep stacked compared to new money) there is no point sticking around as the total pool of money will slowly be transferred to the house.
I never believed that people could actually make a living doing this, but then again, I know there are people who write blogs for a living, and who would have thought that was possible either?
I never really got involved with playing poker. I knew I would lose money. I am glad these got shut down because I know so many guys in college who see poker as a legitimate income source instead of a game.
Why not tax and regulate it heavily like they do for Casinos? If the government is going to take the high ground why single out only poker?
They should and will. The gov’t would be STUPID to close down all the sites. Just take em at 40% and make $2.4 billion in extra revenue a year. No brainer.
Is this satire? You said it yourself – you don’t consider it gambling because it is between two consenting adults. Look, the government doesn’t want to shut it down, they just realized they’ve been missing out on their piece of the pie. It’ll be regulated and it’ll be back.
I don’t play poker online personally, but I see the appeal of it. It’s no different than the casino that’s twenty minutes away, nor is it any different than putting your investments on the stock market in my opinion. Just another way to spend your money.