Poker and the Digital Felt

On May 12, 2004, the second highest stakes poker game in history began at the Bellagio in Las Vegas. Andy Beal, a self-made billionaire, sat down across from Todd Brunson, the son of poker legend Doyle Brunson and a host of other professional players. Between them, $20 million lay on the table. It was an anomaly, particularly since most of the high-stakes games were being played on the internet at the time. Considering what was happening in the poker world and online, it looked like Beal might have been playing the swansong of the high-stakes casino poker game.

Or were they?

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To understand the complex relationship between poker and the internet, the first thing you have to realize is poker in Las Vegas was a dying game in 2002. And, to understand why it was dying, you need to know how a casino makes its money. It all has to do with mathematics, and who is playing whom.

In most casino games, the player is playing against the “house” – the casino itself. In these games, any time the player loses the casino wins the entire pot. So long as the casino can win at least 50.1 percent of the time, it can rake in a nice profit, particularly when several high-stakes gamblers are wagering thousands of dollars on each table. Even with lower-stakes games, the profit margin is still very high as long as the house can win more than half the time.

In a game of poker, however, the house is not a player at all. The casino provides the dealer, the table, the cards and the chips, and for this Nevada law allows it to take 10 percent of each pot, and often the casino takes less. So, if $3,000 crosses a poker table in a single night, the house is only going to make $300 at most. And the casinos didn’t like this.

By 1995 poker was in decline. By 2003 most of the Vegas poker rooms had been shut down. But then two media came and saved the game from virtual extinction.

The first was the World Poker Tour, which used little cameras to read hole cards and turn the game into exciting reality TV. The second was online poker, which allowed millions of WPT viewers try their hand at the game without from their armchair.

And the game, while resuscitated, would never be the same again.

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Contrary to popular belief, poker is not a game of luck. It is a war against it, waged using psychology and mathematics. While random chance dictates what cards hit the table, every move and bet is used to minimize the impact of that chance.

A good poker player must understand how to calculate the odds of his cards improving to the best hand, known as “the nuts,” and then use that to determine what amount to bet. Once the player can do that, he can use that knowledge to read the other players’ hand, based on their betting patterns and body language.

The betting itself is a form of communication, as each player uses mathematics to manipulate the others, sometimes presenting the impression of a strong hand where none exists, sometimes drawing out the other players by portraying a weak hand while he has the nut. A skilled player can use this, as well as an understanding of body language and psychology, to make a fortune at the table.

While poker used to be played on the felt at casinos and poker clubs, the internet has changed the very nature of the game.

“The game has gotten much more aggressive, and it has made it even more of a chess game than it was before,” said Daniel Negreanu, a professional player who has earned the nickname “Kid Poker.”

Negreanu, a native of Toronto, began playing in the 1990s in casinos, ranking among the top professional players within a couple of years and making millions. Like most of the professional players, he has also branched out into the internet and attached his name to Full Contact Poker, where players can sit down at the online table and play with him. And, as Negreanu has noticed, the online play is a godsend for players who want to get involved in the tournament scene.

“Not everyone has a free $10,000 [for the entry fee] lying around,” says Negreanu. “What online poker does is allow anybody, for as low as $1, to compete online.”

The online competition has flooded the tournament scene with players. The World Series of Poker, which bases its first prize on the number of contestants, has increased its numbers to the point that thousands of players are entering, and the grand prize for 2006 was $12 million – part of a prize pool that totaled $82.5 million and set a world record for a single sporting event.

While players entering the conventional way have to pay a $10,000 entry fee, a player can win his way in by winning an online tournament. Under certain conditions, a player can get into a larger tournament through what is called a “freeroll” – a competition where the website pays the entry fee.

Poker has never been so accessible as it is now. However, while there are advantages to learning and playing game online, there are disadvantages too.

“When you play online you have nobody staring you down, no added pressure of people watching you,” says Negreanu. “When somebody is staring you down, it’s a lot more difficult to execute those plays.”

While this weakness places players who have only played online at a disadvantage at a real card table, it also gives them an advantage over many players who have learned in the conventional way. Playing poker online is easy. You see your cards, wait for your turn and then bet, call or fold. But while players may not know how to make a play under pressure, the online game provides a perfect training ground for learning the mathematics of play.

But, when it comes to the game as a whole, this does not necessarily give the online player the overall advantage over a real-world player. While the mathematics are important, it is even more important to be able to play the other players, and to do that you need to read body language. This gives a live player an easier time picking up online play than vice versa.

“In live poker, the focus is in betting patterns,” says Negreanu. “And online poker is nothing but betting patterns. [But when it comes to] simple people-reading skills – they lack people-reading skills. They’re not as good picking up on how people look, or picking up on their tells. A good top player like Doyle Brunson will look at the guy and say, ‘He doesn’t have it – I don’t care what the math says, he doesn’t got it.'”

While the player pool has changed with the online revolution, so has the profession itself. The World Poker Tour turned poker players into celebrities, but online poker helped turn them into a brand.

Although there are players like Phil Hellmuth and Phil Gordon who have their own lines of poker supplies, the big rush for the new celebrities was online. With a field of dozens of now-famous players, poker sites scrambled to sign as many players as possible for lucrative celebrity endorsements. While the professionals used to earn a living “rounding” the tables and winning hands in the high-stakes games, it became possible for a pro to attach his name to a website, live off the endorsement money and never hit a card table again.

But, for those who kept to the card tables, the location of the games had changed. Since most players preferred to stay at home and play on the internet, the high-stakes poker games in Vegas began to migrate online. And professional players followed the money.

“If I was to start again, I wouldn’t ever play live poker,” says Negreanu. “You can play five low-limit games at a time and build a bankroll far easier than hitting a cash table.”

The real world of poker was changing – while the offline tournament circuit remained strong, the cash games that had been the staple of the profession for decades were drying up. After all, why would a beginning player go to Las Vegas if he could play at home?

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While online poker not only helped save the game, but also changed it forever, it would be the real world that dealt the game a massive blow.

The October 13, 2006, signing into law of the Unlawful Internet Gambling Enforcement Act (UIGEA) by President Bush forbade credit card companies in the United States from conducting transactions with online gambling companies and sent poker sites scrambling to find loopholes. Even over a year later it’s still too early to tell for certain, but the law may have dealt poker a crippling blow.

“All live tournaments will take a huge hit,” says Negreanu. Indeed, since poker sites now have to build work-arounds in order to take in money and pay it out, the massive influx of players into live tournaments through online qualifiers has been endangered as the qualifiers become fewer and farther between.

The new law raises other questions, none of which have easy answers. Many of the poker sites located outside of the United States; to what degree do they need to follow the law? And where does American territory end and the international begin on a medium that traditionally defies any such categories?

“Why should it be illegal for me to go online, which is not the United States, and play poker from Amsterdam?” demands Negreanu.

These issues have already been the source of at least two international lawsuits. Both the European Union and Antigua have filed claims for damages after the trade bans impacted the online casinos located in their territories. Both followed the World Trade Organization’s March confirmation of its ruling in January 2007 that the new law had violated American treaty obligations.

The true impact of the UIGEA is unlikely to be as simple as many professionals fear. While the online cash games may be endangered, most, if not all, of the sites offer games with play money, including freeroll qualifiers. Since no real money changed hands in these games in the first place, the new law has little impact on them, even while it decimates the cash games.

One likely result is the return of the high-stakes game to the real world. Now that cash games are harder to find online, dedicated players will need to return to the real world, where poker is not illegal. Andy Beal’s $20 million game may very well prove not to have been the swansong of the high-stakes game on the live felt, but instead the herald of far more to come.

Robert Marks is s a freelance contributor to The Escapist.