Bill's Poker Blog » Poker Pros

Phil Galfond’s, Let’s Make Some Changes

Bill Rini — Fri, 20 Jan 2012 20:36:19 +0000

Phil Galfond recently wrote an excellent blog post that I both wanted to draw some attention to as well as respond to as Phil invited other people to share their thoughts.

In a nutshell, Phil covers several different annoyances and problems with the way online poker sites operate. At the meta-level he seems to be focused on two major issues:

* Player tracking software
* Bumhunting and tables breaking when the mark leaves

While I agree with Phil on many of his points I disagree with his logic because I feel that Phil sees the poker landscape through Phil’s eyes. There’s nothing wrong with that. If you’re a Razz player, you’re likely to see Razz problems and solutions. Phil is a high-stakes player so he sees problems from a high-stakes player’s perspective.

How would you feel if you were playing poker for fun, just lost a $10k stack, and the 5 people at your table instantly sit out? Takes a little bit of the fun out of poker, I would think.

I completely agree that this would piss me off as a recreational player. I would not view this as a positive experience. But how many recreational players donk off $10K? The vast, vast majority of poker players don’t even have a $10K bankroll. That’s sort of where I think Phil sort of views this through a different set of eyes than I do.

But his point is valid. Even if we’re talking about $100, nobody wants to feel like the mark at the table. However, whether you’re looking at the problem as a $100 problem or a $10K problem can make a significant difference in how you address the issue.

In talking about poker tracking software, Phil says:

What’s more important, by far, is that they are scary. If a recreational player saw what your screen looked like while you played against them, how much less would they be excited to play? And some may not understand what a HUD is… some will talk about how the internet pros use programs that play for them or cheat, and use that as a reason not to play online. Obviously, that’s not what we’re doing, but we can’t prevent people from thinking that.

If you’re sitting down at an online poker table with $10K and you don’t know what PokerTracker or a HUD is, well, knowing what they are probably wouldn’t save you anyway.

But the bigger issue is by this rationale of thinking anything that offers one player an advantage over another can be viewed as being unfair. As I point out in this post in response to Kim Lund and Taylor Caby, access to knowledge is the biggest edge in the game. Isn’t someone who gets coaching from Phil at an unfair advantage against someone who has never been coached? If I read this or that book about poker, don’t I have an edge on someone who hasn’t?

The argument is a slippery slope. Eventually they’ll be asking players to take IQ and poker knowledge tests to make sure that players are evenly matched.

While Phil says that he doesn’t think poker tracking software and HUD’s should be banned, he only does so because he thinks banning them would be unenforceable.

I look at it a different way. I say, integrate poker tracking software into the poker client. If the big concern is that it offers an unfair advantage (which I don’t believe) then eliminate the advantage by giving the same tools to everyone.

In fact, why haven’t any of the poker rooms either bought out the existing poker tracking software developers or developed their own? They’re considered standard tools for online poker players and most poker rooms, for reasons similar as to those Phil cites, have no restrictions on using the software. Owning the software would give poker rooms much better control over how the tools are used.

Phil’s observations and ideas on bumhunting and tables breaking when the mark leaves are interesting and he’s obviously put a lot of thought into them but he’s approaching the problem too much like a high-stakes pro. He spends a lot of time exploring somewhat convoluted ways of preventing both of the above annoying behaviors when a much more simple solution exists.

In fact, he finally gets to part of it in bullet point number five when he suggests Must Move tables. Don’t most of the problems go away if you just employ land based card room solutions?

What if you ran your online poker room just like an offline poker room? You want to play $100 NL? There’s a board. Your name goes on the board and you either take the next available seat or you lose your place and have to wait at the bottom of the list again.

If you don’t like your table you can request a table change just like you do in a brick and mortar poker room. You don’t get to pick which table you get sent to though. You get sent to the next available table with a seat open.

Sure, it’s going to be frustrating for people attempting to pick tables according to the number of fish but that’s how live poker rooms operate and it works for them.

Phil spends a lot of time trying to resolve the issues around heads-up games but that’s not where a lot of the site’s overall games are played nor is it a huge revenue source for the poker rooms. In other words, because he plays a lot of HU, he sees this problem as a much bigger issue than it really is for the entire poker playing pool. All that’s really needed is a system that provides a fair way for people to compete against each other HU and that doesn’t allow certain players to horde HU tables waiting for fish.

IMHO, the most valuable suggestion Phil puts forth is in #6 Rewards/Promotions for Game Starters and Hands Played. I’ve long been a critic of calling what exists today, “loyalty” programs. They don’t really reward loyalty. They reward raw play. The more you play the more points you earn.

But, there are many actions that provide value to the poker room which are more akin to being a loyal player. For instance, as Phil suggests, players who are willing to start games are more valuable than players who will only sit at a full table. So let’s reward them for that. Why not award loyalty points at a higher rate for players who do things beneficial to the poker ecosystem and penalize players by awarding points more slowly for actions which are detrimental to the poker ecosystem?

For instance, why not award loyalty points at double the normal rate for a player who starts a table and plays short-handed until it fills up? Or why not penalize players that sit out when the fish leaves by taking back points for every hand they sit out? Even if you’re morally opposed to taking back points you could give those players a weighted penalty which would lower the amount of points awarded when they sit back in.

Players who attempt to angle shoot the system by sitting out of games, habitually short-stacking, etc would have much of their edge negated by the fact that they are earning loyalty points more slowly and thus moving up loyalty levels slower. Likewise, players who are starting games, playing during normally off-peak hours, or demonstrating other behaviors that benefit the poker ecosystem would earn loyalty points at a faster rate.

Overall, I wish more people would analyze the game the way Phil does. I think it’s healthy for the entire poker community. Whether or not we agree or if the solutions are commercially viable is not really relevant. It’s the discussion of these issues that adds value to everyone.

It would also help if the poker rooms were more open to discussing these topics as well. Instead of just rolling out a rake calculation change maybe they could explain their thinking to the poker community so everyone better understands what is good and what is bad for the poker ecosystem. I think more players would be willing to accept some limitations if they can see what the overall purpose of the change.

“Crushing the Microstakes” by Nathan BlackRain79 Williams

Bill Rini — Fri, 13 Jan 2012 20:45:50 +0000

I just got done reading Nathan BlackRain79 Williams’ new eBook, “Crushing the Microstakes” and thought I would do a quick post to let people know about it.

Coming in at a whopping 251 pages, Crushing the Microstakes is a fairly impressive eBook. Williams, who claims to be the winningest player at the microstakes, walks beginning players through playing NLHE at the $2 and $5 buy-in levels.

While you probably won’t get rich playing at these stakes, Crushing the Microstakes is perfect for players just getting started. Most books out there teach you how to play against low or mid stakes players which is not exactly the kind of action you see at these micro stakes. In fact, Williams admits that some of his advice at $2 NL might sound crazy to people who player higher stakes but insists that the strategy works against your typical $2 NL players.

Another thing that makes Crushing the Microstakes unique in the poker eBook market is that Williams also walks you through many of the tools you can use like Hold’em Manager (HEM), PokerStove, automation scripts, etc. Basically everything you need to know to multi-table the micro stakes and crush them.

One of the things I particularly liked about Williams’ style is that he recognizes just how bad your opponents are likely to be at these levels. Most poker books assume you have better opponents so they don’t address the fact that pre-flop raises just aren’t going to drive out some players. Williams, on the other hand, counts on it. He suggests that when you pick up hands like AA and KK you can slip in 10BB raises because once a fish has decided he’s going to play a hand, anything less than an all-in shove is not going to dissuade him from calling your raise.

That’s one of the real strengths of this book. Williams understands these micro-stakes players. He gets how they think about hands and Crushing the Microstakes is all about exploiting their fishy tendencies.

Of course, some of those same moves will get you slaughtered at $100NL but this book isn’t about $100NL and Williams readily admits that. His book is designed to take you from knowing very little about online poker to being able to crush the smallest games.

Another example of the difference between micro and higher stakes that is worth talking about is bluffing. The percentage of players who will call you down on the river with ace high or an under-pair to the board is much, much higher in the micros than it is at even low-stakes. The value of bluffing goes way down if you’re up against a guy who has called down 99 out of the last 100 river bets.

This is one of the reasons I like this book. How many times have you heard someone complain that they want to move up in limits where people respect their raises? Well, if you can’t beat the total fish you don’t understand the game well enough to beat people who do respect raises.

Poker is a game of adjusting to your opponent. If you’re playing against a guy who has never met two cards that he wouldn’t see a flop with or will call a big river bet just to see whether you’re bluffing, and you don’t adjust your game to exploit that, you really aren’t a very good poker player to begin with.

You can bluff into this guy all night long and complain about how everyone on 2+2 agrees with your line or pull out PokerStove and empirically demonstrate that you made the mathematically correct move, but you’re still going to end up losing pots to this guy. Not because he’s a better player than you, but because you’re employing an ineffective strategy against that type of opponent.

I give Crushing the Microstakes a big thumbs-up for players who are just starting out and even for players who haven’t yet figure out that there isn’t a single perfect strategy in poker. There are a lot of little snippets here and there that I’ve learned (usually the hard way) over the years of playing but I don’t think I’ve seen anyone actually put down on paper before.

Reviewing Tri “Slowhabit” Nguyen’s “How I Made My First Million from Poker”

Bill Rini — Thu, 01 Dec 2011 14:55:01 +0000

I just got done reading a pre-release copy of Tri “Slowhabit” Nguyen’s “How I Made My First Million from Poker.” It’s definitely not your typical poker book and if you’ve read some of Nguyen’s previous books on poker strategy this is an entirely new look at the game.

In many ways it will remind you more of Barry Greenstein’s “Ace on the River” than it will “The Mathematics of Poker” by Bill Chen. In fact, Barry wrote the foreword for the Nguyen’s book.

Like “Ace on the River,” “How I Made My First Million from Poker” is less about what starting hands to play and more about avoiding the pitfalls of the poker lifestyle as a professional online poker player. Where Barry focused on the casino life Nguyen concentrates more on the new, younger breed of players who fire up 20 tables and grind out rakeback.

I’m unsure if the release of Nguyen’s book is fortunate or unfortunate with all that has been going on in the poker world recently but perhaps if we get a regulated US market soon his book will find its place with up and coming online poker grinders.

Nguyen’s nuggets of wisdom are invaluable and are obviously from someone who has been there. He talks about everything from how to keep yourself motivated to how to know when it’s time to walk away from poker entirely.

The parts I found most valuable though were sprinkled throughout the book on a topic he hits on repeatedly which is improving your game. He emphasizes over and over again that the game is constantly evolving and that a tricky line that works today is going to become a standard move tomorrow and if you want to stay ahead you have to keep working on exploiting weaknesses in your opponents.

It’s obvious that Nguyen comes from the new breed of poker players. These young, aggressive players that seem to give yesterday’s poker heroes so much trouble. A lot of his advice is geared toward this type of player. For example whereas Sklansky and some of the old-guard poker players talk about having X number of buy-ins or big bets in their bankroll Nguyen fully encourages you to take shots, risk your bankroll (intelligently), and play fearless.

For instance, in the chapter on Bankroll Management he says:

Another reason why you should try to move up as soon as possible is as you grow older, your willingness to gamble and take risk decreases tremendously. You have worked hard to get to where you are, making the risk of losing it all disheartening and even at times scary. You won’t want to deal with an enormous amount of stress anymore.

When you’re young, you don’t know any better, and that’s a good thing. You have a lot of hope and aspiration to be the best. You have that gamble in your blood. You want to play because you truly love the game. It’s exciting. The high when you win is comparable to the low when you lose. During this phase in your poker career, you should be as aggressive as you can with your bankroll. You have time and age on your side. If things go wrong, you can always rebuild.

That’s not the kind of advice you read very often.

If I could offer Tri some advice it would be to be a little more sensitive to those of us who are youth-challenged. There’s nothing like reading a 25 year old write about being old and the challenges he faces with younger poker players coming up behind him to make you really feel your age.

This is one of those books where if you just take away one useful lesson you’re sure to pay for the book many times over. And believe me, there are enough nuggets of gold strewn about that it’s almost impossible not to find something that you can take away from reading the book.

But make no mistake; this is not a book where Nguyen tells you which hands to play or when to raise. You won’t be able to read this book and walk away a better player. You need to follow up and actually follow his advice and do the assignments that he offers. Being a better player is hard work. There are no quick fixes. As Nguyen puts it:

When you watch high-level pros at the poker tables, it might seem that all you see are monster bluffs and huge pots. But you don’t see the behind-the-scene preparation. That is, you don’t see the endless instant message conversations, the forum postings, the Poker Stove analyses, the personal coaching sessions, the downswings, the depressions, the anxiety attacks, the broken keyboards, the smashed screens, or the flying mice. All you see is the performance when you are the table.

This is really the essence of the book. Nguyen gives you ideas and tools but then you need to go out there and act upon them. When he tells you to write down a description of the type of opponent you have problems playing against and to figure out how to eliminate your weaknesses and to find the weaknesses in your opponent, you actually have to do it. Just reading what he wrote won’t make you a better player but if you actually do the work there’s no doubt you’ll learn something new and hopefully improve your game.

I did have some constructive criticism though. First off is that the breadth of topics covered leaves one wanting more depth. I got to the end of several chapters and wanted more. Some topics should have been books unto themselves.

Also, while Nguyen is wise beyond his years, he’s still rather young. What I mean by that is that what is wise beyond one’s years when you’re in your mid-twenties might not seem wise at all for someone considerably older.

For instance, when talking about keeping in a positive mind set Nguyen talks about eliminating things from your life that bring you negative feelings.

Write down a list of people and/or things that annoy you. Proceed to avoid these people and things like the plague. Your life and poker game will be better than yesterday.

There’s nothing wrong with the advice but the better answer would be to figure out why those things or people annoy you in the first place and work on not being annoyed by them. For example, if your skin is exceptionally sensitive to the sun, one option might be to avoid the sun but the better answer would be to see a dermatologist who might be able to prescribe you some medication that either treats or cures your condition.

Likewise, Nguyen labels a chapter Mindfulness, but the chapter really isn’t about mindfulness in the sense that Buddhists, meditators, or psychologists define mindfulness. For instance, he says:

This is what being mindful is about. You make a conscious effort to go over your choices and how they will affect you.

But that’s not the definition of mindfulness I know. According to Psychology Today, mindfulness is:

Mindfulness is a state of active, open attention on the present. When you’re mindful, you observe your thoughts and feelings from a distance, without judging them good or bad. Instead of letting your life pass you by, mindfulness means living in the moment and awakening to experience.

These are really rather minor issues though. Avoiding things and people that annoy you is a perfectly reasonable way to avoid negative emotions. The more common use of the word mindfulness might not fit with Nguyen’s definition but the advice he does give is solid.

Besides, I felt I had to find something to correct just to show Nguyen that some of us old farts often pick up other kinds of wisdom along with our grey hairs. J

Overall it’s a solid and much needed book in the poker community. It’s not a book about whether to raise or fold or what starting hands to play. And that’s a good thing because what makes you money today can change tomorrow. If you’re just following a set of instructions on autopilot you won’t be able to grow as a player. When change happens you’ll have to wait for someone to write a new set of instructions for you to follow.

Nguyen’s book attempts to give you the tools so you don’t need someone else to give you the answers (though he does recommend coaching and surrounding yourself with other poker players as a tool to help you work through your game). It’s about finding a balanced lifestyle that allows you to become the best player you can be.

And what more could you want?

What is a Professional Poker Player?

Bill Rini — Tue, 22 Nov 2011 18:20:12 +0000

I’ve been doing a lot of light reading lately and nearly every poker magazine article is written by “a professional poker player.” Likewise, watching many of the televised poker events the commentators will often identify a player as a “professional poker player.”

But just what the heck is a professional poker player?

Is it someone who makes their living playing poker? That would be my definition. But how many supposedly professional poker players derive all or most of their income from actually playing poker?

I mean, if you’re a sponsored pro making $20,000 a month in endorsements and coaching and then losing it all on the poker tables are you really a professional poker player?

Or, what if you’re grinding out $40,000 a year playing poker. Are you more or less of a professional poker player than someone who has a full-time job but consistently wins $80,000 a year playing part-time?

It just seems as if the title gets thrown around pretty easily these days. As far as I can tell, the generally accepted definition is, “someone who plays poker and doesn’t have another job.”

Over the years I’ve been contacted on numerous occasions by self-billed professional poker players who want an in on some entry level job in online poker. I also know of a few “pros” that have done multiple tours of duty in the customer support departments of online poker sites. They stick around long enough to fund a bankroll and then quit and come back six months later looking for work again.

Or how about the poker pro who has $1.2 million in career tournament cashes but it’s over a 10 or 15 year period? That’s only $80,000 – $120,000 per year when you average it out. Granted, that’s still good money but it doesn’t count buy-ins and how much they’ve spent in tournaments where they didn’t cash. Nor does it indicate how much of it they actually saw. If they sold a piece of themselves or took backing then they may have only seen a fraction of that.

That’s sort of like looking only at a company’s gross income without knowing the cost of sales. It gives you a very distorted picture.

Company A has $10,000,000 in revenue but only makes $500,000 in profit. Company B has $5,000,000 in revenue but has a $1,000,000 profit. If we were to judge companies like we do poker players, Company A would be considered the better company to own because we’re only looking at gross revenue.

Of course, I’m not counting cash games and such but the point is that many of the people who are considered professional poker players aren’t exactly living the balla lifestyle.

In fact, back in 2004 I wrote about this when Fortune Small Business ran a piece on Annie Duke. After all of the backing, cash game wins, appearance fees, sponsorships, etc she was clearing $228,000 a year.

Again, $228,000 isn’t exactly chump change but it’s not really big money. Especially when you consider the risk involved. And $86,000 of that total was for consulting and appearances so her take at the poker tables was only $142,000.

Several years ago someone asked me whether or not I was a professional poker player. I laughed and said, “Well, maybe a semi-professional. I never quit my day job.” He responded, “Semi-professional? To me that means that you’re not good enough.”

It was a fair take on the difference between professional and semi-professional but only if you look at it on the surface. Let’s say that you’re a college student or just out of college or working some low-wage job. Making $50,000 a year playing poker might sound like a dream job if you’re slaving away for $25,000 a year bagging groceries or flipping burgers. But if you’re making $50,000 a year in a 9-5’er it’s a questionable decision as the $50,000 from your job is somewhat reliable income (far more reliable than what you make at the tables).

In poker, you could win $100,000 this year and nothing next year and average out to $50,000 a year. I prefer not to live like that. I like having a reliable source of income (strangely, my creditors prefer that as well).

Plus there’s no medical, matching 401K, paid vacation, annual bonuses, annual wage increases, etc, in poker. So your $50K a year also pays for many things that are considered benefits by an employer. So really, after you pay for all of those things you might only be making $35K – $40K.

I was just reading a blog post and the author started off saying, “As a former professional poker player . . .” I wanted to laugh a bit because I know that writing blog posts isn’t exactly lucrative. How much money could he have been making as a “professional poker player” if hacking out articles for poker blogs seemed like a step up?

You see this on the affiliate forums as well. A self-proclaimed poker pro will offer to write poker strategy articles for $20 a 600 word article. Twenty bucks!!

I have a friend of mine who got a cushy consulting gig where he cranked out a report every couple of weeks and they sent him what most people make working all month. He called himself a professional poker player because he played poker online. When the company cancelled his gig he sent me a frantic email saying he needed to find a job asap. Why? Because he was never really making much playing poker. He was funding his break-even/losing poker playing with income from his consulting gig.

Professional seems like it should be an indication of whether or not you possess the skills to earn a living doing something. If I quit my job tomorrow and start playing bingo and eventually bleed away my savings and have to take a job in six months, was I really a professional bingo player?

Or how would this apply in other sports? If I retire, start collecting a pension, and start playing in golf tournaments but only earn a few thousand a year, am I professional golfer?

To be honest, I don’t know what constitutes a professional poker player. I do know that a large percentage of the people who claim to be professional poker players need more than one source of income in order to be a professional poker player which doesn’t sound like a professional at all.

Ed Miller’s How to Read Hands at No Limit Hold’Em

Bill Rini — Tue, 18 Oct 2011 20:47:27 +0000

I had the great pleasure of reviewing a pre-release version of Ed Miller’s new book, How to Read Hands at No Limit Hold’Em. I call it a great pleasure because I’ve been a big fan of Ed’s writings over the years. I religiously read his 2+2 postings and was one of the first in line to purchase his first book, Small Stakes Hold’Em, that he co-wrote David Sklanksy and Mason Malmuth. That was the first poker book that I really connected with.

Miller’s How to Read Hands is one of the missing pieces in poker literature. There really isn’t a good book on reading hands. About the closest you can come is Caro’s writings on tells and-or books that gloss over hand reading (or fail to discuss the topic at all) but are mainly focused on playing your own hand.

Miller’s book takes a different approach. You actually learn how to read hands. Ed walks you through assessing your opponents, pre-flop action, flop action, turn action, and river actions to help you narrow down what your opponent can be holding. You start with a range of hands that different players might play in various situations and narrowing down that range as more cards are exposed and betting actions give you more and more valuable information.

As with many of Ed’s writings, the focus in How to Read Hands is on besting low-limit opponents. Phil Ivey is still going to be a tough read but you’ll have a good handle on how to deconstruct and analyse a hand against your typical $100 NL opponents by the time you’re done with the book.

My only real criticism of the book is that the guys Ed sees at his low limit games and the ones I often encounter aren’t really the same. His examples of nit, regulars, and fish hand ranges may not be a great fit for the types of players you encounter in your local game.

But it’s a minor criticism since the book does push you towards developing your own ranges for player types based on your own experiences. What Ed sees in a Las Vegas card room might not match the types of players you encounter at a LA card room. You need to adjust your ranges based on your observations.

Overall it’s a solid book on a topic that isn’t covered in any great detail elsewhere. In fact, I share Miller’s frustration when he talks about people putting their opponents on a hand but being unable to explain why.

I think our natural tendency as players is to either put our opponent on the scariest hand they could have or to wishfully think that they’re holding a weak hand. We tend to look for the obvious and on a board of:

7s 8d 9h

We immediately jump to the conclusion that either your opponent is holding TJ, 56, 6T. or some random hand that we have beat. We tend to polarize the range. Either it’s a monster or complete air.

But we need to ask whether or not the action fits. How likely is it that your opponent raised from UTG with 6T? If you know that this guy’s pre-flop raising range is AA-TT or AK – AJ then certain hands like 56 make no sense.

It sounds basic but it’s amazing how many people cannot articulate how they arrive at a hand that they’ve put their opponent on. How many times have you heard someone claim that “they just knew it”?

Ed walks you through that process. Instead of “just knowing” you can use a methodical approach to developing a hand range for your opponents and then slowly eliminating hands as your progress on each street.

Having a pretty good idea where your opponent is in a hand is a huge advantage. I know that sounds rather obvious but how many times do you call that river bet with middle pair when your opponent’s actions have been screaming overpair? How many times do you check it down on the river because you’re not confident enough in your read to put in a value bet? How much has that cost you?

Other than playing too many hands, not being able to accurately put your opponent on a range of hands is, IMHO, the biggest difference between mediocre players and good players.

I really can’t recommend How to Read Hands enough. It’s a true original in a sea of poker books that do nothing but rehash the same old strategy concepts. I can truly say that this is one of the first books I’ve read in years that I’ve felt is a must-have book for aspiring poker players. Don’t buy this book at your own peril.

How Things Became So Screwed Up At Full Tilt Poker

Bill Rini — Tue, 04 Oct 2011 19:40:02 +0000

I haven’t been able to stop thinking about how things could have gone so horribly wrong at Full Tilt Poker. None of the people I know there are stupid. Nor are they malicious. It’s easy to go for the simple answer that Howard Lederer, Ray Bitar, Chris Ferguson, and Rafe Furst are greedy, thieving, conmen who set out to rip off Full Tilt players for their own benefit but that doesn’t really fit with the people I know.

So, I started to try to imagine, logically, how things came so unglued.

Keep in mind, this is all my own personal speculation. I have no inside knowledge. I haven’t consulted any of the indicted or other people within the company. It’s just me trying to take a scenario where we know certain facts and trying to determine what logical process brought about a decision.

I have no agenda. I’m not trying to make anyone look good. I’m not trying to make anyone look bad. If this were a poker game, all I’m doing is trying to read how the hand played and put a player on a hand or range of hands.

Lastly, I would like to point out that this is written with the assumption that all or at least major portions of the complaints by the DOJ against the indicated poker rooms are true. Rather than write “allegedly” fifty times, please just assume the alleged portion.

I think you have to go back to September 2006. Full Tilt was just completing their migration over to Dublin from Los Angeles. Part of the selling point for relocation was a nice stock option package and promises that the company would attempt to float of public offering soon.

The UIGEA changed all of that. Full Tilt Poker was forced into a very difficult decision. Stay in the US as a rogue operator or retreat to the European market. In some ways, I think the decision was even more obvious since non-US traffic on the site probably didn’t amount to more than 10% – 20%. Even in 2011 after Black Friday, FTP’s traffic dropped off 50% when it lost the US while PokerStars only slipped about 20% so even during those 5 years FTP hadn’t done a particularly good job at diversifying its revenues.

Now, Full Tilt has repeatedly claimed or inferred that their legal counsel was of the opinion that FTP was breaking no laws. Poker is a game of skill. There are no specific federal laws making poker illegal. Yes, we can almost recite these arguments from heart.

But, I highly doubt any lawyer ever told FTP this. If they did, they should have their right to offer legal services revoked.

Every year some new chucklehead claims that the US government doesn’t have the legal right to tax income. They usually write books where they lay out all of the legal theory behind their position and urge people not to pay their income taxes. And every year the US government prosecutes and convicts guys like this and the people who take their advice (i.e. Wesley Snipes) for failure to pay their income taxes.

The point is, no matter how strongly YOU believe what you’re doing isn’t illegal, in the end, it’s what the DOJ and/or the courts believe is illegal. And the US government was sending some pretty clear signals that online poker fell into the category of stuff they felt was illegal.

So the most likely scenario is that Full Tilt’s legal counsel did not give them a thumbs-up to keep offering online poker. It’s far more likely that what the lawyers did was outline FTP’s risks. What are the chances of the DOJ coming after them? What are the chances of anyone doing time? What are the chances of a negotiated settlement with the DOJ?

But, as I mentioned, the decision had already been made for Full Tilt to some degree. Leaving the US market was pretty much the end of the company. Losing that much liquidity that quickly would have hurt Full Tilt very badly. Chances are they wouldn’t have been able to continue operations.

So, the legal justification seems like something that only buttressed a decision that had already been made.

I think this is a very important decision because it sets up everything after it. The online poker world was operating in a grey area up until the UIGEA. The UIGEA sort of drew a line in the sand and forced companies to stand on one side of the line or the other. Those who left the US market did not have the risk tolerance that those who stayed had. More importantly, it was a key decision because those who stayed in the US did so knowing they were breaking the law. They were publicly declaring that profits were more important than ethics. Of course, that eventually proved to be FTP’s downfall five years later.

However, what would you have done? Some people would never cross the line. It’s just not in their DNA. But these guys are gamblers. The upside is hundreds of millions of dollars and the downside seemed fairly minimal. Back then the DOJ seemed somewhat impotent in doing anything about online gaming. Plus FTP had itself shrouded behind so many shell companies and their claim that the companies who did all of the work at FTP, Tiltware and Pocket Kings, were only consultants to FTP.

For them it seemed like getting all of your money in as a 3:1 favorite.

The decision to stay in the US had another fallout that was less than obvious to the rest of the industry. One of the big selling points to the FTP staff in LA to follow the company to Dublin was a grant of stock options. Staying in the US basically killed any chance of the company going public so the stock options became far less attractive.

So, at some point, FTP decided to pay out a dividend or profit distribution to shareholders. Whatever the official reasoning behind it, the move seemed to be designed to quiet people who were wondering when the big payday would be.

These payments, which the DOJ would later highlight in their complaint against FTP, originated when the company was paying them out of profits. They weren’t stealing player money to pay anybody. This was all coming out of what was left over after all the bills were paid.

At this point, all would apparently seem right with the world as far as FTP is concerned. They’re making tons of money, essentially doubling overnight, and everyone is happy that they’re getting a cut of the profits.

Now, fast forward a few years. The DOJ has been systematically going after the payment processors facilitating payments to the US facing poker rooms, Stars, Tilt, and UB/AP. It’s becoming more and more difficult to process payments and its beginning to impact business.

Again, this is another pivotal moment because they could have shrugged, thanked the business gods for a good run, and left the US to focus on Europe. FTP was in a much different position by this time and could have survived without the US market. Granted, a good chunk of their liquidity and revenues would have disappeared but they were diversified enough to be able to survive.

Instead, FTP made the decision to engage in all sorts of risky and illegal behavior in order to keep the money train running. They bought a piece of a struggling bank they could get to look the other way and they engaged the services of people so shady that one person was under two different indictments while FTP was shipping him payments to process.

I flag this as a pivotal moment because it again allowed FTP, Stars, AP/UB to establish just how far they were willing to go. When you start committing bank fraud, money laundering, and other similar crimes there’s no turning back. Even if they legalized online poker in the US tomorrow you still have the banking and financial crimes hanging over your head.

So why isn’t anybody mad at Stars? Mostly because Stars was able to pay people back. The fact that they were driven by the same greed and disregard for the law as Tilt doesn’t seem to concern many people but I think it should.

But let’s just delve a little deeper into how Tilt became the industry pariah.

When the bank fraud, money laundering, and other financial crimes still couldn’t pull in the money fast enough, Full Tilt embarked on a bold plan to capture market share.

Stars backed off. There was a limit as to how far they would go and they reached it. The executives at Full Tilt saw this as an opportunity. If Stars couldn’t get money onto their site all Full Tilt needed to do was come up with a way to get that money and those players would flock to Tilt.

The plan? Lend the players the cash to play until another payment method could be concocted that allowed Tilt to recover the funds.

I’m sure the finance, marketing, and other teams were called in to make the numbers work. I’m sure that on paper this looked like a brilliant move.

Somewhere in a PowerPoint presentation is a worst case scenario showing how the company would be impacted by various default/noncollectable rates on these “loans” and they all indications were that Tilt, over the long term, could afford to lose a certain percentage of deposits due to nonpayment and still make a profit.

But is that a Ponzi scheme?

Not really. It’s a calculated business risk. There was no intent to steal the money.

But as we’ll soon see, when you start to compromise your ethics it becomes a slippery slope.

One of the first decisions you’re faced with is how to finance the loans. One option would be to cut the profit sharing distributions and scale back spending. But that would draw attention to Tilt’s flanking move. In order to keep Stars, the DOJ, and the players unaware of their scheme they had to keep operating business as usual.

If too many people found out that Tilt was floating the money to the players, players would begin to take advantage of it and make deposits without having the funds to back them up. No, this needed to be done in strict secrecy so that nobody was the wiser. Stars might even catch on and counter with their own loan program.

That only leaves other player deposits to finance the loans. Again, I’m sure there’s a PowerPoint slide out there showing the historic deposit and withdrawal levels over the last several years indicating that Tilt could float a significant portion of player deposits without ever having to worry about cash flow issues.

And since nobody would ever know, minimal cash flow risk, and no real government regulation, why not?

Of course, what everyone forgot to ask is whether or not it was the moral and ethical thing to do. It’s one thing if Tilt wanted to give out loans from their own pocket but now they were playing with player funds which made it an entirely different gamble.

This is where I lay the real blame on FTP. I have nothing against Howard, Ray, Chris, or Rafe but whoever was fully aware of this plan and authorized it deserves everything they get. Because not only is this ethically unsound but it’s against the rules of the AGCC licensing authority. Not only is FTP now operating illegally in the US but worldwide since they are in material breach of their licensing agreement with the AGCC.

How do you know all of these risks and give it a thumbs up? How can you do that?

Was FTP’s board operational? Was the board made aware of these decisions?

That’s why I previously said that compromising your ethics can be a slippery slope. Tilt was already too comfortable with operating in ethically and legally grey areas. This is the point where maybe back in 2005 Tilt would have said this was a line that couldn’t be crossed. But in 2009 or 2010 with so many lines already having been crossed, this one seemed trivial in comparison.

The problem with this strategy is that it turns the relationship from a fiduciary responsibility to protect your customer’s interests to a total gamble on the player’s dime. Surely as the numbers grew and grew each month someone inside of Full Tilt had to have done a little math and figured out that the company was insolvent if anything caused a run on the bank or there was a major seizure of assets.

And, it’s not like assets hadn’t been seized from online poker sites in the past. Several times since 2006 the DOJ seized bank accounts believed to belong to online poker sites. Even if you get over the ethical problems with this loan strategy you would expect that FTP would have gone to great lengths to make sure that there was never too much money sitting anywhere within the grasps of the DOJ.

This is where the regulators deserve some blame as well. Even an accountant who earned his degree from a mail order study course should have been able to notice tens of millions of dollars disappearing from Full Tilt’s balance sheet. Shame nobody thought about including regular financial audits as a condition of holding player funds.

Also, like I wrote in Who to Blame for Black Friday? this is where the poker media should have been asking more questions. Some people have pointed out 2+2 threads going back to December and January in which the lack of their accounts being debited for deposits was discussed.

But none of that happened. Instead, Black Friday happened and Full Tilt couldn’t have possibly been in a worse cash situation than that fateful morning.

This is when the full extent of Tilt’s f-up became fully known. According to the DOJ this is when Howard and Ray both acknowledged that the company was screwed. There was that email from Howard that documented how bad the problem was as well as the Ray Bitar email that noted that they company couldn’t stand even a mild run on the bank.

Yet again, Full Tilt management is faced with an ethical dilemma. Publicly acknowledging their situation would create a run on the bank as players rushed to get their money off the site. Likewise it would have opened them up to civil lawsuits from players who weren’t able to get paid. There could even be criminal penalties as Full Tilt previously had advertised on its website that player funds were not commingled.

So what are we to make of all of this?

Well, for me, it’s like I told QuadJacks, I don’t think Howard Lederer, Chris Ferguson, Ray Bitar, and Rafe Furst are bad people. But I do think they’ve done bad things or bad things were done that they should have known about. I highly doubt any of them specifically set out to defraud anybody of their money. It just doesn’t fit with their personalities.

Having worked with Howard and Ray on a daily basis in the past I can tell you that whenever there was a question of what was in the player’s best interests Howard and Ray always came down on the side of the player. Chris never seemed especially engaged in the business. He didn’t really get involved in the day to day operations of the company even though he was often in the office playing poker until the wee hours of the morning. And Rafe is a smart guy who is more interested in raising money for cancer research and chatting about the future and potential of technology than he is in making a quick buck.

None of these guys comes off as a criminal to me.

However, that being said, Howard and Ray are very aggressive people. I can see them sliding down the ethical slippery slope. They have a poker player’s mentality of pushing small edges and wanting to be the best. I could see them taking the attitude of the whole payment processor mess being a giant cat and mouse game with the DOJ that they thought they were winning.

I don’t mean to sound like I’m apologizing for Full Tilt or to make excuses for them. I’m not. I just don’t subscribe to theory that everyone involved in what happened is evil or that they set out to steal the money. I still disagree with nearly every decision they made.

I’m just trying to offer a slightly more realistic picture of how the company got to where it is today. An analysis that includes people acting in a completely rational manner given their circumstances and knowledge at the time.

I may have hit the mark or I may have missed it by a mile. You tell me.

A Rubber Band Story and Other Poker Tales by Tommy Angelo

Bill Rini — Wed, 10 Aug 2011 04:33:40 +0000

I am very tardy. Very, very, tardy.

Tommy Angelo sent me a copy of his latest book “A Rubber Band Story and Other Poker Tales” several months ago and I haven’t gotten around to reviewing it yet.

I don’t really offer this as an excuse but life has been very busy for me lately. Black Friday, getting married, my move back to the US, starting a new job, having to buy a car and find an apartment, blah, blah, blah. It’s been a hectic few months.

Like I said, that’s not really an excuse. The real excuse is that A Rubber Band Story is easy to put down. No, no, no. Please don’t take that the wrong way. It’s the format of the book. It’s a collection of short stories and essays about random thoughts, views, and observations Tommy has had about poker and life.

My massive delay in getting through the book is that it is so easy to read a story that lasts a page or two and then to set the book down as you ponder the greater meaning of the anecdote. The whirlwind pace that my life has followed since Black Friday often meant a week or two between picking the book back up and I didn’t want to power through 4 or 5 essays at a time and miss out on enjoying each one.

With the apologies, excuses, and other useless slobbering out of the way allow me to give A Rubber Band Story two raging thumbs up. If you like Tommy’s style or writing and have enjoyed the short stories he’s submitted on Bill’s Poker Blog you’ll love A Rubber Band Story because that’s basically what the book is.

It has all of the hallmark Tommy Angelo qualities. It’s humorous, well written, insightful, offbeat, thought provoking, and sometimes just plain silly. What I enjoy most about Tommy’s writing style is that he writes from the heart.

The book is a mixture of some new material along with what Tommy felt were his best blog posts, articles, postings, etc over the last decade or so. The information is timeless because it’s the essence of poker.

Tommy’s writings have never been about whether to fold AJs to a reraise pre-flop. It’s about getting in touch with our biggest leak in poker, ourselves. He explores different ways of thinking about the game, life, and balancing the two. And he’s able to do that through story telling that leaves most poker writers in the dust.

It’s easy to be entertained by Tommy’s stories because they’re normally witty and light but that’s often a trick Tommy is able to play on his readers because there is a more profound message underneath it all. He may write a story about folding that makes you chuckle but when you dive a little deeper he’s really seeding a message about how successful players think about their starting hands and folding differently.

If you’re a fan of any of Tommy’s writings you can find on Bill’s Poker Blog or on Tommy’s own site, you’ll love A Rubber Band Story.

Click here for info on ordering his book.

Full Tilt Payout Problems Exposed

Bill Rini — Tue, 26 Jul 2011 18:16:58 +0000

Last week Todd Brunson tweeted that he had run into Howard Lederer in Las Vegas and that after telling him how short he was of cash Howard offered to pay him what he had locked up on Full Tilt.

He asked how much I had on tilt and I told him 150k.. He said come with me. We went to his car and he opened his trunk and paid me!!!!!!

He even tweeted a photo he grabbed of Lederer before the payout.

This got me to thinking. First off, what the hell was Lederer doing with $150,000 in the trunk of his car? Is he filming a new reality television show called “Carjack me”? What kind of theft deductible does Howard carry on his wheels? Then it hit me. Full Tilt has been shut down by nearly every bank in the world. This must be their “technical difficulties” that they’ve been referencing in their FTPDoug posts.

So, is this a brilliant PR move by Howard and Ray Bitar? Is Howard going to tour the US in his Audi A8 and hand out people’s bankrolls to them at prearranged restaurant parking lots across the country?

Sadly, a little investigation into this matter proves this too may be a “technical difficulty.” As you can see in the image below, it is highly unlikely that $150,000,000 (represented to scale) would fit in the trunk of most cars (even minus Todd’s $150K).

My sources have told me that the reason that Full Tilt asked for (and received) an adjournment at the Alderney hearing today was so Howard could rent a more appropriate vehicle for the cash dispersal. Unfortunately, Howard’s Full Tilt, Tiltware, Pocket Kings company credit card was declined at U-Haul and Ray is busy in Dublin trying to find a staff member who might be able to lend them a debit card.

Please stay tuned here for more information and dates for the “FTP W00t W00t, Come Get Your L00t” tour.

Full Tilt Poker Can’t Say Anything But Has Plenty To Say (When It Suits Them)

Bill Rini — Sun, 05 Jun 2011 05:11:26 +0000

Over the last couple of months since Black Friday Full Tilt has repeatedly stated that they can’t say anything due to the DOJ indictments. I partially addressed how odd this sounds in my post Full Tilt’s Money Woes. Full Tilt is acting like they have a gag order in place but none has been announced. Neither the company or the pros seems to want to make any public statements about the lack of communication pertaining to the return of player funds.

And while they acknowledge that this is causing harm to their brand they still aren’t answering any direct questions. As I mentioned in the Money Woes post there simply isn’t a legal reason for this. And I think Full Tilt has proven how BS this excuse is with their response to the Ivey lawsuit (also mentioned in the Money Woes post).

“Contrary to his sanctimonious public statements, Phil Ivey’s meritless lawsuit is about helping just one player – himself. In an effort to further enrich himself at the expense of others, Mr. Ivey appears to have timed his lawsuit to thwart pending deals with several parties that would put money back in players’ pockets. In fact, Mr. Ivey has been invited — and has declined — to take actions that could assist the company in these efforts, including paying back a large sum of money he owes the site. Tiltware doubts Mr. Ivey’s frivolous and self-serving lawsuit will ever get to court. But if it does, the company looks forward to presenting facts demonstrating that Mr. Ivey is putting his own narrow financial interests ahead of the players he professes to help.”

This was released roughly 24 hours after Ivey posted it on his website. Wait . . . they can write this highly provocative response to Phil Ivey in 24 hours but they can’t answer simple questions about where hundreds of millions of dollars are?

This says a lot. One of the reasons this brief statement says so much is because they discuss the fact that Ivey’s actions are possibly holding up paying back players. Whether the accusations is true or not is irrelevant. What is important is that it seems FTP can discuss paying back customers when it suits them. When players were making many of the same accusations that Ivey did the company had little to say claiming that their lawyers were preventing them from discussing it. Phil Ivey makes an accusation and suddenly it’s okay to talk about paying back customers.

Likewise, FTP has been leaking information to eGaming Review about the status of seized funds (or in this case frozen but not seized) while at the same time claiming that they can’t say too much because of the indictment.

So which is it? Can they talk or can’t they?

Joe Sebok Gets Canned

Bill Rini — Wed, 11 May 2011 02:28:29 +0000

First off, I want to say that as far as I know I’ve only met Joe Sebok once a few years back at the WPBT event at Imperial Palace. He came with Barry Greenstein who was speaking before the tournament and we said “Hi, nice to meet you” or some other rather impersonal exchange.

I want to get that out there because I have no ill-will for the guy. I don’t know him. I have nothing against him.

That said (you knew that part was coming, right?) I did want to address his blog post about being let go from UB/AP. You gotta give the guy credit for being and admitting to being naïve but I think he misses something in his post. He says:

Regarding the current state of AP/UB, I haven’t given up hope that all of you will get your money back. I believe that UB is making many, many efforts to get you that money. You may say, “Well, if there were lies before…” and that’s totally fair, but their is absolutely a segment of that company trying to do the right thing. I dearly hope that they are successful. I have been told by upper management that ongoing discussions have been happening between the DOJ and UB with that being the focus. There is a lot of misinformation being thrown around and it really saddens me that so many have fanned the flames of panic when, in truth, they simply do not know what is going to happen, just like me. UB and their legal team is trying to work creatively to get that money back to players, I have been told. I haven’t been promised that that can happen, but I have been informed that is the goal. This was never going to be a short process though, which leaves so much room for speculation. I am trying to not engage in that, hope, and be patient. It’s not easy.

(emphasis mine)

I emphasized a few points there because they contradict each other. First off, Joe has already admitted that he was too naive in dealing with them in the past. He seems to indicate that he’s learned his lesson but he goes right back to relying on what they’re telling him. If he doesn’t know any more than we do and he’s relying on people telling him that they’re doing this or that then that’s not simply being naive. That’s called denial.

On one hand, I believe that Sebok didn’t know about anything going on in the company. On the other hand, you’re staking your reputation on a company built up of guys who have been caught ripping off players. I don’t expect Daniel Negreanu to go in and do an audit of PokerStars’ books but PokerStars hasn’t had two cheating scandals previously. Anybody who is going to take the job of being a spokesman for UB or Absolute better do some due diligence.

Back in 2009 when Sebok joined on at UB here were some of the things he was saying:

Although heavily involved with PokerRoad, Sebok said UltimateBet started pursuing him several months ago, but he had to make sure things were on the up-and-up with the site. “They told me that they were very interested and initially I was too turned off by the past scandal to even consider it. We kept talking, though, and it quickly became apparent that both Paul Leggett and I were on the same page with wanting to not only to do things completely differently, but also to atone for the way things had been handled in the past. From that point, it was just a matter of getting a few things started to make us both feel comfortable” Sebok said in an interview with Pokernews.com.

Having drawn a line in the sand, Sebok felt there were three hurdles to get over before he could take Leggett seriously. “For me personally, I wanted to get three things accomplished: get the cheating account handles out in the open, open up the access for players to get all their hand histories, and get the actual physical names of the cheaters, besides Russ Hamilton, out in the open. We succeeded in getting two-thirds of that list done and that was enough for me to come on board and continue to work for #3 on that list,” he said.

So it’s a little confusing when he says today:

I was never privy to the deep inner workings of the business. How money was moved around, whether it was held in segregated accounts, etc, was nothing I ever worked on, and to be honest with you, ever thought about before April 15th. I really put a lot of faith in the people I worked with, and the company itself. I really believed that management thought the past was the past and that they wanted to have things be different in the present and the future. I wanted to believe that with all of my heart, and in fact I completely staked my reputation on it.

How can someone be deep inside the company fighting crime like a superhero and not have any insight into the deep inner workings of the business? Wouldn’t that be a prerequisite if someone had been turned off by the scandal and wanted to atone for the way things had been handled in the past?

That has been one of my biggest complaints about UB and AP since the scandals. Neither of them have ever fully stated exactly what they are doing different today that will prevent something like this from ever happening again. That would be my number one priority. I would want to see everyone even remotely involved in the previous scandals gone, a checks and balances in place (internal security that keeps an eye on employees), and internal auditing. And since those would be very positive developments you would expect UB and AP to be shouting them from the rooftops if they actually had put anything even remotely like that in place. The silence is deafening.

And maybe Sebok wasn’t the best person in the world to understand how all of that works but that should be the huge red flag that maybe this isn’t the job for you. If you don’t understand how money moves on and off a site or how people inside the company can game the system hire someone and make it a condition of your endorsement that your guy gives the place a clean bill of health.

I think Daniel Negreanu’s take is dead-on:

Then there is Joe Sebok who signed with the company in the hopes of cleaning things up. I genuinely believe that was his intent. I genuinely believe he thought he could make a difference and clean up that mess of a company. I also don’t personally believe he knew of the Tom’s involvement, but I can’t say that with certainty. I definitely think he was naive in trusting Paul Leggat with his reputation. That’s a lot of faith to put in a man who’s first instinct during the original scandal was to cover it up. Seems like that was a really bad read on his part.

I personally think it was a foolish mistake to ever get involved with those crooks, regardless of the price, but that wasn’t my decision to make. It’s hard to come back from touting a company through twitter and other social mediums, that in the end, likely won’t make good on paying the players back. At this point, why would they pay the players back? The site is going under, so paying the players in the hopes of more good will would be useless. It would be the “right thing to do,” but I don’t that matters much to them. If you had money on UB/AP come to terms with the fact that it’s gone forever, and in the case of a miracle, think of it as free money. That’s sad to say, but you don’t really have many other options at this point it doesn’t seem like.

In the end, Sebok’s mouth wrote checks that his knowledge of the online poker industry couldn’t cash. He also demonstrated a lack of business accumen and gullibility that should preclude him from ever taking on a similar role for any poker room ever again. I could be wrong but I believe the guy when he says he didn’t know anything. But that is part of the problem. I believe he had no idea what was going on while being a mouthpiece for the site and staking his personal reputation on people who had already demonstrated their ability to run cons.

Now his credibility in the industry is right up (or down) there with Ultimate Bet. If they eventually pay players off some people might be willing to at least forgive though they might not necessarily forget (and if US players were somehow allowed to play on UB again they should be rushed immediately to the mental ward). Same will probably hold true for Sebok. If UB pays people will still remember him for being gullible and naive but some of their bitterness might be diluted with the fact that everything worked out in the end.

On the other hand, if UB and Absolute skip town on the money Sebok is toxic waste in the poker industry. The other pros let go the other day Maria Ho, Tiffany Michelle, etc, etc never claimed they were going to clean up UB so they escape from all of this as mere casualties of war who couldn’t sign with a better room. Somebody put some money in front of them and asked them to wear a patch and they did it. The only exception to that might be Prahlad Friedman who now comes in just behind Sebok in terms of damage done. For Friedman, this was like finding out your girlfriend is cheating on you, breaking up with her, taking her back, and finding out she’s still cheating on you.

As Daniel said in his article, this is all of our fault. By not demanding better we got what we have today. It’s the apathy of the industry and the players that let UB and AP survive their cheating scandals. It’s lax gaming regulators who let them keep a license that helped get us to where we are today. If there’s any silver lining in all of this is that maybe after players lose some money they’ll start demanding regulation in the US to make sure that this never happens again.

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