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Views: 1497
Date Posted: Sep. 26, 12:30pm, 0 Comments

As the popular nursery rhyme goes I'm not a "tinker, tailor, soldier, sailor, rich man, poor man, beggar man, thief, doctor, lawyer, Indian chief." But I have been a small business man for the last two decades and I am using that experience to try to make sense of all the numbers that I've been reading about Full Tilt Poker these last several months.

I'm listing 20 financial figures that have been publicized regarding FTP's financial situation. Accompanying each one is a short description and a source if the information didn't come from the DOJ investigation. My speculation on some key questions generated by these eye popping numbers follows.

$1 Billion - The civil judgement being sought by the DOJ towards Full Tilt (for reference $300-350 million is the range of 2006 Party/Dikshit settlements)

$390 Million - The player fund liability as of March/April ($150 of which is to US players)

$300 Million - The currently offered player fund liability

$443 Million - Amount distributed to 23 FTP owners since 2007 (Subject:Poker asserts roughly $500 million has been "distributed" since the start of FTP)

Chris Ferguson (19.2%), Howard Lederer (8.6%), Ray Bitar (7.8%), and Furst (2.6%) - FTP Board Member ownership percentages

$41 million for Bitar, $42 million for Lederer, $25 million for Ferguson (supposed owed $62 million in dividend payments), and $12 million for Furst - Payments and distributions the four received since 2007 (The DOJ is seeking essentially the same figures in their money judgement)

$278 million - The 62.8% of owner "distributions" not accounted for as of yet (19 significant unnamed owners identified)

$40,078,646 - Amount special FTP "owner1" has received in dividends (including additional millions in loans of which at least $4.4 million has not been repaid - Subject:Poker speculates that this Phil Ivey)

$130 Million - Money FTP credited player accounts, but not as of yet collected from banks/processors ($60 million was the figured revealed in court several months ago)

$60 Million - Cash on hand at FTP at the end of March$6 Million - Cash on hand at FTP in June (source: Howard Lederer)

$10 Million - Average amount "distributed" per month to FTP owners over the last few years (Included April payments, since then unknown)

$1 Million+ - Amount Tom Dwan has pledged to redistribute to players (by Hanukkah 2012 if players don't receive their funds back, representing all compensation Dwan has received since his sponsorship deal)

$16.2 Million - FTP desired retrenchments of 250 employees to meet necessary budget cuts in the wake of Black Friday indictments.

$2 Million - Amount Phil Ivey received per month from Full Tilt as a player and shareholder (source - Phil Hellmuth shared at a 2010 charity event).

$500 Million revenue, $100 Million profits - Yearly figure estimated by Forbes magazine for Feb. 2011 article.

$1 Billion - Estimate of overall business done at Full Tilt (source - financial site)$1.63 Billion - A range of $1-$2 Billion was given for a pre-Black Friday valuation for FTP (source - PokerKing)

$4 Billion - Valuation of FTP given in court action (source - Clonie Gowen lawyers)

$4.8 Billion - Global online poker market (source H2 Gambling Capital)

Resulting questions:

What financial figures draw the most scrutiny?

1) The first is a figure of omission. Why hasn't the DOJ or FTP ever revealed how much was seized. The DOJ has released specific details of the bank, owners and account numbers but never the amounts seized. Knowing those figures would help to explain a number of uncertainties regarding FTP's situation.

2) Although there are select individuals who shared on forums that they were receiving funds into their playing account that weren't being pulled from their checking/card accounts as of November 2010, there is no indication of the mass scale of uncollected funds that would lead me to believe that the $130 million is accurate. Only several months ago in court, regarding one of the indicted bank officials, a figure of $60 million in uncollected funds was documented.

In my opinion, there would have been much more "chatter" within the poker community if $130 million was systematically credited to players. I can speak from personal experience that one deposit for $600 was credited in February without funds taken from my account, but it was one of 8-10 deposits of similar amount over the surrounding 6 months that funded my promotional freerolls for which were all properly debited from my account. There was also the mention of $48 million seized from the payment processor owed to FTP in 2010. If accurate, they make for roughly in $180 million in rightful player funds that should have been collected by FTP. These are huge sums representing hundreds of thousands of players' funds, especially considering it affected only the U.S. half of FTP's business.

3) What accounts for the difference of $390 million player liability at the end of March and it being $300 million at the end of June when FTP's gaming license was suspended and they were shut down globally. U.S. players were unable to withdraw from Black Friday forward. Is the inference that $90 million was successfully withdrawn by non-U.S. based players? Were U.S. players succeeding in trading/selling/transferring funds to non-U.S. players who successfully withdrew?

4) From the end of March to the end of June, how did FTP burn through a net $54 million in cash on hand? They claimed that their non-U.S. business was stabilizing and generating funds for operations.

Was Full Tilt Poker justified in distributing $10 million a month to owners over the last roughly four years?

The Full Tilt owners have been recently portrayed as exceedingly greedy; choosing to willfully skim player funds and defraud their FTP customers/players. In order to get a better sense of whether $10 million a month was a reasonable sum to distribute to owners monthly, we need to get a better grasp of how much Full Tilt was making in revenue and profit.

The best reference point comes from reports out of PokerStars based on their 2010 results. There are a number of if's, but these numbers represent the best public information available. If the U.S. poker market was pegged at $1.4 billion in revenue for 2010 and PokerStars and Full Tilt Poker controlled around 70% of the U.S. poker market, it would make their collective revenues at $980 million. If PokerStars was roughly twice the size of Full Tilt Poker, that would attribute $327 million in revenue to FTP from the U.S. market alone. If half of Full Tilt Poker's revenue came from the U.S. market, then they could have made $650-$700 in gross revenue. That would align with reports of PokerStars' global revenue being $1.4 billion of annual global revenue with some $500 million of that as profit. While Forbes estimated a 20% profit rate for FTP, PokerStars numbers suggest that it is as high as 35%. That differential might possibly be reporting gross versus net profit, or different operational climates which is harder to determine from our limited information but it gives a reasonable range to dig deeper.

At the minimum 20% profit off operations, Full Tilt would have generated $130 million profit a year. If we take the the higher PokerStars profit percentage along the higher end of the range of FTP gross revenue, Full Tilt would have generated $245 million profit. In the first scenario, FTP was distributing their entire profit without reinvesting any of it into operations or growth to distribute to owners at $10 million a month average. In the second more optimistic scenario, Full Tilt was balancing both healthy ownership distributions with reinvesting in the business roughly half and half.

The debate over what is reasonable ownership distribution won't be settled here. That debate rages at every Fortune 500 company as well. Even if we accept that the rich owner distributions were "reasonable" during times when cash flow was so flush, there are additional key questions to ask on this subject.

- When did the profit balance shift to negative operating territory as a result of DOJ-influenced processor restrictions thus calling into question continuation of such a rich ownership distribution?

- Should FTP owners and managers have been building a "rainy day" fund and contingency plan with so many challenges to their business plan for their U.S. business operations?

- With tremendous financial resources for several years and knowingly operating in a legally murky environment, where was their plan for a "Black Friday"-type shutdown or dealing with the sticky territory of commingling player and operational funds?

Is the U.S. Department of Justice (DOJ) a hero or a villain?

Both. Frustrated in their ability to shut down an offshore industry that they deemed illegal, the DOJ squeezed the online payment processors and thus the poker sites until the poker sites, desperate to continue their profitable ways, made illegal decisions that allowed the DOJ to rightfully pounce to shut them down. If the DOJ had not applied the pressure, it is much less likely FTP would have made various player and bank fraud maneuvers to keep their businesses going.

While the DOJ rightfully investigated and charged FTP and its owners for breaking numerous financial laws, they are also quite complicit in creating the sense of urgency that facilitated the need to skirt the law more openly in the first place. It's interesting that the DOJ has sought civil penalties that pragmatically seek to recover every dollar illegally gained since the UIGEA was implemented. The DOJ has fought hard to win the court of public opinion as much as the court of law by sensationalizing details that give the impression that FTP was a Ponzi scheme and that greedy owners were skimming player funds. The reality is that unlike most other notable financial violations that are investigated and prosecuted, the DOJ doesn't usually instigate the conditions for the violation. This was much more than just a sting operation. Years of pressure on payment processors and then setting up fake payment processors to gain further information. The DOJ share a partial responsibility in creating the climate for the eventual illicit action. The DOJ didn't feel confident proving that online poker was illegal in a court of law, so they frustrated and pressured the online poker sites via processors until the poker sites unwisely took more desperate bank and player fraud options to continue their business.

Only if the DOJ were to facilitate the rightful complete return of player funds from the process of collecting their civil fines could they ultimately position themselves as the hero who cleaned up a dirty industry. Anything short of that and the DOJ will share in the villainy.

Where did Full Tilt go wrong?

This is a topic that is too complicated and involved to answer fully here with the limited information we have. But clearly:

FTP didn't have to classify credit card transactions as golf balls and flowers.
FTP didn't have to bribe bank officials.
FTP didn't have to commit bank fraud and secretly purchase a bank.
FTP didn't have to keep crediting player accounts when they were unable to receive the funds from player bank accounts.
FTP didn't have to keep compensating their owners so richly in the face of a deteriorating business climate.
FTP didn't have to loan millions to their Team Full Tilt pros with no firm mechanism for repayment.
FTP didn't have to commingle player and operational funds
FTP didn't have optimal accounting, customer service or public relations systems in place.
FTP didn't communicate well or honestly with their customers and partners.
FTP didn't have to maintain their loyalty to a troubled and indicted CEO (Ray Bitar) who is ultimately responsible for many of the poor decisions listed above and the general state of systems at FTP.

A combination of greed, ego, and incompetence is a lethal mix for any business; especially one faced with an unpredictable and adverse climate that the DOJ created. FTP seemed to lack the proper moral compass, adaption to changing business environments and eye towards future negative event preparation that was key to their ultimate survival. PokerStars proved that while not immune from some poor decisions, they could navigate a path through the resulting chaos prioritizing their customers and players.

What might an investor pay for Full Tilt now and will players receive their money back?

The complicated web of legal, financial, and public relations issues surrounding Full Tilt Poker has already scared away a handful of potential investors. The leading present candidate, a reputed French consortium of investors, must be looking to tackle all the major outstanding issues so they can emerge with the two key money making assets of value; the software and customer database.

Conjecture on what they might pay out to ultimately acquire Full Tilt Poker:

- $400-500 million in civil fines for a settlement. I would think some of the fines would be contributed by present owners and Full Tilt Poker who profited handsomely the last few years. It would be a larger payout than the Party/Dikshit penalties of 5 years ago, but half of the unrealistic $1 billion being sought presently.

- $300 million in player funds to be returned.

- $200-$300 million in re-start-up operational funds and investment in new branding and customer recovery.

- X$ for purchase of the software and customer database. While the software and customer database is the ultimate reason for any investment and hope for future return on their investment, I imagine that at this point this will be rolled into the deal for covering all the other outstanding issues.

Previous FTP valuation estimates of nearly $4 billion may have not been far fetched given an economic and legal environment that didn't include a total global shutdown and massive DOJ fines to be faced. In the current environment, a prospective investor who re-brands with the assumption that a large percentage of the player base follows might be willing to pay up to $1 billion in total to gain a revenue stream that could eventually return to making $100-$250 million in profit a year especially if the lucrative future US market would be available after some negotiated period of time.


Unfortunately the story of Full Tilt Poker is still very much incomplete. It seems every few days, more information is released that helps flesh out some more details of this saga. It switches from desolation to hope and back again regularly. Only once the players see the complete return of their funds will they allow themselves to move on from the attachment they had to this once proud brand who professed to be a site created by pros with players in mind.

Full Tilt Poker innovated some wonderful advancements to the online game and was home to many of the world's best players playing the biggest online cash games anywhere. The poker world is still at a loss from the lack of play from the most famous and successful FTP players like Phil Ivey, Gus Hansen, Patrik Antonius, Tom Dwan and Dan Cates (note - Cates isn't affiliated with FTP but he isn't playing for associated reasons like his reputed $6 million bankroll being stuck on FTP).
Many thousands of poker players called FTP home and were quite loyal.

Now, the general public perception of the sad Full Tilt Poker saga is perhaps most poignantly summed up by 71-year-old six-time WSOP bracelet winner T.J. Cloutier...

"They didn't need to cheat, they didn't need to do anything," he said. "It's an absolute cash cow if it's run right. They get a percentage out of every single pot that's played and every dollar put on the site.

Why would they ever try to get more than they should get out of it? To me, it's greed. You know that television program, 'American Greed'? They ought to have this thing on there. I heard point blank that none of the players on Full Tilt are going to get their money. The feeling now is if there's any money left, the government is going to get it."

Having done my research, I better understand how complicated it is to evaluate Full Tilt Poker from the outside with limited information. I welcome your thoughts on my Full Tilt Poker conjecture. Let's hope the number keep coming in and that they ultimately roll in the player's favor.

Views: 1488
Date Posted: Sep. 23, 10:54am, 1 Comment

I'm excited to share a new project with all of you. I've been asked to do a weekly column covering "the poker world on Twitter" for that will normally run on Wednesdays. (Yes, there was a method to my madness for writing about social media in my last few blogs)

It's called
The Social Director and it will cover various thoughts and observations I have from following over 600 poker pros, media and poker industry mavens on Twitter.


The first column discusses our powerful voyeuristic tendencies on Twitter.

I'm already hard at work on next weeks' column that will discuss the topic of Twitter "Scoreboard."

Views: 992
Date Posted: Sep. 21, 2:32pm, 0 Comments

I had planned to make an announcement today, but that has been put off by a day so I thought I would share a little more from the Twitterverse...

As most everyone has heard by now, the U.S. Department of Justice amended their Full Tilt Poker civil money laundering charges to include additional owners of Full Tilt (i.e. Howard Lederer, Chris Ferguson, and Rafe Furst) and their resulting liability in the wake of revelations that Full Tilt rewarded their owners over the last four years to the tune of $443 million and yet the company finds itself unable to pay back over $300 million in player liabilities.

The Twitterverse buzzed all day with reactions and commentary. Humor based reactions were quick to follow with the hashtag
#RejectedFTPSlogans. I thought I would share a few of them with you.

- Play with the pros who play with your money

- Full Tilt Poker: $443 Million Reasons To Learn, Chat and Play With Our Pros
- Learn, chat, and play with the guys who are pocketing your deposits.
- Full Tilt Poker: Not Just Your Home For Poker. We Sell Flowers and Golf Balls, Too.
- You've got to ask yourself one question. 'Do I feel lucky?' Well, do ya, punk?
- Full Tilt: We treat your money like its ours.
- $600 Deposit Bonus. 100% Rake!
- You stand a better chance of cashing out your Zynga chips.
- Our pros beat you, they keep your money. You beat our pros...same thing.
- Full Tilt: Segregated Accounts are for Nits.
- Learn how to hustle from the pros.
- We will gladly pay you Tuesday for a deposit today.
- You deposit this time, and it's all over, baby.
- Deposits so easy, we don't even wait for your check to clear!
- You know when to hold 'em and when to fold 'em. We know when to walk away and when to run.
- Full Tilt Poker: At least we don't pay $16 for our muffins!
- Nobody's perfect.

Special mention goes to @PokerGrump who single-handedly carried the topic for most of the day with funny contributions. One of his early observations -"I wonder if Preet Bharara is going to get Full Tilt t-shirts for knocking out three red pros."

Views: 884
Date Posted: Sep. 14, 12:32pm, 0 Comments

I wanted to continue my discussion from the last blog of the impact of social media on our lives. As most of you know, I spend many hours a day in front of my computer in my home office. I've had a fairly workaholic approach the last few years ever since I switched from owning an art gallery and sculpture garden to my online poker work first with CardRunners, then Poker Curious, and now at the various sites I contribute.

Spending so many hours at the computer has kept me in tune with all the key poker industry information to support my work, but it has come at a cost. Working seven days a week has taken its toll. My marriage and family life has suffered as I tried to find the right balance of how much I live online and how much I live with them. Fortunately, I can report that the balance has been improving for a while now.

My current employer inadvertently assisted in that process by cutting back my compensation, thus giving less incentive to give so much of myself for work. I started taking weekends off and that has been a necessary boon to allow my mental battery to recharge for the upcoming week. More recently, I have been cut back again giving significant time and flexibility for family time which has been great with my active soccer and ballet schedules of my children, but forcing me to hustle to find new opportunities.

The risk to having a lot of time away from work is experiencing a feeling of detachment and disconnection when you return as the social media world never stops moving. There are some steps you can take to shift the balance:

Connection - I have primarily used my desktop and modem to remain connected. This week I decided it was time to purchase a device that can keep me in touch when I spend increasing amounts of time away from the home office. I bought an android phone, the Motorola Atrix. It has dual core processor and a good hardware package that should have good longevity despite not having industry leading software with Motoblur. I'm hoping that Google's purchase of Motorola will have a positive impact on their phone hardware and software. It will take me some time to get things configured just right with the right apps and widgets to efficiently use my new tool, but I'm excited for that new option.

Consult - I've spoken to a few poker industry leaders who have shared their issues with managing their online vs. offline time and how to manage it best. When you don't have all the answers it always helps to consult others you respect around you.

Research - I don't come into the social media realm as an expert or someone with tons of experience. But like with anything simply applying yourself to a new priority can do wonders. In today's world of just about any information at our finger tips, there is never a major impediment to quickly learning something new.

To that effect, I've been keeping an eye out for more pertinent social media information. @darrenrovell and his team of Twitter posters shared a link Tuesday to the third quarter analysis of social media's impact according to the respected information company Nielsen.

Here are some key figures from the Nielsen report:

80% of active U.S. Internet users are reached by social networks and blogs

60% of people who use three or more digital means of research for product purchases learned about a specific brand or retailer from a social networking site. 48% of these consumers responded to a retailer's offer posted on Facebook or Twitter.

Almost 40% of social media users access social media content from their mobile phone.

53% of active adult social networkers follow a brand, whereas 32% follow a celebrity.

70% of active online adult social networkers shop online, 12% higher than the average adult internet user.

Surprisingly, Internet users over the age of 55 are driving the growth of social networking through the Mobile Internet.

Facebook blows away all competitors for how much time is spent on their site with over three times as much as their nearest competitor Yahoo.

97% of people access social media via their computer while 37% access social media services via their mobile phone.

After GPS services, social networking is rated as the next most valued feature on your phone, ahead of download/play music, and web browsing. Social networking comes third after games and weather in category of apps downloaded.

The impact of active social media types is profound in an offline world.

They are:

45% more likely to go on a date
75% more likely to be heavy spenders on music
26% more likely to give their opinions on politics/current events
19% more likely to attend a professional sporting event
18% more likely to work out at a gym/health club
47% more likely to be a heavy spender on clothing/shoes/accessories

There is a tremendous amount of fascinating data out there regarding the impact of social media on our lives. I will continue to do some research and pass along any interesting tidbits I find.

Until then, stay connected and balanced.

Views: 915
Date Posted: Sep. 7, 7:43pm, 0 Comments

Recently, I've been thinking more about the role of social media in one's life. I am the exception, rather than the rule, of someone who might embrace social media. Believe it or not, I've never even opened a Facebook account. I don't have an exhibitionist perspective to my life and keep my personal social circles intentionally small. The focus of my social expenditures are my nuclear family who see me every day. I have always taken the perspective that I have a limited amount of social energy and I would rather focus it and my natural intensity on fewer rather than more people.

So the natural question is where do I find value in social media. For me it comes in the business or conceptual discussion realm. Social media is essentially using web-based and mobile technologies to increase communication and interaction. It is in that swifter and deeper dissemination of information and communication amongst people that social media gains value for me. The ability to manage the flow of what I find to be interesting information is key.

For all but the most social of people who thrive off casual interactions, social time is precious. Their days feel like a bombardment of the senses. There is the constant struggle to balance the use of social media like Facebook, Twitter, Google Plus, and LinkedIn with being productive in work and home environments. Social media can eat up a disproportionate amount of your time if you let it. But used wisely it can increase your reach and interaction with people.

Twitter is the one social media platform that I use regularly. The immediacy of potential communication and information delivery is unmatched. But when you follow 600 people, as I do, it can overwhelm you and suck up too much of your productive time. So while it's easy to watch the ticker-tape fly by of tweets, I actively minimize the time I allow Twitter to take over my life.

I find that most people tend to fall in one of three categories when using Twitter.

Social connectors
- These people Tweet and frequent Twitter a tremendous amount. With their smart phones as their companions, they hold running conversations through Twitter, share pics and links, retweet, reply or generally post their thoughts, locations and opinions with tremendous frequency. For many of them, Twitter becomes their main mode of social interaction.

Balanced tweeters
- For lack of a better term, I'll use this description for this loose category of Tweeters who tweet regularly but not at a hyper level. They manage their Tweeting with a purpose, sometimes social, sometimes professional. They have a goal in mind, whether it be to socialize with their friends, grow their followers, share interesting information, or carve a position on a particular issue. You will find periods of activity with long stretches where they are actively living their life off of Twitter.

Infrequent tweeters
- This amalgam of infrequent tweeters refers to those who don't invest enough of their time and effort to build momentum or regular communication on Twitter. They don't understand the value of the medium nor the idea behind its reach. It is a different beast than Facebook and requires some regularity of posting or communication to develop an identity.

The beauty of Twitter and social media in general is in its revolutionary potential uses. When I read a couple weeks ago that the New York Police Department was catching flack for creating a new sub-department to combat and shut down social media in cases of terrorism or public panic, I realized how powerful and threatening it had become to established societal infrastructures. Twitter has been blamed for the London riots, through the quick spreading of information and venting of a few disenfranchised youths. Twitter has been blamed for helping organize and coalesce revolutionary forces in the Middle East that struggled for decades to find some way to unite against the oppression they felt. When people can quickly communicate their thoughts and reach a wide audience that can go viral within minutes, the power of ideas both progressive and destructive can flourish where they couldn't before. Twitter also serves the rather base purpose of mindless trending topics that rarely add much more than humor to the equation.

My aspirations for social media aren't grand. Nor am I willing to sacrifice my personal life to become a social media force. But I find that social media, and Twitter in particular, serve a valuable service in connecting with people within an industry or area of interest who can enrich you with information you can't access as easily. Those same valuable people can stimulate conversation and feedback on your ideas.

So when asked, "Do you need to be social to do social media?" I say that social media allows you to manage and define its reach and impact to a degree that can't be readily replicated anywhere else. For me, I'm not looking to be the most popular guy in the room. I am looking to interact with intelligent and thoughtful people on shared interests and I can do that in no better setting than the ultra-swift Twitterverse. Are there plenty of times I don't have something to say? Sure. But I think my followers and their clogged twitter feeds appreciate that too. The person who is most social isn't necessarily the most socialized. As with everything, you must find your own balance that represents who you are.


Views: 1518
Date Posted: Aug. 26, 1:00pm, 1 Comment

In a question I posed to Olivier Busquet in his excellent in-depth interview (Part 1 is up -, Part 2 coming Monday), I asked what his thoughts were concerning the visible cheating scandals of late.

The biggest issue with cheating is related to legalization. There is an incentive that exists for scammers and cheaters because if they get away with it they make money. And there is almost no recourse available to the individuals who are scammed or to the websites on which the scams are taking place. If we get poker legalized there should be strong consequences and penalties for people, whether it's multi-accounting, trying to superuse or cheat. If people start getting prosecuted, a lot of these people will stop trying this stuff."

I wholeheartedly concur that the way forward to remove the majority of cheating and scamming in the poker world is to establish clear and well communicated rules of what is acceptable and unacceptable behavior and then create proper penalties with a strong but reasonable detection and enforcement mechanism to back up the standards.

The Nevada Gaming Control Board recently released their first draft of regulations for intrastate "interactive gaming." In section 5A, the NGCB lays out their suggested framework for online gaming. In addition to issues related to licensing,
application requirements, expected internal controls, self-exclusion rules, and dispute resolution, there are elements that should assist in cutting down on cheating:

Player registration requirements - Players may only have one account at a given operator and may not use fake names. If there is a mechanism to prevent players from setting up multiple accounts at a poker room, that will help in cutting down multi-accounting. Regulated and enforced IP tracking and other security technology will help detect and cut down on other instances of cheating.

Incentives for poker rooms - Licensees will be required to maintain a revolving fund of $20,000 to pay for compliance investigations. If there are costs and penalties associated with violating the rules, the poker rooms are given more incentives to regularly police and enforce the new rules.

Hand histories must be kept by the operator for five years - Poker rooms will need to provide documentation to prove they are hosting a fair game and provide hand evidence of players who might be cheating.

Operators must take proactive steps to prevent bot use - Poker should be a single human vs. single human game and removing the specter of bots from internet poker would be a big improvement.

5) Legal online gambling age will be 21 - While I would never categorically say that younger players cheat more, I will assert that the moral compass for younger players isn't as fully developed and the temptation to find and push the gray area edges is likely greater in younger players who have yet to see consequences in their life.

Inter-account transfers between players are not permitted - While likely to be quite unpopular with players, this is a step to clean up the very murky money flow online. For too long, poker players have used poker accounts as pseudo-banks. They transfer money to other poker accounts for a variety of reasons including to settle prop bets, debts, or stake other players. There is no real trail for this money. Speaking to one poker room manager recently, he spoke of the dirty secret that high stakes players often create the impression they are laundering money with all the deposits, transfers and withdrawals. If each player can only move and manage their account's funds, in an environment where depositing and withdrawing is much easier and faster, the ability to track your wins and losses and the resulting tax burden should be easier and clearer.

As Gaming Control Board Chairman Mark Lipparelli stated, "Internet poker has become a multibillion-dollar business around the world. The technology supporting it, while not perfect, has improved dramatically since its introduction. Similar to our land-based requirements, Nevada will establish high standards giving players as much confidence as possible in the entities and technologies that might eventually gain approval."

These statements from Nevada, the leading state that will likely influence eventual U.S. legislation, compliance and enforcement, give me increased confidence that when online poker returns to the U.S. cheaters will find a much more challenging environment to operate. Poker is a hard enough game when played on an even playing field against other hyper-competitive players. I would happily embrace some reasonable restrictions that could effectively remove the specter of everyday cheating from the poker world and the stain it gives the game in the public's eye. Only with clearly communicated and enforceable consequences for cheating will greed-driven poker cheating be curbed effectively.

Views: 1370
Date Posted: Aug. 23, 3:36pm, 0 Comments

I wanted to share an exchange I had with a forum poster on one of the sites that I contribute poker content. Although I have lots of additional thoughts and details to support my thinking and response, I'll let the exchange speak for itself.

His original post:

Hey guys. Im xxxxxx.

I had been living and working as a poker player for the past 3 or so years (this was about 4-4.5 years ago) . In those 3 years I about $75k, and lived like a king. Now I was always part of a religious family and they would pressure me to stop playing poker, but time and time again, the thought of playing a game online for highstake money, always came first. After these 3 years I realized that I wasn't doing anything of substance, I was like a stock trader or a con-man, In that I did not create, anything tangible or beneficial to the world, but rather, lived off of others. I was was rich and without a purpose, I became a heavy drinker and started abusing marijuana. Currently (for the most part) I have sorted out my life, I have not drank a drop of alcohol in a year, or played poker in 6 months. Even though I didn't loose money (as i still have the large winnings) I still regret my years of playing poker. Not because I was addicted, or because I lost money, but rather because the lifestyle and concept of poker as a career is wrong. I sold out my beliefs and took money from others (in an albeit fair and consensual way).

I write this primarily to help you, young up-and-coming poker players, and tell you guys that from my experience, poker is one of the worse life choices I have made, and I regret it every day of my life.

I know this is not a popular view (especially on these forums) but I will feel satisfied if i convince, just one of you kids to just not play poker.

I would have rather earned 2k as a McDonald's worker, over 3 years, Then have earned 75k at poker, as at least one is a honest living, where you contribute to society.

Thank you.

My initial response:

Thanks for sharing your story, xxxxxx. Everyone has a different story to tell on their journey playing a game, whether it's dota, SC2 or poker.

The thing I would say is that I know of many people who have found poker to be a positive experience because they came into poker with a good attitude to use its benefits of money and freedom to grow as people. Aspects like traveling, encountering new cultures, making friends, investing in businesses and maturing in the poker world were all benefits to these players.

It's not so much what you do to make a living, as to what you do with your living that matters. Some successful friends have gone on to great things as a result of their time in poker. After 3 years at McDonald's I'm not sure you could say the same thing.

If you are able to use your $75k wisely to your benefit or to the benefit of society, you may change your perspective about the value of your time spent in poker. Many players struggle with balance and perspective when they are playing and I'm not at all surprised to hear that you did too.

Best of luck to you in your future.

His response:

Zimba you do indeed raise some valid points. The way you put it, there is nothing wrong with someone who plays poker within the setup you mentioned, and like you said, it can even be beneficial for the person. But the thing I was trying to get at (and perhaps I didn't explain this well enough) Is that I fell into a rut in my poker career, wherein, I allowed poker to impact my life negatively and where I virtually did nothing but sit in front of a computer all day. It is for this reason, that I did not grow as a person. However I think that someone who can find a balance, where they focus on growing as a person and being productive through poker, and not just seeing it as a linear gambling career, will be successful and happy as a poker player.

To reiterate, being a poker pro isnt bad, but if you allow it to effect you in any way, where you do not feel like it is right, or that it is not helping you, then I would suggest people to stop, and live without regrets :)

My second response:

Thanks for your additional post, xxxxxx. Making those clarifications is important in my opinion. Poker is just a game that can be played for money. It is not more inherently good or bad than another activity. It is what players bring to the game that matters. I agree that the game allows and in some instances encourages some negative activity in the pursuit of money, but that isn't necessary if players develop balance and perspective. The same can be said for any activity that takes over your life. Addiction is a human quality that gets attached to all kinds of activities in our lives whether it be eating, drinking, gaming or even sex.

It sounds like if you were to start poker again, with the knowledge and experience you have now you would handle your playing and life differently. I touched upon the idea of being too young to play poker earlier today in my Zimba blog on Cognitive Dissonance.

His final contribution:

Indeed. I've read a lot of your articles, and I have found them to be very nice (bring back a lot of old memories) Also Zimba, I think its great that there is a poker writer who is as passionate and as committed to the game as a concept. I admire you, as you seem to have something, some spark that I never did, back when I played. Thanks for the feed back, and it's a really nice poker section you have put together here :)

Views: 1397
Date Posted: Aug. 16, 11:00pm, 2 Comments

My sophomore year in college (1986-7) I had a RD (resident director of my dorm) who had a significant impact on me. He was a 24-year-old Psychology graduate student. He was tall, Italian and liked to run. He drove a Camaro. He oozed confidence and had more than his fair share of girls on campus pay attention to him despite not being the most handsome guy around. As we became friends over the year, I approached him at one point to ask the secret of his success with girls, as I was having little. He informed me of a psychology concept that explained a lot of his success - cognitive dissonance.


Cognitive dissonance is an uncomfortable feeling caused by holding conflicting ideas simultaneously. People who experience cognitive dissonance have a strong desire to reduce dissonance. They accomplish this by changing their attitudes, beliefs, and actions. The can employ rationalization, confirmation bias or more negatively by blaming, and denying. Leon Festinger coined the term in his 1956 book When Prophecy Fails, which related how followers of a UFO cult actions changed as reality clashed with their fervent beliefs of an end of days. The classic example offered by Wikipedia is of Aesop's The Fox and the Grapes tale where a fox sees some high-hanging grapes and wishes to eat them. When the fox is unable to think of a way to reach them, he surmises that the grapes are probably not worth eating, as they must not be ripe or that they are sour (the origin of the term "sour grapes"). The fox reduced the desire for something that seemed unattainable by criticizing it.


In my old college relational setting, my RD friend kept himself unpredictable and a bit shocking to girls around him. As an enigma, he created dissonance and confusion for these girls. Instead of the usual pattern of rejection or acceptance, they chose non-traditional methods to try to resolve the dissonance, trying to "understand" or "solve" him which led to further interest and opportunities for him to date or play with them.


Cognitive dissonance can be readily found in the poker world as well. I recall reading a fascinating article from a while back by Kim Lund of Infinite Edge blog who stated that much of the addiction in the gaming world was created by a form of cognitive dissonance. It was the confusion and reaction created from player's expectations of winning and their losing results that kept them coming back again in again, against most reason. A player that loses faces feelings that vary from surprise, dread, guilt, anger, or embarrassment. People are biased to think of their choices as correct, despite any contrary evidence. So they return again and again trying to demonstrate their superiority in the face of rational evidence that indicates their actions are both irrational and destructive.


When playing poker, cognitive dissonance rears its head continually. Each time you make a play like calling in a spot where you are likely beat, but call anyway, it can create tremendous dissonance. To deal with your blunder you rationalize that he could have been bluffing or value betting too thinly. You focus on the few times where your hero call was correct to justify all the times when you are beat and claim you were simply unlucky to run into a hand.


Two recent examples of cognitive dissonance displayed in the poker community come from the two touchstone issues from the past couple weeks; reaction to the Epic Poker League and the Macedo/Qureshi/Cates cheating scandal. The dissonance from these events has generated tremendous reaction from the general public, no matter where you come down on each issue.


The Epic Poker League created dissonance for people by introducing a new (technically not new, but first/best effort in last five years) PGA-type exclusive membership league that featured no rake with added value for players. It generated significant hype amongst some players and industry types for its departure from the expected tournament norm and thus forced players and fans to try to process that dissonance. Passionate pro and con opinions have been formed, many biased by their own prisms. Many focused their attention on the dissonance created by not understanding the financial model. As someone with no dog in the fight, I've found the strong opinions expressed only coming from those with history or allegiances that color their present opinions.


The more sensational poker community issue has been the ongoing revelations associated with the Macedo/Qureshi/Cates cheating scandal. On the weekends, and for a few hours today, I've been following the drama as it unfolded. The driving force for many forum posters over this arduous process has been a desire to understand the situation to their satisfaction. Beyond a simple drive for facts or even punishment is a motivation to fully understand how and why the different parties acted. Any dissonance created from the two not comporting to poster's understanding of how people should act fuels their hunger for more information, revelations and explanation. The actions and deceptions of these seemingly bright, motivated and wealthy young poker players created tremendous dissonance for fans, friends, and critics.


As Jeff218 expressed in his blog today, the answer to why Macedo/Qureshi/Cates made such deceptive and poor decisions is as much a function of their age and immaturity as it is of anything else. It is a strong argument in support of the notion forwarded in potential U.S. poker legislation that Internet poker won't be allowed for those under 21. While players can be strategically successful in the game well before that, as seen by hundreds of successful players over the last half decade, these young players typically don't exhibit the necessary discipline, developed moral compass and self awareness to avoid making tons of poor and rash decisions.


Looking back, I can't claim to have ever mastered the cognitive dissonance theory to help with girls, but it is a fascinating psychological concept that does begin to explain some interesting human reactions and behavior. As you face any confusing dissonance, your mind is compelled to acquire or invent new thoughts or beliefs, or to modify existing beliefs to in some way reconcile this conflict.Coming to understand that process and its affect on you can increase your self-awareness and lead to better decision making in all areas of your life.

Views: 755
Date Posted: Aug. 12, 7:02pm, 0 Comments

A relatively new poker player messaged me with a few questions today. Besides the usual questions about what site to play on and where to find the best poker advice, he asked how he could avoid being cheated or scammed. It is a hot topic in the poker world this week with the Jose "Girah" Macedo, Haseeb "Dogishead/InternetPokers" Qureshi and Chino Rheem cheating episodes being revealed. The poker world continues to have high profile cheating incidents come to light bringing a black eye to the whole industry. New players are particularly wary of getting involved in the game for fear of being taken.

Cheating in the live and online poker world comes in many forms; misdealing, bots, multi-accounting, super-user capabilities, and colluding which involves chip dumping, soft playing, and squeezing etc.

Here are seven concepts to help protect yourself from cheating.

1. Perspective

Poker is no different from any sport, business or life situation. There will always be people looking to take advantage of others. Some people will try to swindle you in the stock market, gain unfair advantage in sports by "juicing" or equipment enhancements, or con you in a relationship. Don't globalize or over-sensationalize the high profile poker cheating incidents to think that everyone is trying to cheat you. There are plenty of ethical, moral and fair poker players you can play against.

Take prudent precautions as you would in other areas of your life to avoid being cheated. For newer players, be aware that more incidents of cheating are found at mid and higher stakes, where there is a better return for the cheating risk taken. The lowest stakes are much less targeted. Prudence, not paranoia, is required.

2. Be observant and diligent

While the blame for cheating falls on the cheater, the ultimate responsibility falls on your own shoulders. There are steps to minimize or remove the specter of cheating in your poker world so take the necessary steps or precautions and don't simply blame others.

Pay close attention when you play, whether it be live or online. Notice any anomalies or out of the ordinary occurrences. If you know the math and probabilities associated with the game, you can better notice when things deviate from the expected percentages.

Cheating in live and online situations can often involve more than one person working together. Observe all relationships and interactions at the table. Noticing relationships and patterns of play between certain players can reveal signs of collusion.

Although online poker rooms have been cracking down on them, there is a risk of running into bots, computer programs geared to play a solid and repetitive style of play that grind significant volume to gain rakeback with some profit. These players will play a robotic style with very repetitive patterns that lack much creativity.

Online poker players have additional tools to detect possible cheating in the form of poker tracking software. If everyone is winning within a certain range, but one player is way above the norm, that is a sign something could be amiss. If showdown hands demonstrate that they are making "extraordinary" plays against you, it could be that they have an unfair advantage.

3. Laziness and apathy are the enemy of avoiding

How many players have chosen not to question a player when seeing a faint sign of trouble. They overlook it or minimize it because it would require work to investigate or prove definitively. Your life matters and so does your poker playing and the real money with which you play. Treat it with respect. Just as the best players need to work hard to improve their game, so must you work to be diligent about the possible cheating and manipulative relationships around you.

4. Cheating involves inequity

Any relationship where one party is gaining at the exclusion of the other party could be considered a form of cheating. If you notice a dynamic where a friend or another player is tilting your relationship towards their needs and not yours, it's time for review. If they want to borrow money, sweat you, learn from you, but return the favor freely that is a sign of being taken advantage. A poker relationship shouldn't involve being told what to do, bullied, or pressured into doing anything you wouldn't do naturally on your own. Stand up for yourself and establish boundaries that respect your beliefs and poker playing ethics.

5. If it feels odd, don't dismiss it. Investigate it

Your "gut" is a powerful and sensitive sense, so don't ignore it. If you feel something is off. Step back and review the action from a different vantage point to see if it makes sense or not. Just because you lose a few hands in a row or have a bad session doesn't mean you are being cheated, but it's still worth taking a break to evaluate. In almost all cheating scenarios that were evident early on that were overlooked or ignored. It's not about being paranoid, but rather giving due attention to the signs around you that something might be "off."

6. Trust is earned, not given

Scamming, conning and cheating are often various forms of confidence games. Don't give your trust easily. Have other players earn your trust over time by their tangible actions, not simply words. Observe their track record in the past. Any black mark or questionable decision in the past is rarely isolated, but rather demonstrating a likelihood or pattern of questionable judgment. Don't buy into the public hype or another person's voucher or word, unless you trust them explicitly as well.

Trust is something given more freely in the poker world than in many other areas of life. The poker culture is ripe with exchanges and transfers on poker sites, along with a lot of loaning and staking. Poker players make and lose money regularly and can be found asking for assistance often. Some players feel guilty if they don't join in that loosely monitored exchange of money. You don't have to participate in that exchange. It isn't compulsory. You can politely indicate that you don't.

7. You can't be cheated if you walk away or say No!

One doesn't have to be cheated before learning to say no. You are allowed to say no to requests. When you are losing a lot or feel a game seems "off" get up and walk away. You can't lose when you don't play.

As a poker site owner with thousands of members, I have had to maintain a firm zero-tolerance policy or it quickly gets abused. Your friends may be disappointed that you don't hand out money freely, but they need to respect that you have limits.

Just because you have seen that top players seem to have a disregard for the value of money doesn't mean you should. Most of us will never play at the nosebleeds and a healthy respect for every dollar you play with is the ultimate respect you can give the game and yourself.

One longstanding piece of advice maintains that you should never loan money that you expect back. The amounts should never be money that you can't do without and would put you in hardship if you don't get it back. That way you protect yourself in case you don't get it back.


Some argue that poker is a zero sum money game where predatory-prey dynamics can't be avoided. While I will agree that poker is a game where players seek an edge over others to assist their playing profitably, that doesn't mean any player has to abandon standards of decency and prudence.

Unfortunately greed, the merciless drive for money, leads people to cheat. The only way to combat the many forms of cheating you encounter is to be vigilant and firm in your conduct. Poker rooms lay out clear guidelines for most areas of poker. It is in the murkiness of the gray areas that some players hedge.

Without a doubt, it's best to avoid the appearance of impropriety so you can be safe and not sorry. As Jose "Girah" Macedo, Haseeb "Dogishead/InternetPokers" Qureshi and Chino Rheem have learned this week, your poker reputation once impugned is very hard from which to recover. Both the one who cheats and the one who is cheated ultimately lose. The sense of violation and vulnerability for the cheated and the shame and guilt of the cheater. Whenever there is a question of what action to take, I find it helpful if you ask if you would like that action taken against you first.

The same discipline that is required to study and play profitable poker is also required to ferret out potential cheating in live and online poker settings. The confidence and pride that you bring to the game will be greatly enhanced if you employ these seven concepts to ensure you minimize the potential of ever being cheated.

Views: 799
Date Posted: Aug. 10, 12:09am, 0 Comments

Sunday evening, Mrs. Zimba sat down to watch Masterpiece Theater's Mystery Inspector Lewis. It is very similar in feel to the earlier classic Inspector Morse series we enjoyed for years that captured the peculiar culture of Oxford. One common element found in most of the embroiled Oxford characters is a profound pain usually masked by their particular Oxford social niceties and eccentricities, but a remnant of prior decisions and regrets.

As I spent several hours Sunday reading the latest poker world cheating scandal surrounding Jose "Girah" Macedo and his backers Haseeb "Dogishead/InternetPokers" Quereshi and Daniel "jungleman12" Cates unfold on twoplustwo, I couldn't help but feel some similarity to the Oxford characters. For all of their talents and social niceties, these poker players are conflicted and troubled individuals. Their decisions reflect the constant struggle to navigate a poker world where trust and ethics battle against gaining an edge and winning big despite the inherent variance.

Observing some of their decisions and action in this latest cheating scandal, and some decisions made over the last couple years (e.g. being cheated themselves, big prop bets, multi-accounting) one might seriously question why these characters are repeatedly putting themselves in questionable situations that could and should be avoided.

For instance, if you randomly ask 10 people on the street why people cheat, they would likely blame it on greed. And while greed is certainly a core motivating force for cheating, deciding to cheat others often brings with it a wide range of motivations.

Focusing on the central character, Jose "Girah" Macedo, I'll speculate on some of the other possible motivations or scenarios for why he cheated others:

1) The motivation for cheating could have come from an insecurity surrounding his abilities in light of the fact that he played up his abilities so much.

2) The motivation for cheating could have come from the pressure he felt by being backed by two of the world's better poker players and falling behind over $50k in makeup.

3) The motivation for cheating could come from the maniacal desire to create more complexity and challenge, by trying to get away with that complexity, rather than winning at poker in a straight forward manner.

4) The motivation for cheating can and often comes from laziness. We prefer a short-cut to arrive at our goals, rather than deal with the sweat and uncertainty of doing it the honest way. It is that same laziness that allows us to be cheated too.

5) The motivation for cheating could be a bizarre manifestation from the shame one feels over prior dishonesty and actions taken.

6) The motivation for cheating could be a cry for help. If one feels helpless and powerless in the face of a daunting world, acting out can be a subconscious attempt to get others to help rescue us.

7) The motivation for cheating could come out of a sense of envy or resentment towards others luckier or more talented with better results.

Macedo's motivation for cheating are likely a combination of the above possibilities. Only he and his family know of his personal history and psychological makeup. For the poker public, Macedo was hyped in January and announced in March with much fanfare. "The Portuguese Prodigy" has been a youthful legend that emerged from the shadows only months ago. Many now suspect it was simply part of the grand scheme of manipulation.

One final option for his cheating is the one used repeatedly by Jose Macedo when confronted with his cheating, "I don't know." Despite his intelligence and charm, Macedo seems unable or unwilling to provide an answer himself. From his chat logs when dealing with his high stakes friends, he appears to lack the self-awareness to identify the inner motivations and demons with which he struggles.

Above all else, Macedo feared his crimes coming to light. The public light is intense and harsh. It can burn us badly. He feared the repercussions from friends, family, and for his reputation. He is not alone in his fear. We all have demons we would prefer to remain in the shadows. For many of us, that is motivation enough to prevent us from taking steps to cheat or harm others that would bring outside scrutiny to the darker parts of our personal worlds.

Macedo needs to learn that restitution is only one step in his recovery. Gaining insight into his motivations is key. He needs to gain awareness into the mystifying desire to want to take advantage of others when you have have previously suffered a similar torment. I am not without sympathy for the youthful indiscretions many of us make when temptation surrounds us. There are many temptations and gray areas that poker players have to navigate in the poker world and having a good moral compass with a keen appreciation for yourself within the greater community is essential.

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