FULL TILT POKER BLOG

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[Reminder: my charity tournament on Full Tilt for the American Cancer Society's Relay For Life is coming up on December 21 at 18:00 ET. Please sign up - it's under "private tournaments," password "relay". For information about the tournament and Relay For Life, check out my blog entry on the subject.]

It’s been over a week since I posted the first part of my blog about the SIXTY MINUTES segment on cheating in online poker. My remarks, which were novel for me but pretty uncontroversial, received a response like nothing else I’ve written in the blog. I’ve gotten e-mails, comments, and (mostly) table chat on Full Tilt like the following:

“Thanks for giving us your thoughts about Full Tilt’s honesty in the wake of this news.”

“It’s about time someone from Full Tilt said something about this.”

“I believe you and appreciate your sincerity but if Full Tilt is so honest, why are they so mysterious? Who owns them? Who runs them? Why isn’t there an toll-free number or live-online  customer-service site?”

First, I’m glad the response has been overall positive. After all, Full Tilt hasn’t been accused of anything wrong. I merely explained reasons why I thought Full Tilt ran an honest operation and why I believed my opinion reflected reality.

Second, I want to take the opportunity to speculate about the future. What would make Full Tilt a better site and more transparent to its customers? And what would make online poker a generally more honest place? I emphasize in discussing these issues that none of this has been reviewed by Full Tilt nor have I gotten anyone’s views on these matters. I’m not copping out on any of this – just letting you know that even though this is what I think is going on inside the giant brains running Full Tilt, it’s all my opinions, not theirs.

I think there are two reasons Full Tilt keeps such a low profile with its customers and the world at large: (1) they are reasonably scared of the U.S. government, and (2) there is no advantage in the current environment to transparency.

This is the way the government sounds to an online poker operator: “What you are doing may be illegal, or maybe just evil, or maybe we don’t care. Maybe we’re targeting you, or maybe we’re targeting someone else and it just looks like we’re targeting you. And if we’re targeting someone else, maybe we’ll still go after you and maybe we won’t. If we don’t go after you, we’ll never tell you that, or that we might not SOME DAY IN THE FUTURE go after you. And if we do go after you, we will seize all your bank accounts, your computers and servers, and everything we can of everybody associated with your business, including their homes and even their spouses’ jewelry. We’ll use RICO, we’ll use money laundering laws, we’ll use anti-terrorism laws, we’ll use vaguely-defined conspiracy laws, we’ll individually charge all your employees in hopes they’ll testify against you in exchange for their freedom. We will make your business cease to run and we’ll do all this before trial, so that by the time this complicated legal issue is worked out, your business will be ruined and your personal lives will be in tatters.”

I’m pretty sure that’s how people at Full Tilt see the U.S. government, based on the government’s posture and how the government has gone after gamblers from Al Capone to Billy Baxter to the Computer Group to NeTeller to online sports books. And if I saw the government that way, I’d keep my head down, too, and so would you.

In addition to online poker’s outlaw status threatening those sites that offer some transparency, it also robs them of the benefits of being above-board and customer-oriented. (That’s not to say that Full Tilt or other honest sites aren’t committed to their customers; I’m saying the steps they would take in favor of customers if online poker was clearly legal and regulated in the U.S. would be much greater.)

If Full Tilt were suddenly to do everything that every customer wanted – physical offices in several large cities around the world (where they could go with complaints and physically send and receive money), toll-free numbers, 24-hour live online customer service, etc. etc. etc. – that would cause some problems. First, these things add up to a big expense. Yes, Full Tilt probably makes a fortune (try adding up the rake/juice sometime) and has relatively low operating expenses, but those expenses would go way up if they suddenly tried to be like American Express.

In a fight against the government, an online poker site so “customer friendly” would be an especially tempting target. These would be assets the government could locate and employees it could approach or harass or infiltrate. A common police and prosecutorial strategy for bringing down an enterprise, whether it’s an investment banking firm or an organized-crime family, is to go after the lowest people. Infiltrate their ranks. Entice informants. Find low-level employees with other problems (say a drug problem or a parole violation) and pressure them. A lot of giant organizations have been taken down by the government with exactly that strategy.

But even if Full Tilt isn’t paranoid, that’s simply not money that’s efficiently spent in this environment. Competitors aren’t doing it. Barriers to entry already insulate the currently-operating sites from more competition. Problems with payment processors and dissemination of information about what sites are up to limits the ability of customers to move from site to site.

Though it should be in every online poker site’s economic interest to be scrupulously honest – shouldn’t even rumors of dishonesty cost a gambling operation far more than dishonesty could net it? – there’s still a lot of room around the margins for sleaze and dishonesty in a regulatory twilight zone.

I note this obvious fact: neither of the sites in which SIXTY MINUTES documented dishonesty was either shut down or lost all its business. Even though just about everyone playing on those sites has known for a long time about the matters revealed, players keep showing up for games and tournaments. If some online poker sites can stay in business despite some examples of crookedness, what’s the motivation for an otherwise-honest site to spend money making customers extra-happy?

The irony here is that without a good regulatory system in place, self-regulation can’t be understood or appreciated. I hope a day will come when players will choose an online poker site based on things like toll-free numbers and physical offices and 24-hour online customer service. And I hope that Full Tilt will be leading the way when that happens. Online poker sites don’t need the government to FORCE them to do that, but in the absence of ANY regulatory system, that’s a lot of trouble to go to for a questionable benefit.

If the U.S. government – or some international coalition of which the U.S. was a part – ventured into this novel area of regulating online poker, I think they might be pleased by what they would find (or what would develop). Land-based casino operators have long realized that responsible operations don’t require chasing every dollar in existence. It’s now without question that casinos would rather not make money from underage customers, or compulsive gamblers, or embezzlers, or money launderers. It’s a marginal part of a giant business and it’s a hassle – because the government is on your back.

If we give Absolute Poker and Ultimate Bet the benefit of the doubt and conclude whatever dishonesty went on there was because of rogue employees, or ex-employees, or improperly/un-screened employees, or operators who had no business operating, that’s exactly the kind of thing government oversight stops. Say what you will about Las Vegas, but it’s pretty unlikely when you sit down at a blackjack table that the dealer is palming cards (either for the benefit of some other player or the house). Most of those omnipresent cameras are looking at their own employees, because they can’t stand the risk of some cheating employee bringing down their multi-billion dollar business.

Same thing with licensing. I can’t say that no wiseguy ever got his hands on a Las Vegas or Atlantic City gambling operation, but it becomes ever-less-likely with each passing year. I remember even when Atlantic City casinos were in their infancy, Playboy couldn’t get a license because it made payments in connection with a Great Britain casino that were either bribes or extortion. It was many years before, in far different circumstances, and may have involved some government official perpetrating a crime UPON Playboy – but no matter. (I remember reading someplace that it didn’t help the cause that Hugh Hefner insisted on being on the license and showed up at a licensing hearing with a young woman wearing a skirt so short you could practically see her uterus.) And they actually built the place and were operating it before they learned they would be denied a permanent license. Likewise, Hilton – long-time, highly-regarded owner of a popular and luxurious chain of hotels and publicly-traded on the New York Stock Exchange – was denied a permanent license in Atlantic City. (One of the Trump properties was originally an already-built casino by Hilton.)

So if you tell me some sleaze-bucket got enough control of an online poker site to be able to access his opponents’ hole cards then play high-stakes poker with them, I’d be comfortable saying, “can’t happen here” if online poker is properly licensed and regulated.

In fact, though there would definitely be novel features to work out, online gambling operations could be much BETTER at rooting out dishonesty than their brick-and-mortar counterparts. Players in cahoots with each other and/or someone “inside” the casino/site would be easier to catch online. You’d have to physically spot the dishonesty in a live setting, which is difficult if you don’t get to know what cards the players had. (And you really need to know for a large, large number of hands. Anything “fishy” could happen occasionally, simply because one player has a hunch he can get an opponent off a much better hand or makes a mistake and thinks an opponent with an actual hand is bluffing yet succeeds in getting that opponent to fold.)

Online, you have the hand histories. In fact, some online cheating has been discovered happened because someone accidentally got access to a cheater’s hand history, or because outsiders tracking large numbers of hands detected patterns that couldn’t exist without cheating being likely. Imagine if sites were institutionally required to maintain such data for regulators and even develop software to develop when patterns of possible cheating were occurring.

Sites could also develop identification procedures – using, for example, the fingerprint readers that appear on many computers or are a not-too-expensive peripheral – to keep out underage and compulsive gamblers, as well as attack the issue of account sharing/changing.

I apologize for making the U.S. government the villain (not really), but the feds can fix all this. This is one of those weird situations in which the best operators in this Wild West environment actually WANT regulation. The U.S. government can make billions in tax revenue, protect citizens, and actually become heroes of the free market, putting a mechanism in place that more accurately rewards honest and transparent operators and more accurately exposes cheaters and sleazeballs.

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5 Responses to “#621 – Honesty & Sixty Minutes, Part II – The Honorable Outlaws”

1. Al Flash Says:
   December 12th, 2008 at 9:00 am

   Interesting little tidbit, my man!!!

2. highlandfox Says:
   December 13th, 2008 at 12:44 am

   There is a Hilton In AC.

3. PecanGrower Says:
   December 14th, 2008 at 8:50 pm

   Happy Birthday Michael!

4. spunkymonkey Says:
   December 15th, 2008 at 4:51 pm

   Great article Michael. It boggles the mind that regulation isn’t the foremost issue in current poker legislation – your arguments make the case compelling and seemingly self-evident.

   Non-article-related comment – do you plan on shedding any light on the situation between Clonie and Full Tilt? It’d be great to hear something candid from you, whether or not it represents Full Tilt’s position…

5. Full Tilt Poker Nut Says:
   December 16th, 2008 at 6:33 pm

   American government is crazy. This is like prohabition era. when they banned alchohol because they couldnt work out how to tax it..
   If they actually just used their brains a bit, and realised they wont stop ppl gambling, be it playing poker online or casino games.. They could regulate and tax it accordingly.
   But ooh no.. far to simple an idea that is. Instead they have to throw their toys out the pram and try to make criminals of good honest decent working folk. The fact is if its my money and i earned it. Then by dam its my money and i should be free to do what i want with it.. Which includes gambling, playing poker, rolling it up and chucking it off a bridge or anything else i see fit..

   If only we lived in a democracy this would all be so much easier )
   And just for the record i think Full Tilt Poker is one of the best and safest poker rooms online !

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