Online Poker goes on Tilt
James McManus recently wrote an excellent summary of unfortunate unraveling of online poker in the US this year.
I remain surprised at how surprised everyone seems to be at the unraveling of the poker ecosystem. You needed no expertise at all to realize that the legal framework in which PokerStars and FullTilt were operating in was, at the very best, dark gray, and likely explicitly illegal. Now, you might think, so are speeding and jaywalking, and despite being illegal (or nearly so), you might choose to do it anyway. Fair enough.
But people were trusting these guys with a lot of money. McManus reports having close to $20K in PokerStars when assets were frozen, and many people had much, much, more. People seemed to trust that the operators were ringfencing the client deposits from the operating expenses of the site (and, even worse, the profit distributions of the owners.) Alas, it turned out not to be true, and a lot of money has gone up in smoke. I feel for the people who lost it, and there’s no justification for the fraud that FullTilt appears to have committed, but I’m hardly surprised.
McManus and others are indignant about the blatantly irrational attitudes that drive regulation of internet gambling in the US, and I wholeheartedly agree. US gambling law is a mess. If you want to understand what get licensed, just look where the money flows and the interests of those parties. Activities like sports wagering or poker playing are weekly rituals of the same legislators, judges and executives that ban them and enforce those bans. It doesn’t make any sense. And yet, I am not outraged like most — since when did any lawmaking and enforcement make any sense in this country? The fact that the process seems driven by special interests and a general sense of arbitrariness is completely in character with everything else our government is doing.
Progress is slow but hopefully will continue. Betfair will launch the first sports betting exchange in the US in 2012, in California. Baby steps. Hopefully for all my fellow players, poker will follow soon after.