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Should You Play Poker Professionally?

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The Discomfort Zone: Manage it for Growth and Success

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Five Fallacies of Legal Online Poker in the U.S.

THE WEEKLY SHUFFLE, 2012-10-21, by Ozone

There is a lot of wrong beliefs and information out there regarding the status of legal online poker in the U.S. Both the current market of poker prohibition and the future anticipated regulated online poker market generate a lot of chatter and commentary. Unfortunately, much of it is rubbish.

Setting the record straight, here are five fallacies pertaining to regulated Internet poker in the U.S.:

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#1: That it exists

In a conversion this week with an American online poker pro via Twitter who was spamming his followers with links to his Carbon Poker rakeback account, I ascertained that he thinks poker rooms currently serving U.S. customers are shielded from the law. He said that since the DOJ changed its position on the Wire Act that unlicensed online poker rooms will no longer be a target of the U.S. This method of reasoning might be convenient for the purposes of a rakeback spammer, but it is wrong.

The DOJ does not need the Wire Act to target online poker rooms. They've got two other laws, the UIGEA and the Illegal Gambling Business Act that can be relied upon in various ways to target unlicensed online poker rooms. Remember that these sites still rely on shady payment processors to move money through the U.S. banking system. If they can make payment processing a large enough headache, which as Full Tilt Poker learned the hard way, they can, then the U.S. won't even need to target sites like Carbon Poker directly to bring their operators to their knees.

#2: That it will be just like the old days

If you think online poker will ever again be like it was before Black Friday, you're wrong.

The next era of online poker in the U.S., once we move past this pitiful climate of prohibition and bottom-feeding operators, will arrive in one of two forms: state-by-state regulated online poker or federal online poker.

The state-by-state approach is already well underway with Nevada poker expected online by early next year. The trouble is, it's going to suck. There are less than 3 million people in the state of Nevada. It represents 1% of the U.S. population. So while it's technically a legal form of online poker in the U.S., it affects almost no one. Even if you are within Nevada state borders, the online poker player liquidity pool will be unimpressive. Expect plenty of savvy Vegas veterans and small prize pools.

Federal-level legalized online poker, while vastly preferred, still won't be as good as the old days. The reason is due to the absence of an international player pool. The current federal online poker bill with the most promise of becoming law expressly eliminates the possibility of players based outside of the U.S. accessing the games. That means no more Swedish fish for Joe Q. Online Grinder to munch on.

#3: That it will be here soon

People have always thought legal online poker would be coming to the U.S. any day now. We remember on the Party Poker Million Cruise in 2008 hearing excitement from players about how if Obama gets elected poker will be legalized because Obama is a poker player.

Yea right.

One thing you can bet on is that however long you think it will take for Americans to be clicking buttons at a legal online poker site, double it and you're probably closer to being accurate. Bureaucracy, gaming commission due diligence, legal battles, and operation complications faced by unfamiliar operators will stretch out the launch of legal online poker in the U.S. for years. Just take Nevada for example. At one point, they were supposed to have legal online poker sites up and running by last summer. Never believe the projections if its policy-makers and profiteers making them.

#4: That Stars/Tilt will be around

Everyone to have reached platinum star on PokerStars' VIP program seems to think the site is invincible. The notion is that PokerStars, by helping the DOJ resolve money owed to U.S. players by purchasing Full Tilt, is now in the good graces of the DOJ and will be able to enter the U.S. market when it is legal to do so. While that may be true on paper, it overlooks one major aspect of reality: Harry Reid.

If online poker becomes legalized in the U.S., it will be because of one Senator deeply indebted to the large casino companies that operate out of his home state of Nevada. They helped make sure he could get re-elected in 2008 and now it's his job to help make sure they get the big piece of chicken when dinner is ready. There is already a clause in Reid's online poker bill that would prevent operators who violated the UIGEA by servicing U.S. players during poker prohibition from entering the market for five years. That gives Caesars and the other bloated land-based casino operators plenty of time to get their act together before they have to face any real competition.

#5: That it won't be a miserable bureaucratic experience

U.S. poker players are in for a rude awakening when the much anticipated legal online poker arrives in their country. It's going to suck. Here are a few reasons why:

1. Gaming operators chained down by debt-riddled corporate giants. Just look at the WSOP and you'll have an idea for what type of quality to expect from an online poker room ran by Caesars. These casino companies care about nothing but hoarding profits to help repair their hurting bottom line. Expansion in Vegas cost these companies big, especially Caesars, who failed to capitalize on the Macau casino bubble. They're urgent for cash flow and will grab every dime they can as soon as possible from online poker.

2. The IRS will be clued in. Many online poker players rely on creative accounting practices to cushion their often meager earnings as an online poker pro. You can kiss these measures goodbye when legal online poker hits the U.S. There will be a tax form sent to IRS offices every time you even think about getting your hands on some of the money in your account.

3. No more player transfers. One of the best things about online poker is how it can be used as a source for settling debts and bets among friends. I owe you $20 from fantasy football? No problem, I'll just ship to you on Stars. Expect that highly convenient feature to be absent from online poker in the U.S. as casino companies wish to disassociate from the money laundering and tax sheltering possibilities of player account transfers.

4. Your state must opt-in. If you live in a state like Utah which is controlled by moralist zealots, guess what? No online poker for you. That's right, the federal online poker bill being pimped by Harry Reid insists states must opt-in to the legal poker market. Failure by a state legislature to vote with a simple majority to permit its residents access to the online poker rooms means it is remains opted-out by default. So it'll be easy for states under the control of fear-mongering Republicans to stick with the status-quo of poker prohibition. Even if your state is progressive enough for online poker to fly politically, it could take them years to finally opt-in. Fun, right?

The Weekly Shuffle is our Sunday column with our observations and commentary on the poker world. Have an idea for an article? Leave a suggestion on the feedback page.


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