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Copyright 2004 Knight Ridder/Tribune News Service
Knight Ridder/Tribune News Service
San Jose Mercury News

August 30, 2004, Monday

HEADLINE: Big stakes as many ante in online poker

By: Sam Diaz

BODY:
   For generations, the poker room has been portrayed as a smoke-filled parlor where whiskey-drinking, tobacco-chewing gamblers would rather shoot you than let you take the pot with a pair of fives.

   But recently, the Internet _ and a guy aptly named Chris Moneymaker _ brought new life to one of the oldest card games around.

   Moneymaker, an accountant from Tennessee, qualified for the May 2003 World Series of Poker in Las Vegas _ after honing his poker skills on the Internet.
With only three years' experience in the game, he bested a lineup of professional players in the Las Vegas tournament, walking away with the $2.5 million jackpot.

   His win, along with the popularity of the "World Poker Tour" TV show, have sparked a boom for online poker rooms.

   Call it poker for the 21st century _ and it's more than just a game.

   It's a big business. More than a dozen poker Web sites drawing tens of thousands of players per hour _ some playing for real money and others just for fun _ have sprouted up in recent years. And because Internet gambling remains in a legal gray area in the United States, most of the sites are based in other countries.

   Yet the online boom has started to affect offline poker. On the Las Vegas Strip, where poker tables were shut down a few years ago for lack of business, some casinos have re-opened poker rooms, giving partial credit to the Internet for introducing new players to the game.

   The Internet also has tweaked the strategies for playing the game, replacing the art of reading an opponent's body language and facial expressions with pure analysis and statistics.

   "Technology has completely changed the face of the game," said Vikrant Bhargava, general manager of PartyPoker.com, the world's leading online poker Web site, based in India.

   Within a year of Moneymaker's win in Las Vegas, the average number of tournament contestants playing poker for real money online jumped from about 1,500 per hour to more than 14,000, according to PokerPulse.com, a Vancouver company that tracks people and money at 19 leading sites around the world. The average number of paying players in non-tournament games jumped from 2,500 to more than 11,000.

   That has created a dot-com phenomenon generating an estimated $3.2 million per day for 19 leading sites, according to Pokerpulse.com. It tallies up to an annualized take of $1.2 billion a year for the industry.

   A table for Texas Hold 'Em, one of the most popular poker games, has an average pot of about $60 per hand and will see about 65 hands in any given hour, estimates PokerPulse.com. The site operator would take $3 out of every hand _ or about $195 per hour.

   Multiply that by the number of tables in the online room and it's easy to see how the industry is pulling in about $3.2 million per day.

   "Imagine a stadium full of people playing poker," Bhargava said. "If we put all of those people at real tables, we'd need 15 or 20 stadiums. Technology has made it possible for so many people to play in one virtual room."

   Even the free tables play an important role in the sites' success because they allow players to test their skills without risking cash.

   For the past five years, Rich MacKanin, 24, of San Jose, Calif., has been playing in a weekly garage poker game. Last year, after hearing about Internet poker rooms and Moneymaker's win, he started spending more time at PartyPoker.com's free tables.

   Eventually, he coughed up $50 for some real-money action. After three hands of play, his $50 was gone.

   Playing the online, real-money game was a different experience for MacKanin, who over the years had become the type of player who often plays his hands based on opponents' body language, such as smirks or raised eyebrows.

   "Half the game itself is staring down the person across the table from you, but how can you stare down a computer? You can't bluff over a computer screen,"
he said.

   Now, he pays more attention to cards in his own hand and those played on the table. Playing online has taught him how to calculate the odds of drawing cards that will build a winning hand and showed him how to figure out opponent's habits by tracking how long it takes for them to fold, bet or raise.

   In an Internet poker game, "you can go back at every hand and look at the hand history to see what everyone had," said Roy Cooke, cardroom manager at PlanetPoker.com. "That's the ability to learn from your mistakes. You can review everything."

   There are even software programs such as Poker Tracker that let you analyze and track your hands. That's something you can't do in Las Vegas.

   Still, poker tables are making a comeback in Sin City, and some casinos have re-opened the poker tables they had shut down.

   "People keep asking for them," said Gary Thompson, spokesman for Harrah's Entertainment, which owns Harrah's Casino and Hotel and Rio, both in Las Vegas.
"You don't really make a lot of money off of a poker room, but the customers want to play and we want to keep them happy."

   The boom in online poker comes despite its murky legal status in the United States. Some legal experts say federal law gives the U.S. government power to prosecute some forms of online gambling, but state anti-gambling laws vary _ leaving online poker trapped in a legal gray area. What's more, most online poker sites are licensed and regulated outside the United States, many in Canada.

   "Even the United States federal government can't do much about it if the operators are sitting in foreign countries," said I. Nelson Rose, a professor of law at Whittier College in southern California and author of an Internet column dubbed "Gambling and the Law."

   And in reality, state and federal authorities are more likely to prosecute gambling operators than players, said Rose.

   Despite the legal murkiness, online poker rooms are operating like real businesses. An online site has the advantage of not having to buy real tables and chips or pay for a dealer like a casino or cardroom would _ but there are other costs involved. The company's finances undergo audits, as do the software products and online security measures for its financial transactions.

   "We don't have the overhead of pit bosses and dealers but we have a fair amount of personnel, people answering questions, watching the tables," Bhargava said. "We have people that are watching tables and software that's watching tables."

   ___

   (c) 2004, San Jose Mercury News (San Jose, Calif.).

   Visit MercuryNews.com, the World Wide Web site of the Mercury News, at http://www.mercurynews.com.

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