Copyright 2004 Investor's Business Daily, Inc.
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Investor's Business Daily

October 1, 2004 Friday

SECTION: SECTION INTERNET & TECHNOLOGY; NATIONAL EDITION; Pg. A04

HEADLINE: Online Poker's Flush With Success As More Folks Deal Themselves In; Discarding Legal Issues; Your telltale poker face won't cost you a penny, and a seat's always open

BYLINE: BY ANDREA ORR

BODY:

   For 40 years, Orrin Gowen turned to his weekly poker games for male bonding, relaxation and low-stakes gambling.

   Recently, technology and retirement have changed that hallowed routine. Now when Gowen is off on an extended vacation, or if he just gets bored in the middle of the day, he grabs a few games with some strangers in cyberspace.

   "It's very convenient," said the 63-year old retired lawyer from St.
Petersburg, Fla. "There's always a game going."

   Exactly how many games are going is difficult to say. The online poker "industry" is so fragmented that no one even knows how many poker sites exist.
By any estimate, the numbers are large, suggesting that enthusiasts like Gowen and others who have never sat around an actual poker table or set foot in a casino are being swept up in the trend.

   PokerPulse.com tracks hundreds of sites offering poker, in which players place bets for 25 cents up to hundreds of dollars or compete for play money. It estimates that more than $135 million is typically wagered in a 24-hour period.

   50 Million Players

   The game is popular worldwide, but particularly in the U.S. It's estimated that more than 50 million Americans play, or have played.

   All this growth has come in spite of the fact that online poker is not necessarily a legal activity. No legislation has been passed addressing the game, but several lawmakers maintain it is banned under the Wire Communications Act, passed back in 1961 to address crime committed over phone lines.

   The game's murky legal status has led American Express and other credit card issuers to prohibit card use for online gambling. And recently PayPal, the online payment arm of eBay, said it would fine people who used its cash transfer service for online gambling.

   It seems few players have been dissuaded. Players say they could always find plenty of small banks that would let them charge gambling debts on their credit cards. Or, like Gowen, they pay by personal check ahead of time.

   As for the game itself, call it poker without the poker face. Playing from a home PC reduces the potential to intimidate your opponents and makes for a game where analytic skills are more important. Instead of attempting to decipher the meaning of an opponent's smirk, online poker makes you carefully study your hand and calculate the odds of different cards coming up.

   Also, automated shuffling and card dealing make for a fast game in which players don't have the luxury of pondering their next moves.

   "Offline you might, for example, play two or three games per hour," said Patrik Selin, chief executive of PokerRoom.com, a Swedish company that is the second largest online poker site behind PartyPoker.com in terms of registered users. "Online you can play 100 hands per hour. You could win a few thousand dollars in a matter of seconds."

   While sites like PokerRoom like to promote the potential for large wins, the reverse is true as well. Like day trading in the late 1990s, online poker offers the potential to strike it rich or lose your shirt in a matter of minutes.
Increasingly reports are surfacing of serious players who quit their jobs to earn a living through Internet gambling.

   This kind of mania for the game has raised concern from groups working to treat gambling addictions. "The online game does have some unique risk factors,"
said Keith Whyte, executive director for the National Council on Problem Gambling. "There's the social isolation, and there is the 24-hour unlimited access."

   PokerRoom's Selin stresses that it is first and foremost a game, and an edge-of-your-seat and intelligent one at that. "When you play online, you really need to know the mathematics of the game," he said.

   Moneymaker Did

   PokerRoom says its business has grown 60% this year. It estimates that 80% of its 2.5 million registered players are based in the U.S.

   Some old-school poker types have been harder to convert, but their biases started to fade last year after an accountant with the appropriate name of Chris Moneymaker won $2.5 million in the World Series of Poker, the best-known offline poker tournament. Moneymaker was unknown in poker circles and had trained almost exclusively online. He used a mere $40 stake to get into, and win, a satellite tournament that gained him entry to the big one.

   "Everyone started to say, "If he can parlay $40 into $2.5 million, I can too, ' " said Lou Krieger, author of "The Poker Player's Bible" and other gambling books.

   Because of the game's blurry legal status, virtually all the online poker sites are based outside of the U.S. Most say they would prefer not to have to operate in the shadow of the law. Some are lobbying lawmakers to pass a clear set of regulations.

   They are not holding their breath. PokerRoom's Selin jokes that the only real problem with the current unresolved legal status is that his tax bill in Sweden is so high.

   "It would be perfect if we could move to the U.S." he said. "The taxes would be much lower."

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