The Poker Chronicles

Game On

Anyone who knows me knows I love some good-natured trash talk. I may even like the bad-natured variety better. So I was pretty excited today when a nugget entitled RIP Draftmix about my fantasy sports site, popped up in my Google Alerts today. Game on.

I normally would never give lip service to the competition, but it was clear from the beginning that they would never really be a competitor. I did follow them for a while, because they were one of the better capitalized competitors out there. They were funded initially through Y-Combinator, and later through some secondary funding rounds (according to Matt). Well it gives me great pleasure to see that they have stopped running fantasy leagues on their site. I am not sure if they are doing this to cut their daily losses, or they are just buying time before they shut the site down like Instant Fantasy Sports did last year. Matt deserves what he gets, and his site never had a chance.

That's funny, because you've mentioned us multiple times. Maybe you should look up the definition of the word normally. As we're about to see, there are a lot of things you should look up.

We have stopped running fantasy leagues on our site because the football season ended. Our biggest strength (and at some times, our greatest weakness) is that we run live drafts. That means that we need a number of users on the site concurrently for it to work. When we have a lot of action, for instance during football season, it's great. Our users find it significantly more engaging than simple "pick from a list" type games, and our traffic shows that.

That's why we get hundreds of drafts per day running during the football season. Sit and goes were popping off every few minutes, almost around the clock, from 2-man all the way up to 8. Unlike FSL, we don't leave a week's worth of them sitting in our lobby to try to pretend we have traffic. We actually do, so we clean them out immediately to make it navigable.

If we never had a chance, you're screwed. Check out our respective traffic from Compete.com:

They are doing some FaceBook stuff I guess, but that will be an utter failure as well.

That Facebook stuff is called Football Tycoon. You can see that it has 54,000 users from that page (Facebook publishes that) and it's growing rapidly. I can't say much more for competitive reasons, but suffice it to say it's far from a failure. If you knew anything about Facebook games, you'd know they are incredibly profitable. Add Mob Wars to the list of things you need to look up.

If this is really it for them, they will probably go down as the worst start-up in Y-Combinators history. If you use Vegas style accounting (You don't count a Blackjack bet as revenue, you count what is won from the Blackjack players as revenue) which is appropriate for this type of business, their revenue is actually negative for the life of their company. Negative revenue for the life of a business is a pretty tough thing to pull off. It means that you are paying people to use your product, not the other way around. Hard to make a living that way, so I can understand why they are trying to cut their losses.

Your accounting knowledge is even more limited than your poker or business knowledge. Apparently you need to look up revenue too, because it can't be negative (except in some rare circumstances). I assume you're trying to make the argument (which you could verify is untrue if you weren't lazy, or had any programmers capable of automating the process) that our rake from tournaments isn't higher than what we give out due to freerolls and guarantees. That would be negative profit if it were true, not negative revenue.

And negative profit over the lifetime of a business is easy to do. In fact, that's the most frequent result, especially of internet businesses. Luckily we're headed in the opposite direction. I can pretty easily prove that your net profit is negative too. A quick scrape of your site would show that you couldn't possibly make enough to cover stats (even though you use the budget XML Team ones, which explains the constant error messages I get from your blog) one server, and one person's reasonable salary.

It really did not surprise me at all. I read the Matt Maroon blog for a while, because he would discuss his start-up from time to time. Pretty much everything he wrote their was dead wrong. He said the iPhone would not sell 10M units in 2008. Wrong! He said the Google Android phones would crush the iPhone. Wrong! He went out of his way to defend the Crap Vista Operating System. Wrong! He wrote a long post about Global Warming being a fact. Wrong! He never bothered to admit that this stuff was wrong, so I tried to point it out in a comment which he censored. Unfortunately, you can't censor me over here.

I did lose the iPhone bet fair and square. They rolled out a 3g model with GPS and for half the price. I'd certainly not claim I've never been wrong before or won't be again. You should try having an opinion and see how you do.

I did say Android will outsell the iPhone, and I still stand by that. I didn't say it would do it in 2 months. It will take a few years. How can defending an operating system be wrong? It's an opinion, which is yet another word you need to type into Dictionary.com. And I didn't say Global Warming is a fact. It's a conclusion drawn from facts that, unless you're a geologist (or related scientist), you have to be either ignorant or stupid (or in your case, both) to doubt.

I actually remember your comment (I didn't know it was you, but then I really don't even know who you are) and I deleted it because it was stupid. I have a firm no idiots policy in my comments on both blogs. You clearly aren't qualified to talk about science (or accounting, or business, or as we'll see in a minute, economics) and you also claimed I said that the Xbox would outsell the Wii, which a quick Google search of my blog shows is untrue. You're one of the numbskulls that the "scientists" paid for by oil companies tricked into disbelieving in global warming by saying things like "the Earth is really getting cooler" even though the ten warmest years on record have occurred since 1997 and areas of the ocean that have never before been navigable due to ice are now easily passable.

So Draftmix leaves the competitive landscape, and we are left with NBC, and a bunch of under capitalised new start-ups. We make things look pretty easy at FSL, but it really is not that easy. Our site was set up correctly from the beginning, and we are laser focused on our target customer.

Yeah, it was set up so correctly that it errors out if you don't put in www in the url bar. Try it. That's an error that no competent developer has made since 1994. We told you about that a year ago, and shocker, it's still there. That's what happens when you contract mediocre programmers to build it for you, rather than hire awesome ones and do it in house.

That's why when you were asked what technologies you use, you didn't even know the answer. I had to answer it for you in the comments. In case you're ever asked again, it's PHP, on Linux with Apache web server. Presumably MySQL for the database, in which case you can say "LAMP stack" and anyone with a clue (i.e. nobody in your organization) will know what you mean. I don't know about the DB for certain, though I guarantee that if your code monkeys can't even properly configure a web server, I could find out with a SQL injection attack in a matter of minutes. I could probably also take over your whole site, but I'm not big into committing felonies, especially to get the $52 total that people have on deposit. Nonetheless I'd never keep any money I cared about there.

Best of luck Matt and Chris with whatever you decide to do next.

You too. I have a feeling you'll be moving on soon. Your business results will be much like your poker ones, and you'll spend your time grinding it away at the kiddie tables while watching the big boys play. Maybe you'll grace us with some clueless business strategy blog posts too. You are clearly, as Jed Bartlet said on The West Wing, a .22 caliber mind in a .357 magnum world.

Just a quick look at your blog found more evidence of that, with you talking as cluelessly about economics as you do about everything else. My favorite quote:

The credit markets being frozen is a huge lie. Does your credit card still work? Mine did last time I checked.

Hilarious. You don't even understand what that means. When economists say the credit markets are frozen (which every single one does, because they are) they don't mean consumer credit. They mean commercial credit. Credit markets aren't frozen when you can't borrow money, they're frozen when GE can't.

But hey, why would you let total ignorance, lack of experience, and at-best marginal intelligence stop you from voicing opinions about things you don't understand? Just as global warming isn't real, because you found a website that says so, credit markets aren't frozen because you can still buy groceries with your Visa. Economics and global warming, clearly both are topics on which you are qualified to have an intelligent opinion.

I'd bet my left nut you're a Republican. Nobody else could be so vocal, while at the same time so blissfully unaware of their own ignorance.

Remember Me?

I know, I know, long time no see. I won't bore you with apologies for not posting in nigh on five months. I'm not that blogger. If you're reading this, it's probably through a feed reader or some such modern technology that doesn't require wasting seconds of your valuable water cooler time each day loading up the site. You're just glad to hear from me, and I'm glad to be remembered.

I haven't written here, on my poker blog, because I haven't had much to say about anything even tangentially related to poker. I've been busy. Real busy. The kind of busy that doesn't happen to a professional poker player until they move on to something bigger and better.

Since I last played a hand of poker, my business has raised a funding round, entered the football season (which is, to us, what Christmas is to Best Buy) and released a couple new products. I've spent much of my spare time writing, and even played around with a novel like a 4 year old plays with the vegetables his parents told him he had to eat in order to leave the dinner table. I'm still sitting in my high chair staring at it, hoping their resolve will crack before mine but knowing in my heart that it won't, and one way or another I'll be eating that asparagus.

I've clicked the publish button with a respectable frequency on my personal site, mainly writing about technology, politics, and the other minutia that my days are now comprised of. It's a far cry from the highs and lows of yesteryear, but it's more fun and more rewarding, so I don't have to tell myself that it was a good decision too many times before I believe it.

I do sometimes miss the money, but not as much as I thought I would. I miss the travel too, more than I thought I would. But I find myself smiling a lot more now. It's a solid trade when you get down to it.

This weekend I'm taking a much-needed and probably all too brief respite from the startup life and heading out to my former home away from home, Las Vegas. I plan on playing some poker while I'm there too so I figured I might as well dust off the old blog for a bit. I won't lie to you and say it'll be a regular thing, but it doesn't have to be a one night stand either.

I'll probably spend my time there playing cash games. Back in July, which was probably the last time I went two consecutive days without working, I'd ventured into the no-limit tables a bit. It took me about five years to say "what the hell?" and join the herd, but then I've always been so far behind the times that when they cycle back around again I'm made to look like a rather prescient trendsetter. So I'm going to go out on a limb here and say that no-limit Texas Hold'em game is going to be popular.

On the plane ride out, the person seated next to me made me realize just how far removed from that world I've become. Apparently the World Series of Poker ended, six or so months went by, and then the final table was played and aired on television with me oblivious to the whole thing. Nowadays I find myself more aware of the goings on of Somalian Pirates than the world I used to inhabit.

Maybe that's not such a bad thing. Poker is much like standup comedy in that most people who do it professionally view it as a stepping stone to something else. You'll notice that a lot of the well-known pros now spend their time promoting their card room or book or TV show or what have you, the same way that comedians always seem to segue into television or movies. It's not a coincidence.

So I've made the jump, but every now and then I still get the itch. Just as you'll occasionally see Ray Romano or Jay Leno do a couple nights of comedy, you might bump into me at a poker table every now and again.

GL Matt

Just wanted to say a quick good luck to Matt Matros. He's going into the final table of the $1,500 NL WSOP event with 2^nd place stack, and his competition is pretty much Random Donkey 1, Random Donkey 2, etc.

Take it down.

Funny NL Hand

Full Tilt No-Limit Hold'em, $2 BB (9 handed)

MP2 ($291.90)

MP3 ($381.30)

CO (Pity Flop) ($186.55)

Hero ($399.60)

SB ($128.40)

BB ($17)

UTG ($204.85)

UTG+1 ($213.60)

MP1 ($175.40)

Preflop: Hero is Button with Kc, Ah.

5 folds, CO (Pity Flop) calls $2, Hero raises to $9, 2 folds, CO (Pity Flop) raises to $18, Hero calls $7.

Flop: ($37) Jh, Qd, 2c (2 players)

Pity Flop checks, Hero checks.

Turn: ($37) 8h (2 players)

Pity Flop checks, Hero checks.

River: ($37) Th (2 players)

Pity Flop bets $35, Hero raises to $383.6 (All-In), Pity Flop calls $135.55 (All-In).

Final Pot: $378.10

Pity Flop doesn't show (Qs Qc).

Hero has Kc Ah (straight, ace high).

Outcome: Hero wins $591.15.

Nice play donkey. Good to be at the easy tables again.

WSOP 2008

I'm out in Vegas. The family was headed out here this weekend, and I had a good offer at Caesars and the WSOP is going on so I thought I'd sneak out for a few days. I head back Wednesday.

I haven't played much live action yet. A little satellite action at the Rio has been about it. Just enough to make me remember why I don't really care so much for live poker really. I may play the $2k limit event tomorrow, I haven't really decided yet. Limit events are huge EV for me, since they're largely full of guys who are good at NL and don't really understand the difference.

In fact, I was talking with a few other guys and everyone agreed that you're more concerned about random people at a limit event than the better NL tournament players. A random Joe who buys into a $2k limit event might just be a winning $30/$60 player, but if Phil Hellmuth sits down, you know you've got an easy spot. And please don't tell me about how many limit hold'em bracelets he has. He got them mostly when the tournaments were full of 70 people as clueless as him.

I've spent a decent amount of time out here playing online in my room. I've become quite the no-limit soldier lately, playing a little low stakes here and there. I don't have much time to devote to it, so in a good week I might get in 1,000 hands total (5-6 hours of play) but I feel like I'm learning. I never really spent much time playing NL ring games, and I still don't feel I'm great at them by any means. I'm clearly good enough to beat the low stakes (a well-trained chimpanzee would be) but beyond that, probably not so much. I'll get there though, one 60 minute session at a time.

It's fun being at the donkey tables again. It's been a long time for me. Those tables where nobody has a clue, and having just read one book makes you probably the best player you'll encounter, they're a blast to play. I hear you start running into some decent players at $3/$6, but before that it's all pretty much gravy.

I did read this book which I think is, for the most part, pretty good. There isn't much in there I didn't already know, and there are a few things I don't agree with, but for the most part the logic is pretty solid. And it's thought-provoking enough in parts to be worth the read. I'll call it the best no-limit hold'em book I've read, but its only real competition is Harrington on Hold'em, which was more tournament focused and was pretty much a steaming pile even at that.

I have to say, I'm loving Poker Tracker 3. They integrated it with Poker Ace and Postgres (no more installing that separately) and now it just works entirely out of the box .Even comes with a 60 day free trial. And it doesn't say "Not Responding" every time it does anything. It seems to be a lot faster and more responsive, so I can't find any reason to not recommend upgrading.

I also got to spend a little time with Richard and a player named Kyle Ray (KPR16 online). It was interesting talking about limit hold'em again. I've been out of the loop for so long. It reminded me of the arguments I used to have with a lot of the 2+2 crowd about preflop play. It sounds as if consensus there has shifted greatly toward my viewpoint. It also sounds like limit games have therefore become a lot tougher. Bad beat.

I've realized that I miss poker. I don't so much miss playing it for a living, and still have no desire to jump back into that. But I miss competing at something. Startups are fun, but they aren't really competitive. They sort of are, in their own way, but the competition isn't truly ever resolved because the variance is so high and the sample size so low. Also they aren't zero sum, which makes it different, and largely (though not entirely) less interesting.

So it's nice to just be playing again. It's like the early days, when I was just playing $3/$6 with my friends, learning the ropes, getting better, and making a little money in the process. Most of all, having fun.

Which reminds me, I need to wrap up part 3 of a previous series…

New Project

I think I'm going to elance up a poker project I've had kicking around in my noggin for a couple years now. It's the sort of thing I would have killed for as an online poker player, and I'm pretty sure a lot of people would be interested in it. It's also the sort of project that I think lends itself well to outsourcing, as it's not too complex (though probably time consuming) and easy to split up and verify if all of the pieces are working independently.

But I need your help. What I need is hand histories from the major sites, and you guys still play poker, right? If you'd be so kind as to send me a small sample (to matt@ for this domain, or just click the link top left) from any of the various sites you play at, I would really appreciate it. I'm only interested in Hold'em and Omaha hands for now. You can send me a whole file from a session, or just cut and paste a few individual hands. Either way is great by me.

In return for doing so, other than my undying gratitude, you'll be among the first to get a sneak peak at the new site when it's ready. And if it makes me a billionaire and I write my memoirs, I'll thank you in the acknowledgements. (It likely won't even make me a thousandaire, so don't hold your breath, but consider it a freeroll.)

Mostly, though, you'll get to use a cool new app for poker players for free and before the general public. In fact if I ever decide to charge for it, you'll get at least a few months of free service, and maybe a lifetime if you're extra helpful.

How To Play Poker, The Bear Stearns Way

I was reading a poker book today, and came across the following quote on the topic of risk management:

Commercial banks make money by managing risk. They solicit deposits in savings and checking accounts. Then they lend these deposits out to others at a higher interest rate and pocket the difference.

You can tell that was written more than a year ago. It's been a while since anyone used banks as an example of good risk management. Nowadays that chapter might continue:

Many of the people to whom they lend those deposits have poor credit histories and/or low incomes. Loans to these risky borrowers, called subprime, are then rolled together into massive portfolios and sliced into tranches which get repaid in descending order from senior to equity. They then package them into shares, called collateralized debt obligations, and trick the credit rating companies (which isn't a very hard task) into rating the top tranches as investment grade.

Because the loans were made as adjustable rate mortgages with an initial discount to people who were already struggling to make their monthly payments, banks and other holders of CDOs leave themselves exposed to massive foreclosures as interest rates rise or the economy slows.

The poker lesson here? Just keep going all-in. Works every time but one.

Legalization: Players and Sites

Legalization of poker will benefit players immensely. As I mentioned in the first post, it will mean an order of magnitude more players than we've ever seen before. If you think the last poker bubble was big, be prepared for 5 or 10 times that.

The poker community is a giant food chain. Players, for the most part, start out at the bottom and, as they improve, move their way up the pyramid. Maybe they start off playing $1/$2 or $2/$4 online, and then after they perceive they're winning (which is easy to do in poker even if you aren't) or get used to the stakes, they start working their way up the ladder.

The problem in recent years (in fact, to some extent, ever since online poker's inception) is that it has been the bottom of the food chain that the law has succeeded in keeping off of the sites. These are the guys who just want to blow off a little steam and gamble away some money because it's much more fun than saving. They saw poker on TV or played it with their friends and want to give competitive poker a shot. But if it's too much hassle (i.e. their credit cards don't work) they'll just go buy some lottery tickets instead. They don't care that much, they just want to piss away money because they're Americans or Brits and it makes them feel good to know that they can.

So some of them are willing to jump through all of the hoops rather than blowing their money at a casino or on scratch off tickets or betting on the Jets (or Arsenal) with their friendly neighborhood bookie. And some of them start to play regularly and get used to the stakes, and maybe a few even become winners, and a few more get lucky enough for long enough to convince themselves that they did too. And all the while, every guy winning at $2/$4 is eyeing the $3/$6 game, because who wants to win $20 an hour when they can win $30? And the guys playing $3/$6 are eyeing the $5/$10 game, because who wants to win $30 an hour when they can win $50? It may not be their livelihood (though many quickly start considering making it that) but everyone wants to make more than they do if possible. It's the American way.

Poker is not a true food chain because there's nothing stopping a rich guy from starting off at $50/$100, but it's close enough that it functions like one. So the casual players at the lowest limits provide the same service to the rest of the community that algae does to a lake. They feed the small fish, who in turn feed the medium fish, who then feed the pike. And just like a lake, if you cut down on the algae, you end up with fewer pike. It takes a while for each level of the chain to starve in turn, but it happens, and it has happened ever since the UIGEA (though I'm told some recent advances in payment processing have helped a bit lately, but it won't last). You can see it in the numbers and feel it when you talk to the players.

What happened between the beginning of the boom and the start of the bust is that the algae exploded. It was a pain to get money on, but there were still more sites advertising on more television shows and in more magazines, and there were more funding options, so a larger percentage of the casual players heard about it and made their way through the filter. And the small fish population grew along with the algae, and the medium fish along with the small, and so on up the food chain.

That's why every few months sites were offering bigger limits. When I first started playing online, $10/$20 limit was the max and no-limit didn't even exist yet. But then poker took off and the algae bloomed and the bluegill population did too. The bass population started growing so $15/$30, $20/$40, and $30/$60 games started appearing. The algae kept growing, as did the bluegill and the bass, and so the pike started multiplying too, and suddenly every $30/$60 game was full, and $100/$200 games were going off around the clock. Some sites were offering stakes bordering on ludicrous. Where once $25 tournaments were the maximum, $215 tournaments ran every day. Prize pools went from hundreds to hundreds of thousands.

And when the UIGEA hit it all started to evaporate. There were a few massive shocks, like when Party Poker pulled out of the market. Action didn't increase that much elsewhere and the site, which lost 85% of its customer base, was still in a not too distant 2^nd place. That's how big it was before, and most of that action was completely gone. Then Neteller left the market (locking up a lot of player money for many months) and things started getting even worse.

The effect rippled through the casino world too. Tournaments, which were fed by online qualifiers and people who won big online tournaments, have since experienced a gradual decline in entrants. Even the WSOP had fewer than the year before (almost a third) which hadn't happened in as long as anybody could remember.

But the UIGEA is just a dam, and behind that there's a river full of algae, entirely unmolested, waiting to pour forth. And that will be the immediate consequence of regulation. Every publicly traded gaming corporation, and even some non-gaming ones (like Yahoo, who dabbles in poker overseas) will apply for licensing at the first possible opportunity. Massive advertising budgets will saturate the internet and the airwaves with poker ads. Ad sources like Google and television, which stopped taking online gaming ads after the Discovery Networks debacle, will open back up.

It's debatable what will happen with the credit card situation, but fraud prevention is a lot better than it was 8 years ago when issuing banks first started rejecting gaming-related deposits. At the very worst players will fund accounts with PayPal or something similar. You may even be able to buy prepaid PokerStars cards at BestBuy just like you can for Wii Points or iTunes credits. Why not?

New sites will sprout like weeds, but just like the last boom, the vast majority of them will perish. In fact, if you look at the top few sites today, it's almost the same names that existed in 2001, before anyone outside of the small community had ever even heard of Phil Ivey. Party Poker, Poker Stars, Ultimate Bet. The only exception is Full Tilt, which found a rather unique competitive advantage by licensing pretty much everyone who ever won a televised event.

Full Tilt has a stranglehold on that particular angle, but a few sites will pop up that have their own unique advantages. Harrah's will probably become a major contender, given their current customer base and ownership of the WSOP brand. Yahoo might be a serious contender given their reach. Maybe a few more will pop up along those lines.

But for the most part, it will be the same 5 or 10 sites we all use now. Poker has a very strong network effect, meaning that the value of a poker site increases exponentially as its user base grows. A site with twice as many players is four times as valuable. So the new players will look around and land at the sites that already have the old players. PokerStars will probably still be the biggest, and they deserve it because they're clearly the best in almost every respect. Party Poker will likely make a strong comeback in the U.S., because they're brilliant at marketing and most of us old-timers have some fond memories of juicy $30/$60 games and ridiculously large cashouts there.

Sites will probably go through some growing pains. It's not trivial to scale to 5-10x your current size, especially that quickly. Sites, newly flush with revenues, will become hacker targets and DDoS attacks will flourish once again. While I'm sure they've never stopped, I'm told they've been greatly reduced since 2003, when Party Poker was being knocked out almost every night due to a combination of that and their own poor planning.

Some sites will buckle and take player funds down with them, as has always happened, but most will be reputable, and, at least for a couple years players and sites will be rolling in the green.

WSOP 2008

I was looking at the WSOP schedule and saw this for the main event:

54A
Thursday, July 3, 2008
12 Noon
No-Limit Hold'em World Championship Day 1A
$10,000

54B
Friday, July 4, 2008
12 Noon
Day 1B

54C
Saturday, July 5, 2008
12 Noon
Day 1C

54D
Sunday, July 6, 2008
12 Noon
Day 1D

Monday, July 7, 2008
All Day
Break

Tuesday, July 8, 2008
12 Noon
Day 2A

Wednesday, July 9, 2008
12 Noon
Day 2B

Thursday, July 10, 2008
12 Noon
Day 3

Friday, July 11, 2008
12 Noon
Day 4

Saturday, July 12, 2008
12 Noon
Day 5

Sunday, July 13, 2008
12 Noon
Day 6

Monday, July 14, 2008
12 Noon
Day 7

How does this make any sense at all? You have the 4 Day 1s, then a break. Then the 2 Day 2s with no break, then Day 3. This is retarded.

It should go ABCD for day ones, immediately followed by A+B and then C+D for day 2s. Then a break.

As it stands, anyone in the second day 2 is at a serious disadvantage. I don't know how they are determining it, but if it's based on when you played the first day, and you have a choice of that, it's very much to your advantage to aim for the earlier one.

In my last WSOP, my first day was so long and so grueling that I went straight home and fell asleep in the shower. Day 2 was better, since they had overshot day 1 and cut it down. But I still relished the day off afterward.

Not that you shouldn't be prepared to play multiple long days in a row if you buy into the WSOP Main Event. But you shouldn't have to do this if half of your opponents don't. I don't think there's a big difference between having one day off or two, but there is a huge difference between zero and one.

Also, and this may come as a shocker to many people who read this blog, people have jobs. I mean, getting away for two weeks is hard. My guess is most of the entrants in that tournament take one week off and figure that if they make it to the second, they've earned enough cash to risk pissing off their boss.

Either way, it's an inconvenience to them, so let them play day 2, since they're on average something like 85% likely to have been eliminated by the end of it. Then have the day off.

The way its structured, someone can make it through day 5 without risking missing a second work week. Day 6 is a Sunday, so if you've made it to that point, you're canceling your return ticket. You're probably also in the six figure prize pool, so you don't mind the change fee.

I also don't think I care for the 4 month delay before the final table. I understand the intent and all. But if they're going to delay it that much for television, why not at least broadcast it live and make a huge spectacle out of it. If they can live cast a golf tournament, I don't know why they couldn't do so for poker. Put it on a Thursday so it doesn't compete with football and you might have yourself some ratings.

Legalization

I've been thinking about the future of online poker a decent amount lately. There's a pretty big push for making it legal, and there's even a bill in the house that would work toward that. I don't know if it will pass or not, but the poker sites finally have the lobbying arm they should have years ago. I even suggested that to Party Poker on one of their cruises long, long ago and Vikrant Barghava said they didn't need to because the US would "just ignore online poker forever." Their share price tells me he was wrong.

Between the PPA, the World Trade Organization, where the Europeans may soon follow Antigua's lead in claiming that our policies are unfair and a violation of the treaty (which has been deemed true), and the lack of banking regulations which were called for by the UIGEA and should have been in place months ago, it seems like there's a good chance that it will become regulated.

So what will it mean for poker if it does? Quite a bit actually.

It's sort of an axiom in the startup world that every hoop you make a user jump through in order to use your site reduces the amount of people who actually do so by some percentage. This should be pretty obvious. The exact percentage depends on the hurdle. Sites like Digg have millions of readers, tens of thousands of commenters, and thousands of submitters, because each step requires more effort than the previous (with just signing up an account being the largest). I vaguely remember reading that in the early days of PayPal they discovered that each new step they introduced caused 30% of people to give up. That's enormous. To put that another way, eliminating one step would grow their signup rate by nearly 50%.

Online poker, almost since its inception, has been besieged with hurdles preventing a new player from playing. To play at a site you have to do the following things:

Go to the website and download the software. (There are web based versions, but not many, and they suck.)
Install.
Create your account. Input user name, password, email address.
Verify your email address.
Input all necessary information for a real money account. Address, phone number, etc., some of which may have to be verified by a phone call or a code in the mail.
Input checking account and routing number.
Wait a few days for the site to EFT a small deposit into your account.
Check your bank statement to see what the deposits were.
Input them into the poker site.
Fund poker account.
Wait a few days for the e-check to clear.

And that's all assuming you knew right away that they wouldn't accept your credit card. Step number 6 for most people is to try the credit card functionality in the cashier and get rejected.

It's been that way for a very long time. Back in 2000, when I first started playing online, the high chargeback rate had already caused almost every credit card issuer to stop accepting online gaming transactions. There's been a cat and mouse game over that for the last 8 years, with payment processors tricking the banks, who found out and cut them off, at which point they closed down and opened a new corporation and did it again. It goes on and on, but the banks have always had the upper hand and 95% of the time your credit card was getting rejected.

Also, that was just the procedure for one site. Most people added an extra step in and went with Neteller so they could then play at any site. Back when I started playing PayPal was the method of choice, but that changed around the time of the eBay acquisition.

There's also the legal hurdle. A lot of people think playing online poker is illegal, even though in most states it is not. I've met a number of people who were deterred by that. That should almost be a step in the above chain.

So if the UIGEA becomes legal, and steps 6-11 (plus the two pseudo-steps) get replaced by one credit card or PayPal transaction, I think we're going to see an order of magnitude more players than ever before.

Over my next few posts, I'm going to examine how I think this will affect the poker economy. I'll talk about the following groups:

Sites (current and future)
Players
Ancillary Services Providers (like myself)
Live poker and events

Stay tuned.

Poker PC

Someone not too long ago asked me what I thought they should look for in a computer for playing poker online. It got me thinking. I realized I've learned quite a bit about that over the last 6 years or so, and that the information might help a lot of you, so here are my thoughts. I'm going to go more in-depth here and talk about the entire office, because there are other things just as important as the pc.

If you're a good player and playing for a living (or for a serious percentage thereof) a good home office isn't a luxury, it's an investment. And if you're good at poker, budget isn't really a concern for you. So I'm going to just assume that price is no real object, but that you're also not looking to spend just for the sake of spending.

First I should start with the setup. Buy the best office chair you can. I bought an Aeron, and it's the most comfortable chair in my house. Unless you count the ones in my car (and if anyone can tell me how to make a Lexus seat into an office chair, I'm all ears) it's probably the most comfortable I've ever sat in. I used to play in a very nice leather recliner, then in a reclining couch, but switching to an Aeron was the best thing I ever did. The reclining tended to make me tired, and caused back pains after very long stretches.

Aerons are the gold standard when it comes to office chairs, and they charge for it. It will run you about $1k new. You can find them on Craigslist used for half that, though if you go that route, be sure to go to a store first and find the right size for you. They aren't one size fits all like the crap you buy at Staples, so make sure you get the right one.

Even used that's a pretty damn expensive chair, but consider that even a mediocre $5/$10 player makes that back in 20 hours (on average of course) and that you're going to be sitting in the thing a hell of a lot. It will save you so many aches and pains that you'll probably work more just for owning it, so it will pay for itself many times over. And it will last forever. I've had mine for about 3 years, and have driven it across the country twice, and it's still almost as good as new.

As for a desk, who really cares? Get something made of sturdy wood since it will be holding a decent amount of weight in monitors (I'll get into that in a minute). IKEA sells passable ones for $50. There's a saying in the startup world that applies to any home office: "Always buy the cheapest tables and the most expensive chairs."

I recommend some stand lamps for your room if it's not very well-lit already. You'll reduce eyestrain by keeping your monitor's brightness down and the rest of the room's brightness up. I did this by replacing the bulbs in my ceiling fixture with compact fluorescents. Since your fixtures can only support a limited wattage (75-100 being typical) CFLs give you much more light (a 40w CFL is equivalent to a 150w incandescent) and save you money since they're going to be on a lot.

Get a good wired mouse. I'd search Amazon for a gaming mouse and buy whatever is highest rated. There's nothing worse than having a battery die on you while you're playing 4 tables, and if you have a wireless mouse, this will happen to you at some point. Keyboards don't really matter, you can play just fine if it runs out of juice. I'm rather partial to my Logitech DiNovo Edge (especially since it has a backup mouse) but that's neither here nor there.

Get redundant internet connections. I like to keep my cable company's highest speed internet as my primary line. If you have telephone service you can probably get their cheapest DSL as a backup for something $10-$15 a month. If, like me, you don't have a landline, get an EVDO USB adapter from Verizon or Sprint, or set your PC up to use your phone's tethering (much cheaper, and very good quality if you have a Motorola Q). If you're playing bigger stakes this only has to save you from timing out once every few months to pay for itself. It will. You don't realize how much your internet goes down until you work a job where it costs you hundreds (or more) every time it does.

If you go with cable and DSL you obviously will have two networks. If you can, have your primary one wired as it will save you some headache. Remember that with technology, each step in the chain is just one more place for something to fail, and wireless routers/cards are somewhat unreliable. If wired isn't an option, just get two wireless routers. It doesn't really matter which, the cheapo Linksys WRT54G that's in damn near every home in America will suffice. Password protect your internet using WPA, like you would any home network.

Get as many uninterrupted power supply (UPS) systems as you need. These are basically like surge protectors with a built-in battery. When a power outage occurs they'll keep things running. Be sure to plug your cable/DSL modems, switches, routers, etc. into the battery protected ports. Also plug in your PC and monitors. I once played a tournament for 3 hours (on a laptop) during a blackout. The UPSes will pay for themselves the first time the power goes out while you're playing. If you're using the setup I'm about to recommend you might only have 15 minutes or so, but that's enough to play until the blinds and then close all of your tables without a disconnect.

Note that all of the redundancy I recommend to avoid disconnects is less important if you play limit games, where you are typically just put all-in. If you play no-limit (which often has a no-disconnect protection policy) it's extremely important, as a power outage could cost you a lot of money. In fact, you theoretically gain a little edge over people who don't have that.

So we've got a great chair, a cheap table, lighting, and enough redundant internet and power that it's pretty much going to take a hurricane to force us to disconnect. And other than the chair, we've only spent a couple hundred bucks. Now let's blow some real cash.

First the PC. You're using PokerTracker/Poker Ace, so that means Windows. (I don't know if you can run PT with Postgres and PA using Parallels on a Mac, but I'd guess it would be a nightmare at best.) What version of Windows doesn't really matter, but you're probably going to be using Vista, so I'd recommend either Home Premium or Ultimate. Not for any poker related reasons, just in general.

I'm going to recommend a desktop as well, because PT/PA can be resource hogs, and we're going to want a workhorse and a couple big monitors to match. As far as desktop OEMs go, I like HP. Their products usually hold up better than Dell's, cost about the same, and have better service. You could buy any brand of computer though, so feel free to shop around. What you are looking for is:

Core 2 Quad processor. I've heard the new version of PT is threaded. Either way, like I said, PT/PA hog a surprising amount of resources, so horsepower is important.

4GB RAM minimum. More is better (though price increases exponentially after this) but don't go under 4, especially on Vista.

Discrete graphics card with 2 DVI/VGA ports. Don't get anything integrated, because we're connecting 2 monitors at high resolution and trust me, you don't want to go there with some turd Intel video chip that shares memory. You don't need a high-end gamer card at all because frame rates aren't a concern, so just get the cheapest one with 512mb and you'll be fine. I'm guessing most cards with 256mb would do as well, but I don't know for sure and the price difference is generally only $40.

Fastest hard drive possible. You don't really care about storage much, as poker hands don't take up much room in the old DB. But I've run PT/PA on a 5,400 rpm drive and it was brutal. Don't settle for less than 7,200 rpm, and if you can find one with a 10k rpm drive (and short of a very expensive gamer PC I don't know that you can) you're golden.

Best of all may be to get a computer with a RAID 1 (also referred to as mirrored) array. These are commonly available even in lower-end PCs now. I don't know how much performance increase you'll get from the increased read speed, but it's probably something, and it definitely won't slow you down. And you have protection from hard drive failure.

Either way, also get an external HD (or maybe one of those personal media drive thingies if you buy an HP) and buy Norton Ghost to backup your pc onto it. You should do this with any computer that has stuff on it you care about, and you definitely do not want to lose years of PT data. Hard drives fail. Trust me. I learned the hard way. And though a RAID helps guard against hard drive failure, that isn't the only way to lose data.

Get a built in 802.11b/g card. Most of the rest of the PC-related stuff doesn't matter. Sound cards, speakers, DVD drives, etc. Whatever you want there.

Now for monitors. I recommend 2 24" LCDs. HP's monitors are generally awesome. Do not buy Dells. I don't know about their current generation of monitors, but the old ones had awful brightness controls and won't let you turn it down far enough. HP does a pretty good job there. I bought 2 of their 23" models 3 or 4 years ago and still love them.

The reason I like ones so big is that they have resolution of 1,920x1,200. A poker table is natively 800x600, meaning you can run 4 on one screen with no overlap. The second monitor allows you to play another 4 if you wish (though I generally don't recommend that many tables). I usually use it for PT/PA and AIM, Rhapsody, Outlook, whatever.

True, you could get smaller screens and resize now that most good poker rooms finally have caught up to the same technology every other program had in 1991. But if anything, I'd like my tables to be bigger. I'm all about preserving my vision.

I priced the PC and 2 monitors at about $2,300 on HP.com. Toss in the chair, etc, and you're looking at $3,000-$3,500 (depending on if you buy the chair new or used). It's not a cheap setup, but it will pay for itself many times over.

Anything I left out?

Rakeback Update

I've gone ahead and paid rakeback for last month. Most of you probably already noticed it, but for those who didn't, it got there a couple days ago. I pretty much realized that there is no way Full Tilt is going to make things right with me. And legal action doesn't really seem sensible. So, I decided my best course of action was to just accept the payment and pay my people out, minimizing the disruption to the customers they haven't stolen, which I did.

That said, I'm going to put a little effort into signing up anyone else who takes Americans. I'm really interested in hearing what sites you guys would like to play at. Does anyone trust Absolute Poker anymore? What about Ultimate Bet? Cake Poker appears to be popular amongst other rakeback sites, does anyone play there?

Back to working on Part 3 of my series.

Full Tilt Sucks

I'm posting this here because I know most of my rakeback clients read this blog and I want you guys to know what's going on. Rakeback this month will be delayed, and I don't know how long it will take to pay out. As per Full Tilt's Affiliate Agreement (which I've posted here so that there will be a permanent copy of it as of the time of this writing) any time I have a problem with Full Tilt's payments, I must not accept them until it is resolved. That's what is going on, and as soon as the problem is fixed I will accept the payments and pay out on the same day.

When I first started running rakeback on Full Tilt, I referred to them a player who had been with me on my program for quite a while. He played a lot, and did well in poker generally, and recently became a Full Tilt Pro. I won't say who he is or what his deal with them is, as it's not my place to do so, but it involves Full Tilt paying him a portion of his rake.

As such Full Tilt apparently decided they don't owe me any of his rake anymore. That is wrong on so many levels. Most importantly, we have a binding agreement that they will pay me x% of his rake. That agreement does not say "we will pay you x% of the player's rake, unless he plays a lot and wins some tournaments, in which case we'll promote him to pro and pay you 0%." Had that been the case, I would have decided to work with a more reputable poker room from the start. Essentially they're punishing me for referring them a high quality player.

Also, the player remained on my reports all month. Full Tilt's affiliate site has been broken sporadically (no big shocker, their programming is all-around pretty shoddy) but not until after the month ended was he removed. So they apparently decided only recently to remove him from my tracker, and never bothered to tell me that they were taking my biggest customer away, even though they'd been showing me his rake all month long. Perhaps they thought I wouldn't notice?

And lastly, it puts me in a tough position with my current rakeback customers. Full Tilt's affiliate support isn’t any better than their normal support, so getting any sort of response from them takes days. I don't know why they choose to run their site so poorly, but you'd think they'd at least respond to people like me, whose efforts make them hundreds of thousands, or even millions, per year. But I have to wait the same week for any response that anyone else does. And yet I have to wait to deal with them, because otherwise I'm going to be forced to pursue arbitration, and accepting this payment would make that impossible.

So I won't be ending Full Tilt rakeback, and I hope to get this resolved ASAP. I suspect we'll get this worked out one way or another, and all will continue as planned. But I'll probably be looking for other sites to focus my promoting on in the future. Where is everybody playing these days?

Rotating

Last night after dinner, the four of us decided it would be fun to play a rotation game. I generally prefer to play those these days, as it makes the game more interesting and I think the draw triple-draw games have a lot more depth to them than hold'em.

I remember when I first learned of their existence and started playing a bit. It was a couple years into my stint as a professional poker player. Up until that point, the only non-hold'em games spread at reasonable stakes were O8 or Stud 8, and I never cared too much for either. (I've since come to at least like Stud 8, if not love it, but O8 still puts me to sleep.) Eventually as poker gained in popularity the long tail effect took hold and you started seeing crazy stuff like Chinese Poker, Badugi, and Triple Draw join mixes. Staid old HORSE tables were replaced with wilder rotations.

I asked Daniel Negreanu for some pointers on 2-7 while we were both on break from a limit hold'em tournament at Bellagio (the one David Williams one, which I know I talked about here long ago) and he told me to read his section in Super System 2 once it came out, and that after I did so I'd be better than almost everyone. A few months later the book was released and I read up, then started playing those games whenever possible, mostly with friends. What Daniel had said proved to be true, the section was brief, to the point, and maybe not flawless (I don't know enough to say for sure) but definitely very accurate. I found myself quickly killing the few TD games I could find.

The problem, of course, is that there is more than one copy of that book in print, and it didn't take long for everyone else to read it as well. No longer could you just sit in a $30/$60 game on Ultimate Bet full of donkeys, because they all paid for their $15 lesson too. And that's when the game really got fun.

All forms of poker have one thing in common, which is that at the lowest levels, it's all about executing a fairly simple plan. It doesn't take a smart person very long to learn to beat a $3/$6 hold'em table if they work at it a bit. It quickly becomes boring and mechanical, but it is also relatively profitable. In fact, you'll never make a higher big bet per hour rate than you will at those kinds of games.

In 2-7, the edge over a sucker seems to be even bigger than in hold'em because the game is, on many levels, more involved. So you can really tear people up if they don't understand the fundamental principles, which are a little different and more complex, and therefore harder to figure out on your own. You see new players calling a raise and drawing 3 all the time, or limping in early and drawing to what you later find out was something like 78. Those people are simply confused by the amount of options and have no chance in hell. It's easier for a novice hold'em player to get lucky and win against skilled competition than a triple draw one.

But when you move up to limits where everyone has a good fundamental understanding, at any variant, it becomes a whole new game. And that's where 2-7 really shines. The game is much more creative than others because you have less concrete information, but more abstract. Unlike hold'em, in which you see 5 of your opponents' 7 cards, a 2-7 player might have 10 or more cards pass through his hand and you never see any of them. In hold'em, the only abstract information is your opponent's betting pattern. In 2-7, you have both that and their draws.

In 2-7, a player can stand with a hand that they should draw to in order to represent a made hand. This becomes even more relevant in a game like Badugi where it is hard to even hit a made hand, and is why I think that that is, in fact, the ultimate poker game. Thus there's nothing in poker more fun than playing rotation games, as far as I'm concerned.

So back to last night. We decided to play a little low stakes rotation, and we ended up doing a little $4/$8 at the Wynn. We ended up playing Badugi, Omaha High, Triple Draw, Hold'em, Stud Eight, Razz, which we called BATHER. Apparently since O usually represents O8, Omaha High is often denoted with an A.

I got into an interesting conversation with a floor guy, who clearly didn't understand my point. Regulations here apparently state that games cannot be spread privately, they must be open to all to join. That's why Andy Beal and his opponents started playing at such ridiculous stakes. He wanted to play heads up, and the only way to ensure that was to play so high that nobody could afford to just horn in on the game.

But, at the same time, the house is required to set a limit on the number of players at one table. This is obvious, as the rules of hold'em would only even allow 22 players to play (44 hole cards, 5 board, 3 burn). Hold'em tables in casinos never accommodate more than 10 though, due to size limitations and the fact that no sane person would play at a 22 man table. So clearly a casino is allowed to set a limit as to how many players can play at a table. They have to.

So my question was "could a casino spread a heads up table?" The table wouldn't be private per se. It would have a list just like any other, and when one player got up, the next on the list could join. The only difference is that unlike normal tables, which typically have a maximum player limit between eight and ten, this one would have a maximum player limit of two.

The floor man clearly didn't understand what I was getting at. I tried rephrasing it as "is there a law that sets the lowest maximum number of players at a table?" but as soon as the words left my mouth I knew they were pointless. I am curious about the answer though. The reason I asked is that mixed games are normally spread 8 handed, but with 2-7 triple draw only 6 players play at a time, which means that two players have to sit out each hand. That's incredibly annoying for me, since I just want to have fun and play draw games. Our table was an unadvertised one spread just for us, but there was a list for a $4/$8 rotation game before we even got there, and since we were already at 6 (two passers-by joined very quickly) we didn’t want any more players to sit down.

My guess is that the casino could technically do that, but they're far more concerned about pissing off regulators than they are pleasing the people who want to play heads up so they won't. Whatever they could rake from heads up games isn't going to move their bottom line enough to risk it.

Today I went over to Bellagio to see if they had any rotation games going. They used to have a great $40/$80 one that featured TD, Stud Hi-Lo Regular (no 8 or better qualifier), Omaha 8, and sometimes Badugi. The floor person told me that all they had was $100/$200 HORSE, but that someone else had just asked about the same game and maybe if we both wanted she could start it. I asked who, and she pointed to my left. It turned out to be Greg Raymer, who was standing right beside me. I figured that he probably wasn't the mark I was looking for, and that I'd be better off trying again tomorrow.

Poker People

I'm out in Las Vegas hanging out with Richard and company (if you're here hit me up and we'll grab a drink) and I must say, it's made me a little reminiscent about the past five years. I miss the poker lifestyle. I don't miss the game that much (though I do a little at times) but I miss the travelling, the food, the company.

I've been spending the past few months out in Silicon Valley dealing with raising an investment round, and it has made me appreciate the honesty and directness you find among poker players. Not all, to be sure. The average poker player is probably a scumbag. But the good ones have an honor code that's simple, direct, and unwavering. That's one of those things that you don't fully appreciate until it's gone.

We're trying to do an angel round and put together a number of individual investors, to avoid the hassles of institutional ones, which means talking to a lot of different people. (If you're interested, feel free to email me for details.) Our experiences with them so far have pretty much ranged from excellent to atrocious. But even at their best, it's not like dealing with poker players, who will often make far larger agreements (in the form of stakes, etc.) in 15 minutes over just a handshake.

Of course you wouldn’t expect or want anyone to invest in a company with nothing but a handshake. But you would expect people to be direct when dealing with you. You don't expect the guy who told you three times that he just invests his own money and wants to be part of your funding round to say a couple weeks later "I'm not sure if we're going to do this, let me talk to my partners." (Partners meaning they invest other people's money too.)

People who invest in early stage companies, use all sorts of strategies to stall for time, even when they're interested, since if a company is 6 months old, stalling for 3 months gives you 50% more data on which to act. Or maybe they decide they don't want to invest, but they don't want to tell you no in case your site takes off a month or two later, so they string you along.
It's the industry equivalent of angle shooting. Luckily Paul Graham explained pretty much every tactic in his writing over the years so none of it is a surprise, though I wouldn’t have expected people to keep using the same tricks after they were so clearly defined, especially on someone they know has spent the last six months listening to the person who exposed them.

I have no problem with people who don't want to invest in my company for whatever reason. Maybe they don't like fantasy sports in general, or they don't feel they know enough to make an educated decision, or maybe they don’t like the gaming nature of our site and worry about the legal ramifications. Or hell, maybe they don't like me. I don't know how that could be, but I've heard (mostly in comments here) that some folks don't.

All of that is fine and good. I figure that when it comes to raising money, if you aren't getting passed on, you aren't talking to enough people. Everyone has their own investment criteria, so even the deals that look like the next Google to one investor look like the next Govworks to another. If you haven't found some of both in relation to your deal, you haven't explored your options sufficiently.

So I can handle getting passed on, because if I don’t, I'm not doing my job well. But I despise the angle shooters. I've pretty much just refused to deal with those people, which might limit my options, but is probably best for the company anyway, because the best investors, the ones you really want on your team, are straight shooters. Just like in poker. As one partner from Sequoia (one of the good firms) told me "you can divorce your wife but you can't get rid of your investors." If someone isn't acting admirably in the beginning you can't expect them to start after they write the check, and then you're in serious trouble, because while you can't get rid of them, they can often get rid of you.

In poker I've done a little bit of staking. (I've never done much on the other end, as I always liked to play on my own dime, but I know a lot of people who have.) I've also done a good deal of splitting, which is pretty comparable, and I've known a lot of others who have. And I've had a couple times where someone has owed me a fairly large chunk (or I've owed them) due to a big win, and there's never been a question of if or when the money was going to arrive.

In fact, a player I had only met a few days earlier once gave me $10k in cash to buy into the WSOP because I was passing through Vegas on vacation and wanted to register. I barely knew him, but we had a mutual friend, so he trusted me to transfer him the money on PokerStars, which I did 20 minutes later.

I could tell you tons of stories about someone staking someone they knew by reputation only, but not one where they ended up getting stiffed when the stakee went on to win. I'm sure it's happened, but among the good poker players, the ones any selective human being would befriend, it's virtually unheard of.

I don't know why poker players have such an unusually strong honor code. I think maybe the bluffing element satisfies that natural human predilection for dishonesty. Maybe people lie, cheat, steal, and angle shoot because they feel the rules society imposes on them are too confining, but those who spend all of their time playing a game where one is encouraged to do everything in their power to outsmart their rivals feel no need to circumvent them. Or maybe it's the other way around, and at some level being an honest person makes you more inclined to play poker, and/or makes you better at it if you do.

So maybe it's a correlation. Maybe it's causation. Or maybe I've just been lucky in that the many friends I've made through poker just happen to be a relatively unusual subset of the general population, though I doubt that given the sheer number. But whatever it is, I miss it.
Which is not to say I haven’t met a lot of great people through the startup world. I have, though almost all of them are on my side of the coin. And it's given me perspective, especially realizing that the most successful investors out here, like Sequoias or Baselines, operate more like poker players and less like average VC firms. I'm pretty sure a sufficiently bankrolled poker player could make a killing at tech investing. Maybe it's something I'll try my hand at one day in the distant future.