Thursday, February 08, 2007

The Worldwide Gambling Storm

As American gamblers tote up the wins and losses from the almost $8 billion that was bet illegally on the Super Bowl (vs. $93 million in legal wagers through Nevada sports books), the world gambling industry is undergoing a fundamental realignment...

...and is counting the unexpected cost of a modest exercise in political opportunism that occurred on the floor of the U.S. Senate on September 29, 2006.

We all know about the butterfly effect: a butterfly flaps its wings in Beijing , chaotic reactions multiply and reinforce, resulting in a storm halfway across the globe.

Today’s subject is a reverse butterfly effect: a minor political disturbance in the United States that caused a storm across the Atlantic that is lapping up on the shores of China.

The butterfly in question is the feeble, doomed presidential aspirations of Dr. Bill Frist, erstwhile Senate Majority Leader.

Dr. Frist will probably be best remembered for the Terry Schiavo remote diagnosis, the Medicare pharmaceutical benefit donut, and for introducing the phrase “reeking of gorilla testosterone” to our political discourse.

But in fall 2006, he hoped to forestall a rout in the upcoming mid-term elections for the Republican Party, which was reeling from the Jack Abramoff and Mark Foley page scandals and public dissatisfaction with the Iraq war, and enhance his own stature and presidential chances by re-energizing the party’s conservative base with some carefully-chosen legislative initiatives.

One windmill he chose to tilt at—Internet gambling—was also a personal priority of Iowa Congressman and bluenose Jim Leach. The fact that Congressman Leach’s good will in the Iowa caucuses would be a valuable commodity for a presidential aspirant perhaps figured in Dr. Frist’s calculation.

Therefore, on the last day of the legislative session, Frist attached a piece of legislation—The Unlawful Internet Gambling Enforcement Act of 2006, hereinafter UIGEA--to a major port security bill that he correctly calculated was politically impossible to oppose or postpone.

The Act made it illegal for U.S. banks and financial institutions to participate in transmitting wagers and winnings between U.S. gamblers and offshore sites.

Absent conspicuous enthusiasm from the domestic legal gaming industry, it passed, President Bush signed it, and UIGEA became law.

Unfortunately for Frist and the Republicans, this particular episode of political kabuki had real and immediate consequences.

American banks promptly refused to handle remittances to e-wallet operators serving the offshore gaming industry, leaving America’s on-line gamblers without the wherewithal to game.

Even worse, Neteller, the leading e-wallet for American poker players feeding the kitty on the offshore sites, abruptly pulled out of the U.S. market, leaving U.S. account-holders—and their money—in limbo.

There are a lot of poker players in the United States (50 million), and a not insignificant number of them (over one million) are on-line poker players whose congenital “don’t tread on me” animosity toward government interference with their gambling activities was compounded by the hardship and anxiety of having their gambling bankrolls tied up in overseas escrow accounts.

Come the mid-term elections, the conservative base was unmoved but poker players were aroused.

They rounded on Jim Leach (Dr. Frist was retiring from office and therefore not up for re-election) and take credit for a “Green Velvet Revolution” that resulted in the veteran, highly-respected Congressman’s narrow defeat by Phil Loebsack, an unknown college professor and Democrat.

Poker sites claim that only 1 out of 10 voters cited Leach’s stand on Internet gambling as a reason to vote for him; 1 out of 7 stated that it was a strong factor in their decision to vote against him.

An even bigger storm was brewing across the Atlantic.

Internet gambling is legal in Europe. The largest companies are English, and publicly listed. They relied on American players for approximately 50% of their revenue, arguing that their offshore status exempted them from U.S. federal and state restrictions on on-line gambling.

When UIGEA was announced and it became illegal for U.S. financial institutions to remit money to gambling destinations offshore, the legality of operations issue was rendered moot.

The value of the publicly traded online gambling companies crashed, wiping US$ 7 billion of dollars of equity from London’s stock exchange at one stroke.

Not satisfied with the chilling effect of UIGEA on stock prices of the international on-line gaming industry, the U.S. government launched a frontal attack on the companies and individuals involved.

Ever since David Caruthers, CEO of the on-line gambling operation Betonsports, was arrested in transit at Fort Worth airport in 2005, executives of British on-line betting operations no longer travel to or through the United States for fear of arrest.

Post UIGEA, the financial institutions that enabled the day-to-day operations of the on-line gambling websites—and their executives—were also targeted.

The two founders of Neteller were abruptly arrested, even though they had severed day-to-day operating relationship with the company, and despite the company’s claim that it believed it was operating within a 270-grace period to come into compliance with UIGEA.

The aggressive pursuit of these largely British-based or listed companies has brought the United States into a direct clash with the U.K.

The Blair government is committed to the development of a highly-regulated and carefully monitored gambling industry that will draw on-line firms to Britain as a source of government revenue and economic growth, and the U.S. law was seen as a direct—and perhaps deliberate—attack on one of Britain’s flagship economic initiatives.

When Tony Blair’s Culture Secretary, Tessa Jowell, held a gambling summit at Ascot, meant to confirm Britain’s vision of a regulated, tax-generating international gaming industry with Britain at its head, the U.S. boycotted the event.

In reply, Jowell chided the U.S. for backsliding to a failed Prohibition model of gambling enforcement—and hinted American coin would continue to clink in Britain’s coffers:

"It [the US stance] is the new prohibition. In relation to gambling, you have three choices - you allow the market to rip, which some jurisdictions do; you prohibit, which some jurisdictions do; or you regulate," she said.

"The risks of prohibition, I think, are very well established. Our concern is that if internet gambling were to be prohibited, it would be driven underground and precisely the kind of protections that we want to extend to people would be impossible."

Ms Jowell told the BBC that there were 4 million regular online gamblers in the US and technology would allow them to evade authorities' attempts to control the activity.

After UIGEA passed and DOJ enforcement efforts reached a crescendo, The Daily Telegraph, employing the vitriol that it usually reserves for attacks on contemptible Middle Eastern despots, declared that the law was part of a U.S. conspiracy to cripple the U.K.’s world-leading gambling industry until America’s casinos had a chance to catch up.

[Gaming law specialist Jason] Chess describes the DoJ's actions as "nothing more than economic and imperialist bullying" and says the two-faced approach of the American authorities towards gambling shows there is a need to stand up to the DoJ. "There are US politicians preaching that gambling is a destroyer of families while a quarter of the population spends its vacations putting coins in slot machines in Vegas casinos," he says. "For me this is more about driving foreign traders out of action so Nevada and Vegas don't lose out on business in the future. The moves being made now give the US time to sort out the legalisation of online gaming and give the Vegas brands time to establish their own brands online."

Warwick Bartlett of Global Betting & Gaming Consultants agrees. "The Americans want to bring these gaming company executives to what they refer to as 'justice', which means slamming them in jail, pocketing their proceeds from the business and claiming the market as their own. Our view is that the US will legalise online gaming within five years. These subpoenas and the arrests represent sheer hypocrisy."

Indeed, post-UIGEA, the Sands announced plans to set up an on-line poker operation registered on the Isle of Man for non-U.S. players, presumably a stalking horse for a site that would be ready to attract U.S. players under a recognized brand once the ban is lifted.

The indignation of Mark Choueke, the Telegraph financial writer whose article is quoted above, was perhaps intensified by the fact that his employers, Sir Frederick and Sir David Barclay, happen to own an Internet gambling website called Ritz Club Online.

Surveying the dismal wreckage of the UK on-line gaming industry, Choueke was moved to invoke the 21st century capitalist Holy Trinity of freedom, anti-terrorism, and free enterprise to stand in judgment of American “justice”, concluding:

So online gaming executives are being hunted all over the globe in a manner more befitting terrorists, dragged off to American shores and forced to fight for their freedom because their successful businesses – perfectly legal in the country they operate in – are being or have been illegally used by American citizens.

British fury and alarm was compounded when it became clear that the DOJ was not just interested in crippling the on-line gambling companies and pursuing their executives.

The announced intention of the U.S. Justice Department is to compel the disgorgement of what they consider ill-gotten gains from illegal operations targeting U.S. gamblers, not just ordinary profits but the fruits of the sky high asset valuations that these companies enjoyed on the London Stock Market:

US authorities are homing in on the billions made by the founders of now-illegal online gambling companies by demanding British banks provide hard evidence of their wealth. Bankers say the US Department of Justice wants to recover the fortunes made by the industry's founders and senior executives through fines and asset seizures.

Dozens of the City's largest banks, accounting firms and law firms have been ordered to hand over documents relating to companies such as PartyGaming, 888 and Empire Online as the Department of Justice steps up its investigation.

The investment banks, accountants and law firms are providing details of individuals' ownership, involvement and proceeds so US authorities have documentary evidence to offer in court. Those caught up include DKW, bookrunner to the PartyGaming float, HSBC, 888's bookrunner, BDO Stoy Hayward, Credit Suisse, Deutsche Bank, Investec and many others.

The numbers involved are not trivial.

The founder of Internet gambling heavyweight PartyGaming, Anurag Dikshit (not a typo) had cashed out his interest for 420 million pounds at PartyGaming’s 2005 IPO.

If one assumes that more than half the value of his shares came from U.S. gamblers (not an unreasonable assumption, given the fact that the company lost over 60% of its value after UIGEA passed), after fines, interest, and penalties he would not have much of a financial cushion for whatever jail time the USDOJ is holding over his head.

The DOJ issued subpoenas to 16 U.K. banks, lawyers, and accountants demanding that they provide information on the personal finances of key principals associated with the on-line gambling industry.

This is a significant step, widening the net beyond the motley collection of foreigners, software engineers, website operators, and gambling executives who built the on-line gaming industry.

The foundations of the British establishment—the IPO billionaires, the big-money passive shareholders, and its premier financial institutions--now appear to be at risk as well.

The U.S. government is apparently threatening financial institutions and stockholders who profited from the public listing of the on-line gaming companies—even if they were never involved in company operations-- with harassment and prosecution if they don’t cooperate helping make the case against the targeted corporations and executives.

The Independent, the Guardian, and the Times of London—which are at best lukewarm on the Blair government’s gambling initiative--had reported the travails of the on-line gaming execs with bemused detachment.

However, with the fortunes and freedom of Britain’s financial establishment apparently threatened by the widened probe, they have displayed a new sense of urgency in defending British liberty against the DOJ inquisition.

Anger and displeasure at the U.S. government—and a call for the UK to resist attempts to extradite British gambling execs-- are no doubt being conveyed to the highest levels of the British government.

The City has been enraged by the US subpoenas. Robert Amsterdam, a specialist lawyer, said: "This means that the US will impose its jurisdiction, retroactively, on this side of the Atlantic. This is a disgrace."

The sense that the London financial world is being unfairly targeted is undoubtedly exacerbated by the fact that big American financial houses such as Goldman Sachs and Merrill Lynch are large holders of Internet gaming stocks, but as of yet have suffered no apparent repercussions.

For example, Fidelity held a stake in Sportingbet, an on-line company that, pre-UIGEA and even with its chairman under arrest for violation of Louisiana gaming laws(!), was worth $363 million. I have been unable to find any report that Fidelity or the other big American fund managers or investment banks have been compelled by moral or legal qualms or the U.S. government to divest their gambling holdings and realize their sizable paper losses.

On January 22nd, a "senior banking source" stated to the Times of London:

“The US is saying to itself, ‘We must get somebody’, and in the process it seems to think it can foist . . . US legislation, even individual state legislation, on anybody.
“It is a straightforward case of the Government being responsible for setting and arranging sensible boundaries on what the US can request.”

Prime Minister Blair, already tottering under domestic scandals and crippled by his image as America’s poodle for his complicity in President Bush’s Iraq disaster, now has to decide whether he wishes to alienate elite English opinion even further by acquiescing to U.S. extradition demands for some of Britain’s richer and better-connected men and women.

If things go badly for him, Tony Blair may supplant Jim Leach as UIGEA’s most prominent political victim.

However, there is more to UIGEA’s assault on the on-line gaming industry than the legal, political, financial, and diplomatic collateral damage it has already inflicted on innocent and not-so-innocent bystanders.

Within the United States, the UIGEA bill, although a premature piece of political grandstanding by Bill Frist, dovetails very nicely with an apparent U.S. predisposition to strangle the Internet gambling baby in its cradle.

The U.S.government is clearly leaning toward a casino-centric vision of gaming development in direct conflict, philosophically and legally, with the British push for Internet-based gaming.

In particular, it represents a rejection of the on-line poker business model that promised to be “the next big thing” that would power a global constellation of financial, media, and high tech interests in a reprise of the boom of the 90s.

The revolution that poker brought to on-line gaming--and promised to bring to international finance-- is conveyed in Online Poker: Going All In to Expose the Internet's Billion Dollar Bet by David Silverberg in the May 5, 2006 Digital Journal, written at the height of the on-line poker frenzy.

Fueled by the unexpected popularity of the World Poker Tournament, televised poker became America’s third most popular TV sport, behind football and car racing.

A seemingly miraculous synergy between television, the creation of a new sport and celebrities, the attractive nature of play on the Internet platform, and the favorable financial mechanics of the game when it could draw on a bottomless reservoir of new, inexperienced players turned on-line poker into an apparent pop-culture and financial juggernaut.

From 2001 until UIGEA in 2006, on-line poker had exploded:

Online poker revenues have grown from $82.7 million in 2001 to $2.4 billion (all numbers US) in 2005; last year, more than $60 billion was gambled on poker sites; and every day, 1.8 million players toss their ante into the virtual pots of the Internet.

Revenues were expected to reach $24 billion by 2010.

Despite the fact that Internet gambling was outlawed in the United States, the astounding growth rates associated with on-line poker revitalized the international stock flotation infrastructure of investment banks, venture capitalists, millionaires, lawyers, accountants, journalists, shills, grifters, and touts that had been laying dormant since the boom had gone bust at the turn of the century.

Then PartyGaming, which was by far the biggest player in the world and U.S. on-line poker business through its PartyPoker site, went public in 2005 in London with an IPO that valued the company at $12 billion—the largest stock floatation on the LSE in five years.

The Guardian gives an idea of the electrifying shock the PartyGaming float brought to the financial world (while noting in passing that two of Britain’s ten top fund management houses—who must be feeling very proud, prudent, and prescient today—passed on the deal because of the legal risks):

PartyGaming's Party Poker website was launched only in 2001 but the company is now worth more than some of the oldest and most famous names in British business, notably Sainsbury's, EMI, Rolls-Royce, British Airways, ICI and ITV.

PartyGaming's advisers, Dresdner Kleinwort Wasserstein, said they could have placed the shares three times over. The investment bank and its fellow underwriters will earn up to £40m in commissions from the float.

Other companies soon followed, netting their founders millions.

Behind all the enthusiasm was the fact that even with the runaway growth already experienced, the on-line poker industry’s penetration in the massive—home to half of the world’s 100 million poker players—had only reached 3% by 2006.

Clearly, there was a tremendous amount of fuel available for the growth rocket.

There was also the perception that the U.S. government would not, despite the archaic anti-gambling strictures of the Wire Act, stand in the way of a revolutionary, burgeoning industry that offered the prospect of so much money and excitement for so many people.

But UIGEA, and the aggressive campaign to enforce it crushed the hopes of the publicly-listed on-line gambling industry.

At first, Internet gaming enthusiasts hoped that Harry Reid, Democrat and Senator from Nevada, who replaced Bill Frist as the new U.S. Senate Majority Leader, would lead an effort to repeal UIGEA.

However, it appears that Reid, who fought against mob control of the Las Vegas casinos in his previous position as Gaming Commissioner, wants a tight lid on all gambling, including on-line gambling, saying “Gambling cannot be regulated. It can only be controlled.”

Reid is probably skeptical of the titanic market forces seeking to shake off the regulatory shackles and grow the gambling industry to reach its full potential, since some of these same forces were responsible for strapping a bomb underneath his station wagon back in the good old days.

He is also, without a doubt, extremely conscious of the support that the brick-and-mortar casinos and their nearly quarter of a million flesh-and-blood employees provide to his political endeavors in Nevada, and will not endanger their well-being lightly or prematurely with some ill-considered de-regulatory legislation.

Therefore, consider it likely that Internet gambling in the United States will be legalized gradually, if at all, and only for U.S.-based operations whose transparency, accountability, and assets at risk within the country offer the best assurance of complete and eager regulatory and IRS compliance—America’s well-heeled, highly regulated, and basically legit casinos.

Ironically, this old-fashioned approach to gambling—call it selective prohibition—may find vindication of its quasi-mercantilist model in the behavior of the world’s other great gambling power—China.

The unequal struggle between on-line gaming and traditional casino gambling for the China market has already begun.

Deprived of its primary growth engine and driven by the financial dynamics of its game, the on-line poker industry is already knocking on China’s door, anxiously chumming for customers, and trying to vindicate its revolutionary business model after the shattering rebuke of UIGEA.

The poker industry requires a never-ending supply of “fish”—inexperienced or unskilled players with a tendency to lose—to provide recreation and profit to the “sharks”, and income to the website through its commission or “rake”. Otherwise, the pool gets filled with too many sharks, it becomes harder to win, and players drift away to other sites or out of the game altogether.

China is teeming with millions of potential fish.

To entice them, gambling sites and their constellation of education/tout websites have been Sinicized. Television deals have been signed. Johnny Chan—Cantonese speaking, and two time winner of the World Series of Poker—is being pushed as the public face of poker in the Far East.

Oliver Tse, a poker writer and eager evangelist for the future of Chinese poker, does the math:

Consider the following statistic: even if only 1 out of every 1,000 mainland Chinese residents were to put up 1,000 Yuan, or about USD$125, to enter an online satellite poker tournament for a 1-in-100 chance to advance to a $10,000 buy-in televised No Limit Texas Hold'em tournament, China alone would qualify over 13,000 players to that particular tournament, which would have a field whose size far exceeds the size of the field of over 8,700 at the 2006 WSOP World Championship Main Event.

Tse predicts that a WTP (World Tournament of Poker) event will be played in a Macau casino by 2008 that Texas Hold ‘Em will reproduce its Western success as a sports, gambling, and growth juggernaut in the Chinese market (although, as he admits disarmingly, his father tells him he “[doesn’t] believe Texas Hold'em will catch on in the Chinese-speaking markets in Asia because Texas Hold'em is too "slow" and too "difficult" to understand and learn compared to games such as Baccarat which dominates the Macau gaming market.”

There are also significant legal and policy factors that militate against on-line poker repeating its miraculous and profitable rise in China.

Gambling is illegal in China--except for limited lottery and keno concessions--and the prospects for tolerance, let alone legalization, of on-line gambling appear remote.

Tse admits that China’s iron control of the Internet will require explicit approval and licenses for poker to be played on-line in China.

One company has apparently succeeded in getting its nose in the tent: Sino Strategic International (SSI).

SSI, an Australian company, already operates lottery and keno gambling through several hundred outlets in Shanghai, with proceeds benefiting a state-sponsored welfare fund.

It has structured a similar deal with the China Aged Care Fund (CACF) “to jointly establish the CACF Charity Poker club and develop community aged care property projects which will include Multi-function Entertainment Centres (MECs) across China.”

The pitch is that the MECs will, through the magic of poker, anchor and fund retirement property developments nationwide.

The developments, described as “destination entertainment locations for surrounding residents and visitors” sound a lot like casinos in waiting, albeit with the disconcerting potential for bewildered retirement home denizens shuffling through the property at inopportune moments.

SSI also has plans for on-line poker.

Fatally, however, they are based on a VPN—a private network linking poker players around the country—instead of access to an open Internet platform.

Expect China to work to keep the Internet gambling genie in the bottle.

China shares with the United States a distaste for the overseas flow of potentially taxable gambling winnings into foreign hands.

Add to that China’s tight capital account restrictions—and the resulting obsession of Chinese businesses and individuals to gamble on the yuan exchange rate through illicit offshore financial hocus-pocus—and I think that China’s enthusiasm for permitting foreign companies and foreign players to fleece China’s poker players on-line is virtually nil.

China has seen the future of Asian gambling, and it looks a lot like its past: Macau.

An in-depth article by William Mellor and Oliver Staley on Bloomberg analyzes the Macau phenomenon—and the gold rush mentality of foreign casino operators flocking to the enclave that is fueling $20 billion in resort construction—in detail.

In 2005, Macau replaced Las Vegas as the world’s leading gambling Mecca. It draws on 2 billion potential visitors within the radius of a five-hour airplane flight (as opposed to 400 million for Vegas) and registered 6.8 billion in legal revenue in 2005 (vs. $6.5 for Vegas).

Thanks to loosened travel restrictions, 250 million residents of China—presumably almost all of the city dwellers who have enough money to lose a significant chunk of it at a casino—are already able to go to Macau as individual travelers.

``In 10 years, Macau will resemble Vegas on steroids,'' says Brian Summers, who helps manage $28 billion at Santa Fe, New Mexico-based Thornburg Investment Management Inc., including $240 million worth of Las Vegas Sands shares. Summers points to the demographics. Macau (population: 500,000) is the only place in greater China -- the mainland, Hong Kong, Macau and Taiwan --where its 1.3 billion people can gamble in casinos.

Led by Macau, Asia’s growth projections look a lot like on-line poker’s did—before UIGEA.

Across Asia, casino companies will spend as much as $71 billion over the next five years, according to [Merrill Lynch analyst Sean] Monaghan. Annual gaming revenues for the region could double to $23 billion in 2010 from $11.9 billion in 2005, according to a 2006 PricewaterhouseCoopers LLP report.

China’s domestic gambling industry is immense—estimated at about $100 billion US, of which only about 10% is accounted for by the legal keno and lottery plays.

However, given China’s basic bias toward government control; the tsunami of corruption, crime, tax evasion, and ruinous competition that a deregulated approach to legalized gambling would engender; and the government’s poor track record in matters of local criminal and tax law enforcement, I believe the PRC will keep gambling under tight control—and largely off-line—for the foreseeable future.

That, in turn, implies allegiance to the brick-and-mortar megacasino national gambling model, whether practiced exclusively in Macau or warily extended to a few locations in China.

Things might have gone differently if the U.S. government had negotiated with the various gaming stakeholders, on and off-line, held off on the premature and disruptive UIGEA legislation, and perhaps thrown its weight behind legalization of Internet gambling and the rise of new, web based gambling enterprises.

Instead, the publicly traded on-line gambling businesses that might have built well-capitalized, valuable, and trusted global brands have been crippled by their exclusion from the United States.

Furthermore, U.S. law enforcement actions against operators and facilitators of on-line gaming has legitimized similar restrictions—that might otherwise have been considered restraint of trade—by China and other countries.

In contrast, the traditional casino companies have been immeasurably strengthened. Secure in their core U.S. businesses, they are free to invest and partner in the new Asian projects.

Instead of internationalized gambling driven by the Internet, we will see the consolidation of national gambling blocs in the United States and China, with operations concentrated in the hands of a few well-capitalized multi-nationals operating brick-and-mortar casinos that double as resorts, with on-line gambling as a distant third priority.

The demand for on-line gambling will survive and grow despite the proliferation of national laws and international enforcement efforts. The only difference: since Internet gaming networks that serve U.S. and Chinese customers will be criminalized, they will simply be run by criminals

But the immense river of money that seemed to be headed for a new generation of publicly-held, visionary--and legal--Internet gaming companies will instead be flowing into the pockets of the powerful and politically connected old guard.

That’s a world of consequence for Dr. Frist’s eleventh-hour legislative coup, one that perhaps was not intended to be much noted or remembered outside of the Iowa caucus rooms in January 2008.


Probably nobody is happier with the havoc that UIGEA has wreaked on the Internet poker industry than one “Dickie Richard”.

“Dickie Richard” is the pseudonym of a professional card cheat whose specialty is the home game, played in what we Internet types call “meat space”i.e. the real world a.k.a. your home.

Richard has made a career out of joining, building, and burning these games with a unique combination of card mechanic skills, psychological manipulation, amoral ruthlessness, and, I might say, monastic fanaticism in his devotion to perfecting and practicing his craft.

He despises Internet poker because it only permits the most vulgar cheating—one grifter playing multiple hands or collusion of one or more confederates sharing information on their cards—without the technical, physical, emotional, and moral risks of walking into someone’s home, robbing a group of men, and returning to steal from them again and again for weeks at a time.

With the drift of poker players toward the Internet slowed by UIGEA’s attack on poker websites and the financial companies that provide the necessary flow of money back and forth, there is a wide-open path ahead for those who want to make a career out of ripping off the incompetent, careless, and self-deluded fish who make up the majority of the home poker players.

Aspiring grifters will be happy to know that Dickie Richard has written a book:

It’s called How to Cheat Your Friends at Poker and was published under the auspices of Penn Jillette, the large, vocal half of the Penn & Teller magic act.

Jillette apparently met “Dickie Richard” when Jillette was scratching out a living on the streets at a young age. Richard mentored him and helped start Jillette on the road to his current career at the intersection of magic, showbiz, and Foucaultian deconstruction.

Jillette feels he owes Richard a debt and assisted him in rewriting his book and getting it published. However, he does have qualms, as he admits shamefacedly in the Introduction:

Cheating at home card games is stealing from friends. It’s as easy as that. The techniques are easy. The work is easy. All that makes it hard is the morals, and unfortunately there are ways to get over that problem. Sadly, this book will help.

In addition to the relatively straightforward discussions of card marking, card palming, cold decks, “tilting” (psychological manipulation), and obsessive practicing that enable a card cheat to take total control of a home card game, Richard also dispenses useful advice on topics shunned by more conventional poker guidebooks, but which will be of use both to the aspiring card cheat and any ordinary dirtbag.

Richard devotes an entire chapter to the important subject of What To Do When Caught Cheating, and pounds home the basic rule: Admit Nothing! even if “someone grabs your hand and the six of diamonds falls out of your sleeve”.

He briskly leads the reader through the psychological dynamics and medical consequences suffering rough justice at the hands of an enraged mob, commenting, “Hand stompings hurt—a lot—but you’ll live, and later you’ll just have to learn the moves again with your new hands,” and ends with the golden rule of getaways:

And always, always keep your car with the driver’s door unlocked and the keys in the ignition.

He concludes mordantly:

Don’t worry about your car getting stolen. You’ll be playing mostly in good neighborhoods...If your car happens to be stolen the same night that you get busted cheating, then god wants you dead and there’s nothing you can do about it.

While providing a how-to manual for the aspiring grifter, “Dickie Richard” also seems to be auditioning for a role in a Russian novel. Dark pride, self-contempt, and hatred pour off the page in equal measure.

He describes his Big Mistake—losing his entire bankroll of over two million dollars in a to a judge in New Hampshire because his ego told him he could win straight up without cheating—like this:

I’ve never been back to New Hampshire. I can’t talk to anyone from Vermont because it’s too close to that memory...I couldn’t look at myself in the mirror for weeks. I still feel sick about it. Honor and equal pay on equal footing, being beat fair and square; that’s not worth 2.3 million dollars. That’s only worth a lifetime of pain...If there’s a lesson to be learned, it’s that you should never ease up, and don’t even think about playing fair.

After this cris de coeur, the triumphant sneer returns to Richard’s authorial voice as he tells how he paid a hooker $5000 to give the Judge a case of the clap—his case of the clap.

As a concluding moral palate cleanser after this sordid repaste, I would also like to point out an instance of useful scholarship in the book—the origin of the phrase “passing the buck”. We all know the philosophy behind Harry Truman’s famous phrase, even if its concrete meaning is obscure.

For our benefit, Dickie Richards glosses the word buck:

People call dollars “bucks” because they used a buck knife as a dealer button in the old days...The knife got replaced by a silver dollar, but they still called it a buck.

The “dealer button” for poker non-initiates, is now a plastic disk (itself heir to the silver dollar mentioned above) passed around the table at casinos to show which player is the nominal “dealer” even when a professional dealer is actually responsible for holding the deck and distributing all the cards.

Apparently, in the rude days of the frontier, poker players learned to alternate the deal to protect the deck from the intensive manipulations of whatever Dickie Richard might be lurking at the table—or maybe just to give each player an equal chance to cheat.

They would pass a buck knife around the table as a marker to keep track of whose turn it was to deal

“The buck stopped” in front of the player who was responsible for dealing the cards for the upcoming hand—something that Harry Truman, an inveterate poker, would be well aware of.

Richard concludes the entry triumphantly:

Who said that cheaters don’t know sh*t?

Not me. Thanks, Dickie.

For those who desire the endorsement of the Academy, Gary Martin covers “pass the buck” at The Phrase Finder.

Truman’s love of poker is attested to by no less authority than the U.S. National Archives, which also records this amusing anecdote:

Winston Churchill joined in one of Truman's poker games during his visit to the United States in 1946. Churchill and the presidential party were on their way by train from Washington to Fulton, Missouri, where Churchill would tell the world about an "Iron Curtain" that had descended upon Europe. This night, however, the great man's oratory was about his poker prowess gathered over forty years. Truman was worried about the honor of American poker players, and he and his companions felt they would have to play their best. As the game progressed, though, Churchill lost steadily, and his stack of chips dwindled. After about an hour of this disastrous play, Churchill left the room for a moment. Truman told his companions that they would have to let up some. "But, Boss, this guy's a pigeon" one of the players, Harry Vaughan, burst out. "If you want us to play our best poker for the nation's honor, we'll have this guy's pants before the evening is over." The players did let up on Churchill some, but not enough to let him go back home claiming he had beaten the Yanks.

How to Cheat Your Friends at Poker/the wisdom of Dickie Richard by Penn Jillette and Mickey D. Lynn, copyright 2005 is published by St. Martin's Press, New York and is available at Amazon.


Henry Hunt said...

Another great article.

I have not followed this topic, but after reading this I tend to think Mr. Frist's bill was a good one. Gambling can not be considered the same as other trade, and never has been.
It seems the British are more liberal on this point since they realize it is an opportunity to tax foreigners. Why should the US or China allow them?

BingoBoy said...

i think it is a brilliant article - very well written and informative. The 1st post needs to be deleted as this person obviously lacks any understanding as to what the online gaming industry is about. There is no taxation of players from either the USA or China - individual companies are taxed in their countries for profits made. What the US government is worried about is that it is not getting any of this action - well they should have had the foresight to do something about it earlier instead of doing nothing - and now they want to bully their way in -=

ste.b said...

yeah good point, why is it that i can put money on the horses using my computer, but i can no longer have a wager when playing online poker? what a load of rubbish mr bush. well at least i can still participate in the odd free online poker game!

Anonymous said...

The politicians keep sticking their noses into what Americans do in the privacy of their own homes. It's about time that they decide to regulate the gambling industry, so that people can play without any worries.

King Tut said...

China is a great country, and it has a great history like ancient Egypt

Irish Lee said...

Wow! It's indeed a very informative article. Online casinos greatly reach its peak in the heart of Asia and other near countries. What I'm looking forward is the legalization and regulations of online casinos in the US. It would definitely a great news for US players out there.

Unknown said...

Gambling is a fertile field for illegal money!! Clenbuterol

Dedy Rachman said...

Great blog, god bless you...