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History of Online Poker Part III: Light at the End of the Tunnel?

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Chasse Rehwinkel

I gamble, therefore I write...or I write, therefore I gamble...honestly, they're pretty similar professions…

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We last left our online poker story hinting that the industry would fall into some sort of precarious predicament.

And if you are expecting a full course rebound, I'm sorry, this is history class.

Not all is sour grapes and poison pills, however. So don't worry too much about your online bankroll and read on to find out what is the position online poker finds itself in today...

The First Fall


What's your feelings on the modernization of the Coast Guard? Or how about a trade partnership to combat terrorism in U.S. ports?

Sounds good, right?

Better than good, really. More like, necessary to continue to fight terrorist actions both domestically and abroad.

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Yeah, also I don't want to deal with this every time I go fishing

Well, then you would probably be strongly in favor of the SAFE--cute--Port Act of 2006, which outlined initiatives and funding for programs like these to help better protect our coastal cities...oh, and it tried to outlaw online gambling in the United States.

Section 802 of the SAFE Port Act, also known as the Unlawful Internet Gambling Enforcement Act, outlines federal restrictions that would prohibit the transfer of funds dealing with online gambling sites. In essence, this piece of legislature sought to kill online gambling in America.

Now legislation in the United States against gambling is nothing new. A quick scan of state and county restrictions would reveal that there are many areas in the U.S. that prohibit or greatly restrict gaming.

Nor is restricting online gambling particularly unusual. In 2001, Australia passed the Interactive Gambling Act, which fined any online casino operators that offered real money internet gambling to any Australian province or territory, and in the summer of 2006 the State of Washington passed legislation to make online gambling a felony.

However, this was the first attempt by the American federal government to restrict online gaming, and its effect sent online poker--an industry that is not strongly defined within the legislation--into a state of suspended animation.

You might now--appropriately--be asking yourself why an act to help safeguard American ports contains a provision on online gambling?

Well, instead of giving my own opinion let me turn to one of the foremost minds on gambling law, I. Nelson Rose, author of the book Internet Gaming Law and operator of the website gamblingandthelaw.com.

Take it away Professor Rose...

"This bill was rammed through Congress by a failed politician, then-Majority Leader of the U.S. Senate Bill Frist (R.-TN). Frist planned to run for President and wanted to gain points with a then-powerful Congressman from Iowa, Jim Leach (R.-IA), who actively opposed internet gambling. Because almost no one else in the Senate cared either way about the issue, Frist had a problem. He couldn't get a prohibition bill to the floor for a vote. So, Frist added his internet gambling act to a completely unrelated bill dealing with port security. In a cynical move, he risked the safety of the U.S. in its war against Islamist terrorists to show his right-wing religious base that he opposed gambling."

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Ouch! That was a hell of a "you're sooo stupid" joke, wasn't it Frist?

The UIGEA's effect once it passed in September of 2006 was both immediate and devastating to the world online poker.

Unsure of where they stood in terms of American laws, major players in the online poker community started to pull out of the U.S.

Party Poker, Doyle's Room and many others felt they could no longer offer real money poker to U.S. customers. While online poker's grandfather, Planet Poker, was forced to shut down its real money games altogether.

In fact Party Poker's losses alone from the UIGEA's passage are believed to be in the neighborhood of £2 billion--close to $4 billion.

Probably the most visible effect of the UIGEA was seen at the 2007 World Series of Poker, when for the first time in poker history the WSOP Main Event decreased in size, from 8,773 players to 6,358.

It was a truly damaging blow to online poker, one that has yet to be fully understood or dealt with.

But, as the poker community organized to fight these new restrictions another major hit to the online poker industry was about to be thrown.

Fall Number Two


Hardcore poker fans out there might remember the story of the failed online poker site PokerSpot.com.

Chris Moneymaker wasn't the only poker celebrity created by ESPN's extended coverage of the 2003 WSOP Main Event. Young online pro, Dutch Boyd, went deep that year as well and his combination of bold play and infectious spirit made him a crowd favorite.

Like it or not online community, but following the 2003 Main Event's debut on ESPN Boyd became the face of the young internet player, his emphatic statement, "we're going to take over the poker world," becoming the rally cry for online grinders everywhere.

Well, Boyd had once decided to try his hand at the other side of online poker, ownership.

In 2000, Boyd started PokerSpot.com and less than a year later the site went under.

That's not really a big deal--sites go under all the time--but, PokerSpots's credit processor was not able to refund all the money to its players in time and subsequently hundreds of thousands of dollars were lost by PokerSpot players.  

Sounds bad, but you know what? No one outside of the poker community really remembers or ever knew that story.

Sure online poker has had it's scandals--just like any new industry--but it has managed to always learn and adapt to these situations.

That is until 2008, when the long running CBS news magazine show, 60 Minutes, ran the following story:



Part I



...And Part II

There are two key differences between the PokerSpot and Ultimate Bet/Absolute Poker scandals.

First, while certainly PokerSpot's failings were important to the site's users it was never really more than a minor player on the online poker scene.

Absolute Poker and especially Ultimate Bet, however, were, with Ultimate Bet alone being considered the third or fourth most popular poker site throughout the 2000s.

Second, and probably more importantly, PokerSpot's story never was reported in the mainstream media and, therefore, never found itself embedded in the general public's idea about what online poker is.

In the 60 Minutes story, however, we have a major publication putting on display online poker at it's very worst, calling the industry--erroneously--illegal and stating that this is a problem that could be happening on any site as we speak.

What's even worse is that at the heart of this scandal was Russ Hamilton, the 1994 WSOP Main Event Champion and former Ultimate Bet sponsored pro, who has been fingered as one of the known cheaters.    

So in the midst of trying to prove online poker's legitimacy as a game of skill to officials that were trying to shut the game down using the UIGEA, a well known, national news program--60 Minutes--reports on a major online poker cheating scandal that involves one of poker's world champions.

A black eye that may have set back online poker decades.

Great, so where are we now?


It might be hard to believe, but both the new legislation and major cheating scandals might help online poker in the long run.

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And I suppose now you'll tell us that you've got some great land in Florida we should buy...

No, I'm totally serious.

Strong pushes by the conservative right has forced poker to consolidate and legitimize itself.

Added to this we have the emergence of two poker giants, Full Tilt and PokerStars.

Full Tilt Poker, which actually got it's start relatively late on the online scene in 2004, has transformed itself into the premier site for ultra high stakes poker online, creating a massive following of online "railbirds" who want to play witness to the absolutely ridiculous swings of big time poker.

PokerStars, on the other hand, has become the tournament Mecca, hosting not only large online tournaments, but major live tours as well, including the wildly successful European Poker Tour--which replaced the World Poker Tour in 2008 as the most prestigious international poker tour--and the new North American Poker Tour--which has entered into a broadcast deal with ESPN.

Looking at the recent strides made by these two sites, the future of online poker doesn't look all that dim.

Online poker might not be where it was in 2005, but it may be moving toward a period of improved prosperity.

Who knows? It's tough to tell.

So I'll refrain from sounding too much like the Amazing Criswell and leave you with just possibilities; possibilities of failure as well as possibilities of success.

I'd like to thank everyone who helped me compile and research the information used in this series. You're help was invaluable.

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