Ship It, Fish!

Barney Frank has always been my favorite Congressional Representative; I had the pleasure of being his constituent for a while in my life, and I miss that time.

If his bill passes (and, of course, it's a huge underdog), I will seriously consider playing online regularly again. Not because I won't play online if the game is illegal, but rather because fully legalized and regulated online poker will be so lucrative that it will be too difficult to pass up.

Similarly, if I didn't dislike California so much (in large part because of the poor public transit in most Californian cities) and happened to live there, I'd play in the legal local card rooms.

There are some people who are going to play poker only when it's fully legal, and those are the fishiest. I just need a huge overlay to persuade me. If the game isn't a full-on donk-fest, I can't make enough to justify the time. Legalized online games could yield hourly rates like those on Cake and Pacific in the hey days. That'd be tough to ignore, even if taking money from the clueless is starting to make me sick to my stomach.

I haven't played poker at all this month. Basically, I've quit. I have more to write about regarding my reasons, and I will. I've won about $20,000 already this year, and assuming that Cake Poker actually pays me (they are having huge delays in processing cashout checks; I've been waiting since mid-February), that will be a win comparable to my best years in the past. Why play anymore when I have better things to do?

That said, I'm still going to have my monthly home game, because the usual group are enjoyable people (not the annoying fish you have to put up with at casino and online tables). I've just sent an announcement for this Saturday.

I did my taxes. I read Ann-Margaret Johnston's book, How to Turn Your Poker Playing into a Business. I recommend this book if the whole Schedule A vs. Schedule C issue still confuses you or if you've never filed one or the other. For those who have studied this issue, it doesn't give any new information.

The only piece that it made clearer to me is why everyone is so touchy about this full-time vs. part-time idea. There is one single court case, once, about a professional gambler, that jhazen has previously quoted in my journal: if one's gambling activity is pursued full time, in good faith, and with regularity, to the production of income for a livelihood, and is not a mere hobby, it is a trade or business within the meaning of the statutes with which we are here concerned.

Added with Johnston's arguments that the IRS gets very suspicious of a Schedule C for any activity that seems fun, this probably accounts for the constant “not full-time” paranoia around the poker world. I believe that this is one court case, and therefore just one criteria among so many. Johnston herself argues that there are lots of criteria considered by the IRS. Frankly, when I'm playing more than, say, 3 hours of poker a week, I enjoy my day job more than I enjoy the poker, so if the IRS wants to see “toil” to believe it's not a hobby, I'll tell them under oath how boring the whole thing is.

Finally, I should note that I nearly had a losing year in poker in 2006. My net profit was a paltry $94.73, as my expenses were somewhat high ($2,105.73). Still, this is much less than I won in 2005. I had forgotten than in January 2006, I was still playing limit regularly at the $15/$30 level and had a bad 200 big-bet loss weekend. So, given that I had to dig out of that hole all year, I am fortunate that I had a win. It certainly didn't help that I spent most of the late summer and fall playing extremely low stakes, wasting time in tiny home games and very small stakes online, too. There's hours of my life I'll never get back.

One year ago last week, I posted that I hope to be a [full-time] professional poker player ten years from now. I was beginning a ten year plan to become a pro. Theoretically, I have nine years left. But, while I didn't journal much about my thought processes this past year about becoming a full-time pro, I have been thinking a great deal about it.

I spent a good piece of my poker time last year preparing for what became the experiment I conducted for the last month and a half to consider what it's like being a full-time pro. I decided last week to end the experiment. External (i.e., financial) factors indicate that it went well, and it's actually pretty clear to me that if I wanted to, in ten years, I could be a full-time professional poker player. I noted earlier this month that if I were to do it now, I think I'd have to take a substantially reduced salary, but it's likely with constant work on my game over the next nine years, I could get to the point where I'd have a full-time job.

I'm usually the type of person that if I can do something that I had a mind to do at one point, I just do it. In other words, I don't reconsider a plan very often; I'm better at executing those I already have it. But, this is a good case for reconsidering.

I do know that I will probably keep full-time poker in my back pocket as a backup in case for any reason I can't continue the work that I currently do. However, I have now let go of the plans to make it full-time.

Over the next few weeks, I'll be making a series of posts detailing all the reasons that led me to this decision. roryk is well known for urging me and others to never ever consider becoming a pro; perhaps my posts will help those considering it. Surely, this series of posts will make Rory happy.

I still haven't decided yet what I'll do regarding continuing the part-time professional play that I've been engaged in for the last few years. I admit that I've gotten used to being able to pay some expenses with ease from my poker business. I'm fortunate that I don't have to decide that quickly. I've more than doubled my bankroll in the last month and a half, and I could easily spend the next eight months not playing at all, pulling some expenses from it, and still not have to drop down in stakes if I do start playing part-time again at any point.

What I do know is that I'm done with the plan to become a full-time pro, and that I may be winding down my work as part-time pro as well. I look forward to exploring my reasons here in the next few weeks.

Cake Poker realized that all of things available for purchase in their Cake Store were too cheap. Hard-core players just earned those gold coins too fast. I was playing on there so much, that under the old prices, I would have earned an 80GB iPod every three weeks! Glad I got two of them before they doubled the cost. :)

Still, it will take a lot longer than six weeks to get my next one. I am not playing on their as much as I was. The Neteller thing really thinned out the player base. I would still declare Cake Poker's NL HE games the easiest to beat on the Internet right now, but that's all becoming relative.

Cashouts have gotten really slow. I have had a cashout pending for a week and a half and they have yet to even process it. Plus, you can't buy fedex shipping for the cashouts anymore. Their answer when I email them is: Checks will be received 15-20 days from the date requested. Most of that time seems to be waiting for them to even process the check request in their system, not the time it takes after they've sent it off to Chexx.

I've decided to pull most of my online bankrolls out at this point. I'm going to be writing more about my plan to substantially reduce the amount of poker I play soon, but I might as well start moving the money out at this point.

I've been reading some older 2+2 titles recently. Sklanksy and Malmuth have this wonderful way of describing things that reminds me of my graduate school texts. I suppose you have to have gone to graduate school for some science-related field to actually enjoy that dry, dense writing.

I finished Sklansky's Poker, Gaming, and Life, and half of Malmuth's Poker Essays, both of which are collections of essays written for Card Player and other magazines in the late 1980s and 1990s.

One of the general themes that amazes me is their constant discussion of “systems”. It's clear that during the period when writing these essays, their simple ideas for poker planning were new. In many of the essays, they seem forced to actively defend the idea that winning players should treat poker like an endeavor centered around an hourly win rate, which is computed based on how much of a favorite the player is to the game she's selected. On the corners of every essay, they defend the now obvious idea that concepts like “loss limits” and “quitting while ahead” are completely silly for the winning player. In those days, it seems that the idea that you should quit a game only if you aren't a favorite or if your non-poker life calls you away was novel.

I read these defenses and imagine that during the late 80s and early 90s (while I was busy winning a mere $20/week in penny-ante wild-card games and didn't even know that “real poker” even existed) must have been a time of some enlightenment in the poker world. There were people, probably even pros, walking around who believed that the “quit while you are up” strategy was somehow smart play, no matter how good the game was. I suppose these were the same people who walked around saying that Internet thing is just for computer nerds.

Of course, the interesting shred of truth in the win/loss threshold approach (and one that Sklansky and Malmuth ignore, since they are writing only to the winners) is that the system works really well for losing players. Someone who is not a favorite to the game should let the short term luck wash over them and run off with the money if they are lucky enough to get hold of some. And, likewise, when they can't get luck on their side, they are better off running from the games as quickly as they can to limit the amount that strong players can extract from them.

(As a tangent, this is why the only thing that really upsets me in poker is the hit-and-run. It's just about the only strategy a bad player can use to defeat good players — forbidding the cards to even out and allow the good player to recover against the short term luck. In essence, the “quit when your up” is the only weapon the weak player has in her arsenal against a better field.)

I can imagine, though, despite how wrong-headed the beat-the-system approach to poker seems today, that Skalansky's and Malmuth's messages were hard for people to hear. Many people chose life as professional poker players so they didn't have to think about spreadsheets and hourly rates and marketing to the right customer base (i.e., choosing games where you're a favorite). The truth is, if you want to be a pro, or even a regularly winning player, you are just a weird sort of entertainer looking for people who actually want to see your show. You're the travelling circus that has to trick people into thinking the freak show is worth paying for. You are running a business, even if (for the recreational player) only a hobby one. You have to treat it as such and let go of the fanciful notions that somehow you are getting something for nothing.

The idea of “beating the system” using some strategy — be it a win/loss stop or anything else — is a fantasy. Playing poker for a living isn't beating the system; it's actually in a pretty simplistic way of being a cog in the machine. Grinding, that verb we use to describe the profitable poker we all hate to play, is what the real pros actually do.

It's always good when clear thinkers come along and burst the delusional bubbles. And, Sklansky and Malmuth have been doing it for decades. I suppose there must be people out there still living in the bubble, believing that some system gives them the power to beat the games. If so, they should probably all go out and buy these books. :)

As many know, I have preferred — since the quick withdraw of Firepay after UIGEA — the paper check cashout method from online poker sites. I have used this method many times. I even used it sometimes while I still had Firepay for larger amounts, particularly in the old days of Pokerroom when the would fedex you a check at no charge if it was over $2,000.

I've seen the sites change what check processor they use many times. It appears that the last one operating is Chexx, Inc., a clearinghouse third-party check processor. I've noticed that sites that once used a different processor are now sending me checks via Chexx; I've received numerous Chexx's checks (don't subvocalize that phrase; it just sounds confusing) from various sites over the past two weeks.

davebreal referred recently to his concerns about Chexx, Inc. Worries about Chexx were initially raised on the 2+2 Internet poker forum. As near as I can tell, that whole thread is a bunch of fear mongering interspersed with an occasional intelligent person pointing out how the banking system actually works. Please, don't panic.

I admit I was a little concerned, too. But then I got Chexx's checks in my own hands and did some research. There are two things that generally matter when depositing any check (I'll get to specific UIGEA worries later): (a) does the account in question have sufficient funds, and (b) is the issuing bank reliable and known to pay their drafts. Nothing else really matters. Admittedly, (b) becomes quite complicated for USA citizens because it is often difficult here when the issuing bank is not in the USA. (Many of the checks I've gotten from various poker payment processors have been Canadian, and I've had many problems at some banks about that.)

The good news is that the Chexx's checks are drawn off a bank in the USA. According to the routing number, Chexx is using a bank called the US Bank, which has 2,472 branches in the mid-west and elsewhere. I don't think we therefore have to worry about the bank itself. Is this bank really going to default on its drafts and run off with the money?

The only problem, then, would be that Chexx's account doesn't have sufficient funds. This, too, seems pretty unlikely. Chexx is a somewhat well-established third-party check distributor, including check processing for many mundane, non-UIGEA-impacted businesses such as consumer product rebates. Even once UIGEA becomes a problem for them, they aren't going to jeopardize their larger business by bouncing checks for any customer — be they an online gambling company or not.

Given that this is an established company with multiple vertical markets, don't you think that they are going to do a careful pull-out? Don't you think they'll inform their customers (the poker sites) when the end date is? Don't you think they'll honor all checks issued before said pull-out? Rumors have gone around that the end might be 1 February. Others have said 1 March. But, we're going to know, and not via rumors. Chexx will tell the poker sites and the poker sites will tell the players, surely with at least 24 hours of warning if not more. Then they'll honor all checks issued up until that point, and they'll refer us to ePassporte or something.

So, you might ask, why is that people are reporting problems, such as tellers refusing to accept the checks from Chexx? Well, this is a problem I know a great deal about. I have been doing online poker check cashouts for almost three years now, and I can tell you first hand that tellers, and even most bankers, are utterly clueless about how even the national banking system works, let alone the international one does. They see a check that doesn't look like all the others they see every day, and they freak. They don't know how to handle it. They see a Canadian return address, and then don't bother to look up the routing number and see if it is a USA routing number. They tell you they don't take Canadian checks, or try to tell you have to pay some exorbitant fee to get it processed, or some other bullshit. Most people (to use a pithy phrase from our world) are clueless donks.

In a comment in davebreal's journal, I mentioned that so-called boutique banks are the best answer. My bank (whom I won't name publicly but if anyone is interested in them email me privately and I'll tell you about them) requires that you keep $2,500 active in your account (at only 1.5% interest), or pay $15/month for the privilege to have an account. Sure, it ain't cheap to keep the account open, but I get serious service for the cost. I have a personal banker assigned to my account who knows me and understands my business. I've explained to her that I do business with a number of companies in Canada and elsewhere, and they use these payment processing services. She's researched each one to make sure the checks are good when I start doing business with a new company or service. She figures out the best way to process the check (either as a standard ACH deposit or as a foreign check claim from Canada), and I get the money deposited. She even puts it through as “cash”, so that I don't have to wait for the amount to clear the other side.

My point here: the people freaking out haven't done their homework, and they are relying on the clueless employees of large, overly corporate banks to tell them how things work. Yes, there are going to UIEGA problems. Sometime in the next 153 days, US Bank will decide that they can no longer accept Chexx's transactions from their gaming customers. Perhaps before that, Chexx will have already voluntarily left the poker site payment business. We'll all find out some date when we can't request checks anymore. The existing checks we have will clear; we'll just have trouble getting the new ones out. We'll have to switch to ePassporte or some other crazy thing for a while. But, I'm sure they'll be some way to get the money out almost right up to the day compliance with UIGEA is mandatory (which is 10 July 2007, BTW).

That said, I definitely think slowly reducing your active online bankrolls to the bare minimum is a good idea. The last cashout right up against 10 July will be tough. But, we have a lot of days to go. Remember that these banks and check processors are run by people — regular old human beings like you and me. People procrastinate. People try to get their papers into the professor just under the deadline. People try to renew their license the day before it expires. Particularly when there is a lot of money involved, people will be slow to implement new measures for new legislation.

The challenge is following carefully the changes and anticipating when you have to switch tactics (just like in poker :). I have a feeling that check cashout has legs for another 60 days or so, then we'll have to switch to ePassporte, which will probably have about 50 days of life, and then it's over. That's my rough estimate based on gut instinct and how things played out with Firepay and the other sites that withdrew from the USA.

However it works out, note that arrests appear to be the only way to lock money up. Neteller and the other sportsbook case are the only examples that I know of where USA players funds have been seized. Even my experience with the Pokerstars instant cutoff from Firepay worked out; Pokerstars dutifully sent me a check upon request right after Firepay disappeared. I suppose that if we see arrest made of any US Bank or Chexx employees, we should assume the worst. Therefore, although I flirted with it for a while, I'm going ultimately to pass on the panicking. I hope you will too.

I'm a big believer that NL HE players should sometimes be able to lay down sets in full ring games when set-over-set is a strong possibility. But, having been known for seeing monsters under the bed, I figured I should ask.

NL HE $200-buy-in $1/$2 blinds online: Limped pot with five players including big blind. I have $225, Unknown Player has just joined and bought in for $200 and has the big blind. I limp in cutoff with 4 4.

Flop is K T 4. I lead $5 into $9.80 when it is checked to me., I am check-raised to $25 by the Unknown Player. I make it $50 to go. At the time, I was really thinking about getting away from the hand if he came back over the top. He did, for all his chips, and I eventually called, thinking that I didn't know the player that well and sometimes players go crazy with top two. I figured he'd have raised preflop almost all the time with KK so his range is only KT and TT (most players where I play don't semi-bluff with the nut flush draw, but I guess I could throw specifically A Q to the mix). Also, the average player (which I have to declare him since he just joined) will sometimes raise from the big blind with TT, so that contributes a little bit to the odds he has that in the big blind. The statistics I could compute in the 15 seconds I had (no time bank on this site) seemed to indicate that even if he is twice as less likely to make the play with KT/A Q than he is with TT, I should probably call for roughly 1.5-to-1. Of course, he had TT, or I wouldn't be telling this story.

I can't really take a turn from his check-raise due to the heart draw, so I think the reraise was right most of the time. Maybe I should have reraised more on the flop, in which case it would have been an auto-call due to odds. His over-the-top for all his chips made it possible for me to fold, but I just couldn't do it. Should have I?

My game selection has gotten so good that I basically never get stacked anymore drawing this thin, so I'm hyper-aware when I do and want to be sure I did it right.

I have disappeared from my journal because I've been coming home from work every day and immediately launching the Cake Poker client and playing until I can't keep my eyes open anymore. I've put in approximately 6-8 hours each weekday and 12 hours each weekend day in playing on this site. I'm earning around $64/hour muli-tabling mostly $1/$2, $200 max, and occasionally $2/$4, $400 max NL HE.

This site is completely amazing. The closest game I can compare it to is what you find in the $1/$2 NL HE games in Atlantic City. These games can be beaten by the clueless. Indeed, the would-be other “sharks” on the site are actually very weak players who simply hold money for me and one or two other strong players to get.

I think there are a few factors that make this site so amazing:

• The Sports Book Players: Cake poker has a skin arrangement with with an online sports betting site. Most of the players (based on chat comments) are actually coming through the sports betting site, not Cake Poker. These players are truly horrible, and have virtually no textbook knowledge of the game and minimal playing experience. They don't even know what hands particular bets represent, let alone figuring out if the other players hold the represented hand or are bluffing.

• Lack of Poker Tracker Support: A lot of otherwise strong online poker players are not that smart. I once knew someone who has been a losing player for years who told me there was no reason to play on a site that didn't support Poker Tracker. He said this during the hey days of Pacific, when the limit games there were the best ever seen on teh Internets. Pacific then was much like Cake is today. This fellow, who was struggling to do well at limit games, would only play on the shark infested waters of Party and elsewhere, losing steadily, while I was cleaning up on Pacific. At the time, I was probably only a little better at limit HE than he was, but I was a consistent winner and he was a consistent loser, because of his stupid Poker-Tracker-only game selection criteria.

  Of course I'm annoyed that my hand histories aren't imported and I have no heads-up display on the players. Thing is, I started playing online poker before Poker Tracker and like systems were even available. I know how to beat the game without it. Anyway, the opposition on Cake Poker is so bad, even someone who is completely spoiled with the Poker Tracker crutch should be able to beat the games with ease. These players are horrendous; a trained monkey should be able to at least break even in these games.

  Frankly, I am heavily rooting for Poker Tracker to not support this site. Once that happens, many sharks will give it a try. I recall that six months after HandGrabber came along and made PT work for Pacific, the games started to decline. Now, Pacific is nothing special — just another crappy software poker site.

  I am so amazed at the near-exact parallels between Pacific and Cake Poker: another gambling site sending players over (888 and Sports Book), bad software, no Poker Tracker support. In poker, you have to live where the fish live, even if it puts you out of your comfort zone.

• Completely readable, loose passive players: This is key here. They slow-play when they shouldn't, and min-raise with monsters. They just call down with any top pair, but let you manipulate the pot size. They stack off every time with any two-pair or better holding. You basically have to be a moron to get a lot of chips in the pot bad against them, since they are trivial to read.

• Profitable Promotions: They have this “gold card” thing where you collect cards from their vault. They are used for a number of their promotions. The most interesting one is the weekly “GC 500”. There's a lot of luck involved, but if you play every day for five hours or more, odds are you are going to win an average of $250 in the thing a week.

You may note that this post was originally friends only. I didn't initially want to tell the whole Internets about the fish pond. These days, it doesn't matter as much.

Anyway, I might not be posting a lot, as I want to suck down this money before it runs dry!

Excellently insightful as always, Ed Miller posted an excellent piece on the Neteller situation and the danger that has always been inherent with online poker that many don't see. I recall distinctly when I started playing on Pokerroom in 2001, and then again Pacific a year or so later, that it was extremely important for me to be playing not on my preexisting bankroll, but with a new bankroll won on that site. I still try to follow this rule, whereby I attempt to cashout my initial investment as quickly as possible. In this way, I can view any collapse or inability to pay as merely wasted time, not wasted bankroll.

I've modified that somewhat since buying in became difficult; I'm keeping more in online poker accounts than I used to, due to fear that I can't buy in again if it falls. That is probably a mistake, because the trustworthiness of online balances is actually most in question. Miller's right that an online version of the proverbial 1929 “run on the bank” could cause a serious collapse due to cashflow problems.

The most important thing for all of us to do — particularly those of us that receive a serious portion of our real income from online poker — is, in the words of Douglas Adams: Don't Panic. Keep playing your usual games. Do your usual cashouts. We all know we'll see a steady slowdown in the action, and eventually the games will move towards empty as the USA players disappear. But, online poker isn't changing much outside the USA. I hope my non-USA friends can comment, but I bet the feeling outside the USA is these silly USAmericans, always with their morality-oriented legislation. We'll keep doing what we're doing and forget them and their idiot president. If that's the sentiment, which I hope it is, that's the right one. The USA is an important market, but it's not the center of the universe.

I expect I have lots of online poker in my immediate future, and lots of live poker in my medium-term future, which just can't get the EV pumping the way my current online work can. But, I'm happy to let the online scene wind down gracefully around me, and then make my decisions based on what the post-UIGEA and post-Neteller-arrests world looks like. I hope everyone else will do the same. Keep your heads cool; let's all put our chips in, take a flop, and see how this hand plays out.

Update: I forgot to put this link into the slashdot story on the Neteller arrests. Like all slashdot, there are a very few excellent comments and lots of useless ones. Here's a particularly interesting one from a former Neteller employee.

It's been a long time since I've seen something even close to this — probably a few years. After a $15 preflop raise in a $1/$2 NL HE game where five people saw the flop, three stacks of $200, $250, and $450 got it all in on the flop of: 4 8 A

Of course, it's set (4 4) over set (8 8) over set (A A). This was only the second time in my life I saw this in a hand I was dealt into. (I folded preflop in both cases.)

Then, I proceeded, for the first time in probably two years, to actually be surprised by a draw out. Board finishes: 7 3. Bottom set wins — the only one that can make a flush on the unpaired board.

What I do think: it's two people's stories about how online poker is “rigged”.

Seeing it made me feel good in a way. I know I've been playing poker for a very long time when I finally see situations this unlikely. I have to get to bed soon, so I don't have time to calculate the odds on flopped set over set over set yielding a win for bottom set with a four-card flush on board. I am curious how the odds compare to other unlikely random events in life. Some days, I think all of poker is just a world wide experiment in confirming that statistically unlikely events do happen at roughly the theoretically proposed frequency.

For those of you keeping score on me, this doesn't count as a bad beat story being told in my journal because I didn't have a single $1 of my own in the pot, therefore it isn't my bad beat story.