Last year was tough for online poker. A lot of people were swept away in poker’s surge in popularity in the early 2000s. A big part of the spike in was a new generation of players who cut their teeth playing online. You might remember Chris Moneymaker, the first World Series of Poker Champion to qualify from online tournaments. Some used the skills they picked up on the web to transition to the tables of Atlantic City, Vegas, and Reno. Others chose to focus on online play and made a healthy income doing so. The New York Times Magazine profiled one such prodigy, Daniel Cates in late March of last year. But the legality of online poker was suspect since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006.
The Department of Justice put a stop to the boom when shut down the biggest and most lucrative poker sites just weeks after the article on Cates was released, including the UIGEA in the indictment. Full Tilt Poker, Poker Stars, and Absolute Poker, played a “game of cat and mouse” with the US Government, and did business here while operating offshore. They argued online poker was not gambling, but a “game of skill”. The Department of Justice was not persuaded: they quickly shut down domains, filed a civil lawsuit for money laundering, and froze company assets. With such a dramatic blow to the biggest outlets in the market, it was easy to assume online poker in the United States might not recover at all.
Maybe not. In a decision reached in September but made public in late December, the Department of Justice has made a dramatic reinterpretation of the Wire Act. According to the ruling, the law’s ban on betting crossing state or international borders now only applies to a “sporting event or contest,” not to online lottery tickets. Professor I. Nelson Rose made a great post summarizing why this matters for online poker. The Wire Act can be used against people who attempt to make cross-border bets on events. But a lottery is not a bet on a separate event: when you buy a ticket, you are wagering whatever you pay on winning the pot based on the numbers drawn, not something external. Instead, it’s a bet in the event. As Professor Rose points out, a bet placed during a poker game follows the same logic. When you wager money on your hand, you’re not betting on anything other than that round itself.
This likely will not mean that the lawsuit against the big poker sites is over with. The Federal Government has made clear they are concerned about technology facilitating illegality, like money laundering. It would be hard to believe that the Department of Justice would make such a sweeping show of force against those poker sites, then abandon the effort. It could mean that online poker could see a rebirth, provided players are in states where that sort of gaming is legal. Due to its checkered past, anybody considering getting into the business would “wait and see”, making sure they are on solid legal footing before putting down any serious investment.
What is particularly interesting to us at Law of the Game is that this could open the door for gamers to make legal bets on their own performance in online gaming tournaments. Players of games like Call of Duty: Black Ops can already wager points used to purchase new items and skills based on their performance in a given round. If it is legal, a player could place cash bets on how they might perform on a given round, or the entire tournament. Remember, it would be a bet in the event, not on. There are some important caveats to consider.
It will be up to game companies whether or not this kind of infrastructure is set up. Some might not find it appropriate for a title, either because of the intended audience or the mechanics of the game. Companies would also need to consider whether they want to assume the burden of regulating betting on their game. The Department of Justice would want to make sure that online games were not being used to launder money, so they would expect gaming companies to take appropriate precautions: tracking bettors, making sure games are not fixed, and so on. Game companies have a vested interest in making sure that their product promotes fair competition, and no one wants to get caught up in illegality. That regulatory burden could provide a benefit.
Game companies would want a fee for their troubles. It could take the form of a temporally charged amount above and beyond the amount it costs for a subscription service like Xbox Live, or a per-bet percentage on every wager, win or lose. If the gambling systems on games became popular, this income stream could convince a company wary to dive in the market. A wagering system could extend the shelf-life of a game for quite some time. World of Warcraft just turned seven years old, but it is still generating income for Blizzard today. This is due in no small part to the subscriptions every player must buy. Subscription or transactional fees could be a powerful enticement to bring companies into the business.
This could also signal the return of integrated gambling models like we saw with Kwari, and an increase in 3rd party tournament sites, as we have previously discussed. It will be interesting to see if a proliferation of tournament sites puts their operators in conflict with the game developers/publishers, and what creative lawsuits may result.
Online poker’s future is still an open question, and any type of betting on video games would probably be preceded by a more concrete development clarifying poker’s legality. But, as Professor Rose points out, there are not many federal regulations left prohibiting the interstate transactions involved in gambling. In fact, there have already been proposals, including one from Representative Barney Frank, to overturn the UIGEA, and move the industry to regulation and taxation on a nationwide level.
As budgets get tighter, there is always the lingering question of whether the previous moral objections to online gambling might give way to the very present opportunity to increase government revenue and create jobs. If companies can put in the time and effort to keep the competition fair and above board, we might be able to put cash down on our performance on Mario Kart. Which, reminds me: do not bet on a game of Mario Kart with Mark, it is a bad idea.
Zack Bastian is an official contributor to Law of the Game. A third year student at George Washington University Law, Zack works at the Woodrow Wilson Center's Science and Technology Innovation Program and is a member of the American Intellectual Property Law Association. The opinions expressed in his columns are his own. Reach him at: zack[dawt]bastian[aat]gmail[dawt]com.
Showing posts with label Poker. Show all posts
Showing posts with label Poker. Show all posts
Tuesday, February 14, 2012
Monday, August 4, 2008
Poker, The Internet, and The Skill-Chance Continuum
A particular question has been bothering me for quite some time now, specifically whether the skill chance ratio changes for online poker versus real life poker. The issue seems fairly straightforward, but the more I've analyzed it, the answer is far more complex than I would have anticipated.
To illustrate the issue, the game of poker has to be examined from both a chance and skill angle. For the purpose of this discussion, imagine that the poker game in question is consistent between the online and real world application, because changes in the rules would make this analysis less accurate. From a chance perspective, the games are theoretically identical. There are the same number of cards dealt at random in the same manner. Seeing this identical chance element may make many people stop their analysis, and that is the trap I initially fell into.
However, examining the games from a skill angle, there is a difference. Now, bear in mind this analysis is examining online poker without the use of webcams or other direct feeds on the actual faces of the players. Running a poker that requires active webcam use and participation (i.e. every player's actual face and upper body must appear on camera at all times) may very well be no different than playing in person. But assuming a more traditional online poker venue where representation is by avatar and some sort of chat system, the online variant only has some of the skills that could be used in a real life game. Specifically, the online game does have the skill of reading your cards odds (although this may not be as great since online players can be referencing statistical information while playing) and reading your opponents' betting behavior. Real life poker adds the entire dimension of reading the body language and behavioral quirks of your opponents. Theoretically, someone who took full advantage of all potential skill play in real life poker would be playing a greater skill game than someone utilizing all skill in online poker.
Thus creates the difficulty. If skill/chance is a spectrum, as practically all legal scholars cite, then how can online and real life poker be reconciled? Both have identical chance elements, but one has greater skill elements than the other. This leads to one of only two conclusions: Either skill and chance must be viewed in terms of a relativistic percentage scale, meaning that games with identical chance elements can have variable chance percentages based on the total skill elements in the game or the skill/chance spectrum can be extended, and is therefore not a static spectrum as it is often discussed. To put this into numeric terms, if poker has a chance value of 40, then under the first theory, the maximum value is always 100, so online poker would be 40/60 while real life poker would be 30/70. Under the second theory, the respective ratios would be 40/60 and 40/93.333 for a possible total of 133.333. Clearly either one accounts for this particular issue, and neither one is universally optimal over the opposite approach. Of course, it's not as thought anyone is applying numerical analysis to the skill/chance ratio at this time.
However, where this may matter is for the discussion should the trend continue toward the legalization of skill games online versus the contined banning of chance games in the US, especially if a bill like the Skill Games Protection Act should pass. Really, this operates as an interesting thought exercise that may later prove more troublesome for figuring out there the skill game line will need to fall if this division is in fact going to determine online gambling legality in the US going forward.
To illustrate the issue, the game of poker has to be examined from both a chance and skill angle. For the purpose of this discussion, imagine that the poker game in question is consistent between the online and real world application, because changes in the rules would make this analysis less accurate. From a chance perspective, the games are theoretically identical. There are the same number of cards dealt at random in the same manner. Seeing this identical chance element may make many people stop their analysis, and that is the trap I initially fell into.
However, examining the games from a skill angle, there is a difference. Now, bear in mind this analysis is examining online poker without the use of webcams or other direct feeds on the actual faces of the players. Running a poker that requires active webcam use and participation (i.e. every player's actual face and upper body must appear on camera at all times) may very well be no different than playing in person. But assuming a more traditional online poker venue where representation is by avatar and some sort of chat system, the online variant only has some of the skills that could be used in a real life game. Specifically, the online game does have the skill of reading your cards odds (although this may not be as great since online players can be referencing statistical information while playing) and reading your opponents' betting behavior. Real life poker adds the entire dimension of reading the body language and behavioral quirks of your opponents. Theoretically, someone who took full advantage of all potential skill play in real life poker would be playing a greater skill game than someone utilizing all skill in online poker.
Thus creates the difficulty. If skill/chance is a spectrum, as practically all legal scholars cite, then how can online and real life poker be reconciled? Both have identical chance elements, but one has greater skill elements than the other. This leads to one of only two conclusions: Either skill and chance must be viewed in terms of a relativistic percentage scale, meaning that games with identical chance elements can have variable chance percentages based on the total skill elements in the game or the skill/chance spectrum can be extended, and is therefore not a static spectrum as it is often discussed. To put this into numeric terms, if poker has a chance value of 40, then under the first theory, the maximum value is always 100, so online poker would be 40/60 while real life poker would be 30/70. Under the second theory, the respective ratios would be 40/60 and 40/93.333 for a possible total of 133.333. Clearly either one accounts for this particular issue, and neither one is universally optimal over the opposite approach. Of course, it's not as thought anyone is applying numerical analysis to the skill/chance ratio at this time.
However, where this may matter is for the discussion should the trend continue toward the legalization of skill games online versus the contined banning of chance games in the US, especially if a bill like the Skill Games Protection Act should pass. Really, this operates as an interesting thought exercise that may later prove more troublesome for figuring out there the skill game line will need to fall if this division is in fact going to determine online gambling legality in the US going forward.
Tuesday, November 27, 2007
Poker Bots Causing Real Trouble
From the same wonderful people who brought gold farming bots to life, online poker bots may soon come online to harass online poker players according to the Freakonomics blog. The difference between bots of yore and the potential new breed of bots is that rather than just replicate mundane in-game tasks, poker bots will actually have to outplay their opponents. However, once poker is "solved" like checkers was "solved," it would seem the bot should be able to beat humans over the statistical long run, although any given hand may go one way or the other based on the simple "luck of the draw."
As the article points out, poker sites claim they will boot bots. This may prove more complex than anticipated. Randomization can be incorporated into bot play, or a human may simply reference the bot's choice and play accordingly. Penalizing players who do "too well" over the long term isn't a viable option either, as a good player can simply do well on the long term.
There is one point of contention I take with the article, and that is the classification of poker as "pure skill" like "chess and checkers." This is simply not the case. While poker has a defined and significant skill element, there is still a draw pattern that is not any result of player skill. Chess and checkers have no randomization at all. The pieces always start in the same place, and both players start with identical position. While poker does have skill, the simple dealing of cards at the beginning introduces an element of chance. While I don't wish to argue the varying levels of chance vs. skill in this post, I cannot agree with anyone who classifies poker as a "pure" chance or "pure" skill game. It contains elements of both.
Bots haven't toppled other online games, but the poker bot theory may provide the greatest anti-bot challenge to date. Only time will tell how online poker sites decide to deal with bot players, but I doubt that bots will end online poker.
As the article points out, poker sites claim they will boot bots. This may prove more complex than anticipated. Randomization can be incorporated into bot play, or a human may simply reference the bot's choice and play accordingly. Penalizing players who do "too well" over the long term isn't a viable option either, as a good player can simply do well on the long term.
There is one point of contention I take with the article, and that is the classification of poker as "pure skill" like "chess and checkers." This is simply not the case. While poker has a defined and significant skill element, there is still a draw pattern that is not any result of player skill. Chess and checkers have no randomization at all. The pieces always start in the same place, and both players start with identical position. While poker does have skill, the simple dealing of cards at the beginning introduces an element of chance. While I don't wish to argue the varying levels of chance vs. skill in this post, I cannot agree with anyone who classifies poker as a "pure" chance or "pure" skill game. It contains elements of both.
Bots haven't toppled other online games, but the poker bot theory may provide the greatest anti-bot challenge to date. Only time will tell how online poker sites decide to deal with bot players, but I doubt that bots will end online poker.
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