Thursday, August 18, 2011

Topic #1

    I used to play chess with a friend who would systematically take me apart.  One day, he said a simple thing that revolutionized my play.  He said "Play defense first.  Attack when your own pieces aren't at risk."  After hearing him say this our games became much more competitive.  In the spirit of my chess playing friend's advice, I begin this blog by presenting my view on various anti-gambling and anti-poker arguments. 

Common Anti-Gambling and Anti-Poker Arguments
By Jon Parker
Hello, I’m writing this essay because I want to discuss online poker.  Specifically, I want to discuss the logic behind the laws that currently govern online poker.  Notice, I do not want to discuss what the law actually is – or what that body of laws mean.  I have no expertise in law and I’ve made no effort to learn the relevant laws in all 50 states.  So, I cannot responsibly write about the law itself.  I do, however, feel qualified to discuss some of the moral and logical arguments I’ve heard regarding online poker and gambling in general.
That said; here is the path this essay will take.  I’ll begin by telling you a little bit about myself and why I’ve taken the time and effort to write this essay.   Next, I’ll present anti-gambling arguments I’ve come across in various discussions and documents.  After presenting my view of those common arguments I’ll wrap up by reiterating this most sincere request –– I want to know what I’m missing.  If you believe this essay fails to incorporate an important truth or is otherwise flawed please contact me (at about that omission or error.  I really do want to hear about it.

Who Am I
I’m a 31 year-old husband and father.  My daughter just turned five and my wife and I recently celebrated our 8th wedding anniversary.  I work fulltime as a Software Engineer and I'm currently training for both the Marine Corp and Philadelphia marathons. 
I recently obtained a masters degree in math while working fulltime, fulfilling my family obligations, and running more often than my wife would like.  I'm telling you this because I’m particularly proud of this last achievement.  You might think that I’m proud because I found time to fit it all in – but that is not the case.  I’m proud because earning the degree was the fatherly thing to do.  It didn’t matter to me that I wasn’t gung-ho about going back to school.  Earning the degree would enable me to better provide for my family.  This pretty much sums up life now.  My day-to-day life is dominated by doing responsible things for the long-term benefit of my family. 
On rare occasion, when my daughter was finally in bed and my wife was engrossed in Grey's Anatomy I did enjoy being able to quickly find a low stakes game of heads up No-Limit Hold'em.

Why Am I Writing This?
You may be wondering:  “Why is this guy taking the effort to write this essay?"  Well, to be honest with you, I want to be convinced that online poker should be illegal.  Let me say that again.  I want to be convinced that online poker should be illegal.  This may sounds a little weird because I’m an avid recreational player who has enjoyed playing poker both online and in-person for well over a decade.  Throughout my entire playing history I have never once had a moral or ethical qualm regarding poker.  However, the actions of the Department of Justice on April 15th make me feel like I must be missing something.  Don’t get me wrong, I’ve read, and I understand the DoJ’s indictment.  I realize the banking laws the DoJ is enforcing are important.  What I don’t understand is the reasoning behind the laws that make poker illegal to begin with (in some jurisdictions).  I hope that I can come to understand and accept that reasoning; because, without that acceptance I will be faced with a terrible choice – a choice I want desperately to avoid.  I do not want to choose between being a law abiding citizen and enjoying my longtime hobby.  I do not want to choose between knuckling under to ill-reasoned laws and playing a deep thought provoking game.  I truly want to have a eureka moment where I finally understand and accept the necessity of anti-gambling regulation.  That way, I can easily choose to abandon poker and will not be a victim of arbitrary intrusive government regulation; I will be a citizen content that I am being governed properly.

Argument 0:  Gambling is Illegal
One very common argument I’ve heard is “You shouldn’t play poker because it is illegal.”  This argument misses the point entirely.  I want to know why playing poker should be illegal.  Merely reminding me that poker is illegal in some jurisdictions does not help me understand why poker should be illegal.  Not only does this argument miss the point, but it is circular to boot.  You cannot look to what the law is to help you decide what the law should be.  Two striking examples of unjust but long entrenched laws are slavery and women’s initial inability to vote.  Don’t get me wrong – I know gambling law is spectacularly inconsequential when compared to these two examples.  I mention these egregious examples because if US law could enshrine a terrible injustice like slavery and deny women the right to vote for more than a century then US law is clearly capable of adopting other vastly less important but still irrational stances.

Argument 1:  Money Laundering
This is the first argument I’ve come across that rings true.  I wholeheartedly agree that money laundering is worth preventing.  I do not want criminal organizations transferring large sums of money with impunity.   However, I believe money laundering through online poker sites would not be a legitimate threat in the presence of government oversight.  Money laundering is a problem whenever money changes hands in an unauditable fashion.  Proper audits need to determine where money comes from, where money goes, and under what circumstance it changes hands.  Online poker sites can easily answer these questions with perfect accuracy.  The sites obviously know who deposits funds.  They also have perfect knowledge of every poker hand that transpires.  So they know where funds end up and under what circumstance they arrived.  Despite this perfect information, I believe people incorrectly assume online poker sites would be a great place to launder money.  They probably think about all the money changing hands in seemingly random ways and assume sites couldn’t possibly detect malfeasance.  What these people probably don’t consider is the volume of data that online poker sites, and a potential government oversight body, have access to.  This data will make finding people who are laundering money a very manageable task.  Think about it.  Players who are playing honest poker – and sincerely trying to win – will win or lose at statistically unremarkable rates.   Honest players will play a variety of opponents.  Honest players will know that they cannot play every single hand they are dealt.  Honest players will cash-in and cash-out at well-established statistical frequencies.  Honest players will win most of their money with strong hands.  Honest players will lose most of their money when their opponents held strong hands.  Given the numerous statistical signatures of honest play – dishonest play will be easy to spot.  Players who are intentionally losing and players who are receiving intentional loses will stick out like a sore thumb.  Ill-gotten gains will show up as suspiciously extravagant profits while holding ho-hum hands.  Suspicious profits will also come from players whose opponent selection history seems out of the ordinary.  There are so many statistical signatures of honest play that it will be extremely difficult to launder large sums of money without violating one or more of these hallmarks.  A poker site, or government oversight body, could easily detect suspicious play when players attempt to cash out.  The site, or oversight body, could systematically search a player’s hand histories for evidence of suspicious play using automated data mining algorithms before approving any cash withdrawals.  And realize, that if these algorithm hint, but cannot prove, that dishonest play has taken place then it is always possible to audit both the suspicious winner and the suspicious loser.
Due to the copious recordkeeping of online poker sites and the ability to automatically perform a rigorous audit of every single cash withdrawal I believe the threat of money laundering can be addressed thoroughly.  This would be especially true if the US government choose to regulate online poker and required sites to implement rigorous auditing standards.

Argument 2 – Part 1:  Citing an Unfortunate Example
One woefully incomplete argument I’ve seen consists of citing an unfortunate example and then behaving as if the mere possibility of an undesirable outcome proves without question that poker should be outlawed.  For example, I’ve seen people say things like “Look at the experience of John Q. PokerPlayer.  He destroyed his life because he lost huge sums gambling.  We absolutely must outlaw online poker because we don’t want anyone to end up like John Q PokerPlayer.”  This argument suffers terribly from tunnel vision.  It would be ludicrous to say “We should ban high school sports because a student with a heart defect died while playing basketball”.  It would also be ridiculous to suggest outlawing the sale and consumption of peanut products due to the handful of people with severe peanut allergies.  One way to see the absurdity of this point of view is to flip the argument around.  For instance, the claim “Everyone should play basketball because they could earn millions in the NBA” is equally unreasonable.  It is obvious that everyone who plays basketball does not see NBA glory.  Likewise, everyone who plays poker does not drown in gambling debts.
The mere existence of undesirable outcomes is not enough to warrant drastically curtailing an activity millions of Americans enjoy through legislation.  Forcibly curtailing an activity can only be justified when the probability of winding up as an “undesirable outcome” is proven to be unacceptably high.  We could easily imagine our government banning the sale of peanut products if 90% of the population had life threatening peanut allergies.  Yet, banning the sale of peanut products given actual real-world peanut allergy rates would be an absurdly ham-handed way to “solve” the “peanut allergy problem”.  To weigh whether or not gambling should be banned we need to determine how likely the average person is to become a problem gambler when he gets access to legal gambling opportunities.  If a typical person is highly unlikely to experience notable negative consequences then an outright ban on gambling is inappropriate.  In other words, we need to determine if developing a gambling problem is the exception or the rule.

Argument 2 – Part 2:  Claiming Gambling is Universally Addictive
Roughly 30 years ago the American Psychiatric Association (APA) believed, along with most laypeople, that exposure to gambling opportunities was sufficient to stimulate the development of gambling disorders [1].  In other words, the APA believed gambling was addictive to everyone exposed to it.  Due to multiple pieces of new evidence the APA now considers this belief to be incorrect.  The most noteworthy piece of evidence is the observation that prevalence of pathological gambling actually decreased from an estimate of 0.7% in 1976 [2] to an estimate of 0.5% in 2008 [3, 4].  This slight decline in pathological gambling prevalence is important because it occurred during a 32 year period in which the number of casinos, slot parlors, and lotteries nationwide increased dramatically.  If gambling were in fact universally addictive then we would have seen pathological gambling rates increase significantly as the number of legal gambling venues increased significantly.  A second piece of evidence indicating that gambling is not universally addictive is the fact that the risk for pathological gambling is predicted quite strongly by genetics.  In fact, 50% to 60% of the variation in risk for pathological gambling is immediately accounted for by genetics alone [5].  If gambling was truly exposure driving then the variation would be dominated by the degree of exposure to gambling not by genetic factors.
In the past, legislation that sought to prevent gambling was justifiably rooted in the common medical belief that “gambling leads, in all cases, to pathological gambling”.  We now know this belief is incorrect.  Consequently, existing legislation should be revised to reflect the fact that only a very small fraction of the population is at risk of developing a gambling addiction.  We know, given the stability of problem gambling rates over the last 30 years, that legislators need not fear precipitating an epidemic of problem gambling by passing a piece of legislation regulating and expressly legalizing online poker.  

Argument 3:  Protecting the Problem Gambler
I’ve heard several congressmen and senators justify an anti-poker stance by claiming that banning online poker is tantamount to protecting problem gamblers.  Sadly, I doubt the sincerity of any legislator who makes this argument.  I question the sincerity of legislators taking this position because if legislators truly wanted to protect compulsive gamblers they would attempt to prevent gambling in all its forms.  It is two-faced for government to officially sanction lotteries, scratch-offs tickets, charity bingo, horse racing, slot parlors, and even full blown casinos while simultaneously saying “online poker needs to be prevented to protect the problem gambler.”  This position is akin to saying “You can’t drink a single drop at home because you might be (or become) an alcoholic.  But, if you go down the street to your local pub then you can drink yourself into oblivion – no questions asked.”  The ubiquity of officially sanctioned gambling outlets makes claiming to protect problem gamblers by preventing a single form of gambling absurd.  Killing a single bee does not protect a man being attacked by an entire swarm of bees.
On a related note, I find it somewhat sad and amusing that officially sanctioned forms of gambling cannot track the activities of an individual gambler while impermissible online poker is perfectly capable of tracking player histories.  If you are buying lottery tickets or going to a casino no one will, or even can, produce a complete history of all your betting.  No one can tell the lottery player how much he’s won or lost.  No one can tell the casino patron how many hours he’s spent playing slots or rolling dice.  However, online poker sites can easily compute these totals.  Tracking the individual player is important because, as with any compulsive behavior, the first step towards getting help is identifying when there is a problem.  Online poker sites could easily force players to view lifetime totals for hours spent playing and dollars won/lost whenever they log on.  The sites could also implement and enforce responsible usage standards.
It is worth noting that brick and mortar casinos, as well as prominent online poker sites have policies that enable players to "self-ban" themselves.  It is also worth noting that only online poker sites are capable of enforcing these "self-bans".

Argument 4:  Online Poker is an Especially Dangerous Form of Gambling
One incorrect claim used to stigmatize online gambling, and by extension online poker, is that "online gambling is an especially dangerous type of gambling."  A recent study by Howard J. Shaffer and Ryan Martin [1] of the Harvard Medical School explains why this belief came about and why it is wrong.  The belief came about when researchers were attempting to measure gambling involvement.  These researchers (not Shaffer and Martin) observed that Internet gambling is more strongly associated with gambling problems than are other gambling activities [7].  The researchers then incorrectly concluded that online gambling must be more potent than other types of gambling.  That conclusion was wrong because it didn't take into account participation in other forms of gambling.  This is crucial because psychologists know that the number of gambling games a person plays is a good measure of gambling involvement and a good predictor of how likely a person is to be a problem gambler.  Problem gamblers frequently bounce between different gambling games and are much more likely to play multiple gambling games in a single gambling session than are non-problem gambler.  So, when the researchers saw that internet gambling was more closely associated with problem gambling then other forms of gambling they were detecting the fact that problem gamblers were more willing to try the relatively new internet gambling.
One common sense argument about why poker, both online and in person, should be unattractive to thrill seeking gamblers is that the house does not set the odds.  When casinos design games to offer their customers they must perform a balancing act.  They must balance the house edge with the variance of player payouts.  The house edge ensures the casino will always win in the long term.  The variance of player payouts attracts players to the game and ensures that players can win over the short term.  Casinos cannot spread games in which they always win a small fraction of what was wagered.  People don't enjoy those games.  So, they design and spread games where the thrill (variance) of the game is carefully balanced against the house edge [8].  Games that pay $1 for every $1 risked, like blackjack, have small house edges in accordance with their low variance format.  Roulette, on the other hand, pays $35 for every $1 risked (on typically single number bets) and has an extremely large house edge.  Poker is a whole different animal.  The variance of poker outcomes are not carefully balanced to ensure that bad poker players always have a fighting chance to win over the short term.  If a player is bad enough he will almost always lose even over the short term.
I do not understand how people fail to distinguish between poker, a game of skill played against other people, and standard casino games like craps and roulette in which the odds are fixed and unbeatable.  In standard casino games the betting takes place before the cards are dealt or the dice are rolled.  A craps player cannot adjust his bet once he sees an advantageous roll, the best he can do is hope to "roll well" or "get lucky".  In poker the betting takes place after the cards are dealt.  This allows poker players to adjust their betting according to the strength and potential future strength of their hands.  This exceptional important difference – whether the betting occurs before or after the cards are dealt – cannot be understated.  It is this difference that enables poker players to get better over time by studying the game.  Baccarat players can never get better because they have no meaningful gameplay decision to make.
Personally, I have zero interest in standard casino games.  I don’t play, or even enjoy, roulette, blackjack, craps, etc.  Win or lose, I cannot play standard casino games due to an unbearable feeling that I'm giving away money.  Poker interests me because it is played against other people.  I enjoy the subtle mental warfare and direct head to head competition the game provides.  I cannot stand when poker is treated as if it is equivalent to other casino games.  It is like lumping Beethoven’s Fifth Symphony in with the deafening pounding of a jack hammer and the crushing roar of a jet engine.  Just because all three can be heard doesn’t mean all three are similar.  The difference is enormous.

Argument 5:  Gambling is Morally Wrong  
          One argument used to justify anti-poker law is that poker should be outlawed because gambling itself is morally wrong.  I find this point of view unsettling for two reasons.  First of all, this point of view is actually a value judgment masquerading as a logical argument.  Secondly, the value judgment is usually presented as being self-evident and unquestionable.  Personally, I strongly disagree with this value judgment.  I do not believe gambling is morally wrong.  Much more importantly, I do not believe others should be forcing their private values upon me.  I believe gambling, like most things, can be harmless or harmful depending on the circumstances.  Playing poker is not wrong by default. 
The belief that gambling is morally wrong is strikingly similar to the antiquated belief that charging interest on loans is morally wrong.  Long ago charging interest on loans was considered morally wrong.  In fact, Pope Sixtus V condemned the practice of charging interest as "detestable to God and man, damned by the sacred canons and contrary to Christian charity." [9] Not surprisingly, this view was so entrenched that in 1545 King Henry VIII enacted a law specifically to give permission to charge interest on lent money [9].  This law led to a slow but steady shift in how banking was perceived in the western world.  Yet, even today, banks that practice Islamic banking still prohibit charging interest on loans.
  I’m not surprised primitive banking was looked down upon.  Too many early bankers charged interested rates that would be considered predatory by today’s standards.  In modern times, we acknowledge that loans are useful things and that charging interest is necessary to make banking viable.  Consequently, we have brought the banking industry, at least consumer loan portion of it, under strict regulation.  We have enacted laws that limit interest rates.  We have enacted laws that force banks to disclose how much interest a consumer will pay over the life of a loan.  Basically, we attempted to limit the negative aspects of banking by limiting excess and educating consumers.  We did not choose to obliterate the entire industry and its positive aspects.
        A predictable response to this banking industry analogy is “Your comparison between the perceived immorality of charging interest and the perceived immorality of gambling is inappropriate.  Loans have an unmistakable real world value.  Gambling, on the other hand, has no value whatsoever.”  I reject this retort because it is based on the faulty assumption that gambling contributes nothing to society.

Argument 6:  Gambling Contributes Nothing to Society
        I’ve heard people say things like “gambling is a waste of time” and “gambling contributes nothing to society.”  Gambling may be a waste of time.  But that doesn’t mean it contributes nothing to society.  Gambling is a form of entertainment – a popular form of entertainment.  As with any popular form of entertainment, a thriving industry has developed to cater to those who enjoy it.  This industry has directly or indirectly been responsible for the existence of tens of thousands of jobs throughout the United States.  The existence of these permanent and enduring jobs cannot be trivialized.  The gambling industry clearly has material value to society. 

Argument 7:  Underage Gambling
As a society we want everyone to behave in a responsible manner no matter the activity.    Responsible gambling requires gamblers to be fully aware of the risks they are taking and perfectly capable of accepting those risks.  Therefore, we must require all gamblers to have reached the age of majority.   If gamblers are too young they cannot be rightly held accountable for any gambling loses, and equally importantly, they are less likely to fully comprehend the risks they are taking (both short and long term risks).
The best way to prevent underage online gambling is to enact federal legislation that clearly delineates between legal and illegal gambling.  This legislation must also carve out room for a healthy, legal online gaming industry.  The presence of a healthy, regulated online gaming industry will make it difficult to establish a profitable company that caters to the illegal side of the business (which I presume will include underage gambling).  Competition from the legal side of the business will be too intense for the illegal side to survive.  This will greatly limit the availability of online businesses that accept underage gamblers.

As you can see the common anti-online poker arguments are fundamentally unsound or incomplete.  Some of the arguments do raise valid points.  Fortunately, those concerns can be addressed through regulation that enforces good old-fashion common sense.  We do not need ham-handed regulation that makes a classic American game illegal due to an irrational fear of preventable outcomes.
I, for one, am undecided about my poker playing future.  I want to obey the law.  But, criminalizing poker makes about as much sense as criminalizing ice cream.  I enjoy playing poker.  I enjoy eating ice cream.  It is possible to go bankrupt from gambling.  It is possible to die from an unhealthy diet.  I could draw more parallels, but the point is: I disagree.  I disagree with the philosophy that the government needs to protect me from myself.  I am a grown man.  I can play online poker responsibly and I can scoop my own ice cream. 
In closing, please let me know what you think.  Am I missing something?  Am I too caviler about something you find important?  My email address is  With luck I'll be able to find time to write an essay covering the pro online poker arguments.  I'd like to address both the pro and con arguments.

[1] – Shaffer and Martin, 2011 – Disordered Gambling: Etiology, Trajectory, and Clinical Considerations Annual Review of Clinical Psychology
[2] – Commiss. Rev. Natl. Policy Toward Gambl. 1976. Gambling in America: Final Report of the Commission on the Review of the National Policy Toward Gambling. Washington, DC: Commiss. Rev. Natl. Policy Toward Gambl.
[3] – Kessler RC, Hwang I, LaBrie RA, Petukhova M, Sampson N, et al. 2008. DSM-IV pathological gambling in the National Comorbidity Survey Replication. Psychol. Med. 38:1351–60
[4] – Petry NM, Stinson FS, Grant BF. 2005. Comorbidity of DSM-IV pathological gambling and other psychiatric disorders: results from the National Epidemiologic Survey on Alcohol and Related Conditions. J. Clin. Psychiatry 66:564–74
[5] – Lobo D, Kennedy J. 2009. Genetic aspects of pathological gambling: a complex disorder with shared genetic vulnerabilities. Addiction 104:1454–65
[6] – Petry NM, Stinson FS, Grant BF. 2005. Comorbidity of DSM-IV pathological gambling and other psychiatric disorders: results from the National Epidemiologic Survey on Alcohol and Related Conditions. J. Clin. Psychiatry 66:564–74
[7] – Welte J, Barnes G, Tidwell M, Hoffman J. 2009. The association of form of gambling with problem gambling among American youth. Psychol. Addict. Behav. 23:105–12
[8] – The Rational Gambler by Sahand Rabbani –

Thank you for reading,

  I've created this blog for the sole purpose of "publishing" my thoughts on a few topics.  I do not know if I will continue writing on this blog after I exhaust my initial topics.  Upon conception, here is what I plan to discuss:

  1.  Common anti-gambling argument
  2.  The difference between poker and other gambling games
  3. The upside of creating a legal online poker framework
  4.  The long-term economics of a poker economy

  Please be aware that I am looking for feedback on the ideas I present.  I want to come across as a reasonable person who is willing to admit when he is wrong.  So, if I write something that is in need of correction -- please do let me know about it.

Thank you for reading,