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Shutdown of Internet poker hurts players
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David Becker/Las Vegas Review Journal
Former online poker player Mike Ziethlow plays his guitar to collect a few extra dollars on a bridge at Flamingo Road and the Strip. » Buy this photo
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LAS VEGAS REVIEW-JOURNAL
Updated: May 11, 2011 | 10:09 p.m.
It's a standard recession-era tale of woe: A company closes and workers lose their income.
But there's little else conventional about what has happened to North Las Vegan Mike Ziethlow.
Ziethlow earns a living through Internet poker, playing for cash on websites such as PokerStars and FullTilt and selling poker-training software.
It all came crashing down on April 15, when federal prosecutors in New York indicted those sites' founders for fraud, money laundering and operating illegal gambling businesses.
The sites ceased U.S. operations immediately. Caught in the legal crossfire were the bankrolls of thousands of online players. Take Ziethlow, who said he has roughly $9,000 tied up in the sites. That's 75 percent of the 30-year-old's life savings.
"My money is all locked up," he said. "I have no money."
So Ziethlow has taken to the Strip with his guitar, strumming and singing for donations from passers-by outside casinos. He's gone from making $20 an hour online to earning $40 playing for four hours on the resort corridor on a recent Friday night.
"Now that they've taken my money, I can't do anything else. I can't even go play live (poker). And I moved to Vegas just in case they did something with online poker, so at least I could still play live," he said.
Legions of Americans face Ziethlow's dilemma.
50,000 PROS ONLINE
John Pappas, executive director of the Poker Players Alliance in Washington, D.C., said 8 million to 10 million Americans play poker online for money. Roughly 50,000 classify themselves as full-time, professional Internet poker players, while "countless thousands more" use online poker to supplement income from day jobs. The three shuttered sites probably represented about 70 percent of the U.S. Internet cash-play market. Statistics from PokerScout.com, an industry research and data service, show the sites' importance to the game: The world's online poker market shrank 22 percent in the week after the shutdowns.
"The economic impacts of this crackdown are severe. So many ancillary businesses and industries have been supported by growth in the popularity of poker, particularly Internet poker," said Pappas, citing adjunct operations such as training companies, trade magazines and agencies that represent players. "There's untold economic damage."
The harm is even greater in markets such as Las Vegas, where unemployment remains above 13 percent and suddenly cashless players have few options, Pappas said.
"It couldn't have happened at a worse time for poker players, particularly in Las Vegas. They're being thrust into a really terrible job market," he said. "They had a really steady income, and now that's been taken away from them. It's not as if they're able to just go out and get an equally high-paying job."
For Barbara Decker, of Allentown, Pa., the federal case has erased five years of toil invested through PokerStars, FullTilt and Absolute Poker. Decker, who spent around $80 buying Ziethlow's poker software two days before the federal shutdown, said it's taken half a decade to diligently analyze her opponents, take notes and develop a database that allows her to play intelligently.
"All of that is just gone," she said.
"A REAL JOB"
Lest you think Internet poker isn't genuine work, Decker reeled off the effort she put into her online game.
"It is a real job. I work at least as hard at this job as I've worked at any job, and I work hard at whatever I'm doing," said Decker, who left a 20-year career in real estate appraisal to focus full time on poker. "I put lots of time and effort in. On any given hand, poker is a game of chance, but over a large sampling of hands, whether you win or lose depends on your skill."
Decker, 57, wouldn't discuss the size of her bankroll or how much she earned playing Internet poker. She's considering starting over at another, smaller site, or she may look for another job. Because she's lived below her means for most of her life and has some savings to live on, she said she'll be OK.
Her son, Evan Decker, isn't so lucky.
The 26-year-old used his online poker proceeds to pay for college, where he's studying to be a physician's assistant. He's played the game online for four years, up to 40 hours a week. When he started school in 2010, he dialed back to 25 hours a week. At its worst, in 2010, his annual poker income still reached $45,000 to $50,000. He has a bankroll approaching five figures invested -- and now frozen -- online.
For now, Decker and his wife will continue to live with his mother instead of getting a place of their own. He'll look for work in landscaping, where he said he'll likely make 10 percent of what he made per hour during his peak poker-earning years.
Meanwhile, Ziethlow will keep hammering away at his guitar.
Ziethlow estimated that he cashed out roughly $30,000 in income from PokerStars and FullTilt since he began playing through them two years ago. He collected $2,000 or so on sale of online-poker software through his CrushTheGame.com website.
It was a good enough living for Ziethlow. His needs are simple, he said, and he can live happily on $1,000 a month.
It could be tough to clear that much playing on the Strip.
PLAYING FOR TIPS
The Las Vegas Review-Journal recently caught up with Ziethlow on a blustery Friday night on the pedestrian crosswalk between Bellagio and Caesars Palace, where he stood atop a milk crate, dancing and belting out '80s hip-hop classics with his guitar case open for donations. Above his tips jar, he'd taped a sign that read, "Former Online Poker Player -- FBI Seized All My Money -- Please Help." Ziethlow drew a smiley face after the entreaty.
OK, so the FBI didn't technically take Ziethlow's money. Rather, the operators of PokerStars, FullTilt and Absolute Poker suspended "real-money" play in the U.S. after the federal indictment came down.
But the shutdown has had the same financial effect on Ziethlow as any seizure of funds.
Even as he described his frustration with the legal limbo that froze his money, Ziethlow remained affable, smiling frequently and talking about how he planned to make do in coming months.
"Without poker," he said, "I'm gonna make music my life, and making music my life means coming out here and playing for a bit of spare change."
Ziethlow is also working through creative-funding website Kickstarter.com to lure donations for his band, The Dead Languages. Once he reaches $5,600 in contributions, he plans to record an album of original songs. He'd brought in a little more than $3,000 as of Wednesday. He needs to raise the rest by May 16 to make a go of the project.
Ziethlow said he figures online poker won't bring in a good living for at least two years, as the federal government takes time to revisit regulations and "bad players" steer clear of cash-play sites in fear of future bankroll freezes.
The jury's also out on whether Ziethlow and the Deckers get their bankrolls back.
PokerStars said in an April 20 statement that it had arranged a deal with the U.S. Department of Justice to let U.S. players cash out. Cereus, the parent company of FullTilt and Absolute Poker, said on April 28 that it was working out an agreement with U.S. attorneys to "facilitate the return of funds to U.S. players."
Ziethlow said he's received "a small portion" of his money, and the company told him another check "is being processed."
The Deckers said Cereus hasn't responded to their queries.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512.
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Also AnotherMarc,
If my mathematics confound or befuddle you, I will be happy to move in to your house or apartment and play head up with you EVERYDAY-until your 10K has disappeared. The higher we play, the less time it will take,and you can get on with the task of finding true meaning and sustenance in your life.
Wow AnotherMarc, as bad as your are at math, how on earth do you make $30 an hour playing on line? If you have 10K for a bankroll, and make $30 an hour playing 1-2 on line (limit???), then you will have more than 600 big bets for the 8-16 game at the Venetian. If you are the player you claim to be, you will earn from $16 an hour to more than $30 if you have a good shorthanded game. If you were talking about 1-2 NL, well friend you have way more than enough to play 1-2NL live, and the best players in that game earn $20 to 30 an hour. In fact, you have enough to play in the more passive 2-5 games in town(although I will not disclose their locations). The best 2-5 players make $40 to 50 an hour. Whatever nonsense you were spewing about $500,00 bankrolls to play $50-100 is a mystery. If you were talking about limit, $60,000 should be more than enough-unless you suck- then no amount of cushion will save you. If you were talking $50-100 NL, I would hope a man playing that high and calling himself a "pro" would be earning better than THIRTY FREAKIN DOLLARS AN HOUR! Seriously???
couple of comments:
(1) So a 30 year old has only $12,000 in net worth? That is REALLY sad. Also, if he has a couple thousand he should play in at least 1/2 NL games in LV. Probaby has better income potential than playing a guiter for money.
(2) It sounds like the woman and her son weren't paying taxes on the winnings. All "real" professional players keep detaled records and pay their sahre of taxes. In this case I hope the IRS looks at all the payout from the sites (Stars has already paid and Fulltilt will do so shortly) and audits anyone that has over $10,000 (reportaable amount by banks) in their off shore accounts. It is their fault if they didn't pay their share of taxes. Remember the IRS expects taxes to be paid on all income, regarless of the source (Al Capone went to prison for tax evasion for example).
As someone that has worked hard, invested my money and loves to play poker (I play up to mid-limit and have played a few WSOP tournaments) I have zero sympathy for on-line players that are stuck without a back up plan - they have no one but themselves to blame.
As someone who lives in Vegas likes to play very low stakes .05/.10 to .25/.50 to blow off a little steam before dinner or after my wife goes to sleep...who am I hurting? I might win 1,000 per year doing this which allows a nice 4 day weekend vacation at Disney. I am sorry, who was I hurting? It is funny to me that you all live in a town that glamorizes gambling and you are quick to blast the internet causing gambling problems everywhere. Over 40 states have some form of legal gambling, yet playing poker on your couch at the stakes you approve of is (to you) criminal behavior.
For those who think former online players can just go to a casino and pick up "easy winnings" from the tourists, consider the following:
- At a casino I'll be able to play 20 to 30 hands per hour. Online I was playing between 1000 and 1500 hands per hour.
- Online I was making a long term profit of approximately $30 per hour playing on the $1/$2 stakes tables. To cover the inevitable losing streaks that all players encounter, I had a bankroll of approximately $10,000.
- To earn the same level of income at a casino I would have to play at the $50/$100 stakes table with a bankroll of half a million dollars. This is of course in the extremely unlikely event that the skill levels of the players in the $1/$2 online games is the same as those in the $50/$100 casino games.
Hopefully the above math was simple enough for those who think playing poker for a living in real life is just like it is portrayed in the movies.
The only thing amusing here is you comparing playing Americas favorite card game to being a drug addict. I guess you are the kind of funny person that enjoys having big government dictate how you live. Some of us value our freedoms. It's too bad that you don't.
the poster that claims "freedom to spend" its money then to be consistent must advocate spending on narcotics. junkies no matter their addiction usually come up with amusing rationalizations.
Sorry guy but playing online poker isn't "illegal", you don't know what you are talking about. This is a freedom issue it's nobodies business but mine how I spend my own money in my own home as long as I'm not hurting anyone else. If i want to do it playing poker that is what I'll do for my personal entertainment. I guess some of the people posting nonsense here don't like freedom, maybe North Korea or Iran is more your style? How about I don't tell you what to spend your money on and you can give me the same courtesy? Does that work for you nanny state loving jokers?
Internet gambling has been illegal for a while now. The fact that they only decided to crack down now is irrelevant. This guy knowingly engaged in an illegal activity and is now paying the consequences of this. All actions have consequences.
Here is an idea for those guys who lost their money on the internet. If,you are as good as you claim, why don't you go down to your neighborhood casino and play against tourists? I'm sure that a lot of them don't know how to play and you can pick up some easy winnings. Have you seen "Rounders".