Saturday, June 21, 2014

Liquidity and Access - Two Peas in a Pod

Liquidity and Access - Two Peas In a Pod

Members of the poker community have been a down-trodden bunch since that ominous Black Friday of 2011. Following the indictments that came down from the US Department of Justice for online entities like Full-Tilt Poker, PokerStars, and Absolute Poker/Ultimatebet, what was once a thriving online society of global players fell into disrepair, confusion, and anger. American professional poker players scurried for the nearest borders to set up house and their laptops in order to continue their lucrative, relentless pursuit of an honest living through gambling. Poker players in the rest of the world continued as usual, knowing that their governments were unlikely to act in such a paternal way.

But that April day changed the online poker community once and for all. What the US market brought to these global sites was liquidity, defined as huge numbers of players willing to risk small and large amounts of money on the game. Once the US market was squelched, the otherwise unnoticeable restrictions of other countries bent on keeping their own tax money and not sharing with their neighbors, became obvious. The real truth of online poker was there for everyone to see - without healthy, robust numbers of players online at all times of the day and night, online poker was not the cash cow it seemed to be. 

 For the last three plus years advocates of the game have been trying to recapture that magic and most of those efforts have fallen woefully short of the goal.

Online poker is still played legally throughout Europe and illegally by many Americans on sites based outside the US. Yet, online poker revenues have fallen overall during that time. While PokerStars still maintains a clear advantage over other sites, all have experienced declines in players and revenue since 2012. What once was a "no brainer" investment has become a cautious choice for investors. What once was a sure thing has become a gamble.

The recent emergence of legal online gambling in Nevada, Delaware, and New Jersey has done little to improve the picture. US online revenues, especially in New Jersey, have fallen far short of optimistic projections and player numbers have ceased to increase as they did over the first few months of play.

The US online poker industry has been searching for answers and coming up short. National approval of online gambling, once thought to be in the offing, has fizzled and all but died. Individual states, in addition to those already committed to online gambling, have had their proposals bogged down with details and stuck in legislative committees. Among the biggest arguments holding up any progress toward approval is the so called "bad actor"  clauses imbedded in the language of many state bills that forbid any company that operated in the US before Black Friday from participating now. Left holding the bag outside the locked doors of the US online poker market, companies like PokerStars have been looking for a way in.

A scenario like this makes most poker players anxious and when people get anxious they often grasp for straws. 

So, when the merger/acquisition of PokerStars by Canada's Amaya Gaming Group was announced a few weeks ago, American poker players began to salivate imagining that this was the solution to all their ills.

 And that's what everyone was thinking and many were saying - once PokerStars is back in the game, even under another name, we can get back to what we were doing before. And that went on for a week or so until one poker journalist had the insight to see through all the hope and anticipation and the guts to write about it. My twitter friend, Robbie Strazynski, was that guy and I do not pretend to be able to say it better than he did. PokerStars or no PokerStars, the online poker market still does not have nor will it have the liquidity (translate simply as "number of players") to be as good as it was before without everyone, anywhere being able to get online and participate.

Read Robbie's eloquent piece here: Robbie's Article

And what about access? Poker players like to play poker. They do not enjoy flipping from screen to screen trying to get their credit card to work or trying to transfer funds from here to there. They want it easy and until someone can make it easy - like it used to be - to get money in and money out of an online poker site, this dilemma will cut further into the necessary numbers. 

I don't expect a lot of sympathy from professional poker players on these issues. These guys and gals make a living at poker and they can afford to travel and put up with all kinds of inconveniences because they have to in order to survive. But, the thousands of players who are participating in the WSOP right now as I'm writing this aside, the vast majority of poker players are regular men and women looking to have a good time and maybe make a few bucks. Making those few bucks is nice but the fun is usually more important. We play poker because we love it and we will not come back into the game unless it is easy to get in and unless we can find a place to sit our virtual behinds down quickly. Liquidity and easy access will bring us back into the game playing our $10 Sit N Go before we go to bed and enrolling in that $20 Friday night tournament with 2000 other players just to see if we can compete, always walking away with a tremendous rush!

Liquidity and easy access are good for everyone but they are essential to us regular players. We really don't need the ability to play 16 tables at once nor are we ever going to risk $1000 from our day job on a chance to make a fortune. We want to play when the spirit moves us with a table full of other gamers and that's all.

Unfortunately nothing that I see on the near horizon promises that!

Wednesday, June 18, 2014

If It’s Too Good To Be True . . . Street Dice!

I’m usually the last person to criticize something for only having fun value so I may be out of line here but Street Dice is all fun and no equity. If you do not enjoy losing money in a practically no win situation then, in fact, Street Dice may not even be fun for you.

Before I get too deeply into this subject let me explain that Street Dice may not be what you think it is. First of all it is not like any game your father played up against a wall with his army buddies during World War II.

 That was a game where someone took the dice, made a bet that the dice would “pass” or not and other players “faded” a part or all of his bet. Seven, eleven, or a number that then repeated before a seven were winners for the shooter. Snake eyes, three, or twelve were immediate losers and rolling a seven before the “point” number also lost the shooter his bet. The excitement of that game – where dice were literally thrown up against a wall – came mostly from the side bets that could take on any form whatsoever. Odds on bets, which most players had a basic understanding of, were close to or right on the payoff odds you get in a casino craps game these days.

Street Dice is not Cee-Lo, the street game played with three dice that is very popular among young people who have little access to commercial casino environments.
 Cee-Lo (or See Low, or 4-5-6 and many other names) is also a betting/fading game where a player risks a certain amount of money and the other players fade or take a piece of all his action or a part of his action. There are combinations that win automatically (4-5-6, trips, and others) and there are immediate losing combinations (1-2-3 being the most important). Points can also be established and bets are paid off accordingly. Some combinations may pay off as high as 5-1 but the rules allow the players to set the payoff rules beforehand at any level they like.

Last but not least, Street Dice is not casino craps, the fast action, well monitored casino game played on a green (mostly) table layout that accommodates any number of bets for and against the shooter.

The payoff odds of casino craps are well established with only very slight variations by casino throughout the world. The established payoffs allow the house a margin of victory so that, in essence, when you win, they win. When you lose they win big but remembe, they are winning all the time.

A clear example of the “I win/they win” arrangement is when a player makes a straight up, one roll bet on 11. An eleven can only be made two ways – one die comes up 5 and the other comes up 6 (one way) or one die comes up 6 and the other comes up 5 (the other way)! The real odds of that happening are 17 – 1 or 5.56% of the time. When you bet $1 for an eleven to come out on one roll and it does, you win and the casino pays you $15. Notice they didn’t pay you based on the true odds (17 – 1). So, every time you win $15 they also win $2. You win once in a while; they win on every roll. 

I could go on and on but most of you understand that craps, like many other games on the casino floor, is a negative equity set up – the house is always winning. Smart players try to minimize the house edge in these kinds of games and then rely only on luck, a hot streak, or a lucky charm. Good players know how to reduce the house advantage and do so regularly.

Then, let’s get back to Street Dice. About a year ago a newly proposed downtown casino in Las Vegas, the Downtown Grand, promised in promotions preceding their opening that they were bringing gambling out to the street. Their initial proposal promised casino games on the sidewalk outside the casino, intimating that playing on the street is much more fun than playing inside the casino. Rather than just bring their traditional games out, they invented a new game for those who craved out-of-doors gambling – that’s how Street Dice was born.

Setting up for an evening of action!
Exciting? Not really. Initially proposing to use the already existing outer wall of their building as a backboard for their proprietary game, they ran into some blow back from the Casino Control Commission. Instead, they built a low-walled enclosure that looks like a brick wall but isn’t. Anyone who was expecting big, fuzzy dice will also be disappointed since the game uses regular, somewhat larger, casino dice. So far there is nothing too good or too bad about this venture but once you hear about the flow of the game and the payoffs, you quickly realize that your “fun” comes at a very high price.

I’m not going to go into detail on the terrible odds of winning at this game since it is no different from any other new casino game that promises fun but costs way more than traditional games in the end. I will tell you though that the initial wager says it all. Make a bet, roll a 2, 3 or 12 on the first roll and you lose (just like craps!), roll an eleven and you win (just like craps!), roll a 7 and it’s a PUSH! Let me repeat that – ROLL 7 ON THE COME OUT ROLL, THE MOST LIKELY NUMBER TO ROLL (5 – 1), AND IT’S A PUSH! Can you visualize your money flowing toward and down the closest storm drain! It all goes south from there.

The bottom line, and this is probably why they only roll out the fresh-air games on weekends, is Street Dice is a great game for tourists wandering by on a Saturday evening after having had too many cocktails and noticing the action on the sidewalk. Having no idea what the game promises, in all likelihood not even knowing where they are, they plunk down their money to have a good time, only to ask themselves the next morning just how much fun was it losing all their cash up against that pretty faux red brick wall.

My advice – stay away from Street Dice. Or, if you enjoy a good train wreck or multi-car pile up, stand by and watch the suckers keep the sharks in business.

Sunday, June 1, 2014

When Tom DiNapoli Speaks, Everyone Should Listen: Low-Balling New York Casinos

Tom DiNapoli - Low-balling New York Casinos

New York State Comptroller, Thomas DiNapoli
 By all accounts Tom DiNapoli, New York State's Comptroller, is a level headed guy who has yet to be touched by any of the all too frequent scandals that have plagued New York politicos in the past few years. A loner with few visible governmental buddies, he has successfully waged campaigns against shoddy bookkeeping and lousy financial policies in institutions throughout the state. So why shouldn't we sit up and listen when he makes predictions about the eventual economic benefits of the four new casinos proposed for New York? Mostly because we don't want to hear anything bad about something we have yearned for far too long.

Here's what Tom had to say the other day about the impact of casinos on New York, a statement that was widely quoted in the New York Times and every other newspaper still around. "There will be winners and losers. The jury is still out as to what the long-term impact is and whether that might well be as positive as proponents have argued.

Although the original estimates rolled out before the casino legislation was put to a vote had revenues coming in at many hundreds of millions of dollars in addition to the $3.2 billion already there mostly from lotteries and racinos, DiNapoli suggests that as little as $200 million annually in new money will be realized at first. His rationale, worthy of consideration, is that much of the casino traffic generated by the four new casinos will come from in-state residents as opposed to luring outsiders in from neighboring states. In terms of the states economy, such activity primarily represents substitution of gambling losses for other consumer purchases (entertainment or retail sales, for example), he says, rather than net new business.

This is not the first time that Tom's proclamations differ from those of the Governor, Andrew Cuomo, and the legislative leaders. It will not be the last time either.

 The preliminary results of New Jersey's foray into online gambling this year and last should encourage all doubters to lean toward agreeing with Mr. DiNapoli. Initial projections in the many millions of dollars fell far short of even the most modest estimates and in hindsight most of the hype served to get the laws on the books and nothing else. New Jersey will now plod along with more reasonable expectations and see what happens.

In the long run casinos in New York will bring more jobs and will stimulate the economy - just not as much as expected. The state will generate more tax revenue and funnel it into the schools and other places it is needed - just not as much as expected. The message is that casinos can be part of the solution to a big problem this state and every state faces regarding revenue - it just can't be the only solution.

Tom DiNapoli is usually right and he has few, if any, allegiances to satisfy or cronies to appease. I'd listen to what he has to say.