They Were Kings for a Moment

The feds attack online poker, killing livelihoods and a $2.5 billion industry.

Says Mogelefsky: "It's month to month, but the gameplan is, hopefully, I can make enough playing live to survive until that day comes, whenever it may be — five years from now? Two years from now? Ten years from now? — when I can go back to playing online."
_____________________

Vanessa Peng is a vivacious, engaging young woman from Singapore. She came to the U.S. with her newly remarried mother when she was eight, settling in Rock Hill, South Carolina.

It was a culture shock, to say the least. She and her brother found comfort playing video games as they slowly assimilated, and the seed of competition was sowed. She would eventually study law in little Lexington, Virginia. Her eureka moment came when she watched a friend play poker online. "I was completely fascinated."

Maxwell Fritz, a Princeton student, made thousands of dollars with online poker, until he lost it all on Black Friday.
Will Rice
Maxwell Fritz, a Princeton student, made thousands of dollars with online poker, until he lost it all on Black Friday.
Mike Minkoff's business shipping videos and poker books has dwindled to almost nothing after the feds stepped on the online poker business.
Bill Hughes
Mike Minkoff's business shipping videos and poker books has dwindled to almost nothing after the feds stepped on the online poker business.

It wasn't until her third year of law school that she found the time to dive in. She started with $25 in her account and played the penny tables, slowly learning the game. She was thrilled by the competition and the mental challenge.

"The thing about living in a very, very small town is you get bored pretty quickly," says Peng. "Since I didn't have much of a social life in that little town, I was able to play a lot of poker in that six months. By the time graduation came, I was supposed to be studying for the bar and that good stuff, but I was so wrapped up in poker, that was kind of what took over my life. On top of everything else, the legal market had sort of crashed at this point."

She found a job working with a divorce attorney in Chicago, but discovered she didn't have much stomach for it. Then she failed the bar. It was something of an omen.

"I was able to take a step back and really re-examine my life. Around that time poker was going really well for me. I had my first five-figure month and I just really started re-evaluating, thinking maybe this is what I was meant to do."

She made $40,000 that first year. By 2010, she was pulling in six figures annually.

When Black Friday hit, Peng was one of the top moneymakers on Ultimate Bet, with $30,000 in her account. She'd also just won $12,000 in a Full Tilt tournament. All told, she saw $80,000 frozen in the crackdown.

Peng was better situated than most to weather the storm. She and her boyfriend — who also plays — moved to Windsor, Ontario. The Canadian town sits just across the river from Detroit, allowing her to play online while still traveling to live tournaments here and abroad.

Nearly a year after the feds froze her money, Peng, who planned to use it to start a used jewelry business on eBay, still hasn't seen a penny of it.
_____________________

Within a month of the federal crackdown, PokerStars returned $100 million to U.S. players, and continued to operate abroad.

Full Tilt was cleared to offer returns but never did, since it doesn't have the money. It owes $150 million to American players alone. In September, the feds accused owners Howard Lederer and Chris "Jesus" Ferguson of running a "global Ponzi scheme."

"Banks fail for not having sufficient revenue to cover customer deposits all the time," the company's lawyer, Jeff Ifrah, said at the time. "No one refers to such failures as Ponzi schemes. And there was no Ponzi scheme here." The court battle rages on.

This fall the French company Groupe Bernard Tapie stepped in to buy Full Tilt for $80 million, promising to pay off the debts to international players. The feds have assumed responsibility for paying American players. They've announced no timetable for repayment.

Absolute Poker — originally formed by four frat brothers at the University of Montana — wasn't liquid enough to continue either. None of its players have been reimbursed.

In December, Absolute Poker co-owner Brent Beckley pleaded guilty to lying to banks about the nature of his transactions. He's expected to receive 12-18 months in jail.

His accomplice, Ira Rubin, ran a payment processing company in Costa Rica that disguised gambling proceeds through fake merchants and suppliers. He pleaded guilty in January and is expected to receive up to two years.

Rumors have been circulating that Absolute Poker will be repaying players soon, though payoffs may be as little as 25 cents on the dollar.

"If you had a federally regulated system that wouldn't happen," says Congressman Joe Barton (R-Texas). He's also pushing a law to legalize online poker. "This is one of those rare congressional bills that's not a Republican-Democrat issue. There are people for it and against it on both sides, but there are much more people for it. If it came up on the floor of the Senate on a majority-vote-wins, it would pass. Whether it has 60 votes, I just can't tell you."

The general sentiment, from players to politicians, is that something will get done...eventually.

In the meantime, poker has gathered some powerful advocates. Casinos that once guarded their turf are hoping to get in on the online action. They're pushing Senate Majority Leader Harry Reid (D-Nevada) to get something done, but the prospect of new revenue sources is anathema to many Republicans. They squashed Reid's attempt to pass online poker regulation in 2010.

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11 comments
MayoYvette22
MayoYvette22

Ṁy buďďy'ś ex-Wife ṁakeś $67 an ĥouŔ on tĥe laptop. śĥe ĥaś been Witĥout a job foŔ 10 Ṁontĥś but laśt Ṁontĥ ĥeŔ pay Waś $9089 juśt WoŔking on tĥe laptop for a feW ĥourś. Ŕeaď ṁore on tĥiś Śite>>> LazyCash1.com

Thetruth
Thetruth

Walter Wright is a deadbeat Dad who has no marketable skill other than poker. He LEFT his wife and children with a mountain of debt, and has sent them a grand total of $2700 in four months. He would like you to believe he is some kind of activist for the poker "industry", but in reality he is a gambling addict who spent his days locked in a room, playing poker, smoking dope, ignoring his children, and emotionally abusing his wife...Good riddance!

tee-wee
tee-wee

The idea that any of these guys have no choice but to play poker to make a living is incredibly flawed. It's stupid that this was taken away from consenting adults, but these overgrown 12 year olds should grow a pair and take care of their business, but that would make them men.

Lisa
Lisa

Your comment is completely uncalled for and flawed. Do you have the same opinion about people who worked in the mortgage industry who are now out of work? Have you been paying attention to the amount of unemployed Americans competing for even the most menial of jobs?

You operate under the assumption that professional poker players affected by this unfair treatment of their job are not trying to make ends meet by any means possible. If your job was unavailable to you tomorrow, how easy do you think it would be to just find another job to support yourself/your family?

Insulting the members of this industry highlights your immaturity. My husband has played for years, always claimed his winnings on his taxes and, most importantly, loved what he did and helped support our family. The people in the poker industry are doing hard work, just like the "gamblers" on Wall Street, and they have been punished for an activity that caused no harm.

And FYI, there are many female players as well, just like the one mentioned in the article!

Walter Wright
Walter Wright

If you are suggesting we pick up and move to another country where we can continue our professions to take care of our business . Thanks thats a good idea!

Gail S.
Gail S.

Great information. Thank you for shedding light on this story! I'm glad you are providing information on the tragedy that was our Black Friday. It is well past time to license and regulate this industry in the US. Most of the world is able to play this game of skill and strategy online and Americans, of all people, should be free to play as well.

Sheryl J
Sheryl J

- Thanks for this informative article about online poker and what the government did to it. An entire industry was destroyed last year. This is the first article that really illustrates the situation. We need federal legislation that licenses and regulates online poker in the U.S. and brings back an industry. -

Guest
Guest

This is, by no means, "the first article that really illustrates the situation."

It might be the first one you've read, but it's nothing new.

Jamie
Jamie

There is absolutely no new information in this article.

Sheryl J
Sheryl J

Maybe not if you already know the story, but there are a lot more people who have no clue what happened.

shu
shu

"He started as most do, playing what's known as the "cash game." It's simple poker — win by pushing your advantage when the cards are good and bluffing when they're not."

Wow, it's clear from this paragraph that the author is not a poker player – or a poor one. First, the definition of "cash game" is that it's not a tournament. Serious cash games have little to do with being "simple poker," in fact they're quite the opposite. If we're talking no-limit or pot-limit, cash games can require very difficult decision making under big pressure for real dollars. Unlike tournaments, which carry their own type of pressure, but which is dictated most by survival and preservation / growth of what is essentially play money (albeit, for an entry cost), versus real dollars in a cash game. Granted, there is no time / blind level-related survival element in a cash game. But there's a big difference in calling a $10K raise in real cash versus tournament chips, which may have only cost you $5 in real money.

Win by pushing your advantage: of course. Bluffing when the cards are not good: uh... sometimes, in the right position, against the right (few or one) opponents, with the right cards on the board, and based on your table image, stack, and the story you have spun during that hand and that session. I'd love to play with players that simply feel they can continually bluff their way to consistent winning sessions.

All this said, I'm actually glad online poker is potentially fizzling. The best online players are simply not playing the same game as live players. Those who constantly multi-table and play as a job have reduced an art to a science, a numbers game. Play enough hands properly over the course of time, manage your bankroll, find your sweet spot among the limits and structures, and you'll come out ahead.

While many of poker's current "stars" have successfully transitioned from the online world, a vast majority will fall by the wayside, neither having the patience, discipline or face-to-face experience to play one table or one event at a time in the brick-and-mortar world. Plus, if the successful choose to play games appropriate to the size of their bankroll, they're going to be facing much stiffer players in the real world than the "fish" who dabble online.

 
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