The other day I received an invitation to conduct an interview with Jay Lakin from Pokersourceonline.com, a very large poker affiliate site. My first inclination was to decline the invitation since my articles generally don't focus on poker. But as a result of many incidents occurring with online poker of late (including the scandals at Absolute Poker and Ultimate Bet), I decided to take Mr. Lakin up on his offer. After all, Jay is very close with all the poker sites and knows the ins and outs of the industry as well as anyone online. There were no restrictions on my line of questioning.
My first question to Jay concerned the Absolute Poker and Ultimate Bet scandals. For anyone who isn't familiar with the incidents, both sites were found to have "super users" that were able to see the hole cards of other players. The case was brought to light last year when a player in one of Absolute Poker's large buy-in tournaments suspected that another player at the table was playing unusually and he believed he was somehow cheating. Absolute Poker sent the player a list with every hand that was played at the table along with information on the observers. After examining each hand it was clear that the winner was indeed cheating. The cheater was a former manager at the site who had the ability to see the hole cards of other players and played accordingly, easily winning the tournament. For their part Absolute Poker did a full investigation and subsequently refunded the entry fee for all the players in the tournament. Recently the same thing happened at Ultimate Bet, which like Absolute Poker operates from Kahnawake.
The obvious question regarding the scandal was, why it was allowed to occur in the first place? Why do these super users exist? I asked Jay. What possible reason is there for a site to have the ability to see hole cards?
"It had to do with the early testing stages of the site," Jay answered. "Supervisor accounts existed in the early days so that owners could see the hole cards to test the software. Seeing the hole cards would tell if the software was operating correctly." According to Jay, the idea was that the supervisor accounts were to be deleted once the site went live, but two of the supervisor accounts were kept by mistake. Unfortunately a couple of seedy managers who still had access to the supervisor accounts after leaving the company decided to use it to cheat others. "What they did is no different than someone going to a bank and sticking a gun in a teller's face" Jay said. Lakin says he knows the owners of both sites well, however, and is certain that the supervisor accounts were not left open on purpose. Lakin also noted that Absolute Poker made full restitution to players, and then added some security features to their software to try and stop any similar recurrence. One such feature was a block on any account from changing a screen name. Apparently this was a common technique to try and block one's identity from others. "Absolute Poker and Ultimate Bet are probably the safest sites to play at right now," Lakin commented.
Asked what could be done to ensure incidents like that never occur again or that collusion doesn't occur in Poker, Lakin said it was impossible. "If people are determined to cheat they will find a way. People can create virtual accounts, they can make up IP addresses, use Proxy servers, etc. The companies try to stop the cheating, but if someone is savvy enough they can get around it," Lakin stated. Jay suggested that sites are always looking to catch suspicious play and have people watching 24/7 for tell-tale signs. The poker operators also have very sophisticated technology running algorithms, tracking IP addresses, looking for transfers between players, etc. But Lakin suggested the only real way to catch cheaters is for the players to step up to the plate when they see something fishy going on, as happened with the Absolute Poker incident. "If someone raises a concern, the sites take it seriously," Jay commented. "Otherwise, people will spread the word and players will go to other sites." Jay's biggest disappointment with the whole incident is the fact that the cheaters are still walking free in the streets of Costa Rica.
My next question to Jay concerned the sites themselves and whether he thought that they tampered with the software to ensure bad beats in the lower dollar games as many have contended. The belief here is that while software is run by a random number generator, the RNG can be set in such a way that it only gives random numbers within a range on the turn and river for certain games in an attempt to affect the outcome. The reasoning behind this is that it would provide incentive for the fish to keep playing believing they are good players. Note, while I never believed personally in the theory, the question has been raised on various poker forums. In Jay's opinion, the whole notion that poker sites are purposely cheating players is ludicrous. "As long as poker rooms are making money on the rake there is no need to cheat," Jay commented. While he has a bit more hesitation about online casinos where the house makes money on players losing, Jay thinks it would be insane for a poker site to cut its own throat by cheating players when the site has no vested interest in which players win. Jay believes the bad beats that occur frequently in low dollar games and tournaments are a result of players playing too many hands and poor play in general. Whenever someone loses with pocket aces to 3-5 suited in a real game it's the luck of the draw. When someone loses with the same hand online it's because the fix is in. According to one poker site, it has a staff member whose main job is to respond to complaints that the site is rigged. The staff member has to explain that more hands are played online than in real games, as well as other facts that explain bad beats. Jay also believes that these lower staked hands feature people who graduate from the free games and the .net sites. "I tell people all the time," Jay said, "playing at .net sites will only worsen your game. If you want to improve you have to play for real money."
For my next line of questioning I turned to the issue of the Poker Player's Alliance and the Frank and Wexler bills. My two main questions were: 1) how pokersourceonline.com is affiliated with the PPA and 2) what he feels about PPA's seeming desire to sell sports betting down the river to achieve the legalization of poker. Jay said that he is not affiliated with PPA and personally believes that all online gambling should be legal, but he fully understands PPA's desire to want to disassociate itself from other forms of gambling. "Wexler's bill couldn't be clearer," Jay said. "It wants to legalize skill games online and the differentiation is whether one is playing against another player or against the house." Jay doesn't buy the argument that sports betting is still player vs. player (even though, in theory, the sportsbooks balance their action based on how players bet either side.) He also isn't convinced that sites like Betfair or Matchbook is skill simply because one player sets the line and another takes it. Jay's feeling is that as long as they stick to their guns of trying to legalize the skill game of poker, PPA has a shot. If PPA were to venture off track they could lose the battle. In Jay's mind the UIGEA carved out exemptions for horse racing and lotteries which are clearly based only on luck. Therefore the belief is that if a law can make exemptions for games of luck it must provide exemptions for games of skill. "The fact that the same faces are at the final tables of every poker event negates the propensity of luck like that you would find in picking a lottery ticket," Jay commented. Nevertheless, Jay also feels that if poker is legalized eventually courts will rule that all gambling must be legalized. "If someone goes to a liquor store they aren't told that vodka is legal but you can't buy the gin. It makes no sense." In the meantime, PPA has over a million members and is right now looking out solely for the interests of poker, and if that means that it has the appearance of selling out sports betting, so be it. For his part, Jay makes it clear that his site is just an affiliate site and not associated with PPA. Pokersourceonline does post news articles on all gambling and often features ones from MajorWager. Their forum, devoted to poker, has over 130,000 members.
During the discussion of the the UIGEA and the PPA an interesting side discussion took place regarding the law about promotion of gambling. The Feds seem to want to outlaw promotion of gambling, as can be seen by the cases launched by the DOJ against Google, Yahoo, Esquire and The Sporting News, yet every televised poker event features all the stars in Poker Stars or Full Tilt Poker gear. "Why do you think that is?" Jay Lakin asked me. For my part I assumed it had to do with the fact the players wore shirts that had .net on it, but anyone with half a brain can see through that. After all the .net site is just window dressing for the real .com site where anyone can play for real money. Full Tilt and Poker Stars aren't paying these celebrities hundreds of thousands of dollars and paying tournament fees to promote an "information site." But Jay also wanted to point out that all the poker magazines feature ads for online gambling and are never approached by the DOJ for compensation or told to cease advertising poker immediately. All the magazines operate in the U.S. "Bluff magazine has a big building in Atlanta," Jay said "And Card Player has a huge office in Las Vegas. They all run poker ads, but the difference between them and The Sporting News is that poker ads represented a tiny percentage of the advertising for The Sporting News. For Bluff and Card Player it's everything." Consequently Jay is certain that when managers for The Sporting News met they decided it wasn't worth their while to try and fight the DOJ on this. $7.2 million was a small price to pay to get the Department of Justice off their backs and the loss of revenue from online gambling ads was negligable. Bluff and Card Player magazine, on the other hand, are able to operate strictly due to poker ads. Consequently if they were to agree to drop poker advertising for their magazines they may as well fold (pardon the pun). Similarly, with players like Phil Ivey, Allan Cunningham and Chris Ferguson, the advertising gear they wear gives them a reason to play in all these tournaments. They are American citizens and have the right to wear what they want. Jay is convinced that the reason the magazines and players were not approached by the DOJ and told to cease advertising gambling ads as The Sporting News was told to do is that the players, realizing their future earnings could be at stake, and the magazines, realizing their existence is on the line, would take the Department of Justice to court. And the last thing the DOJ wants is to test the law in the courts. Until now the law has never really been tested and the government is fearful that perhaps if the case does go to the courts, the judges will rule that the law is a violation of free speech. If that happens it would open up the floodgates to advertising in the U.S. for online gambling along with other vices the government really would rather not see advertised stateside. So the easiest way for the DOJ to accomplish their goal is to go only after companies it knows won't challenge them in the court of law. It is noteworthy that poker is often testing the reach of the law and thus far has not been touched. The World Poker Tour has a site called clubwpt.com where people can subscribe to the site for a $20 a month fee, and in turn they can play poker tournaments against each other for prizes like free entry fees to real WPT tournaments and every night they have $1,000 tournaments for members. The site makes it clear that "it's not gambling" because people don't actually have money in their account, but really there is no difference in paying a fee to play in a tournament at Full Tilt Poker or paying a fee to play in a tournament at clubwpt. The World Poker Tour also has a site that offers gambling but not to American players. It should be noted that Mega$ports was forced to declare bankruptcy for hosting an online gambling site that only catered to customers in Australia.
Lastly, I questioned Jay Lakin about the Party Poker billion dollar offer to settle with the Department of Justice. I couldn't fathom why a company would pay a billion dollars for such a minor thing as the option of stepping foot again in the United States. "When you're rich it's not a minor thing," Jay replied. "The ability to go to the United States without fear of prosecution probably isn't worth a billion dollars to you or me, but to someone worth at least $7 billion it very well may be." As well, Jay is certain that the Party Poker owners are still concerned about the long reach of the Department of Justice; after all, Gary Kaplan and Stephen Lawrence were extradited from foreign countries to face prosecution in the United States. Lakin agreed there could be other extenuating circumstances, such as a sweet deal for Party Gaming if and when online gambling becomes legal in the United States, but he's not sure that's the main impetus. Asked why Poker Stars and Full Tilt Poker seem to be getting off unscathed by the DOJ, Lakin points out that both places are located offshore. Poker Stars is in the Isle of Man, and unlike the owners of Party Poker, the owners of Poker Stars likely couldn't care less if they step foot in the U.S. again. Moreover, only Party Poker was incorporated and needs to answer to shareholders and the regulatory body where they are incorporated. The owners and management of Poker Stars and Full Tilt Poker only have to answer to themselves.
Asked it he had a preference in the upcoming U.S. election, Lakin (like everyone in the gaming industry I have put the question to) stated he wants to see a Democrat win. "When you look at the UIGEA and similar bills it's always the Republicans behind [them]. And all bills that counter the UIGEA are being put forth by Democrats." When I mentioned that Barak Obama is a well known poker player, Lakin responded, "I don't know if that matters. I'm sure George Bush and John McCain play poker as well. But it's not about playing poker, it's about the superiority of telling you that they believe what's better for you than you do."
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