June 28, 2010

The PPA & Its "Money Bomb" Are Duds

"Son, you're about as useful as a poopy-flavored lollipop!"

—Patches O'Houlihan (Rip Torn), in "Dodgeball: A True Underdog Story"
Yesterday I was listening to a PokerRoad podcast when I heard an ad by Greg Raymer (at the ~9:45 mark) for the Poker Players Alliance (PPA).  The ad was a generic "join the cause" effort:
Hi, I’m Greg Raymer, and I’m a member of the Poker Players Alliance.  Poker has a target on its back, and we need your help to protect the game we love.  The PPA is the single most effective tool poker players have in the fight to defend this great American pastime.  That’s why I’m a member of the Poker Players Alliance. … Every member counts, so join the Poker Players Alliance now to help in the fight to protect your right to play poker in America.
Intrigued, I looked over the PPA website, trying to get a sense of how membership fees are put to use.  Of course the benefits of "premium" membership sell themselves—a card protector, a window decal, and the "ability to donate to the Poker PAC".  Wow, I can pay for the right to donate more money?  Sign me up!

Well, before I donate money to a PAC, I like to make sure it is effective.  Surprisingly, I found little evidence of any real accomplishments by the PPA.  The calendar of PPA events is literally blank except for an upcoming poker tournament to benefit the Ante Up for Africa charity; certainly a worthy cause, but not something I really need the PPA to facilitate.  The vast majority of the PPA discussion forums have grown cobwebs from disuse.  The PPA makes references to lobbying Congress, but gives no details as to its efforts or any tangible results.  Of course, there is also reference to the PPA's role in several state poker legalization lawsuits, failing to point out that its few victories were Pyrhhic, violating the principle of "Primum non nocere"—"First, do no harm."*  So, in sum, I'm not certain that the PPA has really accomplished much, if anything, to this point.

While on the PPA website, I found it interesting that the PPA has designated July 1, 2010, as the date for a "money bomb", looking to raise $25K or $50K from its members, depending on which PPA message you find.  Purportedly, the PPA wants the money to help its lobbying efforts with Congress this summer as various poker legalization schemes are debated.  But the only thing relevant to lobbying is whether a lobbying group is able to deliver votes or money to Congressmen and Senators.  Let's face it, the PPA might have the "million members" it claims, but those members are hardly motivated single issue voters; i.e., PPA members are not likely to be a voter base that can be reliably mobilized in any election.  Also, the voters need to be people who can vote for Congressmen and Senators who matter—those with influential committee or leadership positions, or who are on the fence on the issue—so having a bunch of members nationwide is really irrelevant to getting a Congressman or Senator from a particular district or state to vote for your issue, if there aren't many of their voters in the organization.  So, the other option is money, and in the grand scheme of federal lobbying, $25K to $50K is chump change.  The money the PPA is raising might keep the lights on—or Senator D'Amato on board as lead lobbyist—but it really won't have much effect on lobbying per se, particularly since most of the money is likely to go to the PPA itself, rather than to Poker PAC.

One also has to question how effective the PPA can be at the lobbying game, given that three of its leading spokespersons (and members of its Board of Directors) are either associated with PokerStars (Greg Raymer) or are owners of Full Tilt (Howard Lederer and Chris "Jesus" Ferguson).  The issue is not that any of these men have been accused of any personal wrongdoing (though there is that rumored Full Tilt federal grand jury lurking out there), but that they are closely linked to the two biggest online poker sites, sites that are associated with several recent money laundering arrests, and which openly operate in the United States despite state laws against gambling, and with apparent disregard for the UIGEA.  One has to wonder how many legislators will want to be associated, even indirectly, with Full Tilt and PokerStars.

The PPA's close association with prominent members of Full Tilt and PokerStars also raises serious questions about potential conflicts of interest.  As background, keep in mind that Harrah's and MGM are now aggressively lobbying for legalization of online poker.  However, their vision of legalized online poker encompasses regulatory restrictions on companies that are currently operating in violation of U.S. laws, including the industry heavyweights, Full Tilt and Poker Stars.  As industry expert Bill Rini describes the Harrah's/MGM scenario:

Any legalization of online gaming will come with a regulatory body who will determine who can and cannot offer gaming to US citizens. One of the big assumptions at the moment is that because PartyPoker paid a fine that they are clean. Actually, part of the settlement was an admission of guilt. That admission may come back to haunt them if companies like Harrah’s lobby for licensing requirements that state that any company allowed to offer gaming cannot have illegally offered gaming previously. It’s a perfectly logical requirement and one that many people would agree with so I don’t think it would be too difficult for a land based casino to attempt to get it inserted into any licensing requirements.

In reality, I would be very surprised if any of the current top online poker rooms ever get a license to operate in the US. If I was Mitch Garber running Harrah’s online division I would pump as much lobbying money as it took to make sure that the licensing requirements were sufficiently stringent that all existing online poker sites would be disqualified.

[more from Bill Rini on the topic HERE and HERE.]
Dan Michalski over at Pokerati.com has a similar take on poker lobbying efforts and the Harrah's/MGM likely battle plan for online poker legalization:

Now the purpose of the American Gaming Association’s shift in policy stance is becoming a bit clearer. Considering that they’re the representative voice for B/M casinos, you can see a plausible plan taking shape:

1. Let the UIGEA go into full effect June 1.
2. Eliminate the most powerful online poker operators currently in the industry (i.e., Tilt and Stars).
3. Pass a new law.
4. Let Harrah’s, the Sands, and MGM/Mirage set up shop.
5. Then let the European poker sites join the party.

Step #2, of course, is the billion-dollar mystery question that could dramatically affect us all. Howard Lederer and family have been doing their best to line political pockets with campaign contributions for the past few years … but there’s only so much you can do as an individual when you don’t have an American corporation to funnel your campaign finances through.

[Michalski also linked to a report showing Sen. Harry Reid's top contributors for the 2010 election cycle, with MGM as top donor with $180,400 in total contributions, while Harrah's was second at $111,950].
This scenario for online poker legalization took an ominous step forward recently when the Nevada Gaming Control Board issued an advisory opinion indicating that "those internet companies that have not complied with state and federal law, especially after the passage of UIGEA, and have demonstrated no interest in voluntary compliance will be looked upon less favorably" by the NGC in evaluating whether a company would be granted a gaming license. 

So what does this all have to do with the PPA, and where is the potential conflict of interest?  Well, the PPA's mission statement is a generic, broadbased advocacy for online poker legalization, without regard for the interests of any particular company:

The PPA’s mission is to establish favorable laws that provide poker players with a secure, safe and regulated place to play. Through education and awareness the PPA will keep this game of skill, one of America’s oldest recreational activities, free from egregious government intervention and misguided laws.
If the rank and file of PPA members were told that online poker would be legalized and regulated in the United States within a 12-18 month timeframe, I suspect most of them would be in favor of such legislation.  Now, assume that the legislation were drafted in the Harrah's/MGM-favorable mode discussed above, which would effectively shut out of the market current foreign-based online poker sites, such that the only legal options for online poker—and the easiest options for fully legal deposits and withdrawals—were new sites started by Harrah's, MGM, the Sands (Venetian), and the Wynn.  Do you think most online poker players would care if they had to make the switch, particularly if the softest competition—new players—overwhelmingly flocked to the new legal sites?  So, what's good for online poker players in general and the PPA members in particular might well be directly at odds with what's best for Full Tilt and PokerStars.  Yet three of the major PPA decision makers** have a direct interest in the continued success of Full Tilt and PokerStars, and it's no secret that the PPA's political fundraisers are heavy in major Full Tilt and PokerStars players.  Feeling conflicted yet?

Now, a cynic might wonder why, if the PPA really needs $25K or $50K, PokerStars, Full Tilt, and Ultimate Bet don't just pass the hat among their "teams", "pros", "friends", and other quasi-affiliated menageries; surely they can raise that amount in just a few prop bets.  In fact, a cynic might wonder why the PPA is seeking to raise a mere $25K or $50K in dribs and drabs from its rank and file members, when the PPA already spent north of three-quarters of a million dollars on lobbying in the first quarter of the year alone; a cynic might wonder if the PPA is merely used by Full Tilt and PokerStars to give a patina of populism to their lobbying efforts.  A cynic might wonder if established sites like PokerStars and Full Tilt regard the PPA as a convenient fig leaf to cover their use of the PPA as a de facto lobbying arm, avoiding the legal complications of being foreign companies with significant lobbying restrictions.  A cynic might wonder if the PPA is the political perfume used to cover the stench of lobbyists and campaign donations being funded by companies who currently flout U.S. gambling laws.  Frankly, given the tenor of the PPA's litigation and lobbying efforts, a cynic might wonder if the PPA truly wants legalized online poker if it doesn't include a Get Out of Jail Free card for established online poker sites.

Color me cynical.

They even look "poopy", don't they?

* Although I have addressed the failings of the poker litigation strategy a few times (notably HERE and HERE), my most recent post on the topic sums up the downside to pursuing a flawed legalization-by-litigation strategy:
By tilting at the litigation windmill, poker advocates have instead worsened the position of poker. There are now binding appellate court decisions in several states explicitly finding that poker is gambling. These rulings reinforce in the public mind—with the imprimatur of judicial decisions—that poker is gambling, while also removing any arguable ambiguity as to the legality of poker (and online poker) for players in those states.
**  Greg Raymer's role as essentially an endorser and spokesperson for PokerStars makes his role in the PPA exponentially less problematic than Ferguson and Lederer, insofar as Raymer does not (to my knowledge) hold a major ownership position in PokerStars.


  1. You've pretty much hit the nail on the head. But don't trying saying any of that on 2+2 or out will come the ban hammer. (But if you do, tell theEngineer I said hi, heh.)

  2. Hey Grange, thought you might be interested in this product.

    Sorry for posting here, not sure how else to contact you.
    Great Blog
    Uncle Buck
    AVP Member

  3. BTW, I'll be blogging about this soon probably, but theEngineer's repeated baseless claims that Pokerstars et al. would just absorb any new U.S. government taxes, which the so-called Poker Players Alliance wholeheartedly support, and not pass them on to the players by raising the rake, have been completely belied by real world developments in France.

    I might be banned, but this strongly suggests I'll be prover right in the long run!

  4. @ Uncle Buck: Awesome link, will have to order one. Thanks!

    @ Conan776: There's a reason I don't post on 2+2. Well, a couple reasons. There are definitely some gems amid the refuse in the discussion threads, but the juvenile attitudes of some posters and the random censorship by the moderators make it a rather unwelcoming place.

    Looking forward to your post re French online poker.

  5. Thanks, Grange! I haven't forgotten the upside.

    My thoughts on about Pokerstars.fr developments being the "canary in the coalmine" are here.

  6. You make some good points, Grange. And I think I make some good responses in my comment responding to your comment on Pokerati.

    But here's the real deal (imho) ... ultimately, the PPA will not be able to get the law they really want passed, for many of the reasons you claim. But they are the ones with the ability to get those initial thoughts that ARE representative of poker player desires originally written down on legislative paper. Sure, eventually they will be sliced apart and corrupted by the other interests, but it means there will at least be a few components to any new laws that we like.

    Again, it's messy business ... and if poker players aren't willing to get their hands dirty, then we get exactly the type of online poker world we deserve.

  7. The PPA's nonsense is a delusional fantasy completely disconnected from reality as well as a rudimentary understanding of the legislative process, as is their ridiculous "sneaky conspiricy in the dead of night" narrative on how UIGEA came about in the first place. There isn't going to be ANY federal poker legislation that loosens UIGEA in any way whatsoever, period.

    Speaker of the House Pelosi has publicly stated UEGEA repeal could only happen "over my (her) dead body." That ends the matter right there; it can't ever get to the floor.

    But that doesn't even matter, because the votes don't exist to even report it out of committee, which is why no repeal or liberalization proposal has even had a mark-up session. And, the Congressional sponsors are politically radioactive individuals with negative clout within their own respective party caucuses, for a variety of individual reasons.

    But prospects are not that sunny.

    If Pelosi was hit by a truck, and if members with some real influence suddenly got on board with it, and if the committees with jurisdiction were bypassed, it still wouldn't matter because OVERWHEMLING majorities of all the members of Congress of BOTH parties in BOTH houses continue to support it, and any such legislation would be crushed on any floor vote in either chamber. Congressional opponents of online gambling in all forms under all circumstances continue to outnumber proponents of any form of liberalisation by more than two to one, in both parties, with opposition every bit as intense coming from the left as from the right. If it hadn't already been adopted nearly four years ago in the milder UIGEA form it would pass again today in it's original more restrictive version with overwhelming margins from both parties.


  8. (my long winded comment continued)

    But it's not that rosy.

    There is also no sensible reason to think the President would consider signing any such repeal or loosening, and his record of public statements associated his active fierce opposition to gambling in Illinois indicate he would most likely veto any such bill.

    But UIGEA repeal or some other form of federal level online poker legalization is in worse shape than that sounds.

    The PPA is an incompetent phantom shell which couldn't influence a school board election in Pahrump, and the very effective professional opposition from the cooperative lobbying network formed by the NFL and other sports leagues and the colleges continues to vigorously oppose anything that smacks of any internet gambling in any form.

    But it's less likely than I just made it sound.

    Public support would have to increase enormously to reach a level approaching infinitesimal, with polling data consistently showing public support for suppression of internet gambling running well over 80% (I doubt the Easter Bunny could poll 80% support) and that broad public opposition to any online gambling liberalization is equally overwhelming from both the left and right.

    It is not going to happen. At all. What is going to happen on UIGEA in Congress is this: nothing. Just as it has for the past four years. Absolutely nothing. Ever. Period. Those who are among the more competent Congressional players know this perfectly well, even as they milk the gullible PPA niche with nice statements about their work to support it.

    I think it's an amusing tale revealing the extent to which the poker subculture tends to be comprised of socially marginal alienated individuals, often very young and lacking in a realistic range of life experiences, who are often not well integrated into the broader society, and poorly equipped to understand how it works and to evaluate what is or is not likely. I think many tend to be strangers to most of the society they inhabit, clinging to other people in their disconnected subculture for their frame of reference. Potentially interesting tribe as sociology; complete loser drawing dead in the realm of political science.

    So what do you think are MY chances of winning a popularity contest on 2+2? But it's the truth.

  9. I wonder, is local legalization of intrastate level online poker, perhaps within multiple states, doable? Would a network of such state authorized games be possible without change in federal law?

  10. @ Local Rock: So you're saying there's a chance?

  11. @Local Rock I'm a little surprised at what you say Pelosi's position is, considering she's a fellow Catholic (we don't give two figs about "gambling" in our theology) from San Francisco (the town which remains to this day the pinnacle of Wild West culture, and where the 49er gold miners went to gamble away their profits back in the day).

    On the other hand, a month into UIGEA going fully into effect I see no sign of a crackdown at my local bank, so compared to the tax-us-all-to-death plans of the so-called Poker Players Alliance, I'm more than happy with the status quo.

    So three cheers for Speaker Pelosi!

  12. I'm not surprised you might be surprised, if you read CardPlayer and suchlike of that ilk, but it's pretty well documented and not at all ambiguous where she's coming from, and she's not shy about telling anyone who wants to know, even if the little cottage industry of the specialized poker press usually doesn't manage to notice.

    "Over my dead body" was the response of the Speaker quoted in Poker Player newspaper about three months ago. Then after that little brief interlude of reality in the first paragraph, in the same column Poker Player went on to describe proposals to repeal or modify UIGEA in breathless tones as if it could be happening any day.

    Congresswoman Pelosi was an early supporter the original bill (to protect poor people from exploitation)and voted for that stronger version (H.R.4411) than the final UIGEA when it was first approved on the floor of the House by a vote of 317-93 (115-76 among only Democrats) on July 11th 2006 as a clean stand-alone bill with no "port security" or other unrelated issues involved at all, as documented in the Congressional Record and legislative tracking services such as govtrack.com

    Here is the record of that action on govtrack:

    I think you have a point, along with Grange's original remarks about how if the online poker business was made legal the current online guys would be getting none of it. I suspect the best world the Fully Tilted and Pokah Studs and Absolutely Rigged could realistically hope for is probably the one they've got now, existing in a sort of a twilight between what is legal and what is real. And where you don't pay a big fat ever-expanding vig to the gubmint.

    Three cheers for "black" markets! Hoorah for smugglers and bootleggers! I mean that sincerely.

  13. Sounds as if it's not a battle to make online poker legal, but more about different business interests positioning themselves to make it legal for themselves and only themselves.

  14. @LocalRock i think you're right on some points. Nancy Pelosi is not necessarily our friend. And likewise for Obama. But that's all the more reason for a PPA.

    What do you suggest -- poker players do nothing, and have no representatives in DC beyond Big Casino lobbyists?

    I also think you overestimate the level of opposition. VETO a bill that can be spun by both parties as a freedom-protector and money generator? no way. i'll guarantee you he won't veto anything. doing some other stuff to prevent a bill from getting to his desk? maybe. in fact, some could argue he's already done that.

    Again, I agree with you on the challenges of the process they face. But what they PPA has done, if anything ... won over supporters among the members, one at a time ... all while engaging poker players in the political process in such a way that all those congressional staffs know exactly who we are and what we want, whether or not they like us.

    Poker players (via the PPA, no other political group) have "converted" at least 50 members of congress, at least on certain components of different bills ... probably closer to 100.

    if poker players relied on your strategy, that number would be zero still.

    @Wolynski gets it, btw.

  15. I'm not opposed to the PPA, I just think their political judgement is poor and some of their pronouncements tend to be somewhat silly, and they are in need of significant improvement before they could be of much real practical relevance in actually enacting legislation to change any federal statutes. Currently, they are no match at all for their opponents, such as the NCAA's network of athletic directors and university officials (and their much more professional and effective lobby) for example, who remain vigorously opposed. And I don't wish to offer a strategy, because I don't care very much about poker played online, and feel no responsibility to do so. If I did, I suppose one element of it is that I'd want the PPA to become more clear-headed, competent, and professional, and also to scrub off some of its self-defeating ideological tinge, and to communicate more realistically with its constituency and the niche press that services it so it could become a more effective player in the process. I don't have any desire to advocate leaving the matter up to the turf battles of competing enterprises, even though I don't see PPA currently having even ten percent of the effective lobbying competence of a Harrah's, which is not a particularly well juiced-in player with federal level officeholders outside of Nevada.

    But I've got to tell you that the support of 50 members, and perhaps arguably up to 100 on some aspects, is not reason to be encouraged. Sometimes your friend is the one who is willing to tell you your fly is open, not the one who says you look marvelous. There are 535 members of congress. Fifty committed members is a pretty grim headcount. I'm just describing "what is." An issue with the support of 10-20% of the Congress is not in good shape to pass anything. Passing legislation through Congress generally requires something close to a consensus (as you may already know, the legislative process is intentionally designed to be that way) which would be more like 300+ members - generally something close to 60 in the Senate and 250ish in the House as a minimum threshold, and that minimal level of support assumes one has the active support of the executive branch and Congressional leadership. Lacking that, any committee chair is usually going to be loath to even embarrass themselves and their colleagues by trying to bring an issue to the floor at all, and the leadership (even if they supported it - which they don't) likely wouldn't even want to "give it a rule" and put on the calendar.

    By the way, I'm not aware of anyone in Congress changing their position since UIGEA passed in 2006, are you? Maybe there've been a few? Or one? Somewhere? I think I heard Maxine Waters (D-Cal, south Los Angeles area of Watts & Compton) say she was "considering" her position on the matter a while back.

    I'm just descrbing what is. That is all. Pardon if it is annoying to hear, but it is what it is and I don't think it is useful for those ostensibly in the business of changing it to pretend otherwise.

    If I try hard to imagine something happening, I could picture some possibility of legislative action eventually succeeding in some individual states long before anything changes on the federal level. This is the route horseracing took in developing its simulcasting and account wagering business. I am not at all competent to know the chances of that working for poker strictly from a legal point of view under current federal law, which is why I raised that particular question here with Grange. Racing's legal status when they began doing that state by state in the 1990s seems similar to me as a non-lawyer, but not identical. They had a rocky path (my girlfriend was once threatened with arrest working at a racetrack simulcast hub) to getting their legal status established over a decade and a half or so, and they were and are a much larger and mature and publicly accepted business than online poker.

    Good luck.

  16. @ Local Rock: I think individual states have the legal power to legalize and regulate purely intra-state poker (or online gaming). In fact, a number of states have taken steps toward considering such an option. But my understanding is that a state will have a hard time permitting out of state participation without running afoul of other state's gambling laws, and likely federal gambling / money transfer laws. There are some serious Commerce Clause issues in play, and the best solution would be for Congress to allow individual states to regulate gambling, including whether to permit out of state gambling.

    Maybe there could be a solution like with direct shipping of wine--many states have reciprocity provisions where they allow out of state wineries to ship into their state so long as the winery's home state allows the same privilege for wineries in the recipient's state. For poker, state's could legalize poker in-state, and permit players from reciprocating states to also play. There could be arrangements to ensure proper regulation and tax collection. It's at least one approach.

    I think you are completely correct that for the established online big boys (Tilt, Stars, UB, etc.), the best result is to remain in a legal gray area, not entirely legal, yet generally tolerated. Legalization and crackdowns are the two extremes they fear. Which of course is why I fear that the PPA being intertwined with Tilt/Stars/UB compromises the PPA's ability to deliver for its rank and file members. However, I'm not really thrilled at being left to the tender mercies of Harrah's and MGM, either.