February 28, 2013

Did the PPA "Lobby" for SunFirst Bank?

Haley Hintze is well-known in the poker community for her diligent, even obsessive, investigation into the Absolute Poker and Ulitmate Bet superuser scandals. Since Black Friday, Hintze has turned her sights on the Full Tilt Poker collapse, generating quite a number of informative articles and often digging up fascinating nuggets of backstory to fill in some of the blanks in the public Black Friday narrative.

Hintze today published a four-part story, "PPA Linked to Full Tilt / PokerStars SunFirst Bank Lobbying Effort" which uses emails generated in the SunFirst Bank investigation to fill in some gaps in the events that led up to Black Friday. Her full piece is worth a read by anyone interested in the state of poker lobbying efforts in the months leading up to both the Reid-Kyl bill and Black Friday.

There is a lot of information packed in the Hintze piece which is worth some reflection and comment once I return from vacation. However, I did want to address one point raised by Hintze:

Whether the lobbying effort grew out of SunFirst’s own desire for legal confirmation or whether it was the sensing of an opportunity by lawyers for Stars and Tilt remains unexplained, as does the mechanism of how John Pappas and the PPA became involved in lobbying on SunFirst’s behalf, to benefit Stars and Tilt. The lobbying effort appears to have begun in conjunction with Full Tilt joining the SunFirst operation, but the failure to procure a beneficial legal opinion from the Utah AG’s office did not cause Full Tilt to back out of the arrangement.

As part of my job, I work with a variety of industry groups on legislative and administrative rule proposals. What I do is not "lobbying" per se. [FN1]. My role is more in background support, typically drafting proposed bills or rules, then handing them off to lobbyists who get them submitted. I then provide comments on proposed amendments, and on occasion testify before committees or meet with legislators who have questions about the bill. In drafting bills or rules, I nearly always am coordinating with multiple interest groups; sometimes it's a gathering of the usual suspects for your industry, sometimes you find your group aligned with a mortal enemy group on an issue, and sometimes it's a kumbaya "for the good of everyone" compromise proposal hashed out in advance of submission.

Turning back to the SunFirst / PPA situation, I think it is important to be careful in describing what the PPA's role was in "lobbying" the Utah Attorney General for an opinion that online poker was not illegal, so processing payments was likewise not illegal. First, there is nothing improper about requesting an AG opinion on an issue, even one related to your own business. In fact, AG opinions (or similar processes, like advisory opinions or declaratory orders before certain agencies) are an important tool for businesses looking to clear up legal grey areas in advance of taking the risk of violating an unclear statute or rule.

Next, there is nothing inherently improper about the PPA assisting SunFirst (or any other poker industry business) in obtaining an AG opinion that online poker is legal, or that processing online poker payments is legal. It appears from the emails cited by Hintze that the PPA was advancing its usual arguments that poker is a game of skill, and that online poker was not illegal under state or federal laws as they existed post-UIGEA. Now the mere fact that the PPA's argument--which it had robustly developed by that point--supports SunFirst's business interests in processing online poker payments does not mean that the PPA was "lobbying for" SunFirst. Rather, the PPA was lobbying for online poker, and that argument was of benefit to SunFirst.

Finally, and perhaps most importantly, the mere fact the PPA coordinated its lobbying efforts with SunFirst does not mean there were any shady dealings between the two, or that the PPA was aware of the alleged bribes by SunFirst executive Jeremy Johnson (and Hintze explicitly disavows drawing the latter conclusion). The emails cited by Hintze certainly demonstrate coordination between SunFirst, the PPA, and their respective attorneys. But in lobbying efforts of this kind, such coordination is common--routine, in fact. It makes sense to divide the lobbying work based on the interests and expertise of the coordinating groups. Here, letting the PPA take the lead on the issue of the legality of online poker would make sense, given their expertise in developing those legal arguments. Further, submitting draft bills, rules, or, in this case, opinion letters, is also routine; no legislator or official wants to start from a blank slate, and those most interested in the issue will generally draft a proposal that suits their needs as a starting point for discussion. So the PPA's submission of materials to the AG in support of online poker in general, and in support of SunFirst's request for an opinion on the legality of payment processing specifically, is actually quite consistent with the activities of most issue advocacy groups.

The interesting issue raised by the emails reported by Hintze is whether the PPA had any deeper connection to SunFirst, Jeremy Johnson, or Chad Elie. The connections between PokerStars, Full Tilt, and the PPA have long raised questions in the minds of some poker players about whether the PPA is truly an independent advocacy group, or instead is a stalking horse for the online poker sites who provide most of the PPA's money. Hintze's article explores this issue in light of the new SunFirst emails, and the connections and timeline of events Hintze draws are quite intriguing (and something I will certainly re-read once I get back from vacation). Hopefully Hintze or others in the poker community can use these emails to shake loose more documents that can help fill in the remaining gaps in this backstory.


[FN1]. "Lobbying" carries a technical, legal definition of paid advocacy that is much narrower than the more generic use of that term. I will use "lobbying" in that broader sense of advocacy for a position by a group with an interest in a particular issue or industry.

- Posted using BlogPress from my iPad

February 22, 2013

IMOP VII: The Honey Badger Craps Out

"Wine loved I deeply, dice dearly."

~Edgar, in King Lear, by William Shakespeare

As "Winter Storm Q" sweeps across the Midwest, the thoughts of the Ironmen of Poker turn to the bright lights of Vegas, with dreams of poker tables, casino pits, sports books, and alcoholic beverages dancing in their graying and balding heads. Next weekend will bring the Ironmen back to Poker Mecca to celebrate the high holy days of IMOP VIII—Revenge of the Nerds. D-bags beware! Hijinks will ensue!

"But wait!" cry the loyal followers of the Ironmen. "Whatever happened on IMOP VII—There Will Be Blood? Who won the Jacket Dinner? Who tilted Euro D-Bags while stacking mountains of chips? Who pulled the best "Ta Da"? Did the Honey Badger give a sh*t? Where's the freakin' trip report?"

You know that "What Happens Here, Stays Here" ad campaign for Vegas? Well, here's the dark truth behind all those wild tales of Vegas fun. The Vegas Strip is the high altar for the Gods of Degeneracy. Most who worship there leave happy, if hungover and poorer. But the dark gods demand the occasional sacrifice to maintain cosmic balance. For six IMOP expeditions, the Ironmen left Vegas as winners. Last March, instead of celebrating IMOP-VII, the entire Ironman crew sevened out.

Frankly, the Vegas admen have it all wrong. The happy stories of cashing sports investments, tossing back beverages, and tilting d-bags at the poker table are meant to be remembered and shared. It's the trips where the only stories are of parlays getting hooked, dealers drawing 5s on 16s against double downs, and monsterpottens getting shipped to d-bags hitting perfect-perfect that should be shrouded in a cone of silence. So it is, and so it shall be for IMOP-VII, henceforth known as the Dark Age.

Consequently, there will be no official trip report filed for IMOP-VII, no official record made of the hijinks and hilarity, the pranks and putdowns, the booze and bonding, that mark a successful Ironman outing. However, for the benefit of future poker archaeologists, here are some unfinished notes found on scraps of napkins buried deep in my iPhone notes app.

Returning Vets (Rookie Year):  Santa (I), Lucky (I), JebeDIA (II), Grange (II), Barbie (III), Bonnie (III), Colt (V), River Joe (V), Fat Jesus (V), Mr. Chow (V)

Rookies:  Fun Bobby, Texas Ollie, Beavis (IMOP-TX chapter), Butthead (IMOP-TX chapter)

Tournament I:  Stratosphere. In hindsight, having the official kickoff toast in the bar at the top of the Stratosphere while watching people intentionally jump over the side "for fun" may not have set the right tone for the trip.

Tournament II:  Tropicana, with "Silly Shades" contest. Apparently the Honey Badger JuJu jinxed the poker room, causing it to close shortly thereafter.

Colt rocks the crazy shades at Tropicana.

Tournament III:  Mirage, with "White Trash (wife beaters and tattoos)" contest. Not sure why, but the Mirage poker room has yet to call security on the Ironmen. Maybe this year. It's good to have goals.

The white trash crew at Mirage.

River Joe says, "Ta Da!"

Lucky. Duh.

The Debil.

Third World Poker Tour:  Rooms on the Tour included Mandalay Bay, Luxor, Excalibur, Monte Carlo and ... Flamingo? Imperial Palace? Bellagio? Sure. Why not? If they weren't the actual sites, they should have been. Plus, good luck proving otherwise.

Jebedia gets some culture.

Tournament IV:  Aria. Awesome room. Awesome tourney. Too awesome for the Ironmen who left steaming piles of poker dookie all over the room. Which may be why we can't have nice things.

Jacket Dinner:  Stack at Mirage. Where do you think all the dookie came from? For lack of memory of actual results, and because history is an artificial construct created by the victors to establish a credible social narrative supporting their usurpation of power, the official Jacket Champion was Santa, with Lucky as First Loser.

Lucky looking suave.

Santa makes a statement:
"Even hookers won't hit on me tonight."

Champion:  None. Had any Ironman so much as walked away from Vegas up a solitary credit on penny slots, he would have won the IMOP-VII Championship in a rout. For those of you keeping score at home, rumor has it that the ironically named rookie Fun Bobby won as Leastest Loser.

As two-time defending IMOP Champ Barbie might 
have said if he wasn't busy 4-balling blackjack on credit
with a homeless guy by the Bally's pedestrian bridge:

"Sometimes, the only answer is another drink."

February 15, 2013

The WSOP Ladies Event "Discount" Blunder

“The essence of strategy is choosing what not to do.”

~Harvard Business School Professor Michael E. Porter

Yesterday, the 2013 World Series of Poker schedule was announced. Most of the immediate reaction was focused on Event 51, the long traditional and recently controversial "Ladies Event". It's become one of poker's most hallowed rituals—a chorus of complaints that the Ladies Event is unfair discrimination against men and condescending to women, followed by a responsive chorus of defenses of the Ladies Event as a time-honored WSOP tradition that is a fun and entertaining event for women who would not otherwise play big buy-in tournament poker. Unfortunately, this ritual debate has devolved into zombie arguments, beaten to death, resurrected, and beaten to death again, lying in shallow graves waiting for the first full moon after the summer solstice for the magic incantation of "Ladies, shuffle up and deal!" to call them forth. [FN1].

I have long maintained that all the bickering about the Ladies Event just results in a lot of unhappiness being spread around the poker world. Men are unhappy they can't play the supposedly weaker competition in the Ladies Event, at least without WSOP officials hassling them. WSOP officials are unhappy that men are ruining the fun of their Ladies Event, so they feel compelled to get medieval on the spoilsports. Women are unhappy that men are ruining their day in the sun by playing in their event, unless, of course, they are unhappy that men aren't allowed to play in their event. 

This year, even though we are four months out from the start of the Ladies Event, the old arguments got a new twist. As Shamus observed over at Hard-Boiled Poker, WSOP officials gave the ladies a Valentine of sorts this year, making the Ladies Event officially a $10K buy-in tournament, but giving all women a $9K "discount" on their entry fees. Or, from the other point of view, WSOP officials went up to all the male players considering entering the Ladies Event, looked them dead in their Blue Shark sunglasses, flipped them the bird, then spit on their baller shoes.

Of course, the "ladies' discount" is really just a cynical ploy by the WSOP to find some way to keep out those pesky, uncouth men who have been crashing the ladies' poker party the past few years. Openly banning men from the Ladies Event is illegal under anti-discrimination laws, while strong-arm tactics like threats of player suspensions have been ineffective (and probably illegal if implemented). But the "ladies' discount" gambit is an interesting ploy. Nevada law expressly allows "differential pricing, discounted pricing or special offers based on sex to promote or market the place of public accommodation.” Although intended to permit promotions like "ladies nights" to attract women to bars or clubs, the law appears drawn broadly enough to permit a "ladies discount" for a poker tournament. [FN2].

Based on my Twitter feed yesterday, it seems like many poker players and poker media members regard the "ladies discount" as a good idea. Change100 called the discount idea "genius", while Daniel Negreanu tweeted:

Bravo @WSOP addressing the issue of "men" playing ladies events by making it a $10k and giving ladies a $9k discount! Very clever!

Clever? Well, it certainly is legally creative; I give the WSOP that much. But as I often tell my clients, just because something is legal doesn't mean it's a good idea.

The problem with the WSOP's "ladies discount" gambit is that it sacrifices the WSOP's strategic position of moral superiority in the debate over the Ladies Event in exchange for the marginal tactical advantage of having a legal tool for preventing most men from playing in the event. Prior to this year, although the Ladies Event discriminated against men, the WSOP could defend the discrimination by pointing to the availabillity of numerous other open WSOP tournaments at similar low buy-ins which were available for critics of the Ladies Event. Now, the Ladies Event is nominally a $10K event for men, giving those men no realistic comparable WSOP tournament alternative to the de facto $1K tournament offered solely to women. Further, men entering the Ladies Event will have to pay ten times the entry fee for the same chance of winning the tournament as for women players; the WSOP presumably will not be kicking in an additional $9K to the prize pool for every women player, nor will men presumably be given ten times as many starting tournament chips. [FN3]. Consequently, men who enter the tournament will be at a real disadvantage to women in terms of tournament equity and expected return on investment, and the WSOP intentionally wants men to be at such a disadvantage. Just think of the public relations nightmare for the WSOP when a man pays the $10K buy-in and makes the final table or even wins the event and spouts off in interviews: "Hey, I had to give these women 10-to-1 odds, and I still beat them!" Talk about a credibility killer.

The Ladies Event through its history hasn't continued as a women-only (or women-mostly) event because it is technically legal to exclude men. It has continued as a women-only event because of etiquette, because of gentlemen and their manners. Gentlemen have understood that demanding to play in the Ladies Event is simply rude, regardless of whether they could force the WSOP to let them play as a matter of right. The women-only "rule" to this point has been enforced simply by social agreement to let those women who wanted to play the Ladies Event enjoy their special tournament as a matter of courtesy. But changing the rules as the WSOP has done alters the etiquette equilibrium. The new "ladies discount" rule changes the landscape from a place where the WSOP carved out a small niche tournament for a group of women poker players, to a place where the WSOP is actively placing men at a significant disadvantage to women in a tournament. Those complaints of discrimination by men that once came off as petty whining suddenly take on a lot more gravity.

In my view, the "ladies discount" rule forfeits the WSOP's moral high ground in the Ladies Event debate. The WSOP is basically claiming it needs a 10-to-1 buy-in ratio to protect the Ladies Event, and by extension the ladies participating in the event, from all those awful male poker players. In my book, that implicit attitude changes the Ladies Event from charming to demeaning, and from celebratory to vitriolic. In a word, the rule is rude.

[FN1]  I have contributed my own zombie arguments to the Ladies Event debate, submitting a modest proposal for a compromise satisfactory to all sides, and making a demand for attention to a similar issue in the world of bingo.

[FN2]  I haven't researched the relevant Nevada anti-discrimination laws personally, as I presume Caesars Entertainment (owner of the WSOP) has had its attorneys review and approve the ladies discount "promotion". However, I presume Nevada courts would likely put some boundaries on the sorts of marketing ploys that would be permissible under the differential pricing/marketing exception. For example, if the difference in pricing were so large as to render the goods or services at issue unavailable to men as a practical matter—say, a $500 gin and tonic, or a $10 million poker tournament entry fee—I could see a court holding that the price difference was an illegal pretext for discrimination. Here, even though the intent of the Ladies Event price differential is to encourage men to sit out, arguably the $10K entry fee is not inconsistent with a number of other WSOP events, and the fee is only ten times the price charged to women (equivalent to charging men $10 per drink, while women are charged only $1 per drink). In other words, although there is likely a line to be drawn between legal pricing and marketing differentials intended to encourage women to buy particular goods or services and illegal pretextual pricing and marketing differentials intended to exclude men entirely, the WSOP's $9K discount for women doesn't seem to have crossed it.

[FN3]  It will be interesting to see if the Nevada gaming authorities would object to a purportedly open poker tournament where some players are forced to pay a substantially greater entry fee for the same chance to win the tournament as other players.