Online poker is the game of poker played over the Internet

Online poker


Online poker is the game of poker played over the Internet. It has been partly responsible for a dramatic increase in the number of poker players worldwide. For the year of 2005 revenues from online poker were estimated at US$ 200 million per month.[1]
Contents

    * 1 Overview
    * 2 Legality
    * 3 How online poker rooms profit
    * 4 Integrity and fairness
    * 5 Differences with conventional poker
    * 6 Bonuses
    * 7 Compatibility
    * 8 Online poker portal
    * 9 References
    * 10 External links

 Overview

Traditional (or "brick and mortar", B&M) venues for playing poker, such as casinos and poker rooms, may be intimidating for novice players and are located in geographically disparate locations. Brick and mortar casinos are also reluctant to promote poker because it is difficult for them to profit from it. Though the rake, or time charge, of traditional casinos is often high, the opportunity costs of running a poker room are even higher. Brick and mortar casinos often make much more money by removing poker rooms and adding more slot machines.

Online venues, by contrast, are dramatically cheaper because they have much smaller overhead costs. For example, adding another table does not take up valuable space like it would for a brick and mortar casino. Online poker rooms tend to be viewed as more player-friendly. For example, the software may prompt the player when it is his or her turn to act. Online poker rooms also allow the players to play for low stakes (as low as 1¢) and often offer poker freerolls (where there is no entry fee), attracting beginners.

Online venues may be more vulnerable to certain types of fraud, especially collusion between players. However, they also have collusion detection abilities that do not exist in brick and mortar casinos. For example, online poker room security employees can look at the "hand history" of the cards previously played by any player on the site, making patterns of behavior easier to detect than in a casino where colluding players can simply fold their hands without anyone ever knowing the strength of their holding. Online poker rooms also check players' IP addresses in order to prevent players at the same household or at known open proxy servers from playing on the same tables.

The major online poker sites offer varying features to entice new players. One common feature is to offer tournaments called satellites by which the winners gain entry to real-life poker tournaments. It was through one such tournament on PokerStars that Chris Moneymaker won his entry to the 2003 World Series of Poker. He went on to win the main event causing shock in the poker world. The 2004 World Series featured triple the number of players over the 2003 turnout. At least four players in the WSOP final table won their entry through an online cardroom. Like Moneymaker, 2004 winner Greg "Fossilman" Raymer also won his entry at the PokerStars online cardroom.

In October 2004, Sportingbet Plc, at the time the world's largest publicly traded online gaming company (SBT.L), announced the acquisition of ParadisePoker.com, one of the online poker industry's first and largest cardrooms. The $340 million dollar acquisition marked the first time an online cardroom was owned by a public company. Since then, several other cardroom parent companies have gone public.
Online players engaging in a Texas Hold'em cash ring game on Partypoker.com
Online players engaging in a Texas Hold'em cash ring game on Partypoker.com

In June 2005, PartyGaming, the parent company of the largest online cardroom, PartyPoker, went public on the London Stock Exchange, achieving an initial public offering market value in excess of $8 billion dollars. At the time of the IPO, ninety-two percent of Party Gaming's income came from poker operations.

The market appears to be currently in a consolidation phase, in early 2006 PartyGaming moved to acquire EmpirePoker.com from Empire Online. Later in the year, bwin, an Austrian based online gambling company, acquired PokerRoom.com. Other poker rooms such as PokerStars and Poker.com that were rumored to be exploring initial public offerings[2] have postponed them.

 Legality

From a legal perspective, online poker may differ in some ways from online casino gambling, but many of the same issues do apply. For a discussion of the legality of online gambling in general, see online gambling.

Online poker is legal and regulated in many countries including several nations in and around the Caribbean Sea, and most notably the United Kingdom.

In the United States, the North Dakota House of Representatives passed a bill in February 2005 to legalize and regulate online poker and online poker cardroom operators in the state. The legislation required that online poker operations would have to physically locate their entire operations in the state. Testifying before the state Senate Judiciary committee, Nigel Payne, CEO of Sportingbet, the owner of Paradise Poker, pledged to relocate to the state if the bill became law.[3]

The measure, however, was defeated by the State Senate in March 2005 after the U. S. Department of Justice sent a letter to North Dakota attorney general Wayne Stenehjem stating that online gaming "may" be illegal, and that the pending legislation "might" violate the federal Wire Act. However, many legal experts dispute the DOJ's claim.

North Dakota Rep. Jim Kasper (R-Fargo), the author of the legalization bill, has vowed to continue his efforts, stating that he is "not putting away the idea of getting into Internet gaming licenses in North Dakota" and that the "revenue we missed is too great to pass up." Kasper has also stated that he will introduce the legislation in the 2007 session of the North Dakota legislature.

In response to this and other claims by the DOJ regarding the legality of online poker, many of the major online poker sites stopped advertising their "dot-com" sites in American media. Instead, they created "dot-net" sites that are virtually identical but offer no real money wagering. The sites advertise as poker schools or ways to learn the game for free, and feature words to the effect of "this is not a gambling website." Televised ads still feature the dot-net conceit but print ads have been trending back toward advertising the dot-coms directly.

In July 2006, United States federal agents, citing the Wire Act, arrested BetOnSports CEO David Carruthers in Dallas, Texas while he was changing planes. He was traveling between Costa Rica and the United Kingdom; in both jurisdictions online gaming, including online poker, is legal and regulated.[4]

Later in the year a similar event happened in France, where Norbert Teufelberger and Manfred Bodner the CEO's of bwin [5] when they were giving a press conference in La Turbie. The arrest was made due to offenses against the French gambling laws. The couple were shortly released on the 18 September 2006.

Since many banks and credit card companies will not allow direct money transfers to online poker sites, electronic money transfer businesses provide online "e-wallets" that players can load from a bank account, then transfer the funds directly to the poker site. The advantage of these services is that it makes it easy for people to transfer money between different poker sites without the money going back to a person's bank account.

On October 13, 2006, President Bush officially signed into law the Safe Port Act, a bill aimed at enhancing security at U.S. ports.[6] Attached to the Safe Port Act was a provision known as the Unlawful Internet Gambling Enforcement Act (UIGEA). The UIGEA prohibits online gambling sites from performing transactions with American financial institutions. As a result of the bill, several large publicly traded poker gaming sites such as PartyPoker.com, PacificPoker.com and bwin closed down their US facing operations. The UIGEA has had a devastating effect on the stock value of these companies.[7]

 How online poker rooms profit

Typically, online poker rooms generate the bulk of their revenue via three methods. First is the rake. Rake is collected from most real money ring game pots. The rake is normally calculated as a percentage of the pot based on a sliding scale and capped at some maximum fee. Each online poker room determines its own rake structure.

Second, pre-scheduled multi-table and impromptu sit-and-go tournaments are not raked, but rather an entry fee, often around ten percent of the tournament entry fee, is added to the cost of entering the tournament.

Third, some online poker sites also offer games like black jack or side bets on poker hands where the player plays against "the house" for real money. The odds are in the house's favor in these games, thus producing a profit for the house.

These are also the three primary methods brick and mortar casinos derive profits from operating poker tables.

 Integrity and fairness

As with other forms of online gambling, many critics question whether the operators of such games - especially those located in jurisdictions separate from most of their players - might be engaging in fraud themselves.

Internet discussion forums are rife with allegations of non-random card dealing, possibly to favour house-employed players or "bots" (poker playing software disguised as a human opponent), or to give multiple players good hands thus increasing the bets and the rake, or simply to prevent new players from losing so quickly that they become discouraged. However, there is little more than anecdotal evidence to support such claims, and others argue that the rake is sufficiently large that such abuses would be unnecessary and foolish. Many claim to see lots of "bad beats" with large hands pitted against others all too often at a rate that seems to be a lot more common than in live games. This might actually be caused by the fact that online cardrooms deal more hands per hour: online players get to see more hands, so their likelihood of seeing more improbable bad beats or randomly large pots is also increased.

Many online poker sites are certified by bodies such as the Kahnawake Gaming Commission and also by other major auditing firms like PricewaterhouseCoopers to review the fairness of the random number generator[8], shuffle[9], and payouts for some sites.

 Differences with conventional poker

There are substantial differences between online poker gaming and conventional, in-person gaming.

One obvious difference is that players do not sit right across from each other, removing any ability to observe others' reactions and body language. Instead, online poker players learn to focus more keenly on betting patterns, reaction time and other behavior tells that are not physical in nature. Since poker is a game that requires adaptability, successful online players learn to master the new frontiers of their surroundings.

Another less obvious difference is the rate of play. In brick and mortar casinos the dealer has to collect the cards, then shuffle and deal them after every hand. Due to this and other delays common in offline casinos, the average rate of play is around thirty hands per hour. Online casinos, however, do not have these delays; the dealing and shuffling are instant, there are no delays relating to counting chips (for a split pot), and on average the play is faster due to "auto-action" buttons (where the player selects his action before his turn). It is not uncommon for an online poker table to average ninety to hundred hands per hour.

This large difference in rate of play has created another effect among online poker players. In the brick and mortar casino, the only real way to increase your earnings is to increase your limit. In the online world players have another option, play more tables. Unlike a physical casino where it would be nearly impossible to play multiple tables at once, most online poker rooms allow this. Depending on the site, a player might play from 4 to 10 tables at the same time, viewing them each in a separate window on the computer display. For example, a player may make around $10 per 100 hands at a lower limit game. In a casino, this would earn them under $4 an hour, which minus dealer tips would probably barely break even. In an online poker room, the same player with the same win rate could play four tables at once, which at 60 hands per hour each would result in an earning of $24/hour. Some online players even play eight or more tables at once, in an effort to increase their winnings.

Another important change results from the fact that online poker rooms, in some cases, offer online poker schools that teach the basics and significantly speed up the learning curve for novices. Many online poker rooms also provide free money play so that players may practice these skills in various poker games and limits without the risk of losing real money. People who previously had no way to learn and improve because they had no one to play with now have the ability to learn the game much more quickly and gain invaluable experience from free money play.

 Bonuses

While the practice of comping players with free meals, hotel rooms, and merchandise is quite common in B&M casinos, online poker rooms have needed to develop new ways to reward faithful customers. The most common way of doing this is through deposit bonuses, where the player is given a bonus code to enter when placing money into an account. The bonus code adds either a percentage, or a set amount of chips to the value of the deposit. One should be aware that these are not up front payments. The bonus is released in a piecemeal manner in accordance with the number of raked hands played. Besides this, several online cardrooms employ VIP Managers to develop VIP programs to reward regular players and additional bonuses exist for players who wish to top up their accounts. These are known as reload bonuses.

 Compatibility

Most online poker rooms offer downloadable Microsoft Windows programs that require an emulator program to run on Apple Macintosh or Linux computers. However, several rooms do have clients that run natively on Mac or Linux.

Some mobile content providers have started offering poker on portable devices (mobile phones, PDAs). The functionality of mobile online poker software is much the same as computer-based clients, albeit adapted to the interface of mobile devices. The player must be able to receive a cell phone signal in order to play.

 Online poker portal

An online poker portal is a website offering poker-related content. Examples of such content could be news, tournament results, strategy articles or reviews of online poker cardrooms.

Some portals have a considerable amount of content, while others attempt to act as mere conduits to other sites, normally where actual gambling games are offered.

 References

   1. ^ Digital Journal
   2. ^ London Times
   3. ^ Bismarck Tribune
   4. ^ CBS News: 11 Charged In Web Gambling Crackdown
   5. ^ Online gambling bosses arrested in France (Guardian article)
   6. ^ Forbes: Bush Signs Safe Port Act
   7. ^ WhichPoker: UIGEA Safe Port Act Legislation effect on Online Poker Rooms
   8. ^ Random number generator analysis
   9. ^ Shuffling review