As “The Poker Philosopher”, and in honor of one of my favorite non-poker blogs, I occasionally consider the ethical dimensions of a high-profile controversy or occurrence in the poker community. This is the first in a series of posts about the major players in the recent Poker Stars – Full Tilt Poker – Department of Justice settlement. Older editions of The Poker Ethicist are available in the archives.

Q: As you’ve probably heard by now, the Department of Justice recently approved a settlement in which PokerStars will buy the remaining assets of Full Tilt Poker, pay a fine to the DOJ, restore the FTP balances of non-American players, and ultimately re-open the site. American players (more specifically those of us who were Americans as of June 29, 2011), via a process yet to be determined, will be able to apply to the DOJ for restitution of our money. The online poker community, myself included, is understandably elated about this near-ideal resolution to perhaps the darkest chapter in our short history.

Many direct their gratitude towards PokerStars. The word “savior” has been tossed around liberally. Numerous Stars-sponsored players have expressed pride at representing the company. Short Stacked Shamus, in a characteristically entertaining blog post, paints PokerStars as the hero in a John Wayne-esque narrative of law-breaking and vigilantism. Dominic Kofert, CEO of PokerStrategy.com, sees them as the benevolent dictator of the new world order of online poker:

Once the acquisition is completed and Full Tilt goes back online, PokerStars, which already has a world-wide market share of around 60%, will have substantially grown the margin by which it is the largest operator in the world. With most competitors severely struggling, I will not be surprised if PokerStars/Full Tilt’s market share reaches 75% by the end of 2013.

For many, this market dominance will be something to worry about. However, judging by PokerStars’ conduct over the past years and assuming that the company’s great philosophy does not change now that PokerStars.com co-founder Isai Scheinberg has to step down, I think that PokerStars will act responsibly and with the players in mind going forward – as it has always done in the past.

Do we owe PokerStars our gratitude? Or was this just a savvy maneuver to acquire their largest competitor and establish a near-monopoly on online poker? Should the average player really be celebrating this deal?

A: To quote Grandpa Simpson, “A little from column A and a little from column B.”

Let’s start with the obvious: PokerStars isn’t doing anything out of the goodness of their heart. There’s been rampant speculation about why the company would be interested in Full Tilt. Did they seek its customer database? Good will with the DOJ? Good will with the online poker community? Re-entry to the US market? All of the above?

Your guess is as good as mine. Whatever their reasons, I believe Stars wouldn’t have purchased FTP unless they believed it was in their interest to do so.

I know they’re playing a game and acting strategically in their own best interest, but that doesn’t mean I’m not grateful. What I’ve always respected about Stars – I used to represent them myself – is that they are playing a long game, and that’s good for customers.

Among other things, PokerStars has just purchased a generous helping of legitimacy for online poker. Black Friday and subsequent revelations about the FTP “Ponzi scheme” made mainstream headlines around the world and surely scared away thousands of would-be depositors from other online poker sites. Making the affected players whole may not undo the public relations damage entirely, but it’s a gigantic step in the right direction.

The companies that have done the most harm to online poker – Full Tilt Poker, Ultimate Bet, Absolute Poker – were playing a short game. Common wisdom once held that no company would risk slaying the goose that laid the golden egg by stealing customer money. That assumption proved wrong. Principals at all of those companies chose a short-term windfall over an uncertain but potentially even more profitable future. In other words, they took the money and ran (or not).

In ways large and small, PokerStars has repeatedly demonstrated that they are in it for the long haul. It’s clear from their recent actions that they expect to be in the online poker business 10 years from now, and they’ve just made an investment that may take that long to mature.

That makes them a good company to work with, because it means that good customer service is in their interest. They want satisfied customers and repeat business. They want legitimacy and a regulated, predictable marketplace. Their business model seems to align with the interests of their players in a way that, at least in retrospect, FTP’s and UB’s did not (though also in retrospect, the signs were there: re-entry tournaments, anyone?).

Arguably, FTP and UB made the wrong choice, not just ethically, but financially. They may well have made more money by running honest businesses. Sometimes greed overtakes good business sense, and sometimes people are just short-sighted.

I’m grateful that PokerStars has so far eluded these pitfalls, but I don’t delude myself into thinking that they are playing sheriff out of an innate sense of justice. Nor have they claimed to be. In fact, I would distrust any company that did claim such.

I expect a large corporation to act in its own self-interest. If one tries to tell me they are not, then they’re lying, and that makes me suspicious. I’m far more comfortable in a relationship where I know what game the other party is playing and I can see how their interests align with mine. Both PokerStars and I have an interest in the long-term viability and legitimacy of the online poker industry, and that makes me glad to be their customer, even if I’m not kissing their feet. I’m grateful that they seem to have the foresight that some of their competitors lacked, and that even as they close this landmark deal they continue to work tirelessly to serve their customers.

That doesn’t mean that I’m sanguine about a single company possessing such a large share of the market. I feel better when a company, no matter how benevolent the owner (who, by the way, is stepping down as a condition of this settlement) or how strong the track record, feels that treating their customers right is good business and not simply “the right thing to do” as a matter of principle. Principles change, especially when there’s a lot of money at stake.

Thankfully PokerStars still has a lot of self-interested reasons to treat its customers well. They may soon face competition from gaming mega-brands like Caesar’s/World Series of Poker in a regulated US marketplace. They know that they can’t afford to rest on their laurels if they want to gain access to that market at all, let alone be competitive in it. It’s no coincidence that PokerStars’ own announcement of the settlement concludes with these words:

Our settlement acknowledges that both PokerStars and Full Tilt are eligible to apply for a license in the U.S. to offer real money poker when states or the federal government offer such an opportunity. We look forward to this opportunity and are confident that we bring tremendous value, regulatory experience, market credibility and financial integrity to the marketplace.

We’re optimistic about the future and we look forward to sharing the next chapters in our history with you.

My sentiments exactly.

Segregation is reprehensible when it carries with it a “badge of inferiority” or assigns privileges and opportunities to people based on factors beyond their control. This is not the case here, where men have 50+ other WSOP events, including numerous other $1000 buy-in events, to play. Significantly, every single one of these is a male-dominated affair. Any male player would be hard-pressed to demonstrate how the existence of a single Ladies’ Event harms him personally. The purpose of this tournament is not to push men away from the game but to draw women in.

This year female poker player Victoria Coren has made the case in a much simpler and more persuasive way:

Make no mistake: the guys who sit down in this tournament are the same sort of people who’d barge past old folk in a queue, or slide their cars into disabled parking spaces. When they think they’ve spotted weakness, their minds leap immediately to their own personal gain. Which is a pretty scummy way to think, even if they don’t know they’re thinking it. They’re not just insulting the women who play, but the men who are decent enough not to. They must see those men’s good manners as weakness as well. After all, if they were really trying to make a political point about the tournament, they would protest outside – not join it.

The common-sense ethical appeal of her argument is well-encapsulated in the British slang that she uses to describe Brandon Uhl, the young man she encountered in this year’s Ladies’ Event: wanker. The Ladies’ Event is a nice, once-a-year opportunity that nearly 1000 female poker fans from around the world enjoy playing. Men who insist on entering it are selfish and rude, ruining many other peoples’ good time for their own perceived advantage. It’s as simple as that.

It reminds me of some of the teenagers I’ve met through my work in urban public education. Many of these kids come from circumstances that force them to grow up early. For a variety of reasons, they may be responsible for not only themselves but younger siblings from a very young age. Many have seen violent crime and drug addiction up close, in a friend or family member if not personally.

Consequently, they can seem deceptively mature. One minute, you can be having a deep, serious conversation about religion or education and you feel like you are talking to an adult. Then suddenly your 15-year-old interlocutor will ask you a question like, “Is Bush a Democrat or a Republican?” or just interrupt himself mid-sentence to go run after a girl he’s interested in, and you remember that you are still dealing with a child.

That’s how I felt reading Haseeb’s “confessions” and Daniel’s interviews. These are individuals who have achieved incredible success at a very difficult game, who are dealing with staggering sums of money, and who are suspected of perpetrating some very complicated and serious fraud. It’s an adult situation, and while at one moment they seem to recognize the gravity of it all, in the next they are offering ridiculous, frivolous justifications for their behavior: ” It’s one of those things that happens and that everybody does and has been guilty of at one time or another” (Haseeb on the 25/50 heads up PLO session that he played on the Girah account) or “Maybe I should have confronted Haseeb, but coming out and saying something publicly is nothing but the most sanctimonious mother fuckers would ever do.” (Daniel on why he wouldn’t have said anything even if their chipdumping had resulted in Girah winning the Lock Poker challenge illegitimately).

Of course there’s the open question of to what extent anything that these guys say can be believed. The naivete is there either way, though. Either Haseeb and Daniel really did stake Jose for $100,000 without investigating his results, or they expect the poker community to believe they did. Either they really did think that chip-dumping was the best way to get the money into Jose’s account, or they expect us to believe that they had no idea the dump would give Jose the lead in the Lock challenge. In either case, the naivete is staggering.

Time and again, these scandals that rock our community seem to be caused at least in part by extremely immature individuals who take their ethical cues from a very small and specific peer group and are at best out of touch with the larger context of their actions. How many times have we heard that “everyone” was multi-accounting the Sunday Majors (Bonomo), “everyone” was buying accounts (Mizzi), “anyone” would take a UB sponsorship if money were thrown at them (Sebok et al) etc.?

It’s possible that these are just ex post facto justifications, but I’m often inclined to believe them simply because the perpetrators make so little effort to hide what they are doing. Josh Fields was busted for multi-accounting because one of his friends bragged about him winning a major tournament on an account that wasn’t his. Instructors used to produce videos all the time where they played on other people’s accounts, as though the fact that it made for better videos justified the harm done to their opponents. Dan Flowers produced instructional videos in which his HUD showed tens of thousands of hands’ worth of data on opponents with whom he’d played only a few hundred hands, clear evidence that he’d purchased datamined hand histories.

All of these players were probably aware that they were doing something a little shady, but the fact that they made so little effort to hide suggests that they honestly didn’t believe it was that big of a deal. In some sense, they were right. Of the players I mentioned in the last two paragraphs, Fields is the only who is still persona non grata in the poker community. A shocking number of players support accused cheats in the “no big deal” defense, and sponsors (who remember are often relatively immature suddenly-wealthy individuals themselves) are generally willing to overlook these things. Likewise, if they are good players and/or fun to hang out with (by the way, isn’t it shocking how many of these folks caught cheating were already making tons of money on the up and up?), other members of the community are surprisingly quick to forgive them as well.

There’s a pervasive sense in our community that skirting (to be generous) ethical lines is no big deal if “everyone else” (meaning your small circle of similarly situated and self-interested friends) is doing it, if it is convenient or profitable for you (for some really laughable ethical reasoning, check out this thread about US players playing over a VPN), or if the only victims are “fish” (Tommy Angelo is the only poker player I’ve ever heard condemn the practice of berating opponents simply because it’s a bad way to treat other human beings rather than because it’s bad for the game).

This self-centered mindset where the only ethical compasses are one’s own self-interest and the approval of one’s immediate, usually biased peers is fundamentally immature. Even more immature are the half-assed apologies and justifications and the general attitude that pristine ethical behavior can’t be expected from poker players.

Well, maybe it can’t be expected, but it ought to be demanded. We all probably ought to be more skeptical than we are about our competitors. We also ought to demand better behavior and have higher consequences when people fall short. It seems like even after a player acknowledges wrongdoing, he rarely makes any effort to rectify the problem. See Cates’ unwillingness to repay money he won when playing on the Girah account for a recent example.

Poker players aren’t saints, and I’m not saying that an ethical infraction ought to get you shunned for life. But I do think we ought to demand a little more, from others and from ourselves, before we let it all become water under the bridge. It’s the mature thing to do.

As “The Poker Philosopher”, and in honor of one of my favorite non-poker blogs, I occasionally consider the ethical dimensions of a high-profile controversy in the poker community. Today, I consider the WSOP Ladies’ Event, which began yesterday and is scheduled to conclude tomorrow. Older editions of The Poker Ethicist are available in the archives.

Once again this year, a handful of men have entered the WSOP Ladies’ Event, citing a belief that a women-only event is discriminatory and a Nevada Gaming Commission policy that prevents the WSOP from actually excluding, rather than just discouraging, male players. Critics of these men say that they are only playing because they expect the field to be softer (no pun intended) than open events of comparable buy-in.

Do these men have a case for discrimination? Is it ethical for the WSOP to offer an event that excludes (or at least attempts to exclude) players based on their gender?

It is. This event serves not to exclude but to include.

Segregation is reprehensible when it carries with it a “badge of inferiority” or assigns privileges and opportunities to people based on factors beyond their control. This is not the case here, where men have 50+ other WSOP events, including numerous other $1000 buy-in events, to play. Significantly, every single one of these is a male-dominated affair. Any male player would be hard-pressed to demonstrate how the existence of a single Ladies’ Event harms him personally. The purpose of this tournament is not to push men away from the game but to draw women in.

Historically, only about 3% of players in the main event have been women. Walk into any poker room at any hour of the day and it’s easy to see that women are in the distinct minority. There may be reasons why poker is intrinsically more appealing to men than to women, but surely it is not thirty times more appealing. There must be other reasons for women’s underrepresentation at the poker tables.

Granted, as a man, I am not the best spokesperson for this cause, and it is not my intent to speak for female players or to claim that my observations are perfectly consistent with their experiences. In my experience, though, a female poker player is virtually guaranteed to get comments at the table. These range from relatively innocuous banter (“That’s a big raise for a little lady”) to outright sexual harassment. Casinos may be empowered to stop the worst of it, though they generally don’t, but on the whole there seems to be no avoiding the fact that a female poker player must deal with comments and attention directed at her because of her gender.

Granted, needling and table talk can be part of the game. I don’t mean to argue that women are necessarily entitled to a poker game free of such talk or that males who “fold to the pretty lady” ought to be penalized in anyway. I do think, however, that a desire to avoid such situations keeps many women from playing live poker, and that’s an unfortunate outcome.

Having more women playing poker is valuable in a number of ways. For one, it’s generally good for the game when more people, whoever they are, play. There are a wider selection of games available and more money in the poker economy. Women represent a tremendous, largely untapped market into which the game could expand. This is a worthy goal for the WSOP to pursue, and if they believe that a Ladies’ Event will help them to accomplish it, then they are justified in hosting such an event.

Second, appealing to a broader pool of players is a good thing. Our game is embattled in many parts of the world right now, and winning hearts and minds will require demonstrating that poker is a game with mass appeal, not an unhealthy fixation for criminals and degenerates. There’s a reason that the Poker Players Alliance repeatedly chose Annie Duke to testify before Congress, and it’s because as a mother of four she portrays a wholesome image.

Duke actually argues that,

the Ladies event is not bringing more women into the WSOP. If that were the case we would expect the % of women playing in open WSOP events to have grown over the years and that is just not the case. The % of women entering open WSOP events has remained pretty steady at 3 to 5% of the field

Over 1000 women played in the Ladies’ Event last year. Of course some of these women probably would have played a different event has this one not been available, but many of them surely would not have played at all. Whether they go on to play open events in the future or not, they are still playing at a higher level and stepping up their involvement in the game. They may be more likely to host home games, to play at their local casinos, and to talk about and share the game with friends. When people learn that respectable folk like their friends and neighbors play poker, the stigma that the game still faces in some circles will be broken down.

Duke also asks,

“Why is there a Ladies Event if poker is measuring mental acumen? Are we saying there is a difference between the intellect of men and women that means that somehow we need a separate championship event just for the women? What is that really saying about how we view women in comparison to men on the mental playing field?”

To my knowledge, no one has said this. It’s possible that the event had its origins in some patronizing thinking, but these days I’m not aware of any proponent who argues that women need their own tournament because of some mental deficit relative to their male counterparts. The Ladies’ Event is a marketing tactic designed to draw women into the game, not to demean them or to marginalize male players in any way. If the argument is not that women can’t compete with men but rather that many choose not to for reasons that have nothing to do with a perceived inferiority, then it makes no statement about the skills or capabilities of female players.

The World Series of Poker is about a lot more than crowning the best of the best these days. The WSOP is now the world’s largest poker festival and the dream destination for millions of recreational players. The smaller buy-in tournaments are where amateurs get a chance to play for life-changing money and rub elbows with their heroes from TV. If a Ladies’ Event can encourage more women to have these experiences, then that’s good for the game and everyone who plays it.

CNN reports that,

“Celebrities who won big money in secret high-stakes poker games at Beverly Hills luxury hotels were paid with funds stolen from investors who had been lured into an illegal Ponzi scheme, a series of federal lawsuits contends.

Actors Tobey Maguire, Nick Cassavetes and Gabe Kaplan, along with professional poker player Dan Bilzerian, two nightclub owners and a Los Angeles lawyer are among at least 11 people being sued by a bankruptcy trustee.”

The lawsuit alleges that Bradley Ruderman fraudulently solicited millions of dollars in investments from at least 22 individuals and lost some of that money in an underground poker game played with the afore-mentioned celebrities as well as Matt Damon, Ben Affleck, and others. It seeks to recoup funds lost to these players so that they can be returned to Ruderman’s victims. Are the investor-victims ethically entitled to the return of these funds?

They are not. If the players who won money from Ruderman had no reason to believe that he was gambling with other people’s money, then they are entitled to their winnings. The simple proof of this is that had Ruderman won money in the game, losing players would not be entitled to collect their losses as part of the fund’s bankruptcy proceedings even if it became apparent that Ruderman had been playing with money that was not his own. A rule like this would enable the investors to freeroll Ruderman’s opponents in the game, entitling them pay nothing if Ruderman loses but to keep anything he wins. The fact that Ruderman probably would have never have returned any winnings to his investors is immaterial. The crime is his, and his victims are entitled to recompense from him, not from others who later received that money through no fault of their own.

We can draw an important distinction between this case and the attempts to repay investors who lost money to Bernie Madoff from the funds of those who unwittingly profited from the scheme. In that case, there is a reciprocal relationship between the “winners” and the “losers” in that both were investors with Madoff. Had the timing been different, the “winners” could easily have been “losers” themselves and entitled to recompense from beneficiaries of the scheme. There is no freeroll in this instance, no group that can win but never lose.

The lawsuit alleges that because the game was illegal under California law, “the player[s] had no legally enforceable contractual right to receive payment.” This may create a legal entitlement on the part of the investors, but it does not create an ethical one.

The only way in which the recipients of the funds could be ethically implicated is if they knew the money was fraudulently obtained. In that case, permitting them to keep the money would enable thieves to launder stolen money through poker games with friends, claiming that it is unrecoverable because lost fair and square. If the winners are not in on the impropriety, however, then there is no danger of this and thus no additional harm is done to Ruderman’s investors as a result of his playing poker with their stolen money. If he wins, they win (at least until he finds another way to squander their money), and if he loses, they lose. This time, they lost.

The real winner here is Gabe Kaplan, who is probably thrilled to see his name appearing in Hollywood gossip magazines alongside those of A-listers like Toby Maguire and Matt Damon.

It surprises me how openly otherwise honest poker players discuss their tax evasion. It is not at all uncommon to see thinly veiled references to money laundering or wink-and-nod jokes about unreported income on poker forums. Whereas the poker community is (rightfully) quick to heap its scorn upon multiaccounters, scammers, and even people who still play on UB, there seems to be no community norm against tax evasion.

In the United States as in many other countries, gambling winnings are subject to income tax. This is true even if earned overseas, even if the sites are not regulated in the US, and even if the income is not reported to the government by the sites.

Income tax is a crucial source of revenue for governments and provides funding for vital public goods as diverse as professional fire fighters and law enforcement, military and national defense, food safety and public health inspection, and roads and infrastructure. These are goods from which virtually all citizens benefit and to whose costs all citizens are expected to contribute.

They are also a classic tragedy of the commons. Because their costs are shared by hundreds of millions of people, no single individual feels that his own contribution will affect these goods in a meaningful way. Thus the temptation to under-report one’s income, preserving funds for the immediate gratification of personal use and continuing to enjoy public goods without contributing one’s own fair share. This freeloading is cheating as surely as multi-accounting a tournament or scamming a backer, yet it is far more accepted in the poker community.

I want now to address a few of the common justifications for this unethical behavior:

I Don’t Like How the Government Spends My Money

No one supports everything that the government does. That’s part of living in a democracy. Cheating on your taxes withholds support not only from the government programs and services you dislike but also from those you endorse and from which you benefit.

There are legitimate channels for expressing disapproval of particular government programs, or of government in general, but underreporting income is not one of them. You can campaign and vote for politicians who support your views, voice disapproval to your representatives, or participate in an organized protest.

Even nonpayment of taxes can be a legitimate form of protest, assuming that one is willing to accept the consequences. Henry David Thoreau famously chose prison over payment of a poll tax, his form of protest against legalized slavery.

Thoreau’s willingness to invite punishment for his nonpayment of taxes infused his protest with moral authority and raised awareness about the problem. A college professor of mine once said, “Martin Luther King didn’t write the Letter From a Birmingham Days Inn”. King, inspired by Thoreau, employed civil disobedience publicly to draw attention to racism and discrimination. Forcing the government to punish him dramatized the problem and brought it to the attention of the world.

Cheating on your taxes in secret accomplishes none of these lofty goals. If you have serious grievances with your government, underreporting your income is a cowardly and unethical response. I suspect that in most cases this is merely a pretense for not wanting to pay one’s fair share, but those who really feel strongly about the issue should be issue to make their opinions known publicly and accept the consequences.

I Don’t Use Government Services

Do you drive? Do you fly? Do you have a cellular phone? Do you buy food and otherwise participate in commerce? If your house caught on fire, would you want to have it put out? Do you enjoy not being robbed in the street or invaded by hostile neighbors? Then you benefit from government services.

It’s virtually impossible to avoid. Unless you are a hermit with a self-sustaining garden and a shotgun (and probably even then), you benefit from government services. If you think that the amount you pay is out of proportion to the benefit you receive, you’re probably wrong, but in any event it doesn’t matter. What you pay and what you receive and are determined by a democratic process of which you are a part. Which brings us to…

My Taxes Are Too High

Again, everyone would prefer to pay lower taxes. This isn’t something you get to decide unilaterally. Your taxes are set by your government in proportion to the services provided by that government. Of course everyone disagrees about the proper balance here. That’s what politics is for. The process is far from perfect, but there is a process.

If you have deep disagreements with your government’s tax code, then you can advocate for change or you can leave. You cannot ethically choose to remain a citizen, benefit from government services, and withhold your contribution thereto.

Ironically, if no one cheated on their taxes, then everyone’s tax rate would be lower. Refusing to pay your fair share simply distributes your share to honest taxpayers, who really do end up paying too much because the scofflaws are not paying enough.

The System is Designed to be Gamed

It’s true that most tax codes are designed with quite a few loopholes, exceptions, and deductions. Tax codes are designed with the understanding that many citizens will aggressively take advantage of these opportunities to decrease their tax burden. Accountants skilled in this process command huge salaries.

However, there is a difference between taking advantage of loopholes and underreporting income, and it’s essentially the difference between cheating and playing a game fairly. If you report your income honestly, track your deductions aggressively, and end up writing off a fair bit of your income as untaxable in a way that you can defend in an audit, then more power to you. If you underreport your income and exaggerate your expenses, then you are cheating.

This post is addressed to all of the honest, upstanding poker players who wouldn’t dream of cheating during a game, scamming a backer, or welching on a bet. Sorry to break it to you, but if you aren’t paying tax on your online poker income, then you’re a cheater, no two ways about it.

Technology always pushes the boundaries, especially ethical boundaries. The primary way to think about these boundaries, I think, is the way Andrew presented them: Does everyone have the same understanding of what is allowed, and the same opportunity to use technologies which are allowed? If so, no ethical problem.

I think the conditions that he identifies are spot-on, and I want to delve a bit deeper into them. This time around I’ve got more questions than answers, so I’ll be very curious to hear your opinions on the subject.

The Right To Know

My claim is that use of any technology allowed by the rules of a casino or poker site is ethical, and that using anything disallowed is unethical. This is because, by choosing to play at a particular venue, players agree to both their host and their fellow players that they will follow the posted rules.

As piefarmer points out, this presumes that everyone understands the rules, or at least has the opportunity to do so. Exactly what obligation does this impose on a casino or poker site? Certainly the rules need to be readily available, in writing, for any player or potential player to inspect. Assuming that they are, then I would argue that choosing to play at that venue constitutes agreement to follow those rules, even if the player never actually reads them or fails to understand them correctly.

I think that there must also be a way for players to receive clarification as to the meaning of rules. At live venues, this requires readily available floor staff and properly trained dealers who can explain things clearly and accurately. As many of us know, getting a consistent answer to a question about the rules is not always a trivial matter when playing live poker, and I believe that to be a serious failing of a casino’s obligation to its players.

Is there any obligation on the part of online poker sites to affirmatively warn their players that others may be using HUDs and other technology? I’m sure there are people every day who start playing online and have no idea that such software is available or that their opponents may be using it.

It seems to me as long technology is mentioned somewhere in the Terms & Conditions, the site meets this obligation. I’m interested to hear people’s opinions on this, though. Is there anyone who would argue that sites have an obligation to be more assertive on this point? Perhaps announce to all their players, via e-mail or pop-up, whenever they add a new program to the list of approved software?

Equal Access

This is a thornier question. Is equal access to technology essential to make it ethical? What if there were some piece of poker software that somehow violated the laws of the US but were legal in most other countries. Would it be ethical for a poker site to permit the use of this technology? Would it be ethical for players to use it? What if there were some amazing software whose creator refused to share it with anyone other than a select group of his friends?

Also, is the cost of the software relevant? If there were some amazing software that was readily available for purchase and use by anyone but that cost thousands of dollars, would we still be able to say players had equal access to it?

In response to a recent post I made about using a HUD, commenter “Elmer Fudd” asked,

“I would like you to comment on the ethics of using a HUD in the first place. It most certainly gives you an edge over players that don’t use such software and provides you with stats that you couldn’t readily obtain during a live game. I guess I’m an old-fashioned poker purist, but anything that gives you a slight edge over other players is cheating. “

I would say anything that gives you an unfair edge is cheating. Sleeping and eating better than my opponents gives me an edge. Reading more books than they do gives me an edge. Using a second monitor gives me an edge over opponents attempting to multi-table on a single monitor. Yet none of these is unfair, because my opponents have equal opportunity to take advantage of them.

An edge becomes unfair when it violates the rules of the game as defined by the casino or site hosting the game. Even if you disagree with a particular rule or believe that other players are violating it, violating it yourself is unethical because it is essentially dishonest. By playing on a particular online poker site or at a particular casino, you are promising your fellow players that you will abide by a particular set of rules. This defines the parameters of the game, the ways in which players may and may not seek an edge.

When I sit down at a live game, I accept and agree that physical tells will be part of the game, and that signaling to a partner at the table will not. My opponents, in turn, agree to the same. They know that to keep up with me in this contest, they will need to practice their face-reading skills but not their sign language. If I were colluding with another player, this would gain me an unfair advantage, because it is one my opponents are not expecting me to have and one that they have themselves agreed not to pursue.

On sites that allow them, HUD’s are a legitimate part of the game. Insofar as they do not violate a site’s terms and conditions, then everyone playing on the site implicitly agrees that they are allowed. Some may use them more than others, and some may choose not to use them at all. Similarly, I might choose not to attempt to pick up physical tells during a live game, but this does not make it unethical for my opponents to do so. As long as I have the same opportunity, the playing field is level.

Using a HUD on a site that prohibits it, even if you were to find a way to make the HUD work and to evade detection, would not be ethical. Doing so would violate your agreement with the site and with your fellow players on that site. It would give you an edge that your honest opponents would not enjoy, and this would be unethical.

Online poker is not merely a derivative form of live poker. It bears many similarities, but also many differences. Just because something would not be allowed or possible in a live setting does not mean that it is unethical when done online, any more than a rule prohibiting cell phones at the table at the Rio would it make unethical to use a cell phone at the table at MGM. Different venues have the right to establish their own rules. Some players may prefer the rules generally found in a live setting to those found online, but they may not impose their preferred rules as an ethical obligation on their online competitors.

The latest scandal to rock the online poker world is Nick “Stoxtrader” Grudzien’s admission that he has played under multiple screennames on both Poker Stars and Full Tilt Poker. According to his post in the 2+2 thread on the subject:

In the last few days various allegations have been made that I have played on multiple accounts on FTP and Stars and that by doing so I have violated the terms and conditions of the sites and also cheated in ways including colluding. The relevant facts are:

(1) At no point have I ever colluded. This is a categorical denial without exceptions.
(2) I played on a single account on FTP and a single account on PokerStars for the previous four year period through January 2010. The only exception to this was when I made instructional videos.
(3) In January 2010 I created one new account on FTP and one new account on Stars. I played on these accounts for roughly one month and have not used them since. During that time these were the only accounts on which I played at these sites. I have not played poker since March 7th, and will not play again until I receive communication from a pokersite that I am able to do so.

Since I have admitted to breaking the TOS of stars and ftp I don’t plan on playing any poker until I receive communication from the pokersites that it is ok to do so, and at that time I can share the details of any information I recieve from them. FTP and pokerstars are aware of the allegations and I have encouraged them to do a full and thorough investigation to confirm that what I say is completely accurate. I would like to have the opportunity to continue to be a contributing member of both stoxpoker and 2+2, I ask for your patience while these matters are sorted out over the next few days.

As Grudzien’s post suggests, there are at least three issues here, which I’ll address separately.

I have little to say about the allegations of collusion. Smarter people than I agree that the evidence looks pretty damning, and should they prove true, I don’t think there’s any question that this would be unethical.

Is it ethical to maintain a separate account for the purpose of making instructional videos, either to avoid providing potential opponents with information that can be used against you or to ensure that people do not play differently against you because they know you are recording the session? I would argue no on both counts.

Both Poker Stars and Full Tilt Poker forbid players to play on more than one account. Lee Jones, the former poker room manager at Poker Stars, once suggested that online poker would be better off if everyone played under a new screenname every session, insuring anonymity for everyone. Regardless of what you think of the one-account-per-player policy, though, it is currently the rule and must be followed. To do otherwise is to gain an unfair informational advantage over opponents who play by the rules. In the current online poker environment, players have a right to know who they’re playing against.

Loss of anonymity is to some extent the price you pay for the opportunity to earn money as a coach or instructor Grudzien could have simply obscured his screenname in post-production, as I used to do in my videos. While this doesn’t provide total anonymity, it solves the worst of the problem without harm to one’s actual opponents in the video. Moreover, Full Tilt Poker provides special “educational” tables where its affiliated Cardrunners pros are allowed to make videos pseudonymously, and all players there understand in advance that this is a possibility. Given Stoxpoker’s relationship with Cardrunners, this ought to have been an option available to Grudzien as well.

Even obscuring one’s screenname in an instructional video is not entirely beyond reproach, though, which is part of why I stopped doing it. Grudzien’s customers and students deserve full information about the person they are paying. I don’t consider the practice downright unethical, because ultimately students can choose not to hire Grudzien if he refuses to disclose his screenname and results, but even this requires that they at least be aware that plays under another account than the one they know from his videos.

In Grudzien’s case, the problem is particularly acute since it seems his primary account was actually a well-known ratholer (ie, a player who buys in for the minimum, plays almost exclusively pre-flop poker, and quits if he doubles up). Regardless of what you think about ratholing, students paying for poker instruction have a right to know that the person they are hiring engages in the practice, as this potentially limits his experience and authority regarding post-flop play.

Thus far, Grudzien has been cryptic about why he changed screennames in January:

There are online poker players who have used 2nd screenames for the purpose of deceiving others into giving them action, evading taxes, collusion, entering multiple times into the same tournament, ghosting, to obscure previous results and stats, to clear extra bonuses, to circumvent affiliate CPA or rakeback rules, to bypass the pokersites shortstack buy-in time limitation, to teamplay, to share action with others at the same table, to chip dump or otherwise engage in underhanded actions I do not know about. I have never done any of these things. Beyond that I cannot and will not comment on the screename issue, nor can I say why I cannot elaborate further other than to say that my reasons for that are serious and personal.

Contrary to the demands of the bloodthirsty mob, Grudzien does have a right to privacy and does not have to out his “serious and personal” situation to anyone. Even without knowing the situation, however, I feel comfortable stating unequivocally that changing screennames is not an ethical response.

Regardless of Grudzien’s intentions, playing under a new account provides him with an unfair advantage over his opponents. He knows who we are and have data on their play, but we do not know who he is. I say “we” because, if Nick really is 40putts/bulltf0rdtuff on FTP and Knockstiff/gr3atvlewbr0 on Stars, as is widely believed, then I myself had a good deal of experience with all of these accounts. In fact, there’s some unintentional in “Dominating Short Stacks”, the most recent video I’ve published on Poker Savvy Plus, in which I play against a table full of short stackers on Poker Stars. One of the players was gr3atvlewbr0, who at the time was unknown to me.

At one point, I say, “bballjim and greatview, to the best of my knowledge, are not professional short stackers…. [T]hey very well might be recreational players”. I go on to contrast them with Littlezen and hibachi41, who are professional short stackers, and explain what I expect to be the differences between them. I specifically talk about adjusting my open raise sizing to gr3atvlewbr0 in a way that I wouldn’t against a professional short stacker because I don’t expect him to be able to exploit it as well. I talk through a hand where I lead the flop instead of going for a check-raise because I don’t expect a recreational player to continuation bet a missed flop as often as a professional would.

All of this indicates the kind of informational disadvantage I was at against this new account, while Grudzien had access to all the data and experience he had on my foucault82 account, the only screenname I’ve ever used on Poker Stars. No matter how serious the mysterious problem facing Grudzien may have been, he has no right to a solution that comes at the expense of myself and everyone else who played regularly with his old accounts.

It turns out I didn’t recognize these guys because they are regulars in games so big I don’t even keep an eye on them to see if they’re ever worth playing. One guy was described as a “regular” at 300/600, which doesn’t even run regularly, so I’m not sure whether one can really be called a regular in them. In any event, I decided these weren’t actually games I wanted to play in.

In the meantime, though, I picked up some cards and won some big pots, including this one:

Full Tilt No-Limit Hold’em, $80.00 BB (5 handed) – Full-Tilt Converter Tool from FlopTurnRiver.com

SB ($13765.10)
Hero (BB) ($8080)
UTG ($14597)
MP ($19746.50)
Button ($17475)

Preflop: Hero is BB with A, A
UTG bets $240, 3 folds, Hero raises to $820, UTG calls $580

Flop: ($1680) 10, 10, 2 (2 players)
Hero bets $1212, UTG calls $1212

Turn: ($4104) A (2 players)
Hero bets $2468, UTG calls $2468

River: ($9040) 9 (2 players)
Hero bets $3580 (All-In), 1 fold

Total pot: $9040 | Rake: $3

Results:
Hero didn’t show A, A.
Outcome: Hero won $9037

I completed my third orbit at each table and said, “Peace, I’m out,” having averaged something like $200/hand.

Yes, I hate it when people win a big pot and quit. Yes, I give them a hard time about it in chat. Do I feel like that makes me a hypocrite? Not really.

I get that for a lot of people, it’s a wise move not to stick around in a tough game when they have a lot of money in front of them. I don’t generally believe that they’re under any actual ethical obligation to sacrifice their self-interest for the sake of playing a few more hands. Quitting is good business for them; I get that.

Trying to goad them into staying is good business for me. If I think the guy’s a favorite to lose the money back, of course I’m going to try to get him stay at the table. Creating a generalized social more against hitting and running is in my self-interest, plain and simple.

For example, the other day I was playing heads up with a guy who sat out any time we got 150 BB or deeper. He was willing to start new 100 BB tables, but he wouldn’t keep playing deep. I gave him a hard time about it, I told him he wasn’t being sporting, etc., but ultimately… I started new tables with him. I would have rather played him deep, but it was still worth it to play him shallow. And in the end, I took him for a couple buy-ins.

That said, I don’t sit down in a game intending to quit if I win a big pot. But I will leave without compunction if the conditions that first led me to sit down change, ie if a fish leaves or, in this case, I learn that the spots I thought might be soft were actually quite tough.

Yeah, I bought in for 100 BB at a deep table, too, even though I always give a hard time to the weak regulars who do that at 5/10. See above.

The Situation: Until recently, Poker Stars used two alternate currencies for players who won satellites but either chose not to play the event or won multiple seats for the same event. $T could be used to buy in to any tournament on the site, and $W could be used only for special events like the WCOOP, the SCOOP, and satellites to land-based events. Neither could be used in cash games or cashed out directly.

Although Poker Stars did not itself purchase $W or $T from players, it did facilitate such transfers between players directly through its client. Thus, several businesses emerged to process such transactions, buying $W and $T in large quantities at less than face value and then reselling them at slightly higher but still lower than face value prices.

Earlier this week, Poker Stars decided to do away with $W altogether and convert all players’ $W into $T at face value. This was not privileged information, but Poker Stars did not announce it via e-mail, and many players were not aware of it. Because it was less flexible than $T, $W had a slightly lower value when exchanged for cash. And that’s where the complications arise.

According to a thread that he started on 2+2, George Lind III, a high stakes sit-and-go professional, regularly sold large amounts of $W that he won in single-table satellites to CashmanBrian, the largest buyer and seller of $W. This was a mutually beneficial arrangement: Lind got to convert large amounts of $W into cash, and Brian got $W that he could resell at a profit.

Aware of the imminent conversion, Brian asked Lind if he’d be willing to sell $W50,000 at their usual price. Lind, unaware that his $W was about to become more valuable $T, agreed. When he learned hours later of the conversion, Lind requested a refund of $900, the difference between what his money would have been worth as $T rather than as $W. Brian refused, initially feigning ignorance but ultimately arguing that business is business and that he had no obligation to inform Lind that $W was about to increase in value.

Did CashmanBrian unethically take advantage of Lind, or is this a legitimate act of speculation in which the more informed party rightfully earned his advantage in the transaction?

My Take: It is the former. In actively soliciting a sale that he knew to be disadvantageous to a business partner, Brian abused a trust that had been placed in him. Such dishonesty undermines not only CashmanBrian’s own business but ultimately the trust that is the lubricant for the entire poker economy.

Ethics exist to prevent individuals from pursuing their self-interest in ways that damage their community or society at large. Honesty is a core ethical imperative because it is essential to the functioning of virtually every aspect of most communities, certainly of an economy. Given that it is largely unregulated, the poker economy operates almost exclusively on trust. Players trust that the sites on which they play give them an honest shuffle and will pay out winnings. They trade, borrow, and invest huge sums of money with each other every day, often with minimal or no written contract. These transactions require all parties to extend some amount of trust to the others in the interest of achieving a mutually advantageous arrangement.

Brian took advantage of a trust that Lind extended to him to negotiate a deal that he knew would not be mutually advantageous. He had every reason to think Lind was not aware of the imminent conversion; indeed, if he were, Lind would have little to gain from such an exchange. If nothing else, the timing and the size of Brian’s request suggest that he was actively tapping his contacts to find individuals who did not know what Poker Stars was about to do and would be willing to sell $W at a low price as a result.

The “business is business” argument holds that Brian’s behavior was stupid but not unethical. In business, the argument goes, individuals are free to take advantage of each other in ways such as this, but only the most short-sighted will do so. Good businesspeople will recognize the value of trust, and this will serve as a check against exploitative behavior. For less than $1000, Brian alienated not only a valuable supplier but thousands of potential customers who will no longer do business with him. So while he was free to exploit an information advantage to make a quick buck, he will receive his comeuppance by losing more than that in future business, and George will learn a valuable lesson about doing his research and trusting a relative stranger.

While true, this is not sufficient. This would seem to excuse dishonest behavior if it were sufficiently well concealed or if the payoff were large enough to compensate for the loss of trust. In this case, taking advantage of Lind may not actually have been bad business. There is speculation that the $W conversion will spell the end of CashmanBrian’s business, in which case the trust of the community may not have much value to him anymore anyway.

More importantly, though, the theft at UB/AP has dramatically demonstrated the flaw in presuming that the value of trust alone will prevent bad behavior. It was long believed that online poker operators simply made too much money running an honest business to risk their reputations with theft. Sadly, the UB/AP experience proves not only that large-scale dishonesty is possible but that even when exposed, such behavior will not necessarily be disastrous for the business.

CashmanBrian’s actions undermine more than trust in his business alone. Every time that an incident such as this occurs, it increases the amount of grinding that must be done in all of the gears of the poker economy. The efficiency of these the poker economy is directly proportionate to the amount of trust that each individual feels he can place in any other other individual, some of whom he may never have met. When conducted honestly and efficiently, staking, borrowing, and trading are positive-sum transactions, exchanges where both parties come out ahead. If George Lind needs access to liquid cash and CashmanBrian has an extensive list of customers willing to buy $W, then all parties come out ahead when Brian facilitiates such a transaction. When I stake a talented poker player in an event that his bankroll wouldn’t enable him to play, I get a good investment and he gets the opportunity to play in a profitable game with reduced risk.

If honesty is not widely accepted as an ethical imperative within the poker community, then I will be less likely to stake players, to get staked when I need backing, or to trade money from one site to another. This harms both me and those who would otherwise have been my business partners. Every time there is an incident like this, members of the poker community are more likely to avoid mutually beneficial exchanges, to charge a larger vig on a trade, to insist on an escrow, or otherwise increase transaction costs to compensate for a lack of trust. This is a costly outcome for every member of the poker economy. Regardless of the financial consequences to him personally, CashmanBrian’s behavior must be considered unethical because of the harm that such dishonesty inflicts upon the entire community.

Edit: My girlfriend has just pointed out to me that, as a self-styled poker journalist, Sebok might well be held to a standard of journalistic ethics as well. In that light, endorsing a particular internet poker site might not be appropriate. But that’s beyond the scope of this article, as I mean to look more broadly about the ethics of any professional poker accepting sponsorship from them.

Joe Sebok, CEO of Poker Road Radio and step-son of Barry Greenstein, is the latest poker pro to sign with Ultimate Bet/Absolute Poker since the full extent of the cheating on those sites came to light. The company, ostensibly under new ownership, has conducted a major blitz to refurbish its image, signing well-known players like Cliff “JohnnyBax” Josephy, Adam “Roothlus” Levy (who told me, when I gave him a hard time about his UB patch during the 2008 WSOP, that after learning more about the situation he was having second thoughts about what was then a very minor affiliation with them), and briefly, Eric “Rizen” Lynch. It’s also credibly rumored that during the 2009 WSOP, they were offering considerably more than any other site to players willing to wear their logo at a TV table.

Needless to say, Sebok has caught a lot of flak for this decision on 2+2 and probably elsewhere as well. Many people view this as selling out, compromising his personal integrity for the sake of a lucrative sponsorship. In Sebok’s defense, he claims that his involvement was conditional on two things:

1) They always allowed me to speak my mind 100%.  I would never be a P.R. spinning machine for them and they shouldn’t expect that.  If something were to go down at Ub while I am there, I will be the first to blow the whistle and force the company to be accountable, not the last. 2) They also agreed to create a role for me within Ub that was more than just sponsored player. I would never be comfortable with Ub’s history unless I could have a direct impact on making sure that it never happened again.  With that said, I will also still be running PokerRoad obviously, but will also be taking part in reviewing their processes and adding my opinions as a formal consultant with the team over there as the “Media & Operations Consultant”

Having given myself the title “Poker Philosopher”, I’m going to follow after one of my favorite non-poker blogs and consider the ethics of endorsing UB/AP.

First off, a professional poker player endorsing UB/AP is qualitatively different from a random actor, athelete, or other celebrity endorsing, say, an insurance company or a soft drink. The latter is a relatively transparent financial transaction, and at least in our media savvy culture, most people understand that Britney Spears might not actually be as excited about Pepsi as she seems to be in their commercials. Though she might be able to coo some sugary lyrics, no one expects her to be an expert on sugary beverages. It is understood that she is lending her celebrity, not her expertise, to the product when she endorses it.

This doesn’t mean she is entirely off the hook ethically. If Pepsi were proven to contain a carcinogen or to employ child labor, Ms. Spears might reasonably be taken to task for endorsing it. In fact, such a strategy was employed when activists suspected that a line of clothing bearing Kathy Lee Gifford’s name was manufactured using sweat shop labor.

When a celebrity lends his or her name to a product closely related to his or her field of expertise, that celebrity must be held to a higher standard. We expect the Air Jordan to be not only free of grievous defect and grossly abusive factory conditions but also to be generally excellent athletic footwear. Michael Jordan has a responsibility to understand why Nike seeks his endorsement and how the general public will perceive it.

Similarly, a professional poker player has a responsibility to understand why UB/AP is so much more generous and aggressive than the other sites in recruiting sponsored players. They are trying to repair a tarnished image, and they are looking for players well-respected in the poker community to lend them credibility.

These players have an obligation to understand that by signing with UB/AP, they are endorsing the site as a safe place to play. There are many people, or at least UB/AP hopes there are many people, who will decide it is safe to play there because a trusted poker celebrity represents them. Intentional or not (and Sebok at least certainly seems to understand this), any player who accepts sponsorship from UB/AP is saying that is safe to play there. He (or she- I’m looking at you, Annie Duke) must be held to the same standard of truth as if s/he were literally saying this.

This means that Sebok or any other player has an obligation not only to ask about security measures but to establish affirmatively, to his own satisfaction, that there is no further cheating going on and that the past issues have been 100% resolved. If the company cannot provide him with proof of both of these things, then he cannot ethically endorse them or accept their sponsorship.

Sebok seems to understand this as well and certainly has been far more proactive in addressing these matters than have UB’s other sponsored players. If he really has done due diligence in verifying the current security of the games and the satisfactory resolution of the past issues, then ethically he is in the clear.

So has he? Some new information has emerged this week, including a (supposedly) comprehensive list of all of the superuser accounts. Sebok’s claims to the contrary, it does not seem that affected players have received full histories of their play that they can review for themselves, and there certainly seems to be insufficient transparency regarding the oversight that will be provided by the “regulatory authority” of the Kahnawake Gaming Commission. Nor is there sufficient transparency about who currently owns UB/AP and what happened to the “old owners” who are supposedly solely responsible for the cheating that occurred.

If Sebok has good reason to believe that his involvement with UB/AP can produce all of this information, then his decision to endorse them is an ethical one. But I have my doubts.

The last argument I want to address is one that’s come up a lot on 2+2, not only from random trolls but from some pretty good and well-known players. As an example, here’s an excerpt from a recent post by Jason “JP OSU” Potter, who incidentally was the victim of far-more direct theft himself:

“Not to mention all these nvgtards trashing for someone for taking a lucrative financial opportunity that would never be possible for them. It’s really easy to get on your high horse and bash someone from behind your keyboard, but what it comes down to is the fact that playing tournament poker for a living is really ****ing hard, not to mention at the same time attempting to swing a flailing business into profitability at the same time. How could any of you (save a very select few) ever know what your decision would be in that scenario when you’re getting paid an exorbitant sum of money to wear a ****ing patch?”

In other words, tournament poker is a rough way to make a living (or, in an alternate formulation, sponsorship is an essential part of making a living on the live poker circuit), and therefore a player cannot be judged for looking out for his own financial interests first. For what it’s worth, I dispute both that poker is a particularly difficult or demanding profession and that sponsorship is a necessity. But that’s beside the point.

Financial hardship is not an excuse for unethical behavior. And if one’s career necessitates unethical behavior, then that proves only that one has chosen an unethical career. Being a mobster is not an easy way to make a living, and it definitely requires whacking people when the boss gives the order, but does not excuse murder-for-hire.

Who are we to judge? We, the community of online poker players, are the ones at whom Sebok’s sponsorship is aimed. We are the ones to whom he is making a claim about the safety of the games at UB/AP. If it turns out that he has not verified their integrity, then he is, if not outright lying to us, at least risking the possiblity of lying to us by not verifying the accuracy of his claims. Many people, including some professionals, will be making significant financial decisions based in part on Sebok’s endorsement. He has an obligation not to abuse that trust, and we have every right to evaluate whether he is meeting this obligation in accepting sponsorship from UB/AP.