Life finds a way 

In 2012, French beekeepers in the Alsatian town of Ribeauvillé faced a problem wrapped in a mystery: their beehives had started to produce honey in unnatural shades of blue and green. The anomaly began in late summer, but continued into the autumn, prompting an investigation from the beekeepers who were understandably concerned.

2011 had been a particularly harsh winter and dozens of beekeepers in the region were already dealing with high bee mortality rates and dwindling honey supplies. This new turquoise-tinted honey was unsellable, so a cause and solution had to be found and fast. 

When nature failed to supply enough sustenance, the bees improvised.

The investigation led them to a biogas plant three kilometers away. The plant was processing waste from a Mars factory which manufactured the popular candy M&M’s. With insufficient natural flowers available to forage on, the industrious bees had turned to the residue left by the multicolored candy shells as an alternative sugar source. When nature failed to supply enough sustenance, the bees improvised. Life finds a way.

Black Friday

If the winter of 2011 was inhospitable for the Alsatian bees, it was even chillier for global poker players. In April of that year, the United States Department of Justice seized the dot com addresses of PokerStars, Full Tilt Poker, and Ultimate Bet/Absolute Poker and froze 76 bank accounts in 14 countries associated with the processing of payments for these entities. Player funds were withheld and prison sentences were sought for 11 defendants on the grounds that they were engaged in an elaborate criminal fraud scheme, using a small bank in Utah to mis-code transactions with other banks to bypass the Unlawful Internet Gambling Enforcement Act (UIGEA) restrictions.

In May, Blanca Gaming of Antigua, the parent company of Ultimate Bet and Absolute Poker, declared bankruptcy. Player deposits were lost. Player deposits on Full Tilt were also in jeopardy as it was revealed that the company had stopped segregating player funds, using player balances to fund future marketing campaigns and as a shareholder piggy bank.  

In July 2012, the US government dismissed “with prejudice” all civil complaints against PokerStars and Full Tilt, but only after coming to a settlement with PokerStars which included them purchasing Full Tilt and making the players whole. This was good news for the players with balances on the site but what followed were lean times for all players in an industry that had been booming. 

Trust lost

Poker had emerged from the primordial goo of road gamblers and riverboat shenanigans to become a respectable thing: a legitimate pastime, a mind-sport, even a TV product. The game grew its own mythologies. You’ve got to know when to hold’em and when to fold’em. A chip and a chair. Show me a good loser, and I’ll show you a loser. You call, it’s gonna be all over baby. If you can’t spot the sucker in your first half hour, then you are the sucker. Trust everyone, but always cut the cards.

online poker’s opponents were handed a blunt weapon

Trust was the issue again as the game that takes five minutes to learn and a lifetime to master was rightly under fire. An all-encompassing vision of the Wire Act was ultimately defeated in court in 2018 but, in the period following Black Friday, online poker’s opponents were handed a blunt weapon. Billionaire casino mogul Sheldon Adelson campaigned relentlessly against the legalization of online poker in the US and his significant efforts greatly reduced the willingness of several states to enter into interstate gambling compacts. 

From 2011 onward, the United States was shut out of the global online poker market, of which they had accounted for 35%. US citizens who played online poker for a living lost their livelihoods. Some emigrated, some began playing live, but many were forced to quit the game. Professional players the world over suffered, too, in a shrinking market and there was also a negative knock-on effect to live poker as the three indicted companies had been qualifying a large proportion of World Series of Poker players via online satellites.

A poker world fragmented

To make matters worse, in the years that followed, poker in the rest of the world became even more fragmented. France, Italy, Spain and Portugal became walled-off segregated markets, eventually choosing to pool their liquidity in 2017 but remaining separate from the rest of the world. Regulations in several other European countries, while arguably well-intentioned, strangled online poker operators, curbing their ability to market and promote the game. 

Meanwhile, the legal situation for online poker in Asia continued to be murky. In Japan, the game was legal and regulated by the government. In the Philippines and Thailand, it was legal, but not regulated. In China and South Korea, it was illegal. Australia followed in America’s footsteps, saying hooroo to online poker in 2017 when they passed the Interactive Gambling Amendment Bill. This forced online poker companies to stop offering their services, citing consumer protection and responsible gaming. 

Through the 2010s, poker was actually still growing in popularity, thriving in some countries, but regulations, licensing, ring-fencing and draconian tax laws made it very difficult for many players to access trustworthy games. Market leader PokerStars was one such place but in 2015, they sold out to Amaya Gaming, a small publicly-traded Canadian supplier of poker tables and other gambling equipment whose previous contribution to online poker was helping to run the Ongame poker network into the ground. 

Amaya squeezes the players 

What poker needed badly was Amaya to be a caretaker for the game, but from the get-go, the company treated its vast poker-playing clientele like a giant email list to which to cross-sell other forms of gambling. Amaya purchased PokerStars for $4.9 billion, 60% of which came from loans from Deutsche Bank, Barclays, and Macquarie Capital. Those loans had to be paid back quickly and the players would bear the brunt. Amaya PokerStars immediately increased rake, worsened structures, created more lottery formats, and divested the top tier players of their hard-earned annual loyalty bonuses. 

many understandably looked for alternative ways to sate their poker appetites

Far from nurturing poker, their objective was to squeeze the players, drastically reduce the number of people who could make a living from the game, and push casino and sports betting to their customers. Players reeling from a combination of government overreach, nanny state regulation, and the price-gouging behaviors of a poker operator with 70% of the market and enormous debts to pay, many understandably looked for alternative ways to sate their poker appetites. Poker apps were popping up everywhere, promising good games and offering workarounds for players from countries where poker transactions were banned. 

These apps were mostly unlicensed, but, undeterred, the agents for them spammed the DMs of poker players, encouraging them to join their poker clubs. Games on the app would technically be played for “play money,” but they would represent real money which would be accounted for off the app, the agents facilitating the movement of funds, collecting from losers and paying out winners via crypto-currency transactions. If this was the prohibition era for poker, then the clubs taking up residence on these apps were the speakeasies. 

Poker goes underground 

The historical parallels to Prohibition are striking. From Prohibition’s inception in America in January 1920, people still found ways to keep drinking. Pharmacists were allowed to prescribe whiskey for medicinal purposes. Pharmacies became the fronts for bootlegging operations. Church wine was still permitted under a religious congregation exemption. There was an uptick in church enrollment. Resourceful people learned how to make homemade moonshine, but the major consequence of the ban on alcohol was how it played into the hands of criminals who smuggled alcohol into America or distilled their own to sell in the back rooms of seemingly upstanding establishments. 

bootleggers have exploited the online poker landscape to make serious bucks

In the same way that organized crime syndicates flourished on the back of the black-market alcohol industry, criminal enterprises prospered from online poker’s prohibition and over-regulation. These bootleggers have exploited the online poker landscape to make serious bucks, encouraging their “customers” to use VPNs and bypassing jurisdictional issues and avoiding processing fees via a combination of third party, but not always really third party, agents and cryptocurrency transactions. 

The danger with these poker apps is twofold. While they are not themselves pyramid schemes per se, they do provide a platform and infrastructure upon which hundreds of pyramid schemes can be created. Agents move the money around, buying diamonds and other in-game virtual paraphernalia to give the apps their taste. Each of these agents acts as banker in a totally unregulated environment. If the agent goes rogue, the player is not protected. 

Unfit for purpose

The other danger with the poker apps is cheating. This is an issue on regulated, licensed sites, too, but those sites have dedicated teams who play perpetual games of cat and mouse and whack a mole with cheaters. Because the apps put little to no effort or investment into game integrity and security, the players are vulnerable to cheaters colluding, multi-accounting, and using real time assistance (RTA) far more than they would on a regulated poker site. 

it has gotten so flagrant and widespread that it is no longer whispered about

In more recent years, some of these apps have become so successful, gobbling up so much market share, that they are now bigger than many of the regulated online sites. A few of them are even making strides to conduct their businesses more legitimately, hiring security teams and attempting to become, or at least be perceived as, white label operators. There has, however, been no relent when it comes to turning a blind eye to VPN use and the use of the agent system. In fact, it has gotten so flagrant and widespread that it is no longer whispered about. Players from the US, Australia, and ring-fenced countries are playing against one another on these platforms while the agents act as the financial go-betweens and there is a very real chance that this behavior brings about the next poker Black Friday. 

The money made on these apps is being effectively laundered via crypto currency exchanges or dodgy payment processors which are themselves pyramid schemes. Just as the French bees found a substitute sugar source and 1920s Americans found a place to drink, poker players from banned territories are finding games. Life may find a way, but the players could soon discover that that the in-game money that they make on these apps is unfit for purpose. It might turn out to be turquoise honey.