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Minnesota paradox: 'Hotbed for poker talent' is a leader in opposing online gaming

Minnesota paradox: 'hotbed for poker talent' is a leader in opposing online gaming
Illustrative collage by Corey Anderson

Mike Schneider is at the top of his field. Well-respected by his peers and feared by the competition, the 25-year-old Minneapolis resident has parlayed his skills and work ethic into a lucrative career and co-ownership of a business where he trains others who want to take the same path.

But if a first-of-its-kind effort from the Minnesota Department of Public Safety's Alcohol and Gambling Enforcement Division is successful, Schneider — and many like him — will have to change jobs or leave the state.

That's because Mike Schneider is a professional online poker player.

Last week, gambling enforcement officials announced that the state agency had served written notice to 11 Internet service providers (ISPs) instructing them to block access to nearly 200 online gambling websites from all Minnesota-based computers.


"We are putting site operators and Minnesota online gamblers on notice and in advance," said John Willems, director of the state Alcohol and Gambling Enforcement Division. "… [R]esidents with online escrow accounts should be aware that access to their accounts may be jeopardized and their funds in peril."

Action based on 1961 law
Citing the Federal Wire Act of 1961, state officials claim that every online poker player in Minnesota is violating the law. This places the state in the paradoxical position of producing some of the greatest poker players in the world while also moving to the leading edge of the anti-online gaming movement for the second time in the past two decades.

"Poker is a game of wits," says Jason Senti of St. Louis Park. "It's a mind game that combines psychology, logic and information-gathering."

It's this type of mental challenge, says Senti, a 27-year-old former electrical engineer and current poker professional, that keeps the game engaging for him. Like chess, poker is a complex game of strategy and tactics.

Unlike chess, though, poker is a game of imperfect information — you can see your opponent's king in chess, but not his or her hole cards in poker. This is where psychology, deductive reasoning and the ability to adapt come in.

The arts of bluffing and value betting
Players consistently try to deceive each other while also playing each hand in the optimal way according to mathematics and game theory. Good players learn how to pick the right spots to bluff, winning pots without the best hand by making opponents fold, and how to value bet, tricking opponents into calling bets when the opponent's hand is beaten.

The fact that some people are better at this than others is what makes poker a game of skill. The fact that players compete against each other rather than against the house means that — unlike other games of chance, where carefully constructed mathematical edges ensure that the casino always wins in the end — the better players end up making money over the long run. Some, like Senti, find they can earn more from hours playing poker games like No Limit Hold 'em and Pot Limit Omaha than they could in other vocations.

Mike Schneider
Mike Schneider

But it's Schneider's best game, Limit Hold 'em, where Minnesotans really make their mark.

Only this variant offered
Perhaps because the state's card rooms only offer this variant on the game, which has fixed betting limits, and not its cousin No Limit Hold 'em, which does not, Minnesota has produced a disproportionate number of outstanding players practicing this variation of poker. The prominent site Full Tilt Poker, where Schneider plays as a sponsored pro, calls him "one of the most revered Limit Hold 'em players in the game."

"Minnesota is definitely a hotbed for poker talent," says Schneider, whose biggest single-day score is a million-dollar tournament win.

But don't take his word for it. Ask the two groups most likely to be in the know about these matters: potential opponents and lower-level players trying to take their game to the next level.

As one player ruefully observed on a popular poker Web forum, a policy preventing tough Minnesota players like Schneider, Brian Clark and John Hoppmann from getting to the virtual tables is "[p]robably good news for everyone else still playing Limit Hold 'em online, at least."

In high demand as coaches, instructors
Another indicator of respect: Schneider and other 20-something Minnesotan pros are in high demand as coaches and instructors. As one of the owners of the training site CardRunners, Schneider makes videos of himself playing online so subscribers can watch a master at work.

Ashton Griffin
Ashton Griffin

Senti was tapped by the young but already legendary poker mind Phil Galfond for his nascent site Blue Fire Poker. Ashton Griffin, a collegiate wrestler at Minnesota West Community and Technical College (who, at 20, is not even old enough to play live poker in Las Vegas), plays high stakes and makes instructional videos for LeggoPoker.com. Training sites help recreational players and lower-level professionals improve their games, even if not every player will make a living at poker or win a sponsorship from on a site like Full Tilt.

In fact, if ISPs comply with gaming enforcement officials' requests, no Minnesotan will even get to play on Full Tilt — it's one of the near-200 destinations on the state's list of sites to be blocked.

Second time state has broken new ground
Despite Minnesota's ability to produce successful poker players, the state has been consistently opposing online gambling since 1995. This is the second time state government has broken new ground at trying to curtail Internet gambling.

The first state legal action against an Internet gaming operation came out of Minnesota nearly 15 years ago. Then-attorney general Hubert H. Humphrey III attempted to prosecute a site called WagerNet for "deceptive trade practice, false advertising, and consumer fraud" under Minnesota law.

Since then, says gambling enforcement division director Willems, opposing Internet gaming of all types "has been position of every [Minnesota] Attorney General." Even if the position hasn't changed, the tactics certainly have. While other anti-gambling efforts have drawn upon the Wire Act of 1961, no state has gone so far as to ask the likes of AT & T to prohibit its customers from accessing gaming sites.

Willems, who stresses that he isn't a policymaker, says that his group asked ISPs to nix sites purely at random.

Sampling of 200 sites is a test
"I don't decide what forms of gambling are legal or illegal," said Willems. "To be very honest, [the list of sites] was random, without regard to the type of site." The sampling of 200 sites is a test, he said, that will expand to include numerous other online gaming sites if the initial effort is successful."If we are successful in having the telecoms comply with our request … it is our intent to continue to expand this effort."

Skeptics say that the law is far from as clear as Willems makes it out to be, and point out that the Wire Act is a pre-Internet piece of legislation used primarily to prevent sports gaming. Willems acknowledges the "lack of clear policy at the state and federal levels," and insists that he hopes the state's actions spawn "good discussion, good policy conversations, so that everyone knows what is lawful, what is not lawful, and what is appropriate in terms of online gambling."

The state is not, he said, seeking criminal charges against site operators. Neither will gambling enforcement officials pursue individuals who place bets with these gaming operations, to seize funds or otherwise.

'There is nothing to say that these sites are illegal'
But this isn't enough for Joe Brennan Jr., chairman of the Interactive Media Entertainment and Gaming Association (iMEGA).

"You have states declaring — not through legislation or the courts, but through the administrative process — that certain sites are, quote, illegal, when there is nothing to say that these sites are illegal," said Brennan, whose group has allied with such organizations as the American Civil Liberties UnionElectronic Frontier Foundation and Center for Democracy and Technology to challenge restrictions on Internet use.

The fundamental issue, Brennan says, is whether government and industry should restrict access to what citizens can access on the Internet in their own home.

"Are ISPs supposed to become de facto policing agencies of Internet content?" said Brennan. "And do we really want to put ourselves in the same category, down the road, of a country like China, where Internet access is screened for content?"

iMEGA is looking at various legal options to challenge the policy, said Brennan. On Monday, Rep. Pat Garofalo, R-Farmington, placed himself on the side of these organizations, filing legislation that would bar Minnesota's gambling enforcement agency from following through with this plan. For the time being, gambling enforcement officials have been engaged in "very cooperative" discussions with Brennan's group.

"So far, we're not going to war," he said, "but we're not at peace just yet either."

An exodus of top players?
The legal entities involved might not be at war, but professional players in Minnesota still feel under attack. With the ISPs' decision looming over the next few weeks, poker players in Minnesota are considering their next move. For several top players, that move might be swift and literal.

Schneider is a proud Minnesota native and U of M journalism grad. But he still says it's "quite possible" he'd move out of the state.

"Although online poker is not my only source of income, it's a large enough chunk that I wouldn't be able to simply cut it from my life and be happy with things," he said. Plus, if he were forced to stop playing online, Schneider could no longer make instructional videos for Cardrunners.

The youngest of the bunch, Griffin will be wrestling for Minnesota West through 2010, after which he plans to transfer to another school where he can continue his athletic career. Though he'd rather it didn't, the legal status of poker in Minnesota might determine whether he goes or stays.

"If there are two similar colleges, one in a place where I can play online poker, and one in a place where I can't, I would probably go to the place where I can," he said.

Some consider technical workarounds
Some players are investigating technical workarounds, like using a virtual private network or a proxy server to fool ISPs and get past the ban (Schneider says he would explore "whatever means possible" to continue playing from Minnesota).

Others, like Senti, say they'd feel compelled to relocate without exploring those options.

"If they expressly stated that it would be illegal for me to play here, as much as I love Minnesota, I would move," said Senti. "I support my family as a professional poker player; I wouldn't want to rely on income from something that is borderline illegal. Rather than try to circumvent the law, I would leave the state."

The financial factor is no small consideration — Senti paid six figures in taxes last year from his online winnings. Even if he weren't playing professionally, though, he'd still study hands and play cards.

"I expect to be playing poker my entire life," said Senti. "I love the game so much, I can't see my life without poker in it."

Jeff Shaw is a freelance writer and former web editor of City Pages.

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Comments (3)

Does anyone else find it scary that the state of Minnesota is essentially telling ISP's to filter the online activity of Minnesota?

There are important related issues not mentioned in this article. Here are a couple:

1. It's nice to know that a few college students and young people from Minnesota are winning money on these sites. But what about the people who lose their shirts on these same sites? We know very well it happens at the casinos. I have never seen an estimate of online gaming losses by Minnesotans - anyone have some info on this? It seems to me it's very relevant.

2. What about the business integrity of these gaming sites? At least at the casinos a player can see the physical cards coming out of the decks, shuffled and dealt out, in the open. Casino gambling is bad enough - but I can't imagine how anyone could trust a site operator, in complete control of the software that runs the game, with their money. Is there any regulatory audit whatsoever of the integrity of these games?

3. There are some obvious issues related to #2 above in terms of payment processing. The NACHA Rules require ACH processors to block unlawful internet gambling transactions - those already prohibited by state or federal law. When I was in that industry, the reputable institutions wanted ABSOLUTELY NOTHING to do with internet gambling, and would reject any account applicant who disclosed it. Yet certain payment processors saw this as an opportunity for high transaction fees (where else were the gaming sites going to go?), and so all manner of chicanery was employed in trying to create a smokescreen to cover up where the money was going. Check out the payment options on the Full Tilt Poker site. One of them assures you of "a quick and safe way to deposit and withdraw funds at Full Tilt Poker using your German, Swiss, or Austrian bank account or credit card". Then there are a few other payment processing options - Visa, of course, which dislikes no transactions, and then something called Click2Pay & "Instant Echecks". You have to wonder what institutions or processors are involved in their transactions. If they are subject to NACHA rules, it's an enforcement issue.

As an owner of an ISP, I can only say that this is truly scary while being somewhat humorous. I posted a quip on our blog last week about this issue and I've yet to see G-Men coming storming in our doors.

http://blogs.iphouse.net/2009/05/01/protect-me-g-man/

To respond to Steve Titterud:

1. Yes, it relevant that we understand the losses realized by online gamblers. What I'd really like to know is, how are online gambling losses in comparison to "bricks and mortar" losses.

2. Ever heard of "Buyer Beware"? When it comes to personal responsibility, you can regulate as far as you want, but there will always be those that will scam and con people, and no amount of regulation can prevent that. If someone wants to gamble online, they're TAKING A RISK. Let them.

3. I agree that there are enforcement issues with payment processing, but the fact remains that people who want to gamble online will find a way to do it.

Peace.

-Bil