Tag Archives: poker

Poker and Investing: Selective Aggression Pays Off

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Las Vegas,Navada

I’m quite a poker enthusiast and play tournaments in Southern Indiana and Cincinnati quite a bit, as well as an occasional home game with friends.

One of my favorite players to watch on television is Vanessa Selbst — mainly because she’s managed to parlay an unpredictable, super aggressive style largely based on reading opponents into remarkable results (with well over $10 million in career tournament earnings). She also boasts a law degree from Yale University.

I recently found this 2013 interview with Bloomberg Business in which she discusses the similarities between poker and investing.

Dept. of Justice Shuts Down Popular Poker Sites

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The U.S. Department of Justice seized the online domains of poker sites operating in the United States (not based here, but serving players here, mind you) over the weekend. Last year, Reps. Barney Frank, Ron Paul and others were trying to find ways to fully legalize and regulate these sites in the U.S. As the article points out, 8 to 10 million Americans play on these sites. Additionally, I recall PriceWaterhouseCoopers released a study a few years ago showing legalization of online poker could raise $34 billion in tax revenue over 10 years for the federal government. This topic is just beginning to heat up, and I’ll save my comments on the matter for the comment section, lest there be no confusion that the Chamber necessarily endorses my position on this:

Reporting from New York and Los Angeles— A thriving online poker industry catering to Americans but operating from abroad to evade U.S. gambling laws could be wiped out by criminal charges against top executives in the business.

Eleven people, including the founders of the three largest poker sites open to U.S. players, were charged by a federal grand jury with bank fraud, money laundering and violating gambling laws. The government also is seeking to recover $3 billion from the companies.

The FBI had shut down two of the sites, Full Tilt Poker and PokerStars, by Friday evening and were working to do the same with the third, Absolute Poker. Online visitors were greeted with a message saying, "This domain name has been seized by the F.B.I. pursuant to an Arrest Warrant," and an enumeration of federal anti-gambling statutes and penalties.

An estimated 8 million to 10 million Americans play poker online for money; thousands of them earn their living on the sites, according to a players advocacy group.

Congress tried to shut down the industry by enacting an anti-gambling law in 2006, but most sites found ways to work around the vaguely worded measure. Since then other members of Congress have proposed bills to legalize Internet gambling, but they have failed to reach a floor of either chamber.

In the community of players, news of the indictments unsealed Friday in federal court in Manhattan landed like a bombshell.

"Everyone’s in panic," said David Tuthill, a 22-year-old in Las Vegas who makes his living playing online and in casinos. "Everyone sort of knew in the back of their minds that a day like this was possible — and maybe even inevitable — but it’s really just shocking now that it’s here."

Two of the 11 defendants were arrested Friday morning in Utah and Nevada. Federal agents were said to be working with Interpol to capture defendants located overseas.

None of the companies responded to requests for comment.

UPDATE: Interesting article from the Daily Caller on April 22 regarding this topic.

CEO: What Poker Taught Me About Non-Profits

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Nancy Lublin, CEO of Do Something, wrote an interesting piece recently for Fast Company magazine about what she learned years ago in poker rooms, and how it’s helped her run a not-for-profit:

You’ve got to know when to hold ’em … Every poker hand is like a fund-raising pitch. Your first bet needs to be high enough to garner respect from the other players, but not so high that you scare them all away. It also can’t be so low that you make them think you’re desperate. And that first bet has less to do with your cards than with who’s at the table, where you’re seated (are you the first to bet? the last?), your reputation, and chutzpah. I’ve heard foundations say they ignore requests for under $100,000, but a first-time ask for $5 million won’t get a second look either. Every entrepreneur knows that chasing early funding is similar: What can you request with a straight face and still get a "yes"?

Know when to fold ’em … You should fold about 80% of the hands you’re dealt. That’s hard to do — you get itchy to play or you’re tempted to see if you can string something together. Dress for Success was once asked to provide suits for women seeking restraining orders in court. We wanted to help. We had the inventory. But our purpose was to support women looking for work. Our board debated it passionately and decided that we shouldn’t muddy our mission by getting involved in something complex that we didn’t fully understand. That slope would have been too slippery — we wanted to say yes, but we had to say no.

Know when to walk away. And know when to run. Sometimes you suffer a bad beat and you have to move on. In the office context, this is especially relevant to personnel. Firing an employee is never fun, especially if you hired the person. It’s like starting out with a nice pair in the hole. You’re starting strong, but it never gets better. The best thing is to just cut your losses quickly. If that new employee turns out to be a loser, better to fail fast.

This has been the hardest lesson for me: I fall in love with cards, and I fall in love with potential in employees. Do Something, my current not-for-profit, once hired a successful tech entrepreneur to be our CTO. He took a huge pay cut, which made us feel lucky to have him. He wanted to redesign our site. This was a bad use of our time and resources, but he kept arguing for it. I’d be crazy to ditch the genius, right? Wrong. He didn’t understand our priorities or our agenda. Delaying a decision to cut bait is expensive and affects your head. We finally let the guy go.

You never count your money when you’re sitting at the table. There’ll be time enough for counting when the deal is done. Don’t gloat. Even when you win a gigantic pot, you don’t want your benefactor to feel cheated — or stupid — because you want to play with her again. And counting your chips is distracting. Every second spent examining your own stack is a second you’re not using to suss out others’ cards and nerves. In the not-for-profit context, droning on about how much money you’ve brought in doesn’t help bring in more. Plus, it’s off-topic. Your goal is to build a more effective organization and reach your group’s goals, right? So communicate your strategy for change, not how much change you’ve got.