WSJ -- Skill Poker Isn't Gambling

Making a Bet That Skill Poker Isn't Gambling

By JULIA ANGWIN
Staff Reporter of THE WALL STREET JOURNAL


Police detective Randy Peterson, of Vancouver, British Columbia, has spent much
of his life tracking down illegal gambling. Now he's betting on a way to
legalize online poker .

Mr. Peterson has invented a method that he says removes the element of chance
from poker -- making it a game of skill that he hopes won't be subject to
antigambling laws in most of the U.S. He calls it "skill poker ."

Gambling generally is defined under state laws as an activity that includes a
prize, chance and "consideration," which means you pay to play. Remove one of
those three elements and it becomes a legal activity in most states.

But how much chance has to be removed to make a game legal? "The question is
whether chance is predominant," says Anthony Cabot, a gaming-law attorney at
Lionel Sawyer & Collins in Las Vegas, who says the issue is whether skill poker
removes enough chance to pass legal muster.

Mr. Peterson isn't the only one to see the profit potential of legal online
skill games. Yahoo Inc. and Microsoft Corp.'s MSN have added pay-to-play skill
games such as hearts and solitaire to their Web sites in the past year. So far,
however, experts say the revenue from these games is tiny compared with that of
illegal offshore gambling Web sites -- which have projected revenue of about $5
billion in 2003, according to the U.S. General Accounting Office.


Online poker , in particular, is booming. It got lots of publicity when an avid
online player, the aptly named Chris Moneymaker of Tennessee, won an upset
victory in May at a major offline event, the World Series of Poker in Las
Vegas. A cable television show called "The World Poker Tour" also has raised
the game's profile. The number of players participating in pay-to-play Internet
poker games more than tripled to about 2.8 million world-wide in September from
821,000 in April, according to PokerPulse.com, a Web site that tracks the most
popular online poker sites.

At the same time, however, U.S. legislators are threatening to crack down on
illegal online gambling. Although many online gamblers don't realize what
they're doing is against the law, the Interstate Wire Act of 1960 bars betting
across state or international lines. So far, sanctions on online gamblers have
been rare, although a North Dakota state court in August issued a $500 fine to
one individual. Proposed legislation in Congress would ban banks from
processing any type of electronic transaction, including players' credit cards,
for gambling sites.

Until recently, Mr. Peterson was on the front lines of the fight against
illegal gambling. The 51-year-old policeman says he worked on some of Canada's
highest-profile crackdowns, including one dubbed "Casinogate" that ended the
career of British Columbia Premier Glen Clark and another that halted the
highflying days of an Internet start-up called Starnet Communications Inc.

Mr. Peterson says he was sitting at a bingo parlor when he first realized he
could remove the element of chance from gambling. "I was having trouble keeping
up with one card and the little old lady next to me was playing 12 cards while
leaning over and playing my cards too," he says. "That stuck in my mind. I said
to myself, 'That's a skill set.' "

In an odd twist, Mr. Peterson eventually teamed up with some former executives
of Starnet, the very company he helped to investigate, to develop an online
skill bingo game. Ultimately the venture fizzled out, but not before his
participation in the bingo business drew media attention. So he transferred out
of the Vancouver vice squad to avoid the appearance of conflict of interest and
now is a department security officer. A spokeswoman for the Vancouver Police
Department says an internal investigation found no conflict of interest with
Mr. Peterson's business interests.

Unfazed by skill bingo's flop, Mr. Peterson dreamed up his formula for skill
poker . Here's how it works: Players at different virtual tables are given
equivalent hands of cards. At the end of the game, the players are rated
against their peers at other tables, rather than against the players at their
own table. The winner is the player who did the best with his or her set of
cards. The idea resembles duplicate bridge.

Unable to pay for a patent application himself, Mr. Peterson sold his idea to
Blue Diamond International Capital, a company created by a closely held Swiss
money-management firm, Geneva Management Group Capital SA. Earlier this year,
Blue Diamond sold the patent-pending idea for skill poker to a struggling
Vancouver company called Poker.com Inc., which had just lost its control over
the Web site Poker.com and was facing legal questions about its sale of
software for online casinos. Poker.com's president, Mark Glusing, decided to
bet on the future of skill gambling. So he renamed his company LegalPlay
Entertainment Inc. and last month launched a Web site called Skillpoker.com.
Mr. Peterson has a stake in LegalPlay, which is traded over the counter.

The Web site's launch sparked a debate among online poker enthusiasts about
whether the new game is more susceptible to cheating than other forms of online
poker . LegalPlay says it has taken steps to thwart cheaters.

But the site's legal situation remains a gamble. A few states, including Ohio
and Oklahoma, explicitly define poker as gambling, while other states such as
Arizona ban skill games. Skeptics say Skillpoker.com still contains one element
of chance: If you happen to be placed on a virtual table with weak players, you
have an edge against people holding the same cards on tables with tougher
competition.

"Its an interesting way to play," says Greg Giannokostas, 26 years old, who has
been playing on Skillpoker for about a week-and-a-half under the moniker
"TakeMoney." So far, he's done well, winning $20 apiece in 25 tournaments, he
says.

Mr. Giannokostas, owner of an auto-mechanic shop in Atlanta, plays four to six
hours of online poker a day. "It seems like the better players are going to win
at this site," he says.

Write to Julia Angwin at julia.angwin.DeleteThis@wsj.com

I've been playing on skillpoker for a little while now, off and on, and
while it is a pretty faulty system (it would be much easier, and more
profittable, to collude on their system then on a regular poker site), and
I would advise NOONE to deposit money in it once the real money launches,
I do reccommend everyone go to it and abuse their freeroll-type beta they
have going on. They basically have 8 player tournaments (you have to
amass more money than one other person playing the same cards you do over
20 hands, twice) that pay out $20 to two winners, and the queues
constantly spawn new tournaments. Assuming they are going to pay up once
the real money launches (I was told by a support guy today they hope to
launch it in about 2 more weeks), its a pretty easy way to make some quick
cash.

_________________________________________________________________
Posted using RecPoker.com - http://www.recpoker.com