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The $10bn poker bet
June 3, 2005 10:00 AM   Subscribe

Online poker company's flotation sends owners into billionaires list. Party Poker.com has announced plans to float on the London Stock exchange. This will see the biggest online gambling site on the planet get even bigger. Will the stock market be happy with the current returns or are the voracious demands of shareholders mean we are going to see more people needing help?
posted by ClanvidHorse (29 comments total)

 
Maybe Mr. Dikshit can use a little of that money to get his name changed....
posted by mosch at 10:12 AM on June 3, 2005


A gambing addiction expert's comment on an HBO's Real Sports piece on the explosion of online gambling struck me as very true: The new and massive popularity of poker, especially among young people, is a vast social experiment the results of which on gambling addiction rates won't be come clear for another 10 to 15 years. It is, at best, a gamble.
posted by ChasFile at 10:15 AM on June 3, 2005


Darwin loves gamblers......
posted by HuronBob at 10:15 AM on June 3, 2005


The fundamental rule of gambling is that the House will always, eventually, win. The fundamental reason people still gamble knowing the odds favor the house is because everyone thinks they have luck or skill or something on their side that tips the odds in their favor.

Everytime I gamble, I expect to lose and am pleasantly surprised when I win although I'm usually as drunk as jonmc by that time.

And yes, Dikshit is one of the most unfortunate names I've come across in a good long while.
posted by fenriq at 10:20 AM on June 3, 2005


The House will always, eventually, win

In poker you play against the other players, not the house. The house merely takes a small cut of every pot (5% capped at $3) To win in the long-term you simply need to be a tad more than 5% better than your opponents.
posted by mosch at 10:36 AM on June 3, 2005


fenriq - there is no 'house' when playing poker, at least not in the traditional sense of the word. The online sites take a small rake, but you are competing against other players, not PartyPoker.
I only play poker because I expect to win. My current win rate in live games is about $60/hour, with a standard deviation of about $300. It's the variance that can be a bitch, at times. I make less online, because I still am not comfortable enough playing online to play at the stakes (or with the bankroll) I'm accustomed to in a poker room.

I don't think PartyPoker's IPO will have any more effect on gambling addiction rates than providing clean needles to heroin users will affect drug addiction rates. There is just a fixed number of people who are susceptible to any given addiction, and it is not a number that is affected by laws, or availability.
posted by bashos_frog at 10:36 AM on June 3, 2005


I'd like to buy their stock, but what odds are they giving me?
posted by klangklangston at 10:38 AM on June 3, 2005


There is just a fixed number of people who are susceptible to any given addiction, and it is not a number that is affected by laws, or availability.

I disagree. I was never addicted to porn before [the internets] than in the way I am now. Yes, the seeds of addiction are there from birth, but the availability, and broadband, are key.

Not to mention those filthy german movies.
posted by jsavimbi at 10:39 AM on June 3, 2005


Yeah, the "house" has already been debunked. These guys are only taking 1-2% rake, correct? Compared to what at Vegas and Atlantic City ... 10%? Or Churchill Downs ... 20%?

The biggest impact will certainly be on the traditional gaming venues. As for addiction, yeah, that might be a problem, but what are you gonna do? People are free to ruin their lives any way they see fit.

There is just a fixed number of people who are susceptible to any given addiction, and it is not a number that is affected by laws, or availability.

I also gotta disagree there. I think that "addiction" is an extremely complex concept, but availability must have some effect. What about a rise in heroin addiction due to increased production in Afghanistan? What about TV addiction in the era of cable and satellite (as opposed to three channels)? I'll see if I can find anything ... the key (IMO) is almost always education. The more people learn about their addictions, the likelier they are to beat them (again IMO).
posted by mrgrimm at 10:46 AM on June 3, 2005


I honestly don't think you will find any evidence correlating addiction rates with supply, or legality. Do you think there were less alcoholics during prohibition?
Is there a higher percentage of junkies in Amsterdam than in NYC?
I think availability and legality may correlate with use, but not with addiction, which is an important distinction to make. I truly feel sorry for the gambling addicts I see dumping their money off at OTB, the poker rooms, and Atlantic City.
posted by bashos_frog at 10:54 AM on June 3, 2005


I also think this poker boom is a temporary fad. You want to see some real gambling addiction? Just wait until sports betting is legalized online in the US. Or lotteries.
posted by mrgrimm at 11:01 AM on June 3, 2005


Yes, I'm very well aware that there is no house in poker. But the deal with gambling is that the odds are against you. That's how they can make a casino that costs $700 million to construct.

People seem to always overlook the fact that Las Vegas thrives on your money and the money from everyone else who goes and makes a donation at the altar of chance.
posted by fenriq at 11:06 AM on June 3, 2005


There weren't any crackheads until someone started selling crack.

They weren't crackheads by birth. They were the victims of a pandemic drug explosion, the likes of which we'll probably get to see again once straight, 20-something, city-dwelling white kids get hooked on crystal meth.
posted by jsavimbi at 11:13 AM on June 3, 2005


Yes, I'm very well aware that there is no house in poker. But the deal with gambling is that the odds are against you.

Not true.

How are the odds against you in poker... other than, with more than two players at the table, you have less than a 50% chance of winning? But so does every one else. So your odds of winning is proportional to the number of players in the game; no more or less than anyone else playing. Of course, the way the cards are dealt (luck) and your skills compared to the skills of the other players can either increase or decrease your odds.
posted by Witty at 11:15 AM on June 3, 2005


Witty, note, I didn't say poker, I said gambling.

And it is the belief in your luck or skill that casinos bank on.
posted by fenriq at 11:18 AM on June 3, 2005


Ok, fair enough. But we're talking about poker here... and you're making general statements about casinos. While certainly related, I think the two are different enough to discuss separately.

Personally, I don't know what to think about this new poker craze. I play every once in a while (and only with people I'm very close with and for very little money). I occasionally watch it on TV and enjoy the mini-dramas of each hand. I appreciate the strategy and the skill involved in betting (because that's what it's really all about). But I do recognize that I'm also watching the glamorization of a highly addictive and destructive activity that has the potential to destroy the lives of those who aren't careful.

The fact that a lot of college kids are burning up their tuition money and going even further in debt through the use of credit cards and the like, is quite sad. There are plenty of college GRADUATES out there, up to the elbows in legitimate debt. The last thing society needs is more young people up to their necks in gambling debt and NO education.

So I dunno. On one hand, I think, "what's the harm... it's a card game". On the other, I think, "this is out of hand".
posted by Witty at 11:35 AM on June 3, 2005


As an investment banker, I just see the 55% net margins and swoon. (This is not an offer to buy or sell securities, this is not a recommendation, I do not work for DWK nor any other firm on the offering, blah blah blah.)

As a PartyPoker affiliate, I wants me a token share of the IPO or two.
posted by sachinag at 11:47 AM on June 3, 2005


Witty, quite right. The glamorization of these million dollar high stakes tournaments is detrimental to kids and adults who think its just a step or two from their friendly neighborhood game to the mega pot payoffs.

And we certainly don't need more kids with massive debt and no education.

I can see a coming backlash against the poker craze because of people taking on gambling debts. I read about some senior citizen who have pretty much bankrupted himself gambling online. He's screwed and there are probably thousands of people just like him.

When I was a little boy my father took my brother and me to Pimlico to teach us about the evils of betting on horse races. The only problem is that we kept winning all day long. But I learned the lesson anyway by watching so many other people betting what looked like thier last dollars on long shots. Sad.

I'm leaning alot more towards the "This is out of hand" side.
posted by fenriq at 11:52 AM on June 3, 2005


Playing Card Crazes come and go. In the 1950s a Canasta Craze swept North America. Would it have been a good idea to buy shares of a company called "Party Canasta" at the height of Canasta's popularity? Hell Naw.

Casinos themselves are a strange business to invest in because of The Skim. Even though piles of cash are coming in, piles of cash are also going right out the back door. That's what Howard Hughes found out when he tried to invest in Vegas, and that's what Donald Trump found out when he tried to invest in Atlantic City.

The best way I've found to make money in Casinos is to invest in Casino Equipment Makers. For example, take a look at Shuffle Master's two year chart.

(I do not own shares of Shuffle Master, nor would I buy in at the current valuation... as with any investment decision, do your own Due Diligence. And what's that they say on The World Poker Tour? "May all your cards be live and may all your pots be monsters."
posted by Fuzzy Monster at 12:00 PM on June 3, 2005


Witty, quite right. The glamorization of these million dollar high stakes tournaments is detrimental to kids and adults who think its just a step or two from their friendly neighborhood game to the mega pot payoffs.

And how many kids see rock stars and think it's only a step or two from playing in their garage and being a millionaire with dozens of groupies? People need a sense of reality, that's all.
posted by dagnyscott at 12:16 PM on June 3, 2005


Blowing an entire paycheck on a new Strat isn't the same as droppin' two-weeks pay on a couple of pocket cowboys At least with the former, one has the opportunity to recoup some of their loss... and is simply a case of an unrealized dream. While the latter can easily turn into a very real, living nightmare.
posted by Witty at 2:49 PM on June 3, 2005


You've lost with pocket kings too, eh?
posted by jonson at 3:13 PM on June 3, 2005


Try losing with AA to KJ. :)

I've stopped playing. I was definitely addicted - I played for about 30 to 40 hours a week for months. I didn't lose a much money, but I lost a lot of time.
posted by Bort at 4:09 PM on June 3, 2005


Witty: Anybody who drops two weeks pay on one hand of poker, and can't afford to do it, is just a wildly irresponsible fool. What are they going to do afterwards, go on a booze bender drinking nothing but Hennessy Timeless?

Most poker games aren't high stakes. Beginners are usually found at the 2/4 limit games (max loss per hand: $48... and that would involve raising the max every street... more realistic lost in a "big" 2/4 hand is $20) or small buy-in no-limit games (most beginners will be playing with $100 or less)

Pretending that a lot of beginning players lose two weeks pay in a hand is asinine.
posted by mosch at 5:07 PM on June 3, 2005


Anybody who drops two weeks pay on one hand of poker, and can't afford to do it, is just a wildly irresponsible fool.

I agree. But lots of college-aged kids are exactly that... gambling or not. I was.

Pretending that a lot of beginning players lose two weeks pay in a hand is asinine.

I'm not pretending anything. It was just a hypothetical rebuttal to the rock star comparison... which is to say, while the dream of being a rock star will certainly require some fairly expensive up-front costs (like a guitar/amp), it certainly isn't the same as losing that same money in a few hands of Omaha. One is at least an investment of sorts, while the other is an outright loss.
posted by Witty at 9:20 PM on June 3, 2005


It was just a hypothetical rebuttal to the rock star comparison

Okay, so long as we've established that it was a shitty rhetorical device, not a legitimate concern.
posted by mosch at 11:25 PM on June 3, 2005


One is at least an investment of sorts, while the other is an outright loss.

How is blowing money on instruments that will never make you a buck an investment? Because you can sell them back for half what you paid?

I used to know a guy who ran a music store, and he made a ton of money from musicians who would sell their instruments between gigs because they couldn't afford to eat. Then they'd get a gig somewhere, buy their instruments back, but the gig probably barely covered that, so they were back in there a week later, selling their instruments again.

If that's not as much of an "addiction" as poker, I don't know what is.
posted by dagnyscott at 10:47 AM on June 4, 2005


Ok... I can't argue with you guys on this, won't try anyway. If you think a gambling addiction (or the threat of one) is comparable to the "addiction" some people feel for the dream of rock stardom... well, that's silly and we'll just have to be content with differing opinions.

Sound like I might be discussing this with a couple of 18-22 year-old card sharks.

ANTE UP!
posted by Witty at 11:30 AM on June 4, 2005


Certain things are intrinsically physically addictive: nicotine, caffeine, heroin, etc.

Certain things are considered addictions because they are habits and because they are fun/exciting and therefore increase levels of certain chemicals in the body. Any number of things which are good in moderation can become an addiction in this sense: sex, money, attention, etc.
posted by dagnyscott at 2:25 PM on June 5, 2005


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