A while back a federal judge in New York decided that poker wasn’t illegal gambling under federal law, and we discussed it here, and so I feel a certain sense of responsibility to all of the Dealbreaker readers who quit their jobs to start poker rooms. So I should tell you that that decision was reversed today on appeal, and poker is illegal again, so you’d better shut down your poker room and go back to trading derivatives ha ha ha.
Other than that I don’t have much to say about the decision. The lower court’s decision declaring poker legal was very scholarly about how poker is predominately a game of skill, not of chance, and so is not “gambling.” But it was pretty loony on the law: poker is undisputedly illegal gambling under New York law, so the question of whether it was illegal under federal law turned on whether it’s a “gambling business which is a violation of the law of” New York. The district court said, well, it’s a violation of New York’s gambling law, but it’s not a “gambling business” under my reading of the word “gambling,” because it’s a game of skill, so you’re free to go. The appeals court ignores all the chance vs. skill stuff and just says “it’s gambling under New York law, so it’s gambling under the statute, so you’re hosed.” That’s sad but also probably right.
Here you can read Floyd Norris complaining that synthetic CDOs, and by extension most derivatives trades, are just gambling, the equivalent of a bank’s “put[ting] together a betting book and taking out the bookie’s cut.” Read more »
Disruption on Wall Street, resulting in image problems for the industry, smaller bonuses and less lavish perks, are spurring other midcareer bankers to similarly reassess their careers. After a lifetime of targeted choices—attending top-tier schools and pursuing competitive internships in hopes of winning high-paying finance jobs—some bankers are bailing out with no Plan B. Their only certainty, according to interviews The Wall Street Journal conducted with a dozen midcareer bankers, is that they no longer want to stay in banking…Andy Frankenberger left the industry in 2009 after 14 years as an equity-derivatives trader. “I wanted to grow more as a person,” he says. A recreational poker player, the 39-year-old began playing tournaments in 2010 and has since raked in $2.5 million in winnings. Still, Mr. Frankenberger says he wouldn’t rule out someday returning to banking or even starting his own hedge fund. “A lifetime is a long time, right?” he says. [WSJ]
If you were worried that Social Security is a Ponzi scheme and planned to fund your retirement with poker winnings, today turned out to be a bad day for you. While we here at Dealbreaker generally endorse keeping all of your money in poker, keeping all of your money in Full Tilt Poker was not the correct way to do so. Insofar as it now looks like you’ll only get back at best fifteen cents on the dollar. From the US Attorney’s complaint today: Read more »
You’re a hedge fund manager running a Ponzi scheme in Los Angeles. You’re pretty into poker and attend bi-weekly games with various actors who, as it unfortunately turns out, aren’t half bad at cards. The buy-in’s $100,000 but you don’t have the cash. What do you do? If you’re Brad Ruderman you use some client funds to cover it, as well as the money you lose to Spiderman and Co. Read more »