Can You Still Make Money From Online Poker

1. Can You Still Make Money From Online Poker Real Money

You can start a poker game online for just a couple of dollars or pounds. While you won’t win lots of money with these games, they’re ideal for increasing your skills. You can make mistakes without losing lots of cash, and the extra funds from your wins will still be enough for you to treat yourself frequently to a nice meal or a movie. For six years, Dale Philip travelled to more than 50 countries after quitting his IT job to play poker full-time, winning up to £10,000 in a single month.

The legality of online poker in the United States varies according to your jurisdiction. Contrary to what some sources might have you believe, no federal law specifically forbids online poker. State laws, on the other hand, might or might not, depending on the state. Only one state (Washington) has a specific law explicitly forbidding online poker, while only Delaware, Nevada and New Jersey have legalized and regulated it.

Our goal is to provide the facts about where you can play poker online legally in the United States. You should know up front that our site isn't run by lawyers or anyone with any kind of governmental authority. If you need actual legal advice, you should contact an attorney. The information provided here is for educational and entertainment purposes only. We're not responsible for anything that happens based on your use of the information here.

That being said, the information here is accurate and reliable to the best of our knowledge.

Washington State

We thought it would be a good idea to get this out of the way right away. It is illegal to play poker online for money in the state of Washington.

The state of Washington passed a law in 2006 making online poker a felony. Full Tilt Poker and PokerStars responded by no longer offering services to residents of that state, but they continued to operate in the rest of the country. If you live in the state of Washington, it's a crime to play poker online for money. In fact, it's a serious crime. Our advice to poker players in Washington state is to not play poker on the Internet.

We don't know why the state of Washington has taken such a draconian stance against Internet poker, but if you live there, it's probably best not to play, even if you can find a site which would accept you as a player.

Games of Skill vs. Games of Chance

The amount of controversy surrounding whether or not it's legal to play poker on the Internet in the United States is strange, especially in light of the similarities between the game and the free market system, which is one of the cornerstones of the American way of life. Poker is even commonly called 'America's card game.' Expert players consider it a mind sport. Even the general public considers poker a sport; that's why it's the subject of televised events on ESPN, a TV channel that specializes in sports programming and reporting.

In August, 2012, Judge Jack B. Weinstein, a federal judge in Brooklyn, ruled that poker is predominantly a game of skill rather than chance. The reasoning is that the money doesn't flow to the luckiest players at the table, at least not in the long run. In the end, the most skilled players win the most money. The skills used in poker include reading other players, concealing your own intentions, and evaluating the odds that your hand is the best.

According to Judge Weinstein, 'The most skillful professionals earn the same celestial salaries as professional ballplayers.'

Of course, this doesn't mean that playing poker doesn't constitute gambling, at least not colloquially. What makes a game 'gambling' is the activity of betting money. Skill becomes a consideration from a legal standpoint, though. In many jurisdictions, contests of skill are treated dramatically different from games of pure chance.

You might be the best poker player in the world, but on any given hand, you face an element of risk. The same holds true for other bettors who use skill to get an edge. Blackjack card counters, expert video poker players, and skilled sports handicappers all sometimes lose.

The Interstate Wire Act of 1961

Does the Wire Act make online poker illegal?
The Interstate Wire Act of 1961, sometimes called 'the Federal Wire Act', was passed in September, 1961 in an attempt to thwart organized crime.

In 2005, the Justice Department sent threatening letters to Internet publishers and broadcasting companies, including Google, Yahoo, and Infinity Broadcasting. Their contention was that accepting advertising from companies involved in online gambling was 'aiding and abetting' illegal activities. They used the Interstate Wire Act as justification for this.

In December, 2011, The Justice Department reversed their position, stating that the Interstate Wire Act of 1961 only applies to sports betting, not to poker.

So the short answer, until the Supreme Court rules otherwise, is no, the Wire Act does not make online poker illegal.

The Unlawful Internet Gambling Enforcement Act of 2006

Does UIGEA make online poker illegal?
The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was passed as part of the Safe Ports act. The law made it a federal crime to accept payments connected with illegal Internet gambling. It did not define 'illegal Internet gambling', and since the Wire Act only applied to sports betting, no federal law makes it illegal to play poker on the Internet for money.

So the short answer again is no, UIGEA does not make online poker illegal unless state laws make it illegal (which they seem to do in the vast majority of the states).

As a practical matter, though, UIGEA has made life harder for online rounders. Some companies, including Pacific Poker, Paradise Poker, and Party Poker, stopped accepting real money players from the United States. Other companies, including Full Tilt Poker, PokerStars, and the Cereus Poker network, continued to accept players from the United States. Eventually, even those companies had to capitulate to the prevailing anti-gambling sentiment from the current U.S. governmental regime.

Black Friday

Did the events of Black Friday make online poker illegal?
In 2011, an estimated 2 million Americans played online poker for money on a regular basis. On Friday, April 15, 2011, The Justice Department eliminated most of this play when it shut down the three most trafficked poker sites (Pokerstars, Full Tilt Poker, and the Cereus Network) with charges of money laundering and fraud. The US government contended that the companies had violated UIGEA, but the poker companies operated under the understanding that online poker wasn't illegal and therefore didn't constitute a violation of the act.

The Department of Justice not only seized control of the websites for the three companies, they also froze the assets in 76 bank accounts in 14 countries. Both civil and criminal charges were filed. In July, 2012, the U.S. government dismissed 'with prejudice' the civil complaints, but not the criminal indictments. PokerStars and Full Tilt Poker settled without admitting wrongdoing. As part of the settlement, PokerStars bought Full Tilt Poker.

No, the events of Black Friday didn't make online poker illegal, but they had a chilling effect on the actual play. The industry still hasn't recovered, but there are reasons to be optimistic.

The Poker Player's Alliance

The Poker Player's Alliance (PPA) was founded in Washington D.C. in 2005 as a non-profit political advocacy group to protect the rights of poker players in the US. Their goals include overturning UIGEA and passing legislation legalizing and regulating poker on the Internet. From their about us page, their mission is as follows: 'The PPA's mission is to establish favorable laws that provide poker players with a secure, safe and regulated place to play.'

Multiple bills have been proposed in Congress to amend UIGEA with an exception for online poker and other skill games but none have passed. We encourage the civic-minded members of our readership to visit their site, consider donating, or use their other resources to write to the lawmakers who represent them in the government. If it is the will of the people, safe and regulated online poker can become a reality sooner rather than later.

Delaware, Nevada, and New Jersey

Three states, Delaware, Nevada, and New Jersey, have passed laws explicitly legalizing and regulating online gambling.

Delaware taxes the first $3.75 million of online gambling revenue in a year at 100%, which means that casinos need to generate a tremendous amount of activity to earn any money from online gambling activities. To legally gamble online in Delaware, a player must be of gambling age and operate their computer (or smartphone/table) within the state. The online poker market there is correspondingly small as a result, but state officials are confident that revenues from online gambling will grow as it catches on there.

Nevada has legalized online poker for two sites: UltimatePoker.com and WSOP.com. These two sites have exclusive rights to run online gambling in the state. As in Delaware, players must be of legal gambling age and operate their computer within the state. Nevada taxes online gambling revenues at the same rate (6.75%) as all other gaming revenue.

Websites offering online gambling in New Jersey are required to have a relationship with a physical casino within the state. They tax this revenue at 15% (compared to the 8% they tax their physical casinos). All gambling activities, including poker, are legal within this context, but revenues have been lower than expected. This disappointment is, at least in part, a result of credit card companies' lack of cooperation in processing these transactions.

These are not the only states where it's legal to play poker. They're just the only states to have laws on the books specifically legalizing the activity and regulating it. In the United States, an activity is legal unless a law prohibits it, so the lack of laws on the books in some states does not equate to the committing of a crime. At least nine other states have proposals to legalize and regulate poker on the Internet.

Can You Legally Play Poker for Money on the Internet in the US?

State laws vary. If you live in the state of Washington, playing poker online for money is a felony. In most cases, general state gambling laws make online poker illegal as well. To our knowledge, no one in the United States has been indicted or convicted of a crime related to playing online poker for money so far. This, of course, might change in the blink of an eye. We recommend that you only participate in online poker if it's legal where you live.

I recently passed a milestone in my quest to beat 100NL online. That milestone was playing over 500,000 hands of online cash game poker. The truth is that I’ve played more than 500,000 hands of cash online in my life but these 500,000 make up the vast majority of my online cash game experience. I decided to dive into this data and write up as detailed a post as possible to help share some of the hard facts (data doesn’t lie) about grinding micro and low stakes cash game poker online.
The post has dozens of insights backed up with data but I’m sure there are things that can be included in my analysis. If you would like me to discuss something specific which doesn’t appear in the post then please comment below or email me at justin@thegreatgrind.com.

Distribution of the hands played AKA the high level view of the data

As you can see from the table below the 500k hands were played across all buy-in levels from 2NL (1c/2c) all the way to 100NL (50c/$1). Since February last year when I made the decision to move to cash games I started with only $80 in my account with the aim of building a bankroll. My plan for 2013 was to start at 1c/2c and build up a roll and move through the levels until I was comfortably beating 50NL. It is for this reason that 40% of the hands in the 500k sample were played at 50NL and the buy-in levels with the fewest hands are the very first levels. Since I was able to beat 50NL at around the 400k hands mark, my focus has been on moving up in stakes and beating the 100NL level. As you can see in the 100NL row I still have some work to do.

The 500k hands were played over 699 hours which comes to around 715 hands per hour. On average I see around 65 hands per table at full ring which means that on average I’ve been playing 11 tables simultaneously which sounds about right. Initially I played 4-6 tables and April was the first full month that I played 24 tables. I have since gone down to 12 and even 6 tables while trying to beat 100NL.

The table below shows the distribution of the 500k sample by day of the week. You can clearly see that I play the vast majority of my hands over Friday and Saturday (my weekend).

These 500k hands were racked up in 201 different sessions. During these 201 sessions I lost money 75 times (37%) with my longest loosing streak being 6 sessions. My longest winning streak was 15 sessions (unfortunately this was at 2NL:)). The lesson here is that even winning players loss one in 3 sessions on average. During these sessions I’ve paid $10,012 in rake. Unfortunately I haven’t recorded the money I’ve earned from bonuses.

The law of diminishing win rates

One of the most obvious concepts of poker is that the game gets tougher to beat the higher you go up in stakes. An interesting question though is by how much does one’s win rate go down the higher he climbs in stakes. Before we look at my data to get some sense of the drop, it is important to understand that the shape of the graph of someone’s win rate as you go up in stakes will be very different on a player-by-player basis. The main reason for this is because most players don’t stick to a level they can beat long enough to determine their true win rate. This effect can be catastrophic to some players who move up in stakes too quickly after running hot at a new buy-in level. Ask two poker players how many hands you should play to determine your true win rate and you will get three answers. Later in my analysis you will see that the real number is much higher than what most people think.

Do you notice the different between by actual win rate and my EV adjusted winrate at 2NL and 5NL? The reason for this is because my sample sizes for these buy-in levels are small which means I was running very hot (at 5NL) and very cold (at 2NL). In the long run your actual winrate and EV adjusted winrate will match.

The plight of the break-even periods

Below are three graphs of periods within my 500k hands sample which almost drove me mentally insane. Let’s look at each one on their own and lets see what we can learn from the horror.

The first graph shows a period of roughly 166,000 hands where I broke even at 25NL and 50NL. Before embarking on my challenge to beat 50NL I knew I could beat 10NL but always got stuck at 25NL so when I finally reached 25NL I was ready for the challenge. About 2 month into playing 25NL I took my first shot at 50NL and it went badly. After dropping $1,000 dollars I went back down to 25NL expecting to continue to beat the level like I was doing before taking the shot at 50NL. Not only did I not sustain my earlier win rate at the level but my confidence took a big knock and my volume suffered. I knew I could beat the level and that my failed shot at 50NL was mostly as a result of run bad (more on this later) so I held firm and pushed through it, 40,000 hands later I saw the light and continued to build the mountain (you know, the shape of my graph:)).

The second break-even period is a bit different from the first. The main difference here is that instead of experiencing an extended period of time where I failed to maintain a positive win rate, I ended up wiping out 5 months of positive results in a mere 33 hours. My first shot at 100NL was so devastating financially in comparison to my positive results over the months that in a mere 12,784 hands I wrote off the winnings I had accumulated over the first 7 months of 2013. The way I got through this blow was by understanding the big picture and that if I can wipe out so much money so quickly, the opposite is also true when positive variance is on your side. Losing $500-$1000 or 5-10 buy-ins over a period of 12k hands isn’t unheard of. It is very important to keep things in proportion and to remember the final goal.

The final break-even graph shows all the hands I played at 50NL in the 500k sample. Do you notice what happened during the first 80,000 hands? The first 80k hands was a special type of hell but when I finally got through it and I broke even at the level something happened, I started to beat the level and haven’t looked back. I think a very important lesson can be learnt from this graph. 80k hands is a hell of a lot of hands for someone who plays this game on the side and I know there are many players out there who couldn’t handle going through so many hands without showing a profit for their work. The reality is that if I decided to call it quits after 80k hands at 50NL I would have cost myself thousands of dollars and perhaps even tens of thousands of dollars if I successfully beat 100NL. The lesson to be learnt here is that it can take you tens of thousands of hands to beat a level so keep your head up and don’t quit.

Your aces will break 10 percent of the time and you should fold 9 2

Did you know there are 169 different hands you can be dealt in a Texas Holdem hand? I know what you’re thinking, there are a lot more than 169 different combinations of hands that someone can be dealt. You’re right, there are actually 1,326 combinations but if you had to group those into suited combinations and unsuited combinations you would get 169 different combinations. Don’t believe me, just look at the table below. 13 hands per row, times 13 rows equals 169.

Now that we have determined that there are 169 different hand strength combinations that you can be dealt, lets have a look at how each one fairs.

There are a number of very interesting things we can gather from this table:

• Even the strongest hand in poker loses 1 in 10 times.
• You will flop a set 11.7% of the time (1 in 8.5).
• On average you will be flipping (50-50) when all in pre-flop.
• Even though 500k hands is a large sample size, when you are breaking it down by 169 different hand combos, there will still be variance on a hand per hand basis. This explains why pocket 3s is my biggest losing hand when looking at dollars won and lost and why I’ve lost more money with QJs vs 82o.
• I’ve mis-click folded AA or timed out when I was dealt them 5 times (whoops!!).

One stat which I find very interesting is the fact that I’ve lost money with 130 of the 169 hand combinations shown in the table above, that’s a majority of 77%. I’m beating 50NL for over 3bb/100 and I’m still losing money with 77% of my hands. If you are struggling to beat this game then most likely you are still playing a number of unprofitable hands on a constant basis. Understand that there are hands which can’t make you money in the long run and that you need to cut them out of your game.

How tight is the competition?

Something which was extremely obvious to me when I was moving up in stakes was the increase in the number of regs at my tables. The first level where I noticed this was at 25NL which seems ridiculously reg infested (50 and 100NL aren’t much better). I decided to dive into my data and see the difference in the tightness level for each buy-in level. Check out the pie charts below which show the percentage of players with certain VPIP ranges per buy-in level.

I was surprised by these results because from the 4 pie charts above it seems 10NL is tighter than 25 and 50NL which wasn’t my experience. One of the issues with this data is that we don’t necessarily know the true VPIP of many of the players in the sample. Check out the table below to see the average number of hands for players based on their VPIP. You can clearly see that the tighter players have a much higher average number of hands which makes sense because these are the regulars which are multi-tabling and putting in a lot of hours. We can also clearly see that players which play above 25% of their hands don’t last.

Final thoughts

There is an almost unlimited number of analyses I could add to this post but I’ve decided to stop here. I think there is enough here for now and I hope that even the most seasoned professional will find something in this post which will help them improve their game. I would love to hear your thoughts on this post and what you would like me to include in my analysis.

If you enjoyed this post and want to learn how to analyze your own poker stats then check out this detailed guide on the poker stats which matter at 2NL. You can also subscribe to this blog or follow me on Twitter by clicking on the follow button below.

Can You Still Make Money From Online Poker Real Money

Good luck at the tables.