Tuesday, June 30, 2015

The Roller Coaster Ride at Absolute Poker

When Scott Tom, a student at the University of Montana in the late 1990s, first saw an online poker game he said, "This poker website. It's awesome. I mean, the software really sucks and the graphics are horrible… Even though it's crap, there are like fifty people playing. And they're taking a rake from every table, all night long. They're minting money."

Straight Flush by Ben Mezrich relates the "true" story of how Scott Tom and five of his fraternity brothers turned their weekly poker game into an improved version of that rudimental online poker room. Their Absolute Poker room became, at its height, an online empire bringing in revenues of nearly a million dollars a day.

But before the team could stage an IPO to cash in on their good fortune, their empire came crashing down. The Unlawful Internet Gambling Enforcement Act of 2006 made Absolute Poker take a gamble by leaving its doors open to American players. A cheating scandal in 2007 revealed that someone behind the scenes at the poker room was taking advantage of a super user's ability to see opponents' hole cards. And finally, the U.S. Department of Justice seized control of Absolute Poker's website domain on the infamous Black Friday.

All of that was far ahead in the future in the opening chapters of Straight Flush, which was written by the bestselling author of The Accidental Billionaires (Mezrich's 2009 book which was adapted by Columbia Pictures for the film "The Social Network") and Bringing Down the House (which was adapted into the movie "21").

In the beginning, everything they were doing, the founders believed, was totally legal. "Even though every lawyer they met with continued to assure them that there was nothing inherently illegal about running an online poker website, it seemed that all of the companies were being run overseas…  If they were going to run an international business, there was no reason not to think internationally."

Yet, Scott Tom apparently didn't fully consider the legal implications of what he was doing. "It's a new era. The Internet changes everything… This is the Wild West. And I don't see any sheriff knocking at our door."

The team hired Korean software programmers and set up operations in Costa Rica, launching their room in 2003. Within a short time they took advantage of online poker's booming popularity, following Chris Moneymaker's win at the World Series of Poker. "Scott was starting to catch on. For the first time in history, the two-hundred-year-old game of poker was being beamed into living rooms across America. All over the world too."

With an increased marketing effort, the room's revenues skyrocketed. Behind the scenes, things were a little bit shady, but "the results didn't seem to hurt anybody… The banks made money. Absolute Poker made money. The players got to play poker."

It's only late in the book when we finally learn about the cheating scandal. One of the team says, "I've been hoping it would just go away, as these things often do. Just people griping because they lost. But, well, it hasn't gone away; it's actually just getting bigger."

An anonymous employee publicizes hand history and a suspicious IP address, which is the origin of the cheating scandal. A blogger sleuth connects the address of this super user to an email account, and the account links directly to the founder of Absolute Poker, Scott Tom.

The book offers a quick explanation for this connection, which may or may not be true. According to the book, one of the original programmers in Korea kept a back door in the software open for management supervision. An unnamed Costa Rican operations manager took advantage of the ability to see opponents' cards, pocketed huge profits from this advantage, and acted to frame Scott Tom in the process.

Or so the story goes. Today Scott Tom remains "at large" according to the U.S. government, living in a gilded cage on the island of Antigua out of reach of federal indictments.

Mezrich's tale is fast-paced, highlighting a lifestyle of girls, drugs, and money more than the technical day to day operations of an online poker room. Straight Flush, based on the full cooperation of the Absolute Poker founders, is a quick read and a high budget Hollywood movie is sure to follow.

Buy Straight Flush and read it now!

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