Poker-Playing Refugees Find Internet Connections in Costa Ri

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Poker-Playing Refugees Find Internet Connections in Costa Ri

Postby Phuturist » Thu Sep 15, 2011 3:22 pm

Bloomberg News, sent from my iPhone.
Poker-Playing Refugees Find Internet Connections in Costa Rica

Sept. 15 (Bloomberg) -- New Jerseyans Matthew Stout and Joey Cappuccio have been living in San Jose, Costa Rica, for three weeks, and they only have left their apartment to get groceries. They’ve been playing poker. It’s what they do for a living, and it’s why they’ve left the U.S.

Like thousands of other professional players, Stout and Cappuccio have been denied their source of income since their Black Friday -- April 15, 2011 -- the day when the Justice Department blocked access to the three top online poker sites in the U.S. Relocated and logged in, they’re making up for lost time, according to the Sept. 19 edition of Bloomberg Businessweek.

“It took me a while to admit to myself that things aren’t going to get resolved anytime soon and that we were eventually gonna have to do something about it,” says Stout, who’s perched on a plaid chair in his new home, laptop in hand, registering for the day’s games.

He barely finishes his sentence before Cappuccio blurts out: “By ‘eventually,’ we meant ‘now.’ "

In mid-August, after playing live in the World Series of Poker, the friends, both 26, made a spur-of-the-moment decision to head south, expediting a passport for Cappuccio, who’d never traveled outside the U.S.

To facilitate the move, they signed on to become the first clients of Poker Refugees, a San Jose-based startup specializing in setting up professional American players in Canada, Panama, and Costa Rica.

The service, run by Kristin Wilson, a 29-year-old MBA and former pro surfer from Florida, helps players find apartments, set up bank accounts, and, crucially, a reliable Internet connection abroad. The fee is $1,000 a head, which seemed fair to Stout and Cappuccio, who say they have made about $1 million and $500,000, respectively, from poker since 2006.

World Championship

“Without Wilson, we wouldn’t have been online in time for the (PokerStars) World Championship,” Stout says. “I would have just been here banging my head against a wall.”

Since Aug. 16, Poker Refugees has relocated 14 Americans and received queries from almost 100 more players; a rival business, Tico Tours, also began in Costa Rica. No one knows for sure the size of the potential market, but according to the online poker community and information site PocketFives, players who rely on poker for a salary number in the tens of thousands. (PocketFives hosts Wilson’s website.)

“If you’re an actual professional player, you’re going to move,” says Matt Plecki, a 21-year-old chemical engineering major who took a leave of absence from the University of Southern California to pursue poker. He also hired Wilson to help him set up in Costa Rica. Since playing live games in legal, stateside casinos doesn’t generally allow players to earn enough income, the alternative is finding a regular job.

No Office Job

“No one wants to go in at 9 o’clock wearing a suit and making like a quarter of what they made playing poker while working five times as many hours,” says Plecki. “It’s just not happening.”

Over the past decade, poker exploded as an online phenomenon. Around-the-clock access meant more players and the opportunity to play more hands in less time. The game became less psychological and more quantitative, with online players using computer software to track their opponents’ actions and tendencies.

Online poker also provided an opening for a new crop of talent composed largely of college kids, and the possibility for those with skill -- especially those playing cash games instead of tournaments -- to earn steady money by taking on more hands and exploiting hoards of amateur competitors they call “fish.”

Overseas Poker

Even with a boom in players, online poker in the U.S. was in a legal gray area, and most of the major U.S.-targeted poker rooms are based overseas. The three biggest before April 15 -- PokerStars, Full Tilt Poker, and Absolute Poker/UltimateBet -- are based in the Isle of Man, Ireland and Costa Rica, respectively.

In 2006, Congress enacted the Unlawful Internet Gambling Enforcement Act, making it a federal crime for businesses to knowingly accept payments in connection with online bets or wagers, but authorities didn’t act on the legal changes in a big way until this year.

On Black Friday, the Justice Department, led by Preet Bharara, U.S. Attorney for the Southern District of New York, indicted 11 men in connection with the three sites, charging them with bank fraud, money laundering and illegal gambling.

The charges came as a surprise to some poker players.

“It had gotten to a point where it seemed like online poker was illegal but tolerated,” says Stout.

Along with the site seizures and indictments, authorities also froze millions of dollars in player accounts. Star player Daniel “Jungleman” Cates may have $6 million frozen in a Full Tilt account, according to several poker sites. PokerStars is the only one of the three sites to cash out U.S. players to date.

None of the companies responded to questions from Bloomberg Businessweek.

Smaller Sites

Today, Americans can still access smaller sites such as Curaçao-based Cake Poker and Netherlands-based Lock Poker, which saw its numbers increase fivefold following April 15, according to Stout, who’s a salaried pro for Lock. Plecki and others, however, say that investing large sums is risky: No one knows where the U.S. authorities may strike next.

Many players, including Stout and Plecki, suspect that Black Friday is part of a government plan to legalize and tax online poker in the U.S.

American casinos stand to profit. A bill introduced by Representative Joe Barton, a Republican from Texas, on June 24, would legalize online poker for eligible companies that already have a gambling license in at least one state.

“The Barton bill ensures that sites like Harrahs.com or MGM.com will be best positioned to attract American players at the outset,” says Olivier Busquet, an occasional poker commentator for ESPN. “This is a huge advantage, since having a large player base is invaluable.”

$1 Million Pot

In San Jose, Stout and Cappuccio recently bought into a $1,000 tournament with a pot of around $1 million. The contest starts at 3 p.m. and will run until midnight. They’re wandering around their apartment carrying open laptops, staring at their screens and evaluating the competition while fixing a pizza lunch. Stout is boisterous. He’s been on a winning streak and has big plans.

Cappuccio’s on edge. He’s lost most of his $500,000 in earnings by staking friends who failed to make back his money, and he’s nervous about having to leave poker and go back to a job at his father’s ketchup factory.

“I’m broke,” he says, sheepishly. “I need to win.”
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