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Climbing mountains with stupid people.

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I was browsing a couple of days ago, looking for solid information on how to deal with the IRS' record keeping guidelines for gambling. The sticky point is them wanting you to document the real names of every person at any given table you are playing at. In person this is going to be difficult enough as it is, I'm not sure I'd want to give a stranger my full legal name in a place like that, identify theft and all. Online, it's totally unreasonable. Nobody in an online tournament is going to give you their real name, and the cardroom would be insane (and legally liable) to give up that information. It's also not practical as online tournaments can have as few as eight and as many as ten thousand players in them.

For the most part, all I found were suggestions that you request any and all records that the cardroom is willing to provide you with, up to and including things as detailed as hand history, and pray it's going to be enough should you ever be audited by the IRS. I suspect it's not.

Though I did find some insightful posts by the FossilMan himself, Greg Raymer, the 2004 WSOP champion, the newsgroup is overwhelmingly useless. There is a ton of spam, a lot of people who think they are great and really aren't, lots of amateurs, jerks, and of course more spam. One post that was particularly ugly suckered me in though, and I laid something on the line.

It cost $2400.00 per month to play poker on the Internet.
Tim Montgomery (supposedly) did the math, and figured that if you play poker online 8 hours per day, 5 days a week, you'd be losing about $2400.00 a month to the cardroom in rakes. A rake is a small amount of the pot that the cardroom gets to keep, and is how they make their money. How big the rake is depends on how much money is in the pot, what the blinds are (mandatory betting), and how many players there are (presumably in the hand, not at the table.)

At pokerstars for example, when the blinds range from $2/$4 up to $100/$200, the rake is 50 cents for every $20 in the pot with 2-3 players, and maxes out at $1. The biggest the rake can ever get on that site is $3, and it's really not that bad. The rake for a $5 pot in a low-stakes game is probably only going to be about a quarter.

I told Tim that if you play poker 8 hours a day, every day during a business week, you should be more than able to afford the rakes, and if you can't, you probably shouldn't play. I also suggested that if he was so dead set against the rakes, he should start his own online cardroom with lower rakes, and have fun trying to take business away from the big players. I even offered my services in software development, if he were truly interested doing something rather than complaining. And I had everr intention of following through, should he have the guts.

He didn't, in fact I didn't get a single reply. But I like to be ready in all situations, so I carefully thought about what I would say next, should the conversation continue. This is what I came up with.

Starting an online cardroom is starting a business, and you have to account for every aspect of a startup or you're going to flounder and die fairly quickly. From my little corner of the world, I started thinking about the assets I'd need to develop the software. Java is my first choice in programming language because it has awesome support across many platforms (I don't know of any online poker clients for Linux, do you?), it's extensive class library (premade code) can be leveraged for accelerated development and fewer programmers, and it's something I already am familiar with.

Writing both a client and server is a huge undertaking for a single person, even with the development speed advantage you gain from using Java. I wouldn't expect a single person to be able to go from scratch to production on either the client or the server in anything less than six months to a year each, and that's totally a guess. Right off the bat I'd have to have at least one more programmer, preferably two or three, none of whom would work for free.

The website is not a small component that can be factored into the job of one of the client/server coders. A person with serious professional skill in website design, backend support, server administration, database administration and other misc skills would be required. For a business that will be conducting support for financial transactions, it's not something to be taken lightly. I could foresee no fewer than two people for these jobs.

Any business that takes money from customers needs an accountant. Not having one is a great way to go to jail really fast. Tax law is especially complex when it comes to online gambling. A lawyer, though not a must have for a startup, would certainly make things much easier.

Then theres running the business. An outsider with real-world training in business administration would be a must in my opinion, though many technology startups did just fine without first. And then of course you would need enough technical support staff to handle all your customers 24/7.

All these people would have to be paid, anyone willing to work on such a project without being paid is probably going to be substandard quality, and finding them is no easy task either.

These are just a few of the things that came to mind when I started thinking seriously about what it would take to start an online cardroom. It's hard and risky work, and I'm glad Tim didn't take me up on my challenge. There are better things to do in life than trying to climb a mountain with stupid people.
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The text of this article is Copyright © 2006,2007 Paul William Tenny. All rights reserved. This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License. Attribution by: full name and original URL. Comments are copyrighted by their authors and are not subject to the Creative Commons license of the article itself.