The U.S. Handling of the Poker Industry Is Another Example of Anti-Jobs Policy

EconMatters's picture

By EconMatters

Americans have been card players for ages, whether it is playing card games after Thanksgiving Dinner with Grandma for pennies or watching Doyle Brunson play in the World Series of Poker on ESPN, Poker has become as main stream as college football on Saturday afternoons for Americans.

However, the US governmental approach towards the industry for the last decade serves as another example of why the economy is struggling with 10% unemployment.

Sowing The Seeds

A country just doesn`t wake up one day and voilà! there is no economic activity and thus a lack of jobs to sustain a growing population. Rather, the seeds for economic growth and activity are a byproduct of years of government providing the right kind of pro business environment for various types of industries to thrive and grow and build a network of derivative jobs related to each industry. Think in terms of a long range type of fertilizer paving the way for bumper crops of economic job creation 5 and 10 years in the future.

Poker - A Game of Skill

There is much debate whether poker is a game of skill or just pure luck like playing Dice games or the Lottery. It is a game of skill, and at different levels players have been able to find grind out a living for decades. It evolves like any other industry as technology and information changes occur leading certain strategies antiquated and players adjust or move on to other professions.

Not unlike trading strategies or the retail industry, players come and go, and some players outlast the competition, and make a consistent living for decades. Think in terms of the NFL skill-set, many youths play football in High School, and even college, but only a very select few are able to make a consistent career out of the profession, the truly exceptional. And we wouldn`t call football players just lucky, rather they are the best of the best. It takes the exceptional level talents at a given buy-in level to enable a competitive edge to exist and a consistent win-rate and thus professional designation.

However, unlike football many recreational players are able to play the game often alongside the professionals and derive a substantial entertainment benefit that adds positively to their lives in terms of happiness at a social level. Think in terms of bowling, going to the movies, fishing, or playing pool. It serves as a social outlet where they try to master the challenge of winning the hand against other opponents.

The game is actually quite popular, and people like playing it as a social activity, and if the government would start providing better fertilizer, the industry could support an entire supply chain of industry related jobs, and even provide much needed tax revenue for reducing our growing federal deficit.

Job Creation Strategy With Poker

First of all, poker needs to be legalized, regulated, and taxed at a very minimal level. It needs to be legalized so that businesses can start up card rooms which cater to recreational and professional players across the country, not just select states like California, Louisiana, and Las Vegas.  

This would create jobs for waitresses, dealers, floor personnel, bar tenders, cooks, dishwashers, cleaning, maintenance, marketing, and managerial jobs in a direct fashion. But in addition to the direct jobs, there are advertising needs which create indirect jobs in online advertising, as well as in radio, television, and the print media. Plus, all these card rooms opening create jobs for carpenters, remodelers, construction jobs.

Then the companies that supply products to the industry like poker tables, shuffle machines, big screen electronics and entertainment systems, furniture, appliances and lighting benefit as well. All these companies will then hire additional personnel to meet the increasing demand for their products.

I could go on and on with the amount of direct and indirect jobs that can be created by government getting out of the way and letting the market forces take off and really synergistically create jobs for an industry that finally has the constraints to growth removed.

Contractionary Policies Are Counterproductive  

This is how you spur the economic growth engine, not just in poker, but in many other industries as well, by giving an industry all it needs to succeed, and then getting out of the way, and letting market forces decide if it is a legitimate industry worthy of capital allocation. If the demand is there, then businesses will spring up, jobs will be created, and the economy as a whole will benefit, and you get economic expansion.

The policies of the US government for much of the last decade are contractionary for many types of industries and small businesses from both a legislative and tax perspective and a strategic philosophical shift could help alleviate the burden currently being placed upon many of these industries like the Poker Industry.

Balance With Proper Regulation & Taxes

The poker Industry could benefit from regulation, but not coercive regulation, but just to provide a regular third party auditing function to maintain that the games are run efficiently and fair. A consistent maximum rake across the United States in both the physical and online domains would be an important type of regulation that could be positive for the Industry.

In terms of tax, businesses should be taxed similar to any other business, and not have a “sin” type tax or any other special poker tax designation which would stifle growth instead of help foster growth for the industry. The government usually gets it wrong with tax policy, just implement a reasonable level tax rate, and get out of the way.

If demand for the industry or product is pervasive, the tax revenue will follow. Then this becomes self-fulfilling as a given industry starts to flourish, this attracts more participants, the industry growth accelerates, and so does the tax revenue for the government. Too high taxes have the exact opposite effect, it is contractionary in nature, as it limits participants, slows growth, and reduces tax revenue over the long run.

Online Poker Embraced

Finally, yes online poker needs to be fully embraced in this country. This means having the same legal rights and status as the legalized physical domains of casinos so that all the foreign based operations, jobs, and taxable earnings are repatriated back to the US where most of their customers are located.  The entire Full Tilt Poker fiasco could have been avoided, we wouldn`t have American citizens relocating to Canada to play on Poker Stars, and the DOJ heavily involved in dictating whether a business succeeds or fails.

Sure, there are limited cases where an underage kid goes into debt playing online poker by getting around the safeguards. But the response shouldn`t be to effectively close down an industry just because of some failings. The response should be to address ways to better deal with these types of cases, not just get rid of the entire industry. If we applied the same standard to every industry that had failings, we would be left without many productive and socially acceptable industries.

Pro-Business or Get Out Of The Way!

When we start thinking about legislative policy initiatives or changes, we need to ask ourselves this important question first and foremost:

“Is this going to create or destroy jobs and industries?” 

This is actually a much more important philosophical shift than one would imagine on first blush, having the right pro-business attitude towards all industries and businesses creates animal spirits in the economy, think in terms of the great industrial revolution where many new business ventures were allowed to flourish, make mistakes, fail, and succeed at the same time.

The era had the right business entrepreneurial spirit to create jobs and industries out of ideas because the pro business climate was fostered not hindered. This is a radical change from the legislative and governmental philosophical climate that is in place today and being created by policy makers. Get out of the way, and let market forces take hold and create jobs in many places, diverse industries, and non standard businesses that don`t need governmental subsidies to flourish all on their own.

Washington just might be surprised how this type of approach feeds on itself, as success in one industry, leads to the creation of an entire new industry, creating even more jobs, and before you know it, standard industries like retail and housing are being picked up along the way, and voila we have a booming economy once again in the United States.

It’s the Economy, Stupid!

The Poker Industry has been held back by governmental policy over the last decade, many jobs were lost, and much more were never created, all because of failed policy on behalf of lawmakers. Ask yourselves this question did policy initiatives hinder or foster job creation for the Poker Industry?

And like the Poker Industry, you can apply this same question to many other industries in the United States. The fed have done almost all it can do at this point, and maybe even too much at times, but it is about time that legislative and fiscal policy start doing a whole lot more to foster economic growth and job creation by adopting an industry stimulative approach as opposed to their current contractionary, stifling approach.

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sun tzu's picture

Any area that relies on gambling to provide jobs is usually depressing. Look at gambling towns like Vegas, Atlantic City, and Shreveport. Once you leave the casino, there's nothing but druggies, prostitutes, and conmen. I'm not against gambling, but I don't think that is the way to improve the economy. It should be up to each state to decide

masterinchancery's picture

This is just another example of the nanny State, spurred on by lobbyists for other gambling interests, destroying our freedom.  Meanwhile, state supported gambling rolls on.

Market Analyst's picture

Actually govt. claiming P-Scheme after practically running them out of business.

FunkyMonkeyBoy's picture

Only the government is allowed to gamble and squander your monies.

CapitalistRock's picture

A state run lottery is legal but a private poker game is not. What an injustice.

sun tzu's picture

In most states a private poker game is legal as long as the house doesn't take a cut

Seasmoke's picture

not the best timing for a pro poker article with a picture of Ponzi Jesus

EconMatters's picture

Chris Ferguson has a phd in Computer Science from UCLA, and is "accused", not convicted, and therefore is presumed innocent.  Nevertheless, we got Patrik Antonius picture up for the media-contaminated mind. 

Sequitur's picture

I don't know about the premise of this article.

But it's patently obvious why governments outlaw most gambling. Because private citizens who run gambling halls would compete directly with state-sponsored gambling, such as the lottery and OTB.

It's such bullshit. States prevent you from running a gambling business. Yet is perfectly fine for poor people to throw away money on gambling via state lottery tickets -- one of the worst bets in the entire gambling world, period.

Antipodeus's picture

"But it's patently obvious why governments outlaw most gambling." ... WTF?

Because it's mostly run by Organised Crime' ... and the Government doesn't like the competition?



Rick64's picture

I would say it comes down to who has the bigger lobbyist. Online and any other gambling poses a threat to the Casino industry. Casinoes have a lot of money to throw at D.C.. Ex-super lobbyist Jack Abramoff used the bigger casinoes money to shut down smaller casinoes that were competitors via legislation passed by politicians getting huge donations.

free_as_in_beer's picture

Wasn't full tilt just exposed as a Ponzi scheme?

sun tzu's picture

If it was legal and based in the US and subject to regulation, then it would be less likely to rip off the customers. When you force the company offshore to Curacao or St Kitts, it's easier for them to steal from customers thousands of miles away. I've never heard of Caesars Palace or Mandalay Bay ripping off gamblers.

buck4free's picture

Our dear government hath "alleged" it to be... so I guess the answer to your question is "yes".

NotApplicable's picture

I can't imagine having much success sewing seeds, nor can I think of any reason to do so.

As for the online poker industry, well, somebody has to protect the mafia!

muddy's picture

I will see your "What the fuck is this shit?" and raise you "You have got to be fuckin' kidding me!"

Pike Bishop's picture

<Holy Shit.>

Poker has become as main stream as college football on Saturday afternoons for Americans.

That's great. Do you know why the Illinois/Iowa game is broadcast nationwide? Because the outcome is part of the $100B illegal gambling business. For some reason do you think that programming directors don't know what games are on the betting slips in NYC and LA, and big money on the boards in LV?

However, unlike football many recreational players are able to play the game often alongside the professionals and derive a substantial entertainment benefit that adds positively to their lives in terms of happiness at a social level.

Yeah. Until somebody loses the rent on the last hand. I have two words "Atlantic City". Go see how a family town can be turned into a shithole of pawnshops and prostitution. Don't say I'm stretching the comparison, because under this plan for poker, WalMart will be cashing food stamps for poker chips to play on the tables in Aisle 12. Why wouldn't they embrace the profit motive? Bigger is better.

This would create jobs for waitresses, dealers, floor personnel, bar tenders, cooks, dishwashers, cleaning, maintenance, marketing, and managerial jobs in a direct fashion. But in addition to the direct jobs, ... plus indirect etc (snip)

I'm going to assume you have worked in a gambling hall, and thought it was a real healthy environment in which to work. Just what we need, really shitty service jobs. Oh, and you better get enough tax revenue to double the Police force in your town. Casinos don't have 12 layers of security and 100 Security staff per shift because they feel like it. When cash is involved, people behave in extreme manners. And people will get beat-up and shot-at in the parking lot. We have a rather robust history of that outside of "private" clubs in Phila.

This is actually a much more important philosophical shift than one would imagine on first blush, having the right pro-business attitude towards all industries and businesses creates animal spirits in the economy, think in terms of the great industrial revolution where many new business ventures were allowed to flourish, make mistakes, fail, and succeed at the same time.

Yes it is an important shift. I have seen it in action in foreign cities and in the US in "Call and Response". It's called child prostitution. The laissez-faire free-market sets the price for the child. It is, of course, a lot less than civilized people value the life of a child. Ya just can't beat unregulated efficient markets.

The great thing about fucking and gambling enmeshed in the profit motive, the "good customers" never seem to get enough of it.

</Holy Shit>

bankruptcylawyer's picture

what's amazing is how brainwashed people are by the poker meme, defending it as a game of skill, to not understand that it is gambling and that , the gambling meme conquered 99% of wall street activity in the last 50 years with the rise of securitization and derivatives

gambling is what turned what used to be a mostly legitimate excercise in getting capital from investors to business owners , into a casino used to bilk an entire nation by funding mass financial bubbles, including the one we know as the import bubble based on wage arbitrage. 

----it's funny, even very clever intelligent poker players are blind to the obvious frequently. it's called wisdom and understanding. 

and you can't get it by simply being clever.

bankruptcylawyer's picture

this was the best comment on this board, using the witty language of poker to tell the author he is a fucking moron for using this particularly shitty example of government bungling, mischaracterizing the entire nature of the online offshore casino internet system's economic relationship to the real economy of the u.s., and then comparing it to legitimate bungling. 


thank you. 

this is not acceptable shit on zerohedge. just letting this idiot post this makes me have less faith in zerohedge, and i've been coming for years. 


however, as with any media organization , not every post is going to be innocent. that's ok. 


internet poker---fucking corruption on steroids. it's like a couple clever internet guys figured they could create a virtual vegas on a few offshore servers, avoid the feds (cut deals with god knows which underground crime families who are protecting them from the crime families , oh wait, now theyre corporations, that run vegas), ---and get away scott free without paying off the irs.


i have a professional poker player friend who was valedictorian of his college class and dropped out of a wall street job. he does well, not great but well at poker, unlike most people who attempt to play this game. ----and even this guy who is very smart, has no fucking reservations about trusting the system which is his life support, his livelihood. as a result, he winds up in underground clubs mostly as a staked shark ( i met him at one of these clubs) and that's his life. he enjoys it. it's sad that a smart guy like this can't be more succsful doing productive work, but he is happy enough . i give him that. 

he also lost 25,000 to full tilt because they shut down before he could get his money out. 

seems ok right, but what happens when it's not full tilt, but citibank doing that?



RemiG2010's picture

Poker - A Game of "Skill" ... bots .... and smaller versions of Wall Street Hall 9000s!

Boilermaker's picture

LOL, what the fuck is this shit?

spiral_eyes's picture

I notice this article fails to note that most of the online sites were basically run as ponzi schemes. I think a lot of gambling sites probably have this issue.

Vampyroteuthis infernalis's picture

I have played many a hour of poker. It is a mixture of skill and luck. It is a niche entertainment area. This does not even address the basic fact the developed world fails to produce tangible goods. WTF?

sun tzu's picture

It's cheaper to hire a dirt poor peasant to make shoes than to hire a college grad. As long as there is "free" trade, this will be the case.