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9/26/2004

Gaming industry’s Hot Hand

By Jonathan Krim
The Washington Post

WASHINGTON — Jan Edward Helfeld moved along the bar at the Hawk and Dove, a popular after-work watering hole on Capitol Hill, scanning his quarry.

He stopped several people to ask: “Are you here for the poker meeting?”

Like others who turned out, Helfeld was hungry to meet people who host or play in games he could join. He exchanged business cards with Jason Kim, who hosts a regular game for friends. They discussed stakes they like to wager and types of poker they like to play.

Poker is on fire, its popularity fanned by a combination of television, technology and, for some, the allure of big money.

The game Mark Twain once complained was “unpardonably neglected” in the United States is played by hundreds of thousands of people online 24 hours a day and by celebrities on television.

Industry estimates are that 50 million to 80 million Americans play the game. Card rooms in states where poker is legal are booming, while online directories list games and tournaments in garages and basements around the country. The game is consuming college campuses and has replaced video gaming as the idle-time obsession of high school boys.

“It’s just amazing,” said Nancy Robinson of Arlington, Va., whose 16-year-old son, Nick, has been playing nearly every night this summer with 10 to 20 friends who bet about $10. “I’ve seen a lot less computer games” among her son’s circle of friends. “I certainly favor poker; it probably improves the mind more, and it’s much more social.”

Players say the game appeals to their competitive instincts, challenges their brains and differs from other games because it does not rely on athletic prowess or the ability to buy the best equipment.

Some big Hollywood names are smitten, and not all are playing for charity on the Bravo cable channel’s “Celebrity Poker Showdown.” Ben Affleck won $360,000 in a recent tournament in Sacramento. Mimi Rogers plays often, as do Lou Diamond Phillips and James Woods.

“Poker is like a modern Greek tragedy,” said Steve Lipscomb, chief executive of World Poker Tour Enterprises Inc., who pioneered the way poker is watched in the United States. “It reveals the human condition as well or better than anything else you’ll find. You get the greatest highs and the lowest lows. That’s the juice.”

But it is the growth of poker as a business that is breathtaking.

Cable TV viewer ratings for the World Poker Tour on the Travel Channel and the World Series of Poker on ESPN have been so strong that four poker-related shows are in development.

The success of television and online poker has translated into a surge of entrants in tournaments. First prize in this year’s World Series of Poker doubled from $2.5 million last year to $5 million this year because of the increase in participants. The top tournament prize of the World Poker Tour jumped from $1 million to $2.7 million.

Poker had long been a late-night cable TV offering, but it drew few viewers until three years ago, when Lipscomb produced a documentary on poker.

Lipscomb realized that watching on television was unsatisfying because viewers rarely saw the players’ cards. In the most popular tournament game, Texas hold ’em, every player has two cards that are dealt face down and are rarely revealed unless there is a showdown with another player at the end.

Lipscomb, borrowing from a British TV program, put cameras in the rim of the table to show “hole cards” when each player looks at them. Viewers at home knew what cards the players had and could strategize along with them.

Lipscomb took the camera idea and the notion of a more heavily edited, faster-paced and stylized program to various cable TV outlets. The Travel Channel bit, and the World Poker Tour series was born.

Although ESPN copied the camera idea and now televises the more well-known World Series of Poker, World Poker Tour Enterprises Inc. is growing rapidly. Last month, the company began selling stock , trading on the NASDAQ, and it has filed for a patent for its method of showing hole cards and odds for each hand.

Thanks to sophisticated software and increasingly prevalent high-speed online connections, some of the biggest poker money is being made by companies hosting tables online.

In a recent 24-hour period, about $124 million was wagered in more than 100 online poker rooms, according to PokerPulse.com, a Canadian company that tracks the industry.

All of the sites are based offshore, because of U.S. gambling laws, and nearly all are privately held, making it hard to pin down their profits.

The largest site, www.partypoker.com, is estimated to be making $100 million to $200 million in profit a year.

Citing the possibility of online poker rooms being used for money laundering, the Justice Department has pressured credit card companies to refuse to let players conduct transactions with the sites using credit cards.

U.S. players must use services that deduct or add funds to their checking accounts.

Online gaming executives say they would welcome legalization, with regulation and taxation, so they could operate more freely.

Those who deal with gambling addiction are alarmed.

Keith S. Whyte, executive director of the National Council on Problem Gambling, said online poker is especially worrisome because it can be played by minors, is solitary and is available all the time, which can invite addictive behavior and devastating losses.

“Virtual money ... is easier to spend and easier to get away from you,” he said.

Ann Marchand of washingtonpost.com contributed to this report.