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Old 06-09-2005, 12:35 AM
smb394 smb394 is offline
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Default Financial Times Poker article

One of the Financial Times' columnists has a new column up on their website "Wall Street is Sucker in Online Betting" that is pretty good. It talks about how laxer laws in the U.K. have enabled online gaming (esp. mentioning Party) to strike it big in London markets, while New York isn't getting any of this action.

This article is only available to subscribers (of which I am one). I want to paste the article here, but don't know what the deal is with copyrights. Any ideas?

EDIT: scroll down three posts for the article
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Old 06-09-2005, 12:40 AM
bholdr bholdr is offline
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Default Re: FT Poker article copyrighted?

they're PROBABLY not gonna sue you. geez.

as long as you're not profiting by reproducing it, i think it's okay.
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Old 06-09-2005, 12:44 AM
Jeff W Jeff W is offline
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Default Re: FT Poker article copyrighted?

Connect through an anonymous proxy: TOR.

Open a new account and post the article under that if you're paranoid. I wouldn't worry though.
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Old 06-09-2005, 12:44 AM
smb394 smb394 is offline
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Default Re: FT Poker Article

[ QUOTE ]
they're PROBABLY not gonna sue you. geez.

as long as you're not profiting by reproducing it, i think it's okay.

[/ QUOTE ]

Ha, I know. I was just more concerned with 2p2. Anyway, here it is.


Michael Bloomberg, the mayor of New York, must be feeling a little sore at the moment. His efforts to bring the 2012 Olympics to the city hit trouble on Monday when plans to build a stadium in Manhattan were rejected. That makes it even more likely that the event will be held in Paris or, at a pinch, London or Madrid.
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Here is another sporting rebuff to worry him. As he should recall from his days at Salomon Brothers, President John F. Kennedy helped to revive the City of London in 1963 by imposing a tax on US investment in foreign securities. That made the international bond market move to London, allowing the City to regain its 19th century status as Wall Street's rival in capital markets.

Now US regulators are doing the same thing with another market: online betting and gambling. It does not sound like a very worrying loss for Wall Street given its strong position in equities, bonds and derivatives. But Mr Bloomberg should watch out: in an arena of financial innovation that is rapidly converging with other forms of trading and investment, New York is drifting behind London.

As with international bonds, the sheer size of the US domestic market should give US companies and institutions an edge in online betting. After all, some 45 per cent of online gambling revenues come from American players. But federal anti-gambling laws have been applied so strictly that companies have been driven offshore or towards Europe's biggest financial centre.

London is experiencing a wave of initial public offerings from gaming and betting sites. PartyGaming, a Gibraltar-based company that operates PartyPoker, the dominant online poker site in the US, last week announced plans for an offering that may value it at more than 5bn ($9bn). Betfair, a fast-growing online betting exchange, could float for up to 500m.

Why should New York care? The US authorities have their reasons to stop online gambling advertisements and block people from using US credit cards to play poker. Not only do they regard online betting as a breach of a 1961 federal law, but many politicians do not want what they regard as an immoral pastime to flourish.

The problem is that the line between entertainment and financial services blurs as punters move from placing bets with bookmakers to wagering with others through online exchanges. As Michael Mainelli, a consultant and professor of commerce at Gresham College in London, says: "Betting markets are clearly coming to resemble other financial markets."

Online poker is an example. After Microsoft spotted the potential of the internet in the 1990s, Bill Gates often cited the game of bridge as an example of the internet's revolutionary impact. His point was that you no longer needed to assemble four players in one room to play: instead you could play with partners anywhere in the world by going to an online salon.

Wrong game, right idea. The astonishing growth of online poker - Dresdner Kleinwort Wasserstein, a financial adviser to PartyGaming, estimates that the game's $1.4bn (763m) annual revenues will rise to $5.9bn by 2008 - shows what happens when all inconveniences are removed. You no longer have to take a flight to Las Vegas to wager money with others over a round of Texas Hold'Em.

Poker may prove to be a craze. But there is little chance of the broader trend towards people making bets through online exchanges being halted. Not only is that easier than going to a bookmaker but it is better value. Just as equity trading has moved to electronic markets rather than using marketmakers, online gambling through exchanges eliminates an expensive middleman.

Betfair, which matches bets on sporting and other events using algorithmic software, charges 5 per cent of losses as commission compared with the 15 per cent margin that bookmakers take. It is not surprising that many experienced betters have switched allegiance. Up to 4m bets a day are offered on Betfair, several times the number of transactions on the London Stock Exchange.

That is interesting, but it only hints at the potential of online betting. London is already home to a big spread-betting industry. Companies such as IG Index allow investors to bet on the level of financial markets rather than having to buy securities. Betfair expands this approach by allowing matched bets both on sporting events and on other uncertainties, such as which city will host the 2012 Olympics.

This not only enlarges the universe of things on which investors can take bets but also creates liquidity. As the development of financial markets in the past decade has demonstrated, falling trading costs lead to rising volumes. As it becomes easier and cheaper to make bets, all kinds of unexpected trading approaches - both to take risk and to offset other exposures - are unleashed.

It is easy to imagine, for example, home-owners or lenders placing bets on the future level of a house price index in order to protect themselves against potential loss. Would that be betting or financial hedging? Wall Street's problem is that there is little difference. Anyone with a terminal can trade on a betting exchange as easily as on a stock exchange.

Not all of the potential may be fulfilled, of course, but does New York really want to bet against it? Many people are against gambling in principle and care little about financial innovation. But this should not go for Mr Bloomberg and the denizens of Wall Street. There is an old saying in poker: if you cannot spot the sucker who will lose money, it is you.
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