Virtual Smoke-Filled Rooms In online poker, the tables are digital but the action is real.
By Thomas Mucha

(Business 2.0) – Even before there was poker on TV, there was poker on the Internet. Online players could try their luck against others, or they could square off against the machine itself in training games. But it wasn't until the game caught fire on cable last spring--and Chris Moneymaker, a 27-year-old online savant, won the $2.5 million World Series of Poker--that online poker graduated from curiosity to certifiable phenomenon.

On an average day, an estimated 91,000 Moneymaker wannabes log on at more than a dozen sites like PartyPoker. com, PokerStars.com, and UltimateBet.com, seeking head-to-head encounters with other players. The average wagering: $50 million per day, according to Dennis Boyko of PokerPulse, which monitors online poker traffic. (The figure reflects a threefold increase since Moneymaker's feat.) The market leader, privately held PartyPoker, will take in revenue estimated at $100 million this year.

House rules vary little from site to site. After downloading client software, players can choose from a variety of games--Texas Hold 'Em is the most popular--with pots ranging from nothing (for beginners) to unlimited. When the game begins, the typical screen displays a virtual poker table identifying players by user name and location. A player funds an account with a credit card or online payment service (like NetTeller); the software tallies the participant's chips during play and credits or debits that account when the player leaves the table. Most of the sites' revenues come from the "rake"--a share of every hand played, typically 25 cents to $3.

Players relish the anonymity and convenience of playing from their own living rooms (or offices), but there is a downside. Collusion--when two or more players secretly work together to take advantage of others--is obviously possible around a virtual table. Judging from occasional rants on online poker forums, more than a few players are convinced that they have been victimized. But sites often use automated software and human observation to watch for suspicious behavior, says Dan Goldman, vice president for marketing at PokerStars.com, who claims that actual cheating is rare. "Perception is worse than the problem," he maintains. Players have to hope he's right--because if they are wronged, they have little recourse. Most sites are based outside U.S. jurisdiction, in places such as Aruba, Costa Rica, and Canada's Kahnawake Indian reservation. --THOMAS MUCHA