TEXAS HOLD EM
Recessionary Times Have Turned the Once Shady Game of Texas Hold 'Em into a Profitable Industry
by Steve Butcher

Garbed in sweats, a backward-turned baseball cap, and an unlit cigarette, Cannon Beach resident Mike Balesky fits the classic profile of the modern-day poker junkie. The 35 year-old Balesky has carved a minor livelihood both from local medium-stakes tournament- and ring-games, as well as from internet sessions and visits to Las Vegas. In one such venue—a lounge somewhere on the Oregon Coast (precisely where is none of your business)—he has joined about thirty other bettors for the weekly game.

In the middle of the room, a nun in full regalia carefully divvies the total prize money—about $1,300—into several small envelopes. The Halloween atmosphere is toxic with cigarette smoke, and from behind the well-stocked bar the stereo booms an appropriately thunderous AC/DC (Bon Scott-era) jam. Along with the nun, there are Mr. and Mrs. Neanderthal, a drag queen, and a young woman dressed in a softball uniform. When Axl Rose and Slash enter, conversation turns briefly to the drug problems of bassist Duff McKagan. The costumes and the booze have infused the tables with a blue-collar camaraderie, but make no mistake: there is no such thing as a friendly game of poker—especially when money and reputation are on the line. The first-place $400 prize may pale by Vegas standards, but it will buy a lot of groceries, especially in a haunted-house economy.

Guests are expected to register at the entrance. So when a stranger appears with a notebook and a camera, everyone’s radar goes into overdrive. A stylishly dressed, sixtyish woman, a diamond ring on her right hand, catches his eye and motions to where the nun has finished stuffing the envelopes. “No photos,” she says bluntly. “We can’t have any publicity here.” One of the dealers keeps staring at the stranger before asking him if he is from the government. (The government??) It is only when Mike Balesky explains that the reporter is there to observe him play that the tension—somewhat—dissipates.

Two basic factors explain the Texas hold ‘em phenomenon. First, the rise in the popularity of video games brought more money to the field of computer science and to the study of game theory.

In 2004, for example, scholars at the University of Alberta released an award-winning paper detailing their creation of a computerized “bot player” that was able to successfully execute, for the first time, that most fundamental of all poker strategies—the bluff. Their achievement meant that a computer could now respond to tactics employed by stronger human opponents. “Whereas,” noted the authors, “most human players fail to make the necessary adjustment under atypical [game] conditions, the [computer] program has no sense of fear.”

Three years later, two Carnegie Mellon University computer science researchers used a National Science Foundation grant to write a program that allowed an “agent” to play a fully competitive round of hold ‘em. “Unlike games of perfect information (such as chess and Go), in which players are informed about the state of the world,” wrote the researchers, “poker players face uncertainty stemming from the opponents’ cards, and [from] future actions by nature (i.e., future cards from the deck).” After running 50,000 hands, and after accounting for the “tight relationship between luck and performance,” the researchers concluded that it was possible to artificially duplicate as nearly as possible all facets of the hold ‘em experience. “Our player,” they wrote with understandable bravado, “is the strongest.”

The second factor was the development of cable television. Suddenly hundreds of millions of impressionable viewers were exposed to a quaint little amusement where you could make money by just sitting at a table. “The biggest innovation as far as television goes was the hole camera,” said Mike Balesky. Now each card in every hand, from hole to river, lay exposed. And in a larger sense, it meant that every jowly pensioner and Generation Y gunslinger could follow the trail blazed by someone like Chris Moneymaker, the 2003 World Series of Poker (WSOP) champion, who arrived at the pinnacle of hold ‘em success solely by virtue of his online betting skills.

As of 2008 there are major hold ‘em tournaments in Europe, Asia, Latin America, Australia and even Africa. The 2006 final roster from the European Poker Championship, held in Monte Carlo, featured competitors from 6 different countries, including Netherlands, Sweden and Norway. Not coincidentally, 2006 was also the year Harrah’s Las Vegas processed more than $80,000,000 (yes, eighty million) in entry fees just for that year’s WSOP. Hold ‘em tournaments, including the WSOP, now attract the kind of sponsorship usually reserved for Wimbledon or the Masters. And even though a 2006 federal statute prohibits United States bettors from placing internet wagers, some two dozen sites, including PokerStars, FullTiltPoker and PartyPoker, regularly attract a tidal wave of American dollars.

That same tidal wave has left pools of disposable cash bubbling up in every rural burg that once lived on timber and fish money—an event not unwelcome in the venue where Mike Balesky plays each week. “If it hadn’t been for the money this place gets from the tournament,” he said, “they probably would have closed.”

“When I started playing here we barely got five people together for stud,” said the sixtyish woman, a tournament committee member who has been playing poker “since I was 18.” Over time, as word got around, more players appeared. Some were casual visitors who just dropped in on their way down the coast; others swaggered in with eyes blazing. “We get the obnoxious, as well as the nice,” she said. “This is a stress game, and all the young kids want to make a killing. They bet like crazy.” Describing herself and the other women who play, she added, “We hold our own. I’m a very tight player. I hardly ever bluff, but when I do, I tend to win.”

How can someone bust out of a hand holding A,A (American Airlines)? Statistically, two aces is the strongest possible starting poker hand. But in this example, A,A is facing 8,7 suited (diamonds). The flop consists of 6d, 5s, and Qd. With one more card, 8,7 has a chance at either a straight (4 through 8, or 5 through 9), or a flush (five cards of the same suit). In fact, at this point in the hand, with the turn and river cards yet to come, A,A has a better than even chance of losing—approximately 56% to 44%. Suddenly, American Airlines is about as safe a bet as Pan American Airlines.

For Mike Balesky, the tournament is one link in a chain of games that serves to continuously sharpen his skills. He still works three days a week at Bill’s Tavern, and he lives modestly in a shared duplex on the east side of Route 101. “I do not consider myself a professional player,” he said, “yet. I still keep a job to earn my life money. (His online profile at pokerpages.com ranks him at number 8,343 among participants in tournaments with buy-ins of at least $1,000.) But the Mephistophelian goatee and the Lennon specs betrays a cagey mind honed by years of exposure to strategy games like chess and Magic. “You don’t have to be the best player—you justhave to have enough of an edge over the average player, and you have to be able to manage your money,” he said. “You want to try to make the other players in the hand pay a bad price to see the next card.”

Like any competent hold ‘em player,there are times when he prefers opacity. Asked about his parents, he responds, “Keep them out of it.” Asked how much he has pocketed over his career, he considers for a moment and then says, “I report everything I make.” Does he have a favorite poker Website? “I’m not going to tell you.”

In some ways his attitude neatly coincides with one of poker’s odd little quirks—the importance of duplicity. The most successful players have the ability to convince their opponents to skip happily off the edge of a cliff. “My job is to make my opponent make bad decisions,” said Balesky. “Sometimes I’ll make a bad call, and announce it. If a new player sits down, and I don’t have any information, I might make a loose call to gain information.” Who the player is makes no difference. “I have no fear of anybody. That doesn’t mean that I think I’m better; it just means that I’m not intimidated.”

Balesky’s vocabulary is peppered with hold ‘em argot. References to “fold equity,” “pot odds,” and “expected value” are as much a part of his conversation as the latest football scores. Such attention to the minutiae of the game, he believes, is vital for any aspiring player. He credits a number of local personalities with helping him to sharpen his game. One individual, to whom he refers, simply, as Old Billy Two-Arms showed him “how not to play.”

“Poker is a game you have to practice,” he said. He has never deposited so much as a penny in any internet poker site. During that time he has slowly built his stack, although not without adventure. “The longest I have ever played online is 48 hours,” he said. “I had zero money in my account at [this particular poker site.] I started in the freerolls, and at the end of my session I had pushed my bankroll up to $150. About half-way through I started running out of steam. Then I got a second wind and my brain woke up.” He schlepped his laptop all over the house—to the kitchen to make a sandwich, to the bathroom to pee. “I had a window of about five or six hours where I felt in the zone,” he said, “where I knew exactly what was going to happen—not with the cards, but with the players. I remember I was on the phone with someone, and I told them that it was almost unfair.”

Not surprisingly, one of his most memorable plays came the day he successfully bluffed 3-time WSOP champion John Juanda. “It was at the $1,500 buy-in event at the 2007 WSOP in Las Vegas,” he said. “For the first half-hour I was super-nervous. I kept thinking, ‘Wow, I’m in this big event—and there goes [3-time WSOP champion Mike] Matusow!’” But Balesky’s card sense took over. In a hand against Juanda, Balesky made him fold. “Juanda came up to me a few hands later when I busted out with A,A [see sidebar A]. He patted me on the back, and said, ‘You belong here.’”

At tonight’s tournament, however, Mike Balesky is definitely out of the zone. His remaining pile of chips is small enough to fit in his hand. Unlike last week, when he lost on what players call a “bad beat,” [see sidebar B] tonight his equity is slowly melting away in a maddening, inexorable dribble. If things don’t improve, he’ll be out before they distribute the candy. But he is philosophical; anguish is for donkeys, not for him. “Meltdowns usually happen because bad players do not understand ratios and odds,” he said. “Bad beats are part of the game.” When he is finally forced to go all in, he turns over two under-cards. He stands and looks around. Still in the game—and well-armored behind thick walls of chips—are, among others, Mrs. Neanderthal (Mr. Neanderthal has moved over to the billiards table), and the softball player.

A “bad beat” is, simply, a river card that turns an inferior hand into a winning hand. Mike Balesky sketched this diagram to show how his starting hole cards (10,J) matched up against his opponent’s hole cards (10,9). The flop came up 5,10,J, giving Balesky two pair against his opponent’s pair of 10’s. At that point, according to Balesky, his hand had a 98 percent chance of winning. His opponent bet, and Balesky went all-in. The turn card came up K (giving his opponent a chance at an inside straight), which reduced Balesky’s odds (somewhat) to 92 percent. Only one card could beat him—the Q. She dropped and Balesky lost.

Later he pulls out a spreadsheet depicting the quarterly standings of all the tourney participants. Every three months the top twenty finishers play in a free tournament for the right to claim an additional cash prize. He runs a finger down a column of numbers before stopping at his name. He’s in first place. Outside, he lights a cigarette and shrugs his shoulders. “There is some luck involved,” he says, “but poker is not ultimately about winning or losing; it’s about making the right decisions.”