Online Poker’s Big Winner

[redcorolla95]

For all these stories about how people have lost their fortunes in online poker, here's an example of how people can win when gambling.

Some mental dexterity.
Hard work & Deliberate practice.
Maximizing the odds at a game that is winnable.

Some provocative implications for investing / trading.
If you take one of Buffett's advice about only investing in 20 stocks over your whole life, and then you compare with someone who trades in and out everyday, perhaps the guy who trades in & out pressing on a small mathematical advantage over lots of trades might be a better approach than one who takes 5 years to figure out if he made the right decision.



THE YOUTH ISSUE
Online Poker’s Big Winner
By JAY CASPIAN KANG
Published: March 25, 2011

Daniel (jungleman12) Cates, a 21-year-old self-made multimillionaire, lapsed economics/computer-science major and one-day Bubble Trouble champion of the world, was mildly annoyed. A reputedly solid player under the gun had just bet, and Cates needed to figure out if he was bluffing. Cates consulted the stat readout and deduced that the kid’s erratic betting over the past 200 hands was a product of emotional fragility. With no pair, no draw and no hope of winning a showdown of hands, Cates again raised the pot. At a second table, Cates had just made his flush. He put out a value bet that was precisely calibrated to resemble a bluff. At a third table, he folded. At a fourth, he called for time. At a fifth, his mouse slipped, causing him to accidentally fold. He muttered a profanity before turning his attention back to the first two tables.
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Christopher Morris for The New York Times
Daniel Cates, above.
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Both plays worked. The reputedly solid player was, indeed, bluffing. He folded. Cates chuckled and said, almost seductively, “That’s right, spew monkey, spew all those chips over here.” At the second table, Cates’s opponent called the value bet and showed the worst of it. Cates had just won more than $30,000, but his attention had already shifted over to Table 3, where he had been dealt a monster hand. He turned to me and said: “Sorry if these stakes are boring. I would be playing bigger, but it’s been a rough week.”

His apology was interrupted by a beeping. At one of the empty tables tiled across the top of the screen, Gus (The Great Dane) Hansen’s personalized Full Tilt Poker avatar appeared. (Hansen is one of the most recognized players in the world. His avatar is a cartoonish rendering of his face.) Cates muttered, “There he is.” In the chat box in the lower-left-hand corner of the screen, Hansen asked Cates if he would like to play some Pot Limit Omaha (P.L.O.), a form of poker known for its wild swings and even wilder betting patterns. Cates typed, “Not right now.” Hansen’s avatar disappeared. Cates said, “Gus has been sort of crushing me at P.L.O.” When asked what the phrase “sort of crushing” might mean in the context of high-stakes online poker, Cates shook his head and said: “I don’t know. I’ve lost maybe a million, a million point two over the past few days to Gus. Something like that.”

The thought was sobering enough for Cates to call it an afternoon, and he suggested we have dinner at the Cheesecake Factory. For the next 10 minutes, we sat in the driveway of the modest Orlando condo he shared with two roommates as he fumbled around with the Bluetooth-iPhone sync-up in his new Lexus ISC, a car whose $40,000 sticker price seems perfectly practical for a 21-year-old whose net worth places him in such a high income bracket. After much cursing and mumbling, he gave up and plugged his iPhone into the car’s USB port. The next five minutes were spent trying to find a decent driving song. He ended up choosing a recent dance-hall mash-up of various tunes from the Super Mario video-game series.

The Cheesecake Factory was mobbed. We found a spot at the bar, and Cates flagged down the bartender to order the filet mignon. In the five meals Cates and I shared over three days, he ordered filet mignon three times. As we waited for the bartender to bring us our drinks, I noted our luck in finding a seat on Valentine’s Day. Without a trace of irony, Cates, who speaks in the halting cadence most often associated with World of Warcraft group chats, asked, “Why would a restaurant be any more crowded on Valentine’s Day?”

Daniel Lawrence Cates was born on Nov. 14, 1989, on the Virginia side of the Beltway, and he grew up nearby in Bowie, Md. His father works in a managerial position in a technology firm. His mother works as a manager at the Bureau of Engraving and Printing. He describes his childhood as “weird, a bit aloof and mostly spent alone.” Around age 6, he began to withdraw from the regular play of his classmates. “I was figuring out that my interests were different than the other kids’ at school. I was never into fashion or politics or sports. So I began to spend most of my time by myself.” Most of this alone time was spent in the basement of his childhood home, where he discovered a “natural talent” for playing video games, especially Command and Conquer. Lillian Cates describes her son’s obsession with video games as “uncontrollable”: “When he was a kid, we tried to limit his video-game time and his computer time, but it was impossible.”

At Eleanor Roosevelt High School, part of the Washington area’s network of math-and-science magnet schools, Cates was a gifted, if somewhat unmotivated, student who routinely sneaked off to the school’s computer lab to play Minesweeper, the puzzle game that has come standard with Windows since the first Bush administration. During his junior year, he began playing in local live-action poker games held in the kitchens and living rooms of people whom he describes as “not really friends.” Despite the relatively low stakes involved, Cates managed to lose several thousand dollars over a period of three months. The losses alarmed his parents, who put a freeze on his savings account. Faced with a cash-flow problem and owing $600 to a fellow player, Cates took a job at McDonald’s. But he continued to play poker with a dogged mantra. “I knew that if I just kept working at poker, my game would vastly improve,” he said. “When I started playing Minesweeper, I thought it was inconceivable that someone could clear all the mines in 90 seconds. Then I kept working at it. Before I knew it, I had accomplished what I thought was impossible. The same thing happened with poker. When I started out playing low limits, I’d look up at a guy playing with $2,000 and think, How is he doing that? He must be so good. But I just kept working at it. Eventually, everything changed.”

Within 18 months, Cates went from routinely losing at local $5 games to winning at the highest stakes of online poker for anywhere between $10,000 and $500,000 per night. In 2010, his reported $5.5 million in online earnings was more than $1 million higher than the nearest competitor. Unlike other young poker millionaires who make the bulk of their money by winning televised tournaments — a proposition that, because of the high number of players and the unpredictability of their actions, involves roughly the same amount of luck as winning a small lottery — Cates earned his stake by grinding, the term used to describe the process of pressing a skill advantage over an extended period of time. Because poker is a game of high variance, where a significant difference in ability can be mitigated by a bad run of cards, a player’s Expected Value (E.V.) must be actualized over thousands of hands. Every year, a few dozen kids go on hot streaks and take a shot at the big time. Almost invariably, these kids are eventually ground down by higher caliber players. What made Cates’s run different wasn’t his total winnings or the speed with which he earned his millions. What caught the attention of the poker world was that the 20-year-old top online earner of 2010 won almost all of his money in head-to-head confrontations with poker’s elite.

The gospel of E.V. that keeps the poker hierarchy in order was shaken. Cates had taken on all comers in 2010, including highly publicized matches against top-flight pros like Phil Ivey, Patrik Antonius, Ilari (Ziigmund) Sahamies and his fellow young gun Tom (durrrr) Dwan. Each of these men has helped turn poker into a multimillion-dollar celebrity enterprise. Each ranks among the 20 or so most recognized players in the world. And in each of his matches with poker royalty, Cates came out hundreds of thousands of dollars ahead.

In Sweden, an even younger poker pro named Viktor (Isildur1) Blom was also winning and losing at a dizzying rate. In December 2009, Blom took Cates for $500,000, handing Cates the worst beating of his career to that point. Later that day, Blom won more than $700,000 from Brian (Sbrugby) Townsend. His next opponent was Brian (Stinger) Hastings. Within a few hours, Blom lost an estimated $4.2 million to Hastings, reportedly the biggest one-day loss in online poker history.

The vast sums of money shuttled among the accounts of these young professionals — and the shocking aggressiveness and recklessness with which they played — deepened the divide between the young online players and the older guard who earned their millions when poker was still a game played by men sitting around a table. Since the rise of online poker in the early 2000s, every principle of the game, every lesson learned over hundreds of thousands of hours of play, every simple credo uttered in some old Western gambling movie — all those tersely stated, manly things that made up the legend of poker — has been picked apart and, for the most part, discarded.

Patience is no longer rewarded. If an 18-year-old online whiz can play 12 hands at once, then by his 19th birthday, he is no less experienced than a career gambler who has sat for a dozen years at the big-money table at the Bellagio. It didn’t take long before the young players began crushing established gamblers online, and the question rang out across the poker world: How were these kids, many of whom were too young to set foot inside a casino, outsharking the sharks?

In Command and Conquer, the video game that consumed much of Cates’s childhood, a player leads an army into a real-time battle. The combat units are vaguely futuristic and highly specialized. Success depends on the efficiency with which a player can build his resources and the speed with which he can deploy them. It is a difficult game to play and an even harder game to master. The best players develop a predatory instinct for detecting the exact moment when an opponent has weakened. High-end strategy combines lightning-fast reflexes, unabashed aggression and razor-thin resource management. Reckoning comes by way of particle cannon. By the age of 15, Cates told me repeatedly, he was one of the world’s best Command and Conquer players.

Phil Gordon, a 40-year-old poker professional who has won $3 million in tournaments, written three best-selling books and hosted several TV shows, including Bravo’s Celebrity Poker Showdown, says he believes that the early and immersive training offered by video games, paired with online poker’s increasing space in the mainstream, has laid out a practice ground for a militia of young, fearless, invincible players. “The prototypical successful young gun is fast and unpredictable,” Gordon says. “Those traits make them nearly impossible to beat, especially when playing at warp speeds. The manual dexterity required to play 12 or even 16 or 20 tables at one time is enormous. The mental dexterity required to play well while making that number of decisions in a very short amount of time is even more impressive. Many of the video games the kids grew up with like Command and Conquer or Call of Duty required a similar dexterity and gave these kids a leg up — the more tables they could play accurately, the more decisions they got to make, and the quicker they were able to learn.”

Then there’s the fact that high-stakes poker rewards aggression. A player who cannot fire off a bluff because he is worried about his daughter’s private-school tuition will be quickly run over by the players who don’t have such concerns. While heightened dexterity, comfort with snap decisions and the stamina gained from years spent sitting in front of a computer screen give the young online pro an edge over his older counterpart, the greatest benefit borne from a life spent playing video games lies somewhere in the strange, disconnected relationship between what is simulated and what is real. The armies of Command and Conquer do not suffer real casualties. An unsuccessful session of Minesweeper does not result in the loss of a leg.

In online poker, lost money registers only as debits in the player’s offshore account. When a player loses a million-dollar pot, the action plays out in cartoon animation.

“Most of us young kids who play at nosebleed stakes don’t really have any clear idea about the actual value of the money we win or lose,” Cates says. “Most of us see the money more as a points system. And because we’re all competitive, we want to have the highest score. But really, we don’t know what making $400,000 or losing $800,000 means, because we don’t have families or whatever. This blind spot gives us the freedom to always make the right move, regardless of the amount at stake, because our judgment isn’t clouded by any possible ramifications.”

It is unclear whether Cates actually does understand that the money is real. On the second day of my visit, we took a trip to Best Buy. Cates had grown bored of playing poker and wanted to buy a video game. As we stood in the PS3 aisle, discussing which games looked good, I asked him if he had ever walked into a store like Best Buy — or perhaps a car dealership — and thought to himself, Hey, I can buy out this entire place. Cates smiled sheepishly. He said: “I’m not really into material wealth. Plus, I need to save up some more money. My fiscal goal for 2011 is to reach $10 million in liquid cash.” I asked what the difference might be between $5 million and $10 million, especially for a 21-year-old whose relative spending habits sit somewhere on the line between modest and monastic. He explained: “You can do anything with $10 million. Like, you can buy a house and still have around $5 million left over.”

Days before our first scheduled meeting in Orlando, Cates called from Australia, where he was playing in the Aussie Millions, a live-action tournament similar to the World Series of Poker. He asked if I might be able to move our date back a few days. He was vague about the reasons, citing “a thing” with “some guy.” After a few reassurances, he finally came out with the reason. On the date of our interview, Cates was flying to Austin, Tex., to see a “specialist in human interactions.” This specialist had promised to help Cates understand the nuances of body language in social situations. Cates has been reading several works on human psychology and interactions, including “Social Intelligence,” a book that warns against the dangers of digital absorption. These studies are aimed toward the goal of achieving the “balance of life” (during our time together, Cates used this phrase more than 50 times) that will allow him to enjoy his fortune.

When asked what this balance of life might entail, Cates shrugged and said: “I don’t know. Exercise. Girls. Basically, I need to figure out how to be Daniel and not jungleman. If you draw a Venn diagram of Daniel and jungleman, you’ll see that jungleman is completely encapsulated within Daniel, but he isn’t actually Daniel. This hurts me when I meet people, because all they see is jungleman and not me. I become aloof to them. If I can achieve a balance of life and allow a balanced Daniel to shrink jungleman, I should have more success in my human interactions.”

Ashton (theAshman103) Griffin, Cates’s roommate and online rival, also cites a balance of life as the final frontier for the young poker millionaire. In mid-2009, Griffin says he won $7 million in just three months but lost three-quarters of it in the following five months. He cites that swing as a turning point in his career. “Back when I was jungleman’s age, I only saw money as a system of keeping points,” he says. “But the swings caught up to me. I couldn’t stomach being in front of the computer for six, eight hours a day and having the result be that I lost $2, $3 million. So now my primary objective is to have a healthy balance of life.”

To ensure this balance, Griffin, who is 22, has reduced his time in front of the computer to two hours a day. He spends the rest of his time wrestling for the University of Central Florida. He is also a dedicated runner. Recently, Griffin made the following bet with Haseeb (InternetPokers) Qureshi, a fellow pro and a former roommate in Cates and Griffin’s condo: If Griffin could run 70 miles on a treadmill in 24 hours, Griffin would win $300,000. If Griffin failed, he would pay out $900,000. He crossed mile 70 at the 23rd hour.

It is impossible to see Cates and Griffin sitting side by side in their apartment, backlit by three monolithic computer screens, and not wonder when Cates’s day of reckoning will come. Was the million-dollar loss to Gus Hansen the beginning of the end for jungleman12? Losing, even when it registers in cartoon animation, begins to take a psychic toll. There has never been a player, from Doc Holliday to jungleman12, who can go head to head with the pain of poker and expect to come out with a positive Expected Value.

Lillian Cates has a simpler outlook. “Gambling is gambling,” she says. “Some of those poker pros look like they have happy lives. Some of them don’t look like they’re having the greatest time. I don’t really know if all this will work out for Daniel, but I hope it will. After a while, your kid grows up, and you just hope he’s learned enough from you to have a happy life.”

During one of the long sessions in which I sat next to Cates at his computer, the action had died down, leaving us with little to do. Finding a willing opponent is sometimes hard for jungleman. To pass the time, he was chatting with a fellow online millionaire, Scott (Urnotindanger2) Palmer. The two know each other from their teenage years, when they played poker in the kitchens and living rooms of their shared not-really friends. The nickname jungleman comes from these days, referencing Cates’s frequently disheveled appearance and simian arms. For about an hour, Cates and Palmer played at lower stakes, shooting jokes back and forth. Cates, who, until then, had been distractedly answering my questions, completely shut me out and gave his full attention to his old friend. He giggled, frantically typed his responses to Palmer’s jokes, which were unfailingly about poker. Although thousands of dollars were still switching accounts, jungleman12 and Urnotindanger2 were clearly playing for fun — wild bluffs were made, called and then delightedly discussed over Skype’s chat function.

I asked Cates if he and Palmer ever caught themselves reflecting on those early games in Palmer’s kitchen, if their millions ever felt a bit unreal. He gave a sheepish grin. “Yeah, it’s pretty cool,” he said. “But, you know, we both worked hard.”


Jay Caspian Kang (jckang79@yahoo.com) lives in San Francisco. His first novel, "The Dead Do Not Improve," will be published by Crown in 2012. Editor: Tony Gervino (t.gervino-MagGroup@nytimes.com).

http://www.nytimes.com/2011/03/27/magazi...wanted=all