SHIP IT HOLLA BALLAS! How a Bunch of 19- Year- Old College Dropouts Used the Internet to Become Poker’s Loudest, Craziest, and Richest Crew Jonathan Grotenstein and Storms Reback ST. MARTIN’S PRESS M NEW YORK ship it holla ballas! Copyright © 2012 by Jonathan Grotenstein and Storms Reback. All rights reserved. Printed in the United States of America. For information, address St. Martin’s Press, 175 Fifth Avenue, New York, N.Y. 10010. www .stmartins .com Library of Congress Cataloging- in- Publication Data (TK) I S B N 9 7 8 - 1 - 2 5 0 - 0 0 6 6 5 - 3 ( h a r d c o v e r ) I S B N 9 7 8 - 1 - 2 5 0 - 0 2 1 2 7 - 4 ( e - b o o k ) First Edition: January 2013 10 9 8 7 6 5 4 3 2 1 ship it \’ship ’it\ 1. In poker, an exclamation made after winning a big pot. 2. The affi rmation of a suggested act of extreme awesomeness. Authors’ Note This is a true story, though some names and details have been changed. 0 or reasons that had little to do with taxes, April 15, 2011, was not Fa good day be an online poker player in the United States of America— a group that, at the time, numbered somewhere between 2.5 million and 15 million people. Those who tried to log on to any of the biggest virtual cardrooms that Friday morning were greeted by offi cial government seals and an ominous message: “This domain name has been seized by the Federal Bureau of Investigation.” While smoke had been in the air for a while, the shutdown had come without warning. Americans were suddenly unable to access the money in their online accounts, which in some cases meant sev- eral million dollars. More than 12,000 players rushed to Two Plus Two, a Web site that’s home to the world’s largest and most respected poker forum, looking for answers. The unexpected spike in traffi c crashed the site’s servers, further rattling the poker community. Slowly information began to emerge. The Department of Justice had shut down the dot- com Internet addresses of the four largest sites in the world— PokerStars, Full Tilt Poker, Absolute Poker, and Ulti- mate Bet— alleging violations of the Illegal Gambling Business Act of Jonathan Grotenstein and Storms Reback 1955 and the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. At least $500 million was frozen in seventy- fi ve bank ac- counts across fourteen countries. Eleven people, poker site executives and the payment pro cessors who brokered the transactions between the sites and players, were arrested and charged with bank fraud, money laundering, and illegal gambling. With the exception of a few small rogue sites, “Black Friday” meant the end of online poker in the United States. For the previous eight years— ever since an amateur named Chris Moneymaker upset the pros and won the World Series of Poker (WSOP) in 2003— America had been gripped by a poker craze. Tele- vised tournaments fi lled the airwaves. The World Series had grown by a multiple of ten, one year awarding its winner $12 million— the largest payout ever given to an individual winner of a sporting event. On Black Friday it became apparent just how much this craze owed to the multibillion- dollar online poker industry. The two big- gest virtual cardrooms— PokerStars and Full Tilt Poker— had been spending $200 million each year in the United States on marketing and were the primary advertisers on poker- centric tele vi sion shows like Poker After Dark, The Big Game, and Million Dollar Challenge. All three shows were quickly canceled. Sports giant ESPN immediately removed all of PokerStars’ advertising from its Web site, ending a re- lationship that had been generating $22 million a year. ESPN also scratched plans to broadcast the 2011 North American Poker Tour, a series of big money tournaments that PokerStars had created the year before. Even the future of the World Series; the game’s oldest and most prestigious tournament, grew murky: Moneymaker’s victory may have lit the fi re, but the explosion was fueled by the tens of thou- sands of entrants who qualifi ed through online satellite tournaments 2 SHIP IT HOLLA BALLAS! and a singularly successful TV relationship with ESPN, which was strongly considering getting out of the poker business altogether. The end of online poker also allowed for some perspective. The phenomenon that had kept millions of players enthralled for more than a de cade could now be viewed as a historical event. In many ways, online poker resembled a gold rush or investment bubble: Fortunes were made, sometimes literally overnight, and lost just as quickly. In other ways, it was a new twist on an old game, like day trading— a technological breakthrough that changed the preex- isting paradigm, allowing its early adopters to pursue some form of the American dream while sitting in front of a computer in their bath- robes. But what made the online poker craze truly unique was the extent to which it was powered by kids. You have to be twenty- one to gamble legally in the United States, but the online cardrooms— most of which were based overseas— allowed eighteen- year- olds to try their luck. At the peak of the boom, one out of every fi ve college students was playing poker on the Internet. A signifi cant number of even younger teens were able to bluff their way in as well. The results were occasionally disastrous. An estimated one- quarter of the college players exhibited the kind of clinical symptoms that de- fi ne problem gamblers. Many of them dropped out of school to play professionally, only to descend into fi nancial ruin. Some even resorted to stealing money— typically from other players but in one notable case from a bank— to help fund their poker habits. But poker is a zero- sum game— if there are losers, there are going to be winners— and college- age kids were in many ways the ones best positioned to take advantage of the opportunity. This was, after all, the fi rst generation to have grown up with computer mice in their 3 Jonathan Grotenstein and Storms Reback hands, making them ideally suited to the rapid- fi re pace of online play. They were comfortable with the idea of spending hours playing a game on a screen and had copious free time to develop skills and strat- egies. Not surprisingly, some of them were wildly successful, creating a new economic caste of seventeen- and eighteen- year- olds suddenly bestowed with immediate riches. Like winners of the Mega Millions, these kids were ill- equipped to handle their success. They were earning too much to relate to their age- peers, and taking on too much risk to win the approval of their parents and educators. Many of them were social misfi ts to begin with, the kind of teenagers you’d expect to latch on to the idea of spending most of their waking hours playing a computer game. In other eras they might have lived strange lives in relative isolation. But thanks to the Internet’s evolution into the most powerful social networking tool in history, these kids were able to fi nd one other. Through text mes- sages and e-mails, discussion forums, and online chat, they formed powerful relationships that ultimately fl ourished into a full- on subcul- ture with its own language, fashion, and customs. In many cases their immersion into instant wealth coincided with living on their own for the fi rst time, leaving a serious void in the whole authority fi gure department. These kids had the money and freedom to pursue a fantasy cobbled together from rap videos and late- night Cinemax. They developed expensive tastes and partied like rock stars around the world, dropping massive sums on bottle service, strip clubs, party drugs, fast cars, and the replacement cost of what ever prop- erty got destroyed along the way. The discovery of like- minds with similarly disposible income helped to reinforce and amplify the bad behavior. But the connections weren’t always negative. Some formed loose 4 SHIP IT HOLLA BALLAS! tribes that shared advice, support, and money. In the absence of real adults, they helped one another navigate the oftentimes treacherous waters of postadolescence and, eventually, mature into actual adults. The Ship It Holla Ballas were one of these communities, a loosely affi liated group of seventeen- to twenty- two- year- olds who chose their name to incite a reaction. You were either in on the joke or you weren’t. The Ballas were young, rich, brash, arrogant, and, thanks to the per- vasive media culture that raised them, remarkably self- aware. They knew the Internet wasn’t just a tool for making money, but a place to create a reputation for themselves, defi ning and celebrating a new lifestyle that just a few years earlier never could have existed. They used it as a platform to wage war against the social idiosyncrasies that had previously defi ned them, the parents and teachers who doubted them, and a poker establishment that refused to take them seriously. This is their story. 5 1 During this rigorous time in my life, several thoughts went through my mind: That chick is so hot. This bud is so sticky. This class is so lame. I want a beer. We should go surfi ng. —Irieguy FORT IRWIN, CALIFORNIA (September 2001) rieguy has seen plenty of gambles in his life.