Princeton grad Matt Hawrilenko on ‘Black Friday’ and the future of online poker in the U.S.
Matt Hawrilenko was barreling toward Canada, and the 2004 graduate of Princeton University was just a few hours from circumventing the long arm of the United States Department of Justice.
On April 15, feds operating in the Southern District of New York shut down the world’s three largest online poker sites – Full Tilt Poker, PokerStars and Absolute Poker – and an estimated $500 million in player assets were frozen in overseas accounts.
American players that depended on the legal gray area of online poker to earn a living were out of work.
They call it “Black Friday.’’
The 29-year-old Hawrilenko, a paid sponsor of Full Tilt and one of the game’s most respected pros, committed no crime and he certainly wasn’t running off to Canada, where online poker remains legal, to avoid prosecution.
Rather, Hawrilenko was headed north of the border to run a half-marathon with his wife, Emily, when news of the online poker apocalypse hit the wires.
“It’s funny,’’ said Hawrilenko, who earned $1.8 million online over the first three months of 2011 alone, and has two cashes of more than $20,000 each at this year’s World Series of Poker (WSOP) in Las Vegas. “I was on my way to Montreal when I received the e-mail from my good friend (and poker mentor) Bill Chen, so that was pretty ironic. Playing online in Canada and just about every other country is still legal, but I am fortunate in that I already had one foot out the door and started planning for my life after poker.’’
Although no players were charged in the 52-count indictment, the poker sites and its chief executives are accused of a variety of crimes, ranging from bank fraud to running an illegal gambling operation.
The U.S. government is seeking $3 billion in penalties and up to 65 years in prison for some of the 11 defendants named in the indictment.
An entire economy “virtually’’ wiped out
Many of Hawrilenko’s friends and colleagues in the estimated $30 billion industry were blindsided by the government’s actions, particularly since the movement to legalize and regulate poker had picked up steam over the past two years.
Senate majority leader Harry Reid (D-NV), and Sen. Barney Frank (D-MA), have supported measures to legalize online poker since 2009.
Gov. Chris Christie vetoed a bill March 3 that would have allowed New Jersey to become the first state to offer legal and regulated internet poker.
The legislation was introduced by Sen. Raymond Lesniak (D-NJ), but Christie determined the bill would violate New Jersey’s constitution and it faced “several significant legal obstacles.”
So, for now, everyone’s hand is in the muck.
“Suddenly, many players and a lot of my friends had no source of income,’’ Hawrilenko said. “Literally, on that Friday, tens of thousands of people lost their jobs. There are several things I have wanted to accomplish outside of poker for a very long time and this will give me the opportunity to do that.’’
Hawrilenko may be vastly underestimating those “layoffs.’’
According to industry website onlinepoker.net, between 10 and 15 million Americans were playing online poker for real money every day, with most of them competing on multiple tables against as many as nine opponents at the same time on a standard ring game.
All of the sites still are offering “play money’’ games for U.S. customers, and real money games for customers outside the states.
UPDATE: Courtesy of forbes.com
“The (Nevada) state Assembly passed a stripped-down Internet gambling bill calling for the state to develop a licensing process for online poker businesses, a month after the U.S. industry melted down amid federal indictments.
Members of the Assembly unanimously passed the measure, which calls on Nevada regulators to design rules that would only take effect after the federal government legalizes online gambling.
It now goes to the Senate, and the sponsor said he expects it will pass on that side.”
“Poker is a real job’’
Long before the big crash came the ultimate free roll.
Since ‘Career Objective’’ on the resume Hawrilenko handed to his prospective employers at the Susquehanna International Group (SIG) did not read:
“Use the substantial resources and backing of this company to launch my professional poker career,’’ it is safe to say Hawrilenko stepped into employment utopia.
“The company was founded by poker players,’’ Hawrilenko said of SIG, a technology powered financial trading firm based in suburban Philadelphia.
“I am at the company three months and all of a sudden I am flying out to Las Vegas on one of the partners’ private jets and they are staking me to play in the World Series of Poker Main Event,’’ Hawrilenko said. “So, that was pretty awesome.’’
It was on that plane ride when Hawrilenko began talking poker analytics and strategy with Chen, also an employee of SIG and himself one of the most respected high stakes poker players in the world.
“Bill has a real mathematical approach to the game, and it seemed as if we had similar ideas and came to some similar conclusions,’’ Hawrilenko said. “We found ourselves arriving at the same place, albeit in slightly different ways. We found that we could take a more academic approach and achieve success at the highest levels bit by bit. So, yeah, that is when I realized I could really make some money.’’
Not just some money.
“That first year, I made a fair bit more playing poker than I did at finance,’’ said Hawrilenko said. “By the second year I was making a lot more at poker than at finance. At that point we were pretty confident our strategies were successful. I actually stayed at the job a bit longer (three years) than I could have due to the success I was having at poker.”
Did Hawrilenko ever entertain thoughts of returning to his real job at SIG?
“Poker is a real job,’’ he said. “Anyone can play, but there is a lot of knowledge and skill that goes into playing it well.”
Minimum investment, maximum return
Even before Chris Moneymaker, an accountant and poker amateur from Tennessee, launched the co-called “poker boom’’ by stunning a field of mostly professionals to win the 2003 WSOP main event, Hawrilenko already was on his way to riches on the virtual felt.
All with a mere $100 deposit online.
“It’s been a pretty good rate of return,’’ he says.
Under the online handle “Hoss_TBF,’’ Hawrilenko started at the smallest stakes ($0.25 and $0.50) and has gone on to earn several million dollars in high-stakes ($2,000 and $4,000) cash game earnings, along with an estimated $1.7 million in live tournament winnings since he began building his bankroll as a junior at Princeton’s Woodrow Wilson School of Public and International Affairs.
Hawrilenko also was a varsity wrestler at Princeton.
“I started playing a little before Moneymaker,’’ Hawrilenko said. “Princeton was a great experience because you are surrounded by all these people who are smarter than you, and better athletes than you, and it kind of pushes you to be better. Between wrestling and my studies poker was really just a hobby at Princeton. I played with friends and online a bit, but towards the end of my senior year, when most of my school work was out of the way, I started playing online more and more. It was at that time that I won an (online) satellite (tournament) for the WSOP Main Event and that’s pretty much how everything got kicked off.’’
With his math-based and highly analytical approach to the game, taught to him by the likes of Chen and Jerrod Ankenman, Hawrilenko already had millions in cash game earnings when he won his only WSOP bracelet in 2009.
Hawrilenko captured the $5,000 buy-in, No-Limit/6-Handed tournament (Event 56), giving him his largest live tournament pay-day of $1,003,218.
The native of Hanover, Mass., capped a big year in 2009 by reaching the final table of the WSOP Europe Main Event in London, finishing eighth for $141,814 after entering Day 4 as the tournament’s chip leader.
“Winning a bracelet is on every poker player’s list, but what validates the work is how you do at the cash games,’’ Hawrilenko said. “The bracelet is a way to prove to your Aunt and Uncle and people on the outside that you’re not a schmuck, or just a degenerate gambler.”
Just how did his parents take the news that the son they helped put through one of the most prestigious academic institutions in the world was intent on using his degree in Public Policy as a full-time poker player?
“My parents were awesome and so supportive,’’ Hawrilenko said. “They know that I have always been a pretty good decision-maker, and it’s not like the poker thing came as a shock to them. I had spoken to them for quite a while about it. If anything, they may have been surprised at how long it took me to make the transition.”
The online shutdown did not send Hawrilenko into retirement.
Not yet, anyway.
For the seventh consecutive year, Hawrilenko is in Las Vegas competing in this year’s 42nd annual WSOP in several bracelet events.
The 2011 WSOP is underway and ESPN has added an additional 34 hours of broadcast coverage to this year’s events, including an unprecedented, same day look at players’ hole cards on a 30-minute delay.
The Government’s Case
Internet gambling has officially been illegal in the U.S. since passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) by Congress on Oct. 13, 2006.
However, the actual playing of online poker was not the primary target of the D.O.J. on “Black Friday.’’
Rather, the focal point of the indictments was the alleged unlawful processing of debit and credit card transactions to fund, withdrawal and transfer money in players’ accounts, a total some industry experts estimate at $500 million.
Passage of the UIGEA stopped banks and credit card companies from sending money to gambling websites.
“The case that poker players have been trying to make for years is that the UIGEA is a bad law,’’ Hawrilenko said. “There is widespread confusion about it. Playing poker is legal in the U.S. for the individual (with the exception of the state of Washington), but the law restricts the type of transfers that can be made between banks and online gaming websites, which makes it a lot more difficult for individuals to put money online.’’
Once the domain names of the poker sites were seized April 15, the deposits of all U.S.-based players were frozen, including unspecified sums in Hawrilenko’s accounts.
PokerStars has begun paying out its players.
Full Tilt and Absolute Poker have not.
The FBI also issued restraining orders on a total of 75 bank accounts in 14 nations.
The original complaint alleges, among other things, that some of the payment processing techniques used by Full Tilt, PokerStars and Absolute Poker constituted money laundering and/or bank fraud.
The sites still are free to operate in other countries, including Canada.
One of the accused, payment processing executive Bradley Franzen, pleaded guilty to conspiracy to commit bank fraud, accepting funds in connection with unlawful Internet gambling and conspiracy to commit money laundering during a May 23 hearing in U.S. District Court in Manhattan.
Franzen, 41, originally pleaded not guilty and faced up to 30 years in prison after turning himself into the FBI on April 18. He later signed a plea deal and has agreed to testify in any “Black Friday’’ trial.
Also on May 23, a federal grand jury in Baltimore returned indictments charging two companies and three defendants with conducting an illegal gambling business and money laundering. Another 11 bank accounts and 10 sites were seized.
As for the April 15 indictments, federal prosecutors explained that since most U.S. banks would not process payments related to internet gambling, the companies and their payment processors circumvented federal law by making payments appear to be transactions for other types of merchandise, such as household products and jewelry.
“As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits,” said Preet Bharara, U.S. Attorney in Manhattan.
The future of online poker
As a sponsored professional of Full Tilt, Hawrilenko is not permitted to speak on the particulars of the government’s case, but he does have an opinion.
“We will see poker regulated and legal; probably within the next five years,’’ Hawrilenko said. “There are just too many tax dollars in play. I am not a lawyer, so I cannot speak to the particular details of the indictments, but what I can say is I know many of the top executives at Full Tilt and PokerStars. From everything I have heard they are good, ethical people who are generous to their employees and responsive to their customers.’’
“What is particularly grating to poker players is that over and over, you see anti-internet gaming legislation as a provision in legislation designed to legalize brick-and-mortar gaming, but a bill like this has been rejected twice in the last two years in my home state of Massachusetts. It just feels like a particularly hypocritical double-standard.’’
As of April 15 online poker in its current form has been forever altered in the United States, and the industry has no choice but to wait for state and federal regulation guidelines before another dollar is won or lost.
Recently, Washington, D.C. and states such as Nevada and Florida are working on legalizing and taxing online poker within state lines.
“These sites have all been working very hard for years to get online poker legalized so they can set up shop and pay taxes here,’’ Hawrilenko said. “That is what we all want.’’
“Knowing when to fold’em’’
Among other endeavors away from the tables, Hawrilenko is a research assistant of clinical psychology at Clark University, with a goal of earning a Ph.D. and becoming a professor.
Hawrilenko and wife, the former Emily Kroshus, also a Princeton graduate, are involved with a number of charitable organizations.
In lieu of gifts at their wedding, the Hawrilenkos asked guests for donations to their charities, including the Richard Dawkins Foundation and KIMbia Athletics, which was founded by elite runners to support schools in Kenya.
“I am just so happy I had other things going on and had already started working on my transition when “Black Friday’’ went down,’’ Hawrilenko said. “I have worked hard, but I have also been very blessed to have the success I have had. One of the main goals I have is to one day go back and enjoy poker again without having to worry about a bank account.’’
A more newspaper-friendly edition of this profile can be found in today’s Times of Trenton and nj.comUncategorized