Jason Schlachter has been gambling for a living since college, mostly online, and he makes lots of money doing it. The trouble is, New Jersey — where he does his gambling — isn't having the same success. The state legalized online gambling in 2013, expecting a $160 million windfall in tax revenue, but it has earned less than $8 million so far. WNYC's Jessica Gould looks at what's gone wrong with New Jersey's big bet.

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When New Jersey legalized online gaming last year, Governor Chris Christie told taxpayers that the new industry would bring in more than $100 million in badly needed tax revenue. The reality has been a tiny and disappointing fraction of that.

But reporter Jessica Gould of member station WNYC has the story of one man who is making Jersey's online gaming work for him.

JESSICA GOULD, BYLINE: Monday through Friday, Jason Schlachter leaves his New York City apartment and joins the throngs outside for his commute to work.

JASON SCHLACHTER: It makes me like part of the real workforce.

GOULD: He takes the train across the river to New Jersey and walks to his office, a small table in a corner of a Dunkin Donuts with free WiFi. For eight hours a day, Schlachter, wearing a sweatshirt and jeans, sits hunched over his laptop, playing up to 18 poker tables at a time on websites like 888 Poker, WSOP.com, and theborgata.com.

(SOUNDBITE OF BEEPS)

SCHLACHTER: You start with one site and then go on to the next site and find, you know, tables and games on that site.

GOULD: Schlachter is 32. He been playing poker player since he was a student at the University of Pennsylvania, where he studied economics and psychology. He considered going into finance, but poker just seemed easier. But after spending days on end at Atlantic City casinos, he missed his wife back in the city. So he was thrilled when New Jersey made it legal to gamble online.

SCHLACHTER: Generally, when somebody makes a bad play, sometimes I roll my eyes a bit and wonder what they were thinking.

GOULD: He won't say how much money he makes, but says it helps pay the $4,300 monthly rent for his Manhattan apartment.

SCHLACHTER: Business has been great.

GOULD: But the online gambling business has not been so good for the state. Governor Chris Christie budgeted $160 million in taxes this year alone. Less than $8 million has come in since the launch of online gambling last November.

State Senator Ray Lesniak co-authored the gaming legislation. He says Christie's projections were way too high and the rollout was bumpy.

SENATOR RAY LESNIAK: People trying to get online but being rejected because they weren't in the state of New Jersey when they actually were. And then the United States banks are just not used to online gaming being legal.

GOULD: Several banks and credit card companies still won't accept payments. Gamer Jason Schlachter has to deposit money at the casinos himself or do an electronic transfer.

These problems have been fodder for critics like former New York Governor George Pataki. He's now with the Coalition to Stop Internet Gambling. He says it's a drain on brick and mortar casinos.

GEORGE PATAKI: And the revenue that had been projected is not there by any stretch of the imagination. So this is something that we would hope states would take a look at and say, no, this isn't for us.

GOULD: Academics who study gaming still say there are signs of hope, once people get used to the technology. And the latest report shows that revenues from online gaming have grown over the past year, and the number of people signing up has risen to more than 320,000. If only they were as dedicated as Jason Schlachter.

(SOUNDBITE OF BEEPS)

SCHLACHTER: A player I've played with a whole lot with likes to bluff when I check to him. So I checked to him three times and he bluffed three times. And I called. And I won $80.

GOULD: As Schlachter gets ready to head home, another young man, also in a sweatshirt and jeans, with the same scruffy beard, sits down behind him, plugs in his laptop and starts playing online poker.

For NPR, I'm Jessica Gould in New York. Transcript provided by NPR, Copyright NPR.

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Often, when a poker player loses and they aren’t very good, their chief complaint is that online poker is rigged. They complain that the random number generator that assigns the cards is rigged against them or set by the house to ensure more rake; that there is a “cashout curse,” whereby cashing out causes you to lose; that the number of bad beats they have taken is statistically impossible. Exclusively, the people who complain about the cards being rigged are losing players who are only able to see evidence for the rigging and are highly resistant to any reason, logic or proof.

I will go through the flaws in the common complaints briefly, and only because they are so pervasive that I feel the need to refute them.

1. The software is rigged against them or to ensure more rake. Most poker software is inspected by 3rd parties to ensure fairness and there has never been any case that they have been tampered with or that they have malfunctioned. Many people have played a statistically significant number of hands (I have played over 10 million hands in my career) and these hands and boards can be imported into a database in order to ensure they are occurring at the correct frequencies. People have done this and the random number generator has never been found to be unfair in any way. Since hand histories are available and people can compile a statistically relevant number of hands, if there were irregularities, they would have been found.

2. The “cashout curse,” is when people lose soon after they cash out their winnings. The best explanation I have heard for this phenomenon is regression to the mean. This is when a losing player runs above expectation (is lucky and wins) and then cashes out. When they then return to expectation (by losing) they view losing as something anomalous, because now they believe themselves to be winners who have cashed out. The easiest way to resolve this internal conflict is to blame it on the software being rigged against people who cash out, rather than to admit that they are not as skilled as they believe.

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3. Statistically unlikely events. I smile every time I get aces on the same table in back to back hands, because I know how many players would say the software is rigged because it is so rare (about 48,000 to 1 against). In actuality, I play more than 25,000 hands a week on average, so while it is unusual for me to have aces in back to back hands, it comes up about every 2 weeks. Even I have been a professional for a long time, I sometimes feel like I have lost every hand for a few days in a row. In reality, when I feel like I am getting unlucky, I tend to forget the hands I win and focus on the hands I lose. The truth is that variance occurs and that relative to my winrate, sometimes I lose more than I should and sometimes I win more than I should. Overall, it is exactly as expected.

The irony of the parallel between the 2016 Presidential Election and the people who complain about online poker being rigged is not lost on me. For the past several weeks Donald Trump has started to forcefully call the election, the voting and the media rigged against him.

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First, Trump saying that he might lose because the election is rigged is not a sound argument because that would require the coordination of thousands of local, state and federal election officials, who have both Republican and Democratic party affiliations. Polls in Pennsylvania show Trump down approximately 10 points and predict he has a less than 10% chance of winning. This independent data serves a check against claims of widespread voter fraud in same way I can evaluate my hand histories to ensure that the random number generator is operating correctly. The most likely explanation for Trump losing is not that the polls, media and election are rigged, but that voters are favoring Hillary Clinton by a significant margin. It is highly unlikely that significant voting fraud will take place since there have been several studies who have determined that it is minimal(under 100 cases in the last 3 elections). Anecdotal evidence is not evidence of widespread conspiracy in the same way that your friend getting aces twice in a row doesn’t mean that the software is rigged.

Second, when Trump is suspicious of Republican candidates’ poor performances in inner city districts comprised of mostly minorities, he fails to consider that: a) The districts are small, as small as a few hundred people. b) The districts are comprised of people and demographics who tend not to vote for Republicans. c)Trump is polling in the low single digits with minorities. So, it is not an anomaly that he would get few votes in a district where the polls say people are not voting for him and the demographics predict he should be doing poorly. I am sure Trump isn’t suspect of rural Wyoming districts where he is winning nearly 100% of the vote.

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Third, Trump’s complaint that the media is rigged is bogus. The media’s hyperfocus on him has resulted in enough attention to get him this far. He achieved unprecedented fame and recognition simply from being wealthy. He was in the tabloids when he was younger, on the Apprentice, and now, every news channel covers his rallies, which gives him a platform to expand his audience.

Trump’s expectation in the primaries and in the presidential campaign was poor because of his lack of experience, lack of knowledge and his many scandals. Most other politicians would have lost their support long ago, and the fact that none of his outlandish and offensive statements or actions were enough to squash his campaign meant that he was surely “running above expectation.” Until the last few weeks, the media coverage has been to his “yuge” benefit, so he is starting to sound a lot like someone who is complaining about the “cashout curse.” Over the past few weeks, he has returned to his expectation, in which people are horrified and unlikely to vote for him based upon what he has said and done is merely reversion to the mean. It is not statistically surprising.

In addition, Trump has pursued a strategy that is unlikely to earn him enough votes to win the election. His attacks on Republican allies, attacks on women and minorities and his reluctance to encourage the voters on a local level, do not appeal to voters he desperately needs to win. He has doubled down on his core of support to the almost to the exclusion of others and his core does not contain enough voters for him to win. Touting irrelevant statistics like online click polls and the number of people at rallies as proof Trump is winning are akin to measuring poker earnings by how often your opponent folds to your bluffs. In the past, and hopefully in the future, anyone who behaves like Trump and has views like his will reach their expectation sooner and not be considered a serious candidate for President.

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