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Poker News | People in Poker | Poker Superstars

Andy Beal's Conundrum

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The Las Vegas Strip, and the larger poker community, have been buzzing in the past two weeks. Noted billionaire Andrew Beal , one of the subjects of the popular book “The Professor, the Banker and the Suicide King” by Michael Craig, which chronicled Beal’s epic heads-up battles on several occasions between 2001 and 2004 with a consortium of world-class, high stakes poker players, was back in town. In fact, “the Banker” of the title had returned for a rematch.

Beal’s return re-raises many of the questions explored in Craig’s book. Why would someone, even someone with a net worth of over one billion dollars, want to put millions on the line to play heads-up, limit Holdem with a group of the game’s toughest players? Why would those players, in turn, want to risk vast sums in a high-variance situation where their risk of ruin was potentially greater than that of their opponent, with his unmatchably deep pockets? Andy Beal wanted to play $50,000/$100,000 limit. In a situation where $1.2 million can be won or lost on a single hand (assuming each betting round is capped at four bets), the person for whom the possibility of losing hurts less, financially if not psychologically, would seem to have an undeniable edge. To counter the disparity, a group of poker players, including but not limited to Doyle Brunson, his son Todd, Jennifer Harman, Howard Lederer , Gus Hansen and Ted Forrest, pooled their resources in a syndicate popularized in Craig’s book as “The Corporation.”

Underpinning the above questions is a more fundamental one: who is Andy Beal, and what qualities have enabled him to achieve such tremendous financial success? Beal is a self-made, largely self-taught man who amassed his early fortune in real-estate investments. He then moved on to banking, buying distressed loans in the mortgage, airline and Small-Business Administration sectors, among other arenas. According to the Wall Street Journal, he is the sole owner of Beal Financial Corporation, a banking concern that conducts business in Texas, Nevada and California and, as of January 2005, possessed combined assets of $7.8 billion and a net worth of more than $1.7 billion.

A college dropout and something of a mathematical genius - his Beal Conjecture, a spin off from Fermat’s theorem, is an important contribution to number theory - Beal has a knack for finding a financial edge in difficult markets. He got into banking in the late 1980s, at the height of the Savings and Loan crisis. In his business endeavors, Beal takes chances others avoid. In a January 2005 article in the Wall Street Journal, reporter George Anders offered this revealing insight: Beal “takes an ornery delight in avoiding mainstream banking areas, such as credit-card and home-mortgage lending, in favor of his idiosyncratic investments. ‘We do business where no one else wants to,’ he says. ‘If it's straightforward, it probably isn't for us.’ After 9/11, he bought deeply discounted airline bonds in the face of an ailing airline industry, and has been involved in other “troubled sectors” such as hurricane-relief loans and bankrupt utilities. He was also a leader in bankruptcy financing for Trump’s Atlantic City casinos.

From various accounts, Beal, 53, lives a relatively modest life in Dallas, with his wife and children. Anders observed that, “for all his wealth, Mr. Beal remains unabashedly cheap, pestering employees to turn off the lights when they go home, driving an aging Ford Expedition and frequently eating at fast-food restaurants.” Beal also reportedly flies coach, preferring not to spend extra money on a first-class seat.

But where big money and the chance to effect change in the world are concerned, Beal does not hesitate to jump in with both feet. In the late 1990s, he spent $200 million as the sole investor in Beal Aerospace, a private rocket development company. In founding, and funding, this venture, Beal took on formidable opponents, among them the U.S. government, NASA, Boeing and Lockheed Martin.

Beal Aerospace folded in October 2000, largely due to the intransigence of the State Department, which refused to grant export licenses necessary to launch the rockets from cost-effective locations outside the United States. International relations were a stumbling block as well. Beal sought to create a spaceport in Guyana, after attempts to do so in the Caribbean were met with environmentalists’ objections that rocket launches would have an adverse effect on seabirds. The governments of Guyana’s neighbors, Venezuela and Suriname, blocked the construction of a spaceport there on the grounds that it might have military applications. The general consensus among outside observers was that both countries were concerned that, with an influx of capital and development, Guyana might outpace them in the arms race and other areas.

According to a Dallas Observer article by Joe Pappalardo that appeared in March 2001, Beal had “sought to make an intellectual and scientific mark through his hobbies. His money became a vehicle to leave a profound mark.” Pappalardo conjectured that, “the loss of Beal Aerospace may mean more than the continuing dilemma of expensive space launches. It can also be seen as a discouraging trend in America away from risky ventures, gutsy moves outside stiff government oversight, and the value of an individual to transform the world.”

Beal's close friend, banker Brad Oates, expressed his admiration of Beal’s self-discipline in an interview with Pappalardo. "I admire him for getting into [the aerospace venture], and I admire him for pulling out. It was an intelligent decision, and that's hard. His heart was pushing him to stay in; he was able to step back and keep that passion from consuming him."

These, of course, are qualities necessary to success in the poker arena as well. Beal’s background demonstrates that he is a man who thrives on risk, and on creating new challenges for himself. The same qualities that enabled him to amass a fortune in his working life, a process that depended on his assumption of great risks, prompted him to seek success at the highest levels of play. Beal faced poker the way he would face any new challenge. He wanted to test himself against the best players in the game. The driving force behind Beal’s play was not the money, it was a challenge to himself, to excel at whatever he chose to do.

Initially, Beal faced some setbacks. Between 2001 and 2004, he was an overall loser in the heads-up matches against members of The Corporation.

To date, Beal has held his own in heads-up play with more than one member of The Corporation. Upon his return for the rematch, whose terms were negotiated during the past year (as reported in Card Player magazine and elsewhere), Beal played at the Wynn Las Vegas from February 1st to 6th. His notable opponents were Todd Brunson, Jennifer Harman, and Ted Forrest. He left town having lost approximately $3.2 million, and issued a press release to the effect that he was done playing poker. It is unclear whether The Corporation consisted of the same investors, some of the same investors or an entirely different group than those who were involved in the game from 2001-2004. It has been rumored that, this time around, Beal put up $20 million to The Corporation’s $10 million. As in the past, The Corporation would have divided the spoils among the current investors at the end of the session.

Despite a representative at Beal Bank announcing Beal’s retirement from the game less than a week earlier, on February 12th, Beal returned once more and won $4.9 million in a match against Harman. On February 13th, he took Todd Brunson for $1.2 million. On the 14th, he booked a small win - $75,000 - against Forrest. The next day, he won $3.8 million, also from Forrest. Overall, Beal is up $6.8 million for this year's play. According to Michael Craig, who has been posting updates on the Bluff magazine online forum, Beal is waiting to hear from The Corporation as to when they will play again. He left Las Vegas on February 15th, as most of his opponents had departed for California to play in the World Poker Tour Championship event at the LA Poker Classic, held at the Commerce Casino. Craig reports that, having learned that some combination - perhaps two separate groups - of investors were amassing a bankroll, Beal returned to Vegas on Fri., February 17th to await the next match. As of this writing, he is waiting at the Wynn for play to resume.

What I have chosen to call the Beal Conundrum is this: What do you do when you want to confront a real poker challenge, but you have more money than all the best players combined? It seems to me that this was not a fair fight, as Beal can definitely stand to lose more than the pros, even with their "Corporation" of pooled resources. Perhaps this disparity is counterbalanced by the fact that The Corporation is able to rotate opponents in and out of the game while Beal plays every match, so his opponents are often fresh while he might be facing greater fatigue. (It has been noted that a various number of his opponents, however, have played him on little or no sleep.)

In such a small series of trials, neither player has much of an edge, despite the professionals’ presumably greater experience at the game. The bottom line is that heads up play over a relatively small number of sessions is hardly a measure of anyone's skill.

Furthermore, when measured against the challenges of taking on the aerospace industry, the challenge of confronting a bunch of poker players, no matter how skilled or accomplished, must have seemed puny by comparison. But perhaps Beal’s interest in poker stemmed in part from his having been thwarted by the government in his attempts to commercialize rocket science. Heads-up poker takes global challenges and distills them into a face-to-face intellectual encounter that is largely unparalleled in the modern world. Perhaps only heads of state in matters of war have the chance to confront their adversaries one on one in a similar manner. So do chess players. Who knows? Maybe Beal’s next venture in gaming will be to take on the top chess masters, as well.

In the meantime, some observers are wondering whether Beal might consider exploring the less glamorous, or lower-profile, aspects of the game. While it would take some of the romance out of the situation, a truer test of poker acumen might be to play hundreds of hours of heads-up - or even full-table - matches at stakes that are more in line with the bankrolls of top individual players. Winning poker players, after all, are familiar with the long, uphill grind involved in beating the game. If the amounts of money won or lost are beside the point, why not sit down with the best at levels that still involve big risks, but not total annihilation, for one’s opponents? But perhaps this question misses the point. It is quite possible that, for Beal, the game is really an exercise in temptation: can the pros resist the lure of playing him for huge sums and potentially enormous returns despite their risk of absolute ruin?

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