Chris Carlson, a bright son of New York, returned from college in 2001, looking for a job in the securities industry.
“It was kind of the de facto path for Long Island kids who studied business,” recalled Carlson, 36, who had a couple of promising Wall Street interviews that led to nothing after the 9/11 terrorist attacks, the subsequent recession and the loss of thousands of Wall Street jobs.
After a few years as a waiter, Carlson was hired as a deskbound junior equity analyst for Reuters in 2004. He was bored. He started playing online poker at night, using his proficiency at math and probability to help him make $100,000-plus within six months. He quit his lower-paying day job.
“Poker is a game of skill, not of chance,” insists Carlson, who eschews other casino games because of the long odds when playing against the house. Carlson also built an online business organizing poker competitions and getting a cut for sending players to online games sponsored by various sites. Those big paydays stroked his ego, financed a pricey Manhattan flat and resulted in a booze-laden nightlife.
A decade later, Carlson is the humbler and now-sober CEO of FourCubed, a small business housed in a renovated car-painting factory in northeast Minneapolis. The company builds poker websites, attracts thousands of players, tracks them and guides them — for a fee — to licensed-gaming companies who also are his advertisers.
“I don’t even play poker anymore,” Carlson said in an interview last week. “It takes a lot of time, and now I have a business to run and build and a family.”
Carlson moved to the Twin Cities in late 2005 to undergo treatment for alcohol addiction at Hazelden. He liked the Twin Cities. He doubts that he would have survived a business setback in 2011-12 if not sober. A gradual humility, gratitude for his wife and two kids, and some financial success have replaced hangovers and the smart-guy edge. But he still has that drive and ambition.
“Chris was kind of the typical ‘ADD’ entrepreneur, six or seven years ago, chasing any ‘shiny object’ because he recognized that gambling thing could be great, but there was also great risk,’’ Jeff Redmon, a veteran business lawyer who has advised Carlson. “Chris understands that the Internet is about eyeballs. He gets people to go through his site, keeps them, and then effectively sells those folks to the poker sites that pay Chris for bringing players to them.”
According to a presentation Carlson shares with partners and potential investors, FourCubed generated operating income of nearly $160,000 on revenue of $2.7 million in 2013. He plans to add six people to his workforce of a dozen and grow revenue to about $3.2 million in 2014.
FourCubed also was a Minnesota High Technology Association innovation award finalist last fall.
Business boomed for a while
But the business is still a shadow of its former self — before what’s known in the online gambling trade as “Black Friday.’’ FourCubed soared to nearly $1 million in operating profit and $13 million in sales in 2010. Then on Friday, April 15, 2011, online poker in the United States essentially was shut down by the U.S. Department of Justice.
The department subsequently determined that the Wire Act of 1961, an anti-mob law, applied only to sports betting. Justice has left it to the states to license and regulate online poker and other games.
Carlson was not used to contraction. He sought help from small business consultant Rick Brimacomb.
“We … tightened things up, sharpened the focus and shifted the product mix to improve margins,’’ Brimacomb said. “The Internet will change the gaming landscape just as it has every business. Who would have imagined 10 years ago that online holiday shopping would eclipse bricks-and-mortar shopping? This is like the early days of e-commerce to the gaming industry. The opportunity is massive.”
Said Mike Bromelkamp, a veteran CPA and adviser to Carlson: “Chris has learned from the hard knocks. He’s much more focused and appreciative of the success he’s had. He is going to be successful.”
Carlson plans “to grow by seven- to tenfold over the next three to five years.” FourCubed is long-established in Delaware, Nevada and New Jersey online and casino operations. And the company is poised for California, where pending legislation would let operators of Indian casino open online-gambling operations.
Carlson, who owns more than 90 percent of FourCubed, also is trying to raise an unspecified amount of capital from individual local investors to finance that growth.
Gambling opponents say the gaming industry will use techniques perfected in online advertising and marketing to target vulnerable consumers, leading to a spike in problem gambling.
Proponents say prohibition, whether of alcohol or betting, doesn’t work.
Said Carlson, a recovering alcoholic, “I’m in a restaurant with a bar in it, and that’s fine. Gambling only addicts about 1 percent who try [it]. ... Addiction is a hard-wired thing, and if I’m addicted to gambling, I’ll find a way to gamble, either illegally or through legally, state-sponsored lotteries or charitable pulltabs.
“I don’t connect our business to perpetrating addiction,’’ he said. “We don’t target that 1 percent. We target entertainment for poker players.”