It’s a good time to be an online poker player in the US. As states begin to open up after the Coronavirus pandemic, live poker may be the last part of the casino that flourishes.
Major tournaments remain out of the mix and online operators continue adding to their offerings. When live poker does begin to gain some momentum, where is the US online market headed? Can the current trend be a springboard to better things to come?
Michigan and West Virginia have now legalized and have made moves to come online sooner than expected. Can the current positivity in the industry keep going?
USPoker spoke with the Catena Media poker reporting team to get some views on some of these questions. The team includes:
- Valerie Cross – site runner, PlayPennsylvania.com
- Alex Weldon – writer for OnlinePokerReport.com; former data-driven analyst for GameIntel
- Dustin Gouker – analyst for PlayUSA.com and OnlinePokerReport.com
- Sean Chaffin – site runner, USPoker.com and PokerScout.com
Keeping the online poker train rolling
The US online poker market has seen record fields and prize pools in recent months. While there’s no way to keep the current number of players, what can online poker operators do to keep the momentum?
Valerie: I think big guarantee weekly and monthly tournaments are key, like the Pennsyl-Mania one PokerStars did in PA. It was two days long and drew a massive $515,000 prize pool for a $200 buy-in.
Big series are also attractive to players, and it’s important that operators include a good range of buy-in levels so small-stakes players have many good value tournaments to choose from.
Many new players have recently joined the market with live poker options halted, so keeping those players interested and motivated to play is probably key.
Alex: The new traffic is presumably coming from players who normally prefer live play, moving online due to the shutdown. The fundamental problem with that is that the caliber of live play has been much lower than online in the last decade-plus.
Even without the resumption of live play, we already see traffic dropping. That’s probably due to these players getting chewed up by tough online competition.
One thing sites can do to help with that is to run promotions that encourage casual players to play short, daily sessions, and reward them generously for doing so. Even if you’re returning more money to those players than you’re collecting in rake from them, improving their longevity helps the ecosystem. The money they lose to more experienced opponents will eventually get raked back from those players.
Build it and they will come
Dustin: I would hope they are building on what has worked during the pandemic. Tournament series with large guarantees have always been the bread and butter of online poker and is important in getting the critical mass of players necessary to create a successful ecosystem.
“It’s also clear that the influx of people is largely casual players who were bored while stuck at home. Finding out why they turned to poker during this time and continuing to provide the experience those players want is perhaps the most important thing the sites can do.”
Sean: It seems there has been kind of a “flood the zone” approach with so many players at home. Players respond to big guarantees.
I think more series overall helps. But smaller one-off events and series like the PokerStars Pennsyl-Mania and WSOP.com Online Circuit Season Finale can add momentum.
Promotional efforts are key. The events I mentioned above work well. Extras like trophies and championship hardware add some unique elements. Bounty events also seem to be popular.
I like bells and whistles, and sweepstakes site Global Poker does well with its trophies and promotion. That Pennsyl-Mania event had a wrestling theme. It would have been cool to see the winner score a championship belt like Hulk Hogan. Creativity goes a long way in enticing players.
Growing the overall player pool
How can sites work to grow the pie in the US in regards to online poker and add more states?
Valerie: The success of online poker in other states is a good start. But I think the missing link is the clear path to shared liquidity for all states. As it stands now, the Department of Justice’s position on the Wire Act is still in limbo with regard to sharing player pools across states.
Until that’s in the clear, many jurisdictions may be less motivated to cross the regulatory hurdles it takes to get online poker up and running.
Alex: “Online poker is harder to sell lawmakers on than other verticals because there’s so little money in it. Operators looking to lobby for online poker in more states need to identify and focus on non-monetary advantages, such as the far greater player safety of legal sites versus illegal offshore sites.”
Wire Act woes
Dustin: I am not sure there’s much they can do, unfortunately. The good news is that online gambling has been a bright spot for the states that have legalized it. That should be a compelling narrative of additive revenue.
New Jersey and Pennsylvania online casinos have done very well. If other states look at that data, that should help spread the growth of online gambling. Any state legalizing online casinos is also legalizing online poker.
Unfortunately interstate poker beyond the three states that have it (NJ, Nevada, Delaware) has stalled, until and if Pennsylvania joins the compact among those states. There’s some hope that Michigan and/or West Virginia will join, but there are also potential legal headaches for online poker during the ongoing federal case about the Wire Act.
Sean: I think it’s incumbent on operators to stress safety and security. That means securing player funds and meeting regulatory requirements. Efforts at stopping bots, cheaters, and collusion go a long way in assuring players and legislators of a fair game.
Following the lead of sports betting’s growth
Can the success of sports betting help slowly pull online poker along?
Valerie: “I think so. For example, PA and NJ would not likely have online poker if it weren’t for the incentive to get online sports betting. Online poker is coming along for the ride in Michigan too. It’s a smaller revenue generator, so it isn’t the highest priority for states. But I think many states will include it within comprehensive gambling expansion packages anyway, because why not?”
If you let people bet on sports and also play casino games online, why shouldn’t those same people have the choice to play online poker for real money? Obviously they make more if those people are playing online slots, but there’s plenty of crossover among customers to make offering more games profitable. (i.e. People join because of poker and eventually try some other games.)
Alex: Possibly, though I think there’s more movement the other way. What the two have in common is the appeal of being potentially beatable, unlike other gambling products. At one time, poker was the easier of the two, but these days it’s hard to recommend online poker as a potentially money-making endeavor for anyone who hasn’t already been playing for many years.
Poker lags behind
Dustin: We’d like to think that it could. Unfortunately, the only states that have purposefully legalized poker alongside sports betting were Michigan and West Virginia. Lots of states legalized just sports betting. In places like New York and California, where we had seen some traction for online poker, sports betting has become the topic du jour and online poker is now on the back burner or off the table entirely.
Sean: Online poker seems to be the little brother right now to online sports betting and gaming. I think eventually more states will open up, but it’s going to be a long slog. I think the Coronavirus pandemic may speed up states like New York.
Online poker may eventually be kind of an addendum. Lawmakers may see sports betting doing okay, so why not throw in online gaming and poker as well.
Seeing the future of online poker
Where do you see the US market in five years?
Valerie: I think it will continue to be slow getting off the ground nationwide, largely because of the murky Wire Act interpretation and lack of major revenue incentive. As long as states are ring-fenced, the prize pools will never come anywhere near those of unregulated sites that many US players are pouring money into these days, unfortunately.
I don’t think many state reps are aware of the online poker revenue potential, funds currently going straight to the pockets of offshore companies. These players play at their own risk of course. But it’s unfortunate there is this demand and no supply in most US states. This results in players putting their money at risk with shady sites and few/no consumer protections.
Alex: “A lot depends on what happens with the Wire Act and the possibility of interstate shared liquidity. Without that, it’s unlikely that online poker will ever again be big business in the US.”
However, an interstate network, especially one including some big states like New York or California, would almost certainly create a second boom, albeit a shorter, smaller one.
Slow progress ahead
Dustin: Hopefully we’ll have seen a handful more states legalize online poker, but even that’s an optimistic forecast. I really hope and think Pennsylvania will join the interstate compact for poker within that time frame.
Sean: I’m going to go out on a limb and say that there will be at least 10 states offering legal, real-money online poker. I’m a bit of an optimist and think the recent success will help. I think interstate compacts will also hold up as legal in the Wire Act court case.
That clears the way for a nice grouping of eight to 10 states. Hopefully it’s like a snowball rolling downhill. Several states get on board and then more see it as okay.
More thoughts on the future of online poker
Any more thoughts on the future of online poker?
Valerie: I think the whole nationwide shutdown and Coronavirus pandemic is opening some eyes to the appeal and safety of iGaming.
Poker is always the lowest priority in gaming from a business perspective. Think of live poker rooms that have to fight to build a good tournament offering because those are not the big moneymakers. Some see it as wasted space that could go to high revenue games like slots.
“But the demand is undoubtedly there for poker and it helps get more bodies in the door. I think as the online gaming market matures in the US, new states will opt for more well-rounded offerings and include poker. It’s easier to include it up front than try to add it on later.”
Eventually, people like me who live in California won’t be faced with the tough decision to sit out of the game you love playing for fun, or put your money at risk with no guarantee of game integrity whilst contributing to an offshore site that hikes up rake and contributes no taxes to your state.
Losing players, keeping the game fun
Alex: Looking at global trends, it’s hard to be very optimistic about the future of poker. At this point, there are simply too many highly experienced players and too many advanced analysis tools out there.
It’s an extremely brutal environment for new players, and even formerly winning or break-even players are leaving the game on a daily basis due to their inability to keep up with the level of play.
In hindsight, it seems that the boom of the early 2000s could only happen at that exact moment in the history of the internet. The same technological advances that made it possible in the first place began to undermine its viability once they’d progressed a few steps further.
Sean: “Making poker fun is an absolute must. Appeal to guys and gals just looking to play a nice tournament for a few dollars after a long day at work. I think operators have done a great job of this during the pandemic. Give everyone a shot at getting in a series. Poker is fun and that should always be the focus.”
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