888 To Monopolize US Regulated Online Poker Traffic

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Wednesday, July 22nd, 2015 | Written by Stephen Smith

Following months of negotiations, 888 Holdings announced it has acquired bwin.party for the price of £898 million ($1.4bn), a price lower than the £908 million offered by GVC/Amaya but with the benefit of having fewer associated risks and regulatory constraints associated with it. As a result, 888 Holdings has now not only managed to strengthen its own position within the global online gaming industry, but has also stopped itself from losing ground to its chief rival in the online poker space, Amaya Gaming. Commenting on the deal which is expected to be completed in 2016, 888 Holdings COO Itai Freiberger said:

“Once completed, this deal will create one of the leading operators in the growing global online gaming industry. Both 888 and bwin.party are self-developed technology companies and we are excited by the growth opportunities presented by the integration of these proprietary complementing assets.”

Solidify Position As Second Biggest Poker Room

One of the immediate results of its acquisition of bwin.party is that 888 will be able to further consolidate its position as the second biggest poker operator on the internet. Currently the site sits with an average of 2,200 cash game players over a seven-day period, which together with partypoker’s traffic of 1,050 cash players should raise its traffic to around 3,250 players. Whilst this figure is a long way back from PokerStars (14,500), the synergy does allow 888 to add a further cushion between itself and Bodog (1,700) in third spot, and as Itai Freiberger explains:

“We will benefit from the combined poker player liquidity.. I am confident that this deal will take us to the next level.”

Implications For Regulated US iPoker

If Amaya Gaming had succeeded in purchase bwin.party it would have been able to use the company’s existing platform to operate in the New Jersey market, as well as acquire an untainted brand enabling it to avoid barriers to entry in a future regulated Californian iPoker market, or anywhere else in the US. Instead, if PokerStars is granted a New Jersey iGaming license it will now face one formidable, entrenched larger site/network that will be more difficult to steamroll than a number of other smaller sites.

888 Monopoly In Regulated States

Currently, 888 already enjoys a virtual monopoly of the USA’s regulated online poker market. In Nevada, for instance, 888-powered software runs WSOP.com, the state’s only viable poker site as RealGaming.com is still showing only negligible traffic, whilst Delaware’s three online poker operators all share liquidity with Nevada’s iPoker site via the 888-powered All American Poker Network (AAPN). In the country’s only other regulated state, New Jersey, the WSOP.com/888 partnership has had to compete with the Party Borgata Network, but now that 888 has acquired of bwin.party it can control both networks in The Garden State. Consequently, the operator will soon enjoy control of around 99% of internet poker traffic across the regulated states of Nevada, Delaware, and New Jersey.

Joining Delaware/Nevada Compact More Likely

Up until now there has been much debate as to the need for states to combine liquidity in order to establish a viable, attractive online poker environment for players. 888’s presence in both Nevada and Delaware helped make that a reality not just in terms of reaching consensus between the different parties, but also because it would not have been possible without all the sites operating using the same 888 software. In New Jersey, however, 888 had to compete against the Party Borgata Network, which obviously has stood against an interstate compact with Nevada/Delaware as it would not have been in a position to benefit from such a deal.

In purchasing bwin.party, 888 now has free reign to link all three regulated states across a shared network, a move deemed essential in preventing the downward slide noted in the US iPoker industry. Combined traffic across all three states, for instance, would boost cash game traffic to an average of more than 400 players, rising to around 1,000 players at peak times. Nevertheless, the New Jersey government will still have to approve a final deal.

888 To Provide Counter To PokerStars

With PokerStars expected to receive a New Jersey gaming license by the end of 2015, 888’s monopoly will not last forever but it will at least provide the operator with the potential to give the world’s biggest poker room more of a fair fight when it does return. Had the acquisition not taken place then PokerStars would likely have simply drained customers away from both WSOP/888 and the Party Borgata Network, and in the process fragmented New Jersey’s fragile iPoker market. It’s also conceivable that should PokerStars launch its site in New Jersey before 888 enacts an interstate agreement with Nevada/Delaware then PokerStars could seek to complicate matters. Having said that, the site may still refrain from such a stance in order not to obstruct the industry, and also because it would see the benefit of an interstate agreement allowing it to partner up with casinos in other states.