How To Increase iPoker Liquidity In Smaller Markets

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Wednesday, September 16th, 2015 | Written by Shane Larson

When you read about the prospects for a company’s success in the world of online poker, you’ll always see liquidity discussed. It’s one of the key barriers to financial success that impedes the growth of poker sites and can ultimately be what causes some to go under. But what is it? Why is it a problem? And what can be done to address the problems that a lack of liquidity causes? Read on for answers to your biggest looming questions regarding liquidity.

Liquidity Defined

In the world of finance, liquidity refers to the amount of money that’s available for a company to access and use, but in the world of online poker, the term means something else entirely. Liquidity in iPoker is a measure of number of players, and without high liquidity, it’s hard for poker sites to succeed, not just because it means that they don’t have many paying customers. In order for a site to attract players and get them to play, it needs to constantly have a pool of players wanting to take part in a variety of games. Otherwise, there isn’t anyone to play with. A lack of liquidity causes long wait times for spaces at tables and leads players to navigate to other sites.

When discussing liquidity, industry analysts look at two different types. First is total liquidity, which tells you the total number of players that are on a site. The second is individual game liquidity, which indicates how many players are on a site that want to play a certain type of poker for certain stakes.

Why Liquidity Is Often a Problem

In the United States, online poker is state regulated, so the pool of players is already limited to the total number of residents in a state. If you look at a state where iPoker is legal like New Jersey, it becomes clear how this is problematic. There are only 9 million residents in the entire state, and it’s estimated that there are only about 50 to 100 players for every million residents in any state. That means New Jersey could really only hope to have 450 to 900 potential players, and most of these individuals won’t be online all at one time.

How Liquidity Issues Can Be Solved

Industry analysts have long discussed how issues with liquidity can be overcome by iPoker sites. Short of eliminating the state barriers to game play, there are two main ways that this could be done:

– By Reducing the Number of Stakes. By cutting down on the number of stakes for each game, iPoker sites can gain higher individual liquidity for games. This change is one that sites could make now without any changes to regulations.

– Using Fast Fold Poker. Fast fold poker keeps players continually playing by placing them in a pool of players rather than at specific tables. This increases engagement greatly by eliminating worries about individual liquidity, but it would require modifications to existing regulations to be implemented. One drawback to this type of setup, though, is that a large number of total liquidity is needed to support it, and furthermore, a site faces the prospect that by increasing its multiple fast-fold player pools it may in the process decimate its other iPoker product offerings.

Eliminating State Barriers

A discussion on iPoker liquidity wouldn’t be complete without mention of the constraints which countries impose on its citizens which ultimately result in an unviable online poker playing environment. The biggest problem in this respect is undoubtedly the decision by a country to separate its market from the wider poker playing community, or in the case of the USA by relying on individual states to decide on their own legislation, rather than passing a federal law allowing poker liquidity across the whole nation.

The declining fortunes of France, Italy, and Spain’s ring-fenced iPoker markets, for instance, has become so bad that these countries are currently considering banding together to salvage what’s left of their decimated playing pools. Likewise, the US states of Nevada and Delaware have already enacted their own own Multi-State Poker Network (MSPN) that has combined Nevada’s population of 2.76 million with that of Delaware’s 936,000.

Nevertheless, with almost 9 million people, the USA’s other regulated state of New Jersey would undoubtedly have the greatest impact on the growth of regulated iPoker in the country. Unfortunately, the Garden State has thus far refrained from throwing in its lot with Nevada and Delaware, despite the fact its iPoker industry continues to slide and now represent just 15% of its overall iGambling revenues.