Network Model Best Solution For Regulated US iPoker

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Monday, August 11th, 2014 | Written by Lucy Brown

In 2013, regulated US online poker was launched first in the state of Nevada, followed by Delaware then New Jersey. However, the monthly revenue results coming from these markets have been disappointing, while the lack of an overall cohesive approach to regulation has lead to no progress on returning online poker to its post-Black Friday glory days. Opposition groups, such as Sheldon Addelson‘s Coalition to Stop Internet Gambling, have largely been blamed for stopping the expansion of iPoker, either because of their opposition to online gambling per se, or simply because they are worried about being excluded from the newly regulated market.

Picking up on this point, Curtis Woodard from onlinepokerreport wrote an interesting article in which he suggested the real way forward for the industry was the creation of poker networks, which would help various gaming interests enter the highly competitive market without being at a huge disadvantage to already established online businesses.

Sharing liquidity vital for iPoker

As Woodard’s article suggests, forming networks would be a vital step in encouraging the pursuit of interstate cooperation leading to larger player pools, and ultimately acting as a greater incentive for other states to start their own regulated markets. Already, the Nevada-based All American Poker Network (AAPN) is moving in this direction and is expected to link up WSOP.com Nevada with Treasure Island when the site eventually goes live. Furthermore, Nevada and Delaware have an agreement in place which allows them to share players and so AAPN’s approach could act as a suitable model for others to follow. As Woodard, explains:

“By encouraging – and perhaps even by legislating – poker platform operators to license ‘skins’ to in-state interests including card rooms, tribal casinos, and other entities deemed fit by regulators, we can create a market in which the many interests are served without excessively splintering the all-important player liquidity.

Rather than creating just a handful of partnerships that will leave out so many, and create staunch opposition from same, networks will create an opportunity for even small card rooms to extend their offerings online.”

Potential to drive iPoker industry forward

As the line of thinking goes, a more healthy competitive industry would arise from a shared network as opposed to the current situation in which a number of state interests are forced to compete in order to become a partner of one of a handful of viable poker platforms. Consequently, the huge edge given to the platforms ultimately works against the interests of local companies, while allowing suitable card rooms the option to join a network would help return some of the power back to local gambling interests.

Would competition suffer from a network model?

In his article, Curtis Woodard refers to the concern a colleague of his expressed that a shared network would stymy competition as a large majority of gaming interests would most likely want to have a skin on a PokerStars network. Highlighting a possible scenario in a regulated Californain iPoker market, Steve Ruddock, wrote:

“There is simply no incentive for the Morongos or the Bicycle Club to push PokerStars to make improvements or add more features since all of their competitors will also benefit from this.”

Countering this argument, Woodard speculates that such a situation would ultimately benefit the industry by forcing other operators, such as 888, Party Poker, and UltimatePoker, to improve their own platform or simply be left behind.

Furthermore, poker skins launching on a respected network such as PokerStars would also act as an incentive to improve their tactics for attracting new players rather than the current situation in which they can simply rely on the brand name of their chosen partner. As Woodard, explains:

“Card rooms launching a skin will have to attract players, and they will have to use something other than “we have Pokerstars” as a marketing plan, because they won’t be the only ones who can make that claim under the network model.”

Ultimately, the piecemeal approach taken to iPoker in the USA is not only viewed as a regressive model for the industry as a whole, but the current structure is most likely a result of numerous gambling interests preferring to see no iPoker market in the country at all rather than one from which they feel excluded. Therefore, a network model allowing greater participation by gambling interests could present the best way forward for both operators and players alike.