Unregulated US Online Poker Market Continues To Thrive

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Wednesday, January 29th, 2014 | Written by Lucy Brown

In the US, just three of the country’s fifty states currently offer online gambling, namely Nevada, Delaware and New Jersey, while the remaining states are taking note before deciding on whether to join the bandwagon in the near future. Meanwhile, it would seem lawmakers from the various states are fast coming to the realization that online gambling legislation and regulation is the most prudent path to follow in order to protect consumers, while adding much needed tax revenues to the individual states’ cash-starved economies.

US players will find ways to gamble online

At the heart of this latest line of thinking is the belief that US online poker players will always be able to find ways to play at US-friendly poker sites, despite the governments best efforts to the contrary, which have included the 2006 UIGEA statute, and the Department of Justice’s Black Friday operation. This sentiment was highlighted by Iowa Senator Brian Schoenjahn, who recently commented:

“If people are going to do it [play online poker] anyway, maybe Iowa ought to take a piece of the pie and regulate it.”

The same point was also picked up earlier this week by Louisiana Gaming Control Board Chairman Ronnie Jones, who said that although gambling by computer is a criminal offense in the Pelican State, Louisianans have continued to access various sites and play poker online. The most recent traffic reports coming from US-facing poker sites and networks would also seem to confirm this fact.

US friendly poker sites

At present there are numerous US-friendly sites offering their services in the US, of which Bovada Poker is the most popular as it has a proven online gambling track record, and payouts are conducted in a timely manner. In addition, Bovada operates an anonymous player format which makes it impossible for skilled players to gather statistics on recreational players and so gain a huge advantage.

Nevertheless, Bovada is just one of many such US-friendly sites, which includes other popular online poker rooms, such as Americas Cardroom and Black Chip Poker. The overall result is to confirm that online poker will continue to be served in the United States, whether in regulated or unregulated states, and so the interest of consumers would be best served by embracing the industry, rather than forcing it away from a regulated, legitimized framework.

Regulated US online poker a $2.2 billion industry

In the event online poker becomes legal nationwide, industry expert Dr. Khalil Philander of the University of Nevada said the market could be worth around $2.2 billion annually, explaining:

“If there was a national network, my forecast was around $2.2 billion during the first year. That’s assuming there would be liquidity between all those players. If somehow Congress passed a bill or every state legalized it simultaneously on their own and had compacts.”

Dr. Philander’s prediction also roughly corresponds with those figures noted for the USA’s unregulated offshore market, which in 2012 generated $3 billion in revenue. However, he also highlights that under regulation online poker would be expected to far outgrow its previous peak, with California subsequently becoming the jewel in the US online gaming crown.

Nevertheless, either legalizing online poker on a federal level or the various states deciding to compact their player pools, may ultimately hold the key to further riches, and as Dr. Philander’s Californian online poker study suggests a California-only player pool could grow from $217 million in year one to $263 million in year ten, whereas pooling with other states could give The Golden State a further boost of $120 million.

The regulated online poker story so far

Since three US states introduced legalized internet poker towards the end of 2013, the more populous state of New Jersey (pop: 8.8m) has gotten off to a steady start with 6 of Atlantic City’s 12 licensed casinos generating $8.4 million in revenue for the last six weeks of 2013. The results are particularly noteworthy as NJ’s initial roll out period was blighted by a number of technical and payment difficulties.

So far leading the field was the Borgata Hotel Casino with $3.75 million in online gambling revenues, followed by Caesars Entertainment Corp ($2.38m), Trump Taj Mahal Casino ($883k), The Tropicana Casino ($748k), Trump Plaza Hotel Casino ($427k) and the Golden Nugget ($179k). As senior VP of Moody’s Investors Service, Peggy Holloway, said concerning the initial introductory period:

“While internet gaming is starting off slowly, the pace of growth will accelerate as issues with payment processing and geo-location technology are ironed out and operators ramp-up their marketing spending to educate consumers that online gaming is available.”

Meanwhile, Delaware (pop: 917,000) could only generate $253,000 in online gaming revenues over approximately the same time period, while Nevada (pop: 2.7m), which presently hosts just Ultimate Poker and WSOP.com, said it would hold back on releasing its internet poker revenue details until a third site becomes operational.