Originally Posted by
Dan Druff
Before I begin, let me make something clear.
I want Pokerstars New Jersey to succeed. I want SOMETHING in legalized US online poker to become a success. So far, every legalized online poker site has been an embarrassing failure, and has fallen WAY short of expectations -- by a staggering margin (like a factor of 10, last I heard).
If legalized online poker doesn't translate to nice profits for the companies offering it, then these companies will stop fighting for it. In fact, not only will they stop fighting, they'll stop even bothering to offer it even if it becomes legal.
Right now, Bovada is absolutely dominating the US market, despite being an illegal room. They aren't just winning. They're crushing. True, they have an unfair advantage in an unrestricted player pool (aside from the states they self-prohibit), but the bottom line is that legalized online poker just hasn't worked.
Legalized online poker has existed in 3 states. Let's look at each:
Nevada
Ultimate Poker: CLOSED. Despite being first to market, this room was a huge failure, lost huge money, and is now gone.
WSOP.com Nevada: 150 average cash players online -- mostly microlimits. This is not what Caesars pictured when they spent considerable money to market and develop this site for the Nevada market. Despite being the ONLY viable legal site to play in Nevada, the numbers have stayed flat, and in fact have slowly declined over time. Even during WSOP, when you would expect a massive spike in players, it failed to even double its weak traffic during that time. To say this site is going nowhere is an understatement.
Real Gaming: Open, but no games ever run here. And I mean that. Literally zero games are usually running. This site should be put out to pasture immediately.
Delaware
The only running online poker site in this tiny state merged with WSOP.COM Nevada. So they now have combined player pools, which added just about nothing overall, since the Delaware legalized online poker scene never had players in the first place. At least you can play WSOP Nevada if you're in Delaware, which I guess is nice if that's where you live.
New Jersey
This is so far the biggest state (population-wise) to offer online poker. By comparison, Delaware has about 1 million people, Nevada has about 3 million people, and New Jersey has about 9 million.
Taking a look at the online poker offerings there:
Ultimate Poker: CLOSED. Yep, failed here, too. Ironically, they held off on improving their Nevada product (which was first to market, and heavily criticized) in favor of developing the New Jersey one. Oops.
WSOP.com New Jersey: Despite a merged player pool with 888.com New Jersey, they average an unexciting 170 cash players.
Borgata/Party Poker New Jersey: 110 average players. Prior to the launch of Pokerstars, this was the only other option in New Jersey aside from 888.
So that's a pretty sad reality. Delaware and Nevada combine for 4 million people, yet average 150 cash players online. New Jersey has 9 million people, yet averages a bit less than 300 cash players online. Makes you wonder if even a California online poker room will have much traffic, even with their 38 million population.
But back to Pokerstars.
It soft launched on March 18, with a player cap of 500. On March 21, we had a real launch. Now there is no limit of players, but people are not flocking there in droves.
Right now it's about 10pm ET as I write this (which should be near prime time), and there are 380 cash players online. That's pretty bad. Players should be excited and flooding the site, but instead the reaction has been a collective, statewide yawn. Are they doing better than WSOP and Party? Sure. Is this what Pokerstars was expecting when they fought so hard to be included in the New Jersey market? Absolutely not.
It's true that New Jersey also allows casino gambling online, whereas Nevada does not. In fact, the casino gaming is by far the bulk of these sites' revenue, while poker is producing very little, and in fact is a much bigger headache than the casino games. As you might know, poker players are very needy and vocal with their dissatisfaction, while online casino players tend to be quiet and docile (and it's much simpler to offer these games than poker, from a logistical standpoint).
The bottom line is that online poker in New Jersey has been a complete FAILURE, and only the casino portion has produced any kind of real revenue (though that was also far below projections).
I predict that Pokerstars will become the clear leader in New Jersey, but they will probably average 300-500 cash players online at best, and never really get beyond that.
This may be enough to keep them in business there once already set up, but trust me in that such numbers would be considered a failure by both industry analysts and Pokerstars executives.
If this does occur, it will be a strong blow to legalized online poker -- perhaps far more damaging than anything Sheldon Adelson could do. Pokerstars has been looked to as the savior of legalized online poker. Many have stated that legalized online poker has only failed due to poor marketing, poor customer service, and poor software. Put a highly competent company like Pokerstars in charge, and it will soar to new heights.
But will it? I sincerely doubt it. Here are the reasons legalized online poker hasn't worked, and why it won't work on a state-by-state level:
1) Player pools too small. Even 9 million people is far too small of a pool to get a meaningful player base. It's easy to forget that only a tiny percentage of the population wants to regularly play online poker, so we need a huge population pool if we want active games.
2) Too difficult to get started. The illegal rooms had a "play now, verify later" approach. That is, it was easy to sign up and deposit (even if your credit card didn't initially work), and you would go through the hassle of verifying your identity only after needing to cash out. The legalized rooms have to establish your identity first. Believe it or not, that's a big hurdle, and recreational players find it more trouble than it's worth. Remember, YOU might want to put a lot of effort to play, but recreational players do not.
3) Poor marketing, customer service, and promotions. Existing rooms have simply copied the long established formats and promotions, assuming they would translate well to the state legalized market. It hasn't. The wheel needs to be reinvented. Recreational players (or regular live players) need a reason to want to sign up and start playing -- such as no rake for the first month, or some other attractive promotion. Nothing like this has been tried yet.
4) Games aren't running regularly enough. It's time to hire props to get games running. If a recreational player signs up to play 1/2 NL and sees no games running, he closes the software and never opens it again.
5) Too difficult to deposit. Many credit card companies are still not onboard with the legalized gambling. Most recreational players want to use credit cards to play, NOT bank accounts. Add the credit card difficulty to the initial cumbersome signup process, and recreational players just don't want to deal with it.
6) Online poker is dying in the US, anyway. Even if online poker went back to the "old days" of pre-2011, there wouldn't be the enthusiasm for it that once existed. The 5-year downtime has allowed many to move on to other interests.
7) Lack of recreational players. You need them for a site to succeed. If it's mostly skilled regulars, the games won't run very much.
I don't see Pokerstars changing enough of the above to make things work.
They can do better marketing and customer service. They can modify the VIP program and promotions to attract more recreational players. But they can't change the mood of New Jersey residents, who simply don't feel like playing online poker.
Most players who had a real interest to play New Jersey online poker would be there already.
Pokerstars may introduce a better product to the market, but the market itself isn't going to grow with a better product. Instead, they will just suck traffic away from the other two rooms.
This isn't going to work.
Pokerstars is not going to rescue legalized online poker.
California, which is engaging in its own civil war among gaming entities involving legalizing online poker, is watching closely. And I guarantee you they're not going to like what they end up seeing.
