View: Networks Are the Way Forward for Regulated US Online Poker

Regulated US online poker networks
This article may be outdated. Get the latest news on Views here.
Early in my involvement in advocating for state-level Internet poker legislation, what became clear to me was that the biggest hurdle to getting legislation enacted was not opposition from those against an expansion of gambling, but rather opposition from interests who fear being left out of a newly created market.

State governments have a duty to the existing interests in their states, but an intrastate poker market will only support a few unique platforms. With dozens of in-state gaming interests vying for one of those few opportunities, it is easy to see that those that will be left out of the market will likely oppose its creation.

In my view, this is the real conundrum for legislatures across the nation. And networks are the solution.

Model not seen as ideal by all

But this tends to run against conventional thinking, so disagreement comes as no surprise.

Notably challenging the idea of legislating the network model is prolific poker writer Steve Ruddock, with whom I have had much discourse on the subject, 140 characters at a time.

Recently, Steve wrote an article elaborating on why he believes the network model is all wrong for US poker.

I think he raises some important issues, but rather than being reasons not to push for networks, they are things that need to be addressed through regulation.

Some of his other assertions and conclusions, in my view, completely miss the mark.

Networks will play integral role in pooling liquidity across state lines

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.

Networks are going to be key to liquidity sharing across state borders as well.

Networking common platforms opens the door for interstate cooperation, the beginnings of which we are seeing as the All American Poker Network sets the stage for the first ever regulated US network. It’s already happening, and with so many entities expressing interest in Internet poker, it’s only logical this will expand as time goes on.

As regulated online poker spreads across the nation, one state at a time, sharing liquidity on common platforms, the heart of the network model, makes perfect sense. So steering legislation in that direction from the get go, to me, also makes perfect sense.

Narrower network model could push entire industry forward

I maintain that the network model will actually foster competition in more meaningful ways than does following the pattern set thus far. Currently, you have many in-state interests all competing to be a partner with one of the few viable platforms.

This gives the platforms a huge negotiating edge, because the demand is greater than the supply of poker platforms. This is upside down, and works against the local interests.

The card rooms and tribes should be competing for players, while letting the platform operators compete for the business of the card rooms and tribes. By pushing the platform operators into the network model, and allowing any and all suitable card rooms and tribes to launch a skin, you change the dynamic and give the power back to the local interests.

They will all flock to the best, and the rest will have to compete with each other to be the best.

Would networks undermine competition?

Steve raises this fear in his article, noting that all of the tribes and card rooms would likely want to skin on a PokerStars network, and that this would subsequently be bad for competition.

“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,” Ruddock wrote.

But, if all the card rooms and tribes choose to partner with PokerStars, it would force PokerStars’ competition, the other platform operators, to step up their game or be left completely out of the market.

It is this element of competition that will drive 888, Party Poker, and UltimatePoker to improve, which in turn forces PokerStars to continue to develop their own product, lest the competition catch up.

Under the current models, the card rooms and tribes have no other choice but to take what they are given, or be on the outside looking in. They have no alternatives, so they have no leverage.

Unregulated market highlights important network issues

Steve also pointed to some of the problems networks face in the unregulated market, and those issues are very real.

A particular problem is the poaching of players from other skins – using incentives to get players to switch skins – rather than seeking out new players. I do see this as a problem, just not one that is insurmountable.

I think regulators could set some rules to prevent this sort of thing. Such restrictions would force a change in the way skins operate, and that is a good thing.

This is not to say that every little card room will be able to offer Internet poker under the network model. Regulators will create a minimum threshold for suitability, and perhaps many of those deemed suitable will launch and then fail.

But such is the nature of business. Many start and fail for a variety of reasons, and online poker rooms will be no different. I’m only advocating for opportunity, not assurance of success.

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.

What it all boils down to, in my view, is that there are far too many gaming interests in the US who would rather see no online poker market than an online poker market from which they are left out. The network model allows the widest participation, and it should be embraced, encouraged, and yes, perhaps even legislated.

Read Steve’s original article here.

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Curtis Woodard
- Curtis is a recreational poker player from Seattle, WA who advocates for state ipoker legislation. He is the founder of the Washington Internet Poker Initiative and sponsor of Initiatives 582 and 583. Catch him on Twitter at @curtinsea and @ipokerwa (WIPI).