When PokerStars Returns to NJ, How Much Will The Average Online Gambler Care?

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The expected re-introduction of PokerStars into the New Jersey market is being called a game changer, but just how much of a game changer it will actually be has been a hot topic of debate.

PokerStars is considered the online poker world’s strongest brand. And, if you listen to the poker community by and large (social media and forums), Stars is expected to ascend right to the top of the New Jersey online poker market, crushing their competitors like the Jun horde.

Just one problem: the current situation on the ground in the Garden State suggests a different story could be told.

The New Jersey Petri dish

From the get-go New Jersey has been viewed as a science experiment of sorts.

The use of a synchronized launch (there were a couple of stragglers) put all licensees on equal footing for the first time, ostensibly offering everyone a shot at success based on their marketing, branding, and product.

For the most part, things have gone as expected.

The two strongest brands, and arguably the two strongest products, (the partnership of Caesars and 888 and the tandem of the Borgata and Party Poker) are the most popular and have been dominating the online poker market, while the online casino market has shaken out in a similar way, albeit more competitively across the board.

Land-based brands carry the day

A recent poll of 520 online gamblers in New Jersey conducted by Commercial Intelligence asked NJ consumers which online brands they were aware of.

The top three results were all brick and mortar casinos, and the top five results were all established brands. Party Poker was the first exclusively online brand players cited, and they were tied for sixth with the Golden Nugget.

Here are the polling results from CI:

  • Caesars Casino – 48%
  • Borgata Casino – 44%
  • Harrah’s Casino – 42%
  • World Series of Poker -41%
  • Tropicana Casino -38%
  • Party Poker – 34%
  • Golden Nugget Casino – 34%
  • Borgata Poker – 29%
  • Ultimate Poker – 27%
  • Virgin Casino – 24%
  • Betfair Casino – 22%
  • Ultimate Casino – 20%
  • 888.com – 18%
  • 888 Poker – 16%
  • 888 Casino – 14%

These numbers have been corroborated by the revenue numbers between the different partners operating multiple brands. According to Boyd’s earnings calls, the Borgata is accounting for 75% of the revenue on their online poker network with Party Poker.

I have also seen unofficial revenue numbers for the 888/Harrah’s/Caesars brands and they follow a similar arc to the above awareness rates versus revenue data above, with Caesars (WSOP.com) accounting for roughly 55%, Harrah’s roughly 27%, and 888 a mere 18%.

Once again, 888 is trailing their brick and mortar partners in both brand awareness and in revenue, which seems to indicate a strong connection between the two.

In short: Thus far it has been the land-based casino-branded sites that have dominated the market share, leaving their online partners (even the seemingly robust Party Poker brand) in the dust.

Furthermore, the stronger the brick and mortar brand, the better the online performance has been.

If PokerStars is going to take over New Jersey as is expected, they will have to buck this trend and prove that their brand has appeal outside of the diehard online poker community.

But brand isn’t everything

PokerStars does have an ace up its sleeve, though.

PokerStars is without question head and shoulders above all of its New Jersey competition when it comes to their product.

And as I discussed in this column back in May, in addition to branding, product also plays a key role in success.

PokerStars is also an outlier that may not fit into a classic box.

They are not simply the number one online poker site in the world, they are the number one online poker site in the world by a country mile. PokerStars is likely the only online poker room that has any significant brand awareness prior to launching in the U.S.

My guess on PokerStars’ New Jersey impact

Yes, the PokerStars brand is strong on its own, but if the data is correct we have been overestimating the power of online poker brands in legal U.S. markets.

Not helping PokerStars is the fact that the Resorts brand will likely be near the bottom of the pile of land-based casinos, which means PokerStars’ success could depend on how the PokerStars brand resonates in New Jersey.

This is the million-dollar question: Can PokerStars buck the trend and become the first online operator whose brand is powerful enough to knock off the brick and mortar casinos in Atlantic City?

While PokerStars has managed to keep its brand fairly relevant in the U.S. market, we also have to step outside the poker community to see what their brand looks like.

For one thing, PokerStars hasn’t dealt a hand of real-money online poker in the U.S. since April 15, 2011 (except for maybe that one guy who wouldn’t quit his game for a day and played into April 16). And, to the casual observer, they did not leave the market on the best of terms.

We are now over three years past Black Friday and considering the fast turnover rate of online poker players, the following questions come to mind for PokerStars:

  • How many current New Jersey players are aware of PokerStars and have used their product?
  • How strong is the PokerStars brand in the U.S.?
  • How outdated, and therefore useful, is the PokerStars player list?
  • How many players are loyal to the PokerStars brand after their three-year hiatus?
  • How will the nearly year-long head start of the other sites factor into PokerStars’ market share?

While most people expect PokerStars to climb to the top of the food chain in New Jersey when they come online, others are not sure, and just how dominant they will be is an even heartier debate.

My general feeling is similar to Chris Grove’s thoughts on this. PokerStars will produce a short-term bump followed by a petering out period during which the New Jersey market falls back to historical participation levels.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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