The New Jersey Online Poker Market Could Look A Lot Different After 888 Buys Bwin.Party

What’s less clear is how the market will look once the dust settles.

Below are the possible outcomes, listed loosely from most to least probable, of 888 taking over PartyPoker NJ.

First, three quick notes:

1. The general consolidation that 888 will likely bring to New Jersey will be a net win for the industry, which has struggled financially in the face of a highly-fragmented market.
2. The merger could take quite some time to complete, so it’s not clear exactly how soon we’ll see a change to the status quo in NJ.
3. Global considerations for 888 regarding the Party brand and software platform will trump any local concerns, meaning that the outcome in New Jersey could have little to do with what makes the most sense within the context of the New Jersey market.

888 folds Party and Borgata into network

Currently 888 and WSOP contribute to a shared online poker network in New Jersey powered by the 888 platform. Party/Borgata have a similar arrangement, powered by the Party Poker platform.

The most likely post-acquisition scenario is that all brands contribute to a single shared network powered by one platform (almost certainly the 888 platform):

• Such a shared network would make the most sense in light of NJ’s population constraints.
• A shared network would provide the best competitive bulwark against the entrance of PokerStars.
• Bridging the two platforms would be an expensive and time-consuming process with little upside.
• While the situation has improved in recent quarters, the Party platform has earned the ire of a wide swath of NJ players.

888 folds Borgata into network, shutters Party

This scenario is similar to the above with one major distinction: 888 shutters the Party NJ brand.

Why would 888 elect to close an active brand in the market?

• It’s understood that Borgata is generating the vast majority of traffic to the shared Party / Borgata online poker network.
• An excess of brands may be causing consumer confusion and hampering the growth of the market.
• Operating an additional brand brings costs and overhead that is likely not justified by the return.
• Operating an additional brand in New Jersey may muddy the broader picture for 888 in the regulated U.S. market.

888 folds Party into network, loses Borgata

Here 888 would bring the Party brand (or at least the player base) over to the 888 / WSOP network, but lose Borgata.

How would they lose Borgata? The casino might decide that the acquisition offers an opportunity to broker a better deal and jump ship when 888 balks at a higher price.

Or Borgata may survey the landscape and simply decide that PokerStars makes a better partner.

In any case, the disruption caused by the acquisition certainly opens the door for a shift in the status quo when it comes to Borgata.

888 continues to operate Party / Borgata as a separate network

This scenario could result more from pragmatic need than optimal strategy.

The marriage of 888 and bwin.party will be a complex, extended affair. And figuring out how to handle New Jersey will be incredibly low on the priority list.

The easiest path is to just keep things as they are.

And it may well be that once that path is followed for a time, it simply continues to be the path followed – especially if the perception is at 888 that there’s little hope for material expansion of the U.S. regulated market.

888 packages entire US operation for sale

Continuing on the theme of 888 becoming disinterested in the U.S. market: with an overall package containing the lead in the NJ market, a monopoly in Delaware and licensure in Nevada, 888 may decide that there’s more sense in selling than slogging through the integration on the U.S. side.

It’s no secret that 888 has been disappointed in the U.S. as a market, or that the relationship with Caesars has been less than completely aligned at a variety of points.

While 888 may be a willing seller, the trickier end of this scenario is finding a willing and suitable buyer.

888 folds Party into network, operates Borgata as a separate network

A longshot scenario that involves Borgata wishing to remain independent of the 888 / WSOP network but not willing or able to jump to the PokerStars network.

It’s not impossible, but it seems highly improbable, as it would weaken Borgata’s position and represent a significant cost for 888 (relative to the NJ market potential).