- US Online Poker
- US Online Casinos
- US Online Sports Betting
Not only has the operator been notably absent from U.S. soil for over four years, but at best, the New Jersey market figures to be about a quarter of the size of PokerStars’ struggling ring-fenced operations in France, Spain and Italy.
Yet, so long as PokerStars addresses the primary challenges of the market, and abides by the same ideals that made it the world’s top operator, there’s little reason it can’t establish a lasting bond with NJ players and draft the blueprint for success in the U.S. regulated poker market – all within a six month time frame.
Here’s how I’d make that happen.
When legal online poker first went live in New Jersey in November 2013, players were treated to an influx of lucrative rakeback specials and giveaways. As inconceivable as it seems now, $1 million dollar giveaways and 80 percent rakeback deals were the norm.
Although the promotions artificially pumped liquidity, the capped market size made it impossible for operators to reasonably sustain anything close to their initial efforts.
Compounding matters, players had become so accustomed to sites literally throwing money at them that when the well dried, they abandoned the poker rooms in droves. According to Poker Industry Pro via PokerScout.com, liquidity plunged nearly 50 percent from late January to early June of 2014.
All of this is not to say that PokerStars shouldn’t come out swinging, but by taking a more measured approach to promotional spend, the operator can sell players on the cornerstones of its operation: a strong platform, stellar customer service and a clever player rewards program.
Consistency is the key to building trust, and trust leads to retention. Promotional fire sales are only effective at drawing “bonus whores” and will only divert attention away from an operation’s underlying flaws for so long.
PokerStars has a unique opportunity in New Jersey to launch a platform that supports three gaming verticals: poker, casino and daily fantasy sports.
Based on recent statistics, they’d be unwise not to.
In Q2 2015, 320,000 of PokerStars’ active users participated in the operator’s online casino games, representing a 25 percent cross-sell. And for the first time, online poker represents less than 90 percent of Amaya revenue.
These are fairly significant figures for a company that spent the first 13 years of its business dealing exclusively in poker, and which has yet to actively market its nascent online casino vertical.
By integrating casino games into the PokerStars client, Stars targets a demographic that accounts for 85 percent of New Jersey iGaming revenue, and potentially sells U.S. poker players who remember Stars as a poker-only site on a second vertical.
Moving to daily fantasy sports, PokerStars has only begun to dip its toe in the water. Victiv was just relaunched as StarsDraft earlier this month. Amaya CEO David Baazov has stated fairly adamantly that the company has no plans to match the momentous marketing efforts of perennial market share leaders FanDuel and DraftKings, choosing instead to adopt a wait-and-see approach.
Fair enough, but there’s little denying that one way to grow StarsDraft organically and cost effectively is to leverage its gaming licenses to offer DFS in as many jurisdictions as possible by way of the PokerStars client.
Sports fans, poker aficionados and gamblers all signing in to one PokerStars NJ client – the cross-promotional opportunities are nearly limitless.
Speaking of cross-promotional opportunities, a PokerStars-branded room and tournament tie-in series at Resorts brings with it a slew of positives:
I’d argue that a PokerStars-sponsored tour in New Jersey would pose more benefits for Resorts/Stars than the Borgata Poker Open and accompanying Garden State Super Series/NJCOP do for Party/Borgata.
For one, with regards to brand recognition, the Borgata is more a local celebrity, whereas PokerStars is world-renowned. What this translates to is more out-of-state and out-of-country players visiting the Garden State for, say, a stop on the revitalized NAPT (North American Poker Tour), than stops at the Borgata for WPT-sponsored events.
Going further, there will be nothing stopping PokerStars from hosting online satellites to live NJ-based events on both PokerStars NJ and its worldwide client. Borgata is limited to recruiting players from its own backyard.
Whether PokerStars will actually follow through on its promise to build a $10 million branded room at Resorts is still a matter of debate, as there hasn’t been too much talk on the subject since way back in late 2013.
It seems likely though.
A common trend among poker operators is to offset the high cost of regulation by splitting the expense with players, namely via increased rake and tournament entry fees.
There are several issues with this strategy:
This triad of potential drawbacks has reared its ugly head in just about every country where online poker is segregated and taxed.
On PokerStars France, which features a nearly identical rake schedule as WSOP.com and Party/Borgata in NJ, the impact has been particularly ravaging. Liquidity is down nearly 57 percent in the past four years.
Conversely, PokerStars.com boasts the lowest poker rake on the Internet.
It is best served preserving that distinction in New Jersey, raking cash games at around 4.75 percent (lower at the smaller stakes), capped at $2.50 – $3.00 (again, stake dependent). The current poker rake in New Jersey is approximately 5.56 percent up to $3.00.
A counterargument can be made that by lowering the rake, PokerStars’ ability to generate profit, and subsequently share those profits with the poker playing community, will be limited.
To that I say PokerStars should be more concerned with setting a strong precedent than generating profits.
No matter how you crack it, the New Jersey iPoker market is too small to alter Amaya’s bottom line. A multi-state poker network, however, can reap significant revenue.
By establishing itself as a operator for the players in NJ, PokerStars places itself in that much better of a position for when the U.S. becomes a significant player in the global iGaming market.
Remember, this is a long game.
While there is no good reason not to launch PokerStars’ stellar VIP Club in New Jersey, it should be revamped for the niche market:
As a consequence of lowering threshold requirements, PokerStars will also have to lower the monetary value associated with each tier.
That’s still a better result than going down the same path as WSOP.com, which offers an impressive 35 percent rakeback to top tier players – problem being it’s nearly impossible for any player in the New Jersey or Nevada markets to rake $200,000 annually.
As the core processes driving the U.S. regulated online gaming industry continue to improve, the advantage of being first to market will be just that – an advantage.
In New Jersey, it was arguably a detriment, evidenced by operator struggles in the areas of technology, payment processing, customer service and marketing.
If I were PokerStars, I’d be taking meticulous notes as to where operators went wrong, and conduct thorough analyses on license holders who carved out significant market share despite a late start.
There’s perhaps no better example this than the Golden Nugget Casino.
Part of the Golden Nugget’s strategy was to ramp up its marketing spend as others were winding down their initial efforts.
This, combined with the timely acquisition of Betfair’s NJ operations and the Nugget’s own ability to recognize and improve upon the mistakes of its predecessors, culminated in the operator topping the online casino revenue charts in March 2015.
PokerStars can follow a similar path by:
…and the list goes on.
Really, there’s little reason why PokerStars shouldn’t rapidly vault to the market share lead in New Jersey. But in order to maintain that position, and achieve it in every other U.S. state it enters, it will have to do much more than simply leverage its brand name and archaic US database.