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And to an extent, it has. Both cash game liquidity and revenue are up since PokerStars finally realized its return to US soil over 10 months ago.
But that’s not to say the industry is necessarily in a better spot than it was this time last year, as today’s industry is more fragmented, and in a variety of ways, more restrictive with regard to player options.
One area in which PokerStars has hardly helped to grow the industry is cash game liquidity.
Currently, volume is down 10 percent.
In fairness, PokerStars (and the greater industry at large) has shifted emphasis away from cash games, and toward more low skill edge formats such as Spin & Go’s.
But that alone doesn’t fully account for why industry liquidity, despite the presence of a legitimate third operator, has held relatively flat.
The answer appears to lie in the hard population caps of the market. Simply put, the NJ online poker industry doesn’t have room for three operators to support thriving cash game lobbies.
We witnessed this before, when Betfair could hardly draw a single cash game player to its lobby. Ultimate Poker too, despite offering highly lucrative cash game promotions, couldn’t achieve significant share in a competitive market capped at roughly 9 million residents.
Given this, PokerStars deserves credit for both gaining relevant market share, and for not precipitating the decline of cash game liquidity.
There’s a herd mentality in online poker, where players flock to the most popular games first, and then branch out to second- and third-tier games if the site population size permits. The more the market is fragmented, the more likely it is for these alternative options to disappear.
Thus, a solitary site that averages 350 cash game players can offer players much greater flexibility than the totality of three operators with combined averages of 400, or even 500, players.
This time last year, average seven-day average traffic per operator was 171.3 players. Currently, it sits at just 119.8 players, representing a 30 percent decrease.
Should per site liquidity dip further, we may see a compounding effect where alternative format and higher-stakes players leave in droves. It hasn’t happened yet, but the threat looms.
And with that, the entry of a third operator will have led to the overall decline of cash game liquidity.
PokerStars may not have done much good for the industry’s ring games, but it has set revenue somewhat back on course.
Major tournament series and post-launch novelty aside, PokerStars NJ appears to have grown NJ online poker revenue by between 7 and 14 percent year-on-year. However, this range undermines the true impact of the operator on industry revenue.
Accounting for these variables, we conclude that industry revenue grew by approximately 16 percent as a direct result of PokerStars’ entry.
However, considering PokerStars grew the number of operators by 50 percent, that still means a good portion of its revenue was cannibalized from existing operators. But the gap isn’t quite as wide as it is for cash game traffic.
[geoip2 region=NJarea][i15-table tableid=29874][/geoip2]
For the most part, the impact of PokerStars’ entry on the tournament scene has been positive.
Overlays also appear to be more prevalent than they were. But that’s somewhat justifiable given the wealth of new tournaments that have propped up since March, across all sites.
The reality is that there is a stronger willingness among players to spread their tournament grind across several sites than their cash game play. What results is the rare format that benefits from the addition of more operators.
Well, at least to a degree.
The boundaries can be pushed too far. We witnessed a firm example of this in October, when the Garden State Super Series V went head-to-head with the NJCOOP. Running the two biggest series the market has ever seen, and doing it concurrently, proved too ambitious for player appetites:
All told, it does appear as though the tournament ecosystem is relatively healthy, and will continue to thrive as long as operators keep their ambitions in check.
The entry of a third online poker operator — even one named PokerStars — had a net neutral-to-negative impact on cash game liquidity. But the site did help to boost overall tournament participation, and may continue to help grow this vertical — within reason.
The lesson here is that no matter how strong the brands, smallish online poker markets should abide by the less-is-more philosophy.
Otherwise, the market becomes too fractured, cash game variety suffers, and operator revenue dips too low for individual sites to spend freely on marketing and promotions.
Image credit: Warinezz / Shutterstock, Inc.