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888 Holdings is now the sole owner of the All American Poker Network (AAPN) following a $28 million buyout of its investment partner, Avenue Capital.
“The acquisition of the remaining stake in AAPN is an important strategic step towards 888 achieving its exciting long-term potential in the US,” said 888 CEO Itai Frieberger in a press release. His company takes over the 53-percent interest Avenue previously held.
“Taking outright ownership of AAPN gives 888 additional operational, technological and commercial flexibility to develop innovative and exciting new partnerships and launch in new states – through both B2B and B2C channels – as and when future regulation allows.”
888 Poker is the only online poker site currently serving all three available US markets — Nevada, Delaware and New Jersey — and it is gearing up for Pennsylvania launch in early 2019. It also supplies the software that powers WSOP NJ and WSOP NV in their respective states.
Despite the slow pace of expanded legalization and a lackluster performance in active markets, the AAPN acquisition cements 888’s long-term commitment to US online poker.
It was 888 and Avenue that established AAPN back in 2013, during the lead-up to launch in Nevada and New Jersey. At the time, online poker was seen as a sleeping giant in the US.
That giant has yet to awaken from its slumber.
The expectation that more states would quickly legalize online poker and enter into interstate agreements with one another never came to fruition. As such, online poker continues to be the odd man out in the emergent US online gambling market, with little place for something like the AAPN.
On the revenue front, online casinos have outperformed online poker by a 7-to-1 margin since launch — and by roughly 15-to-1 in recent months. Year-over-year revenue declines have become the norm for poker.
Traffic continues to flounder even amid multi-state poker agreements, and most operators have shifted their focus to online casino and sports betting.
There is some hope that the addition of Pennsylvania might turn things around for online poker. But there are at least two flaws in that logic.
First, it’s unlikely the state would begin pooling its players with other states until 2020, even on an accelerated timeline. These sorts of agreements take time to approve, then more time to test and implement.
Second, while Pennsylvania’s population matches the other three states combined, it still only brings the total US market to around 26 million people. And about a quarter of those are excluded minors.
It’s a solid number, but it’s nowhere near enough to send people rushing to the tables in droves.
The performance (or lack thereof) of online poker in the US has been the butt of jokes for years now. But like 888 itself, it’s not time to write the industry off just yet.
The looming questions for online poker are:
Online poker needs liquidity to thrive. So if the perfect storm occurs, the industry could come back to life in the US in a big way.
With its existing presence in early-adopter states and its new AAPN acquisition, 888 would be well positioned to cash in should another “poker boom” materialize.