Things aren’t so good with the rest of the 888 Poker operations around the world, though. Global online poker revenue fell disastrously during 2018, with year-over-year numbers down 28%.
“Whilst Poker has remained challenging,” the company said, “we were pleased to see an improving revenue trend in Q1 2019 against Q4 2018.”
Challenging is the word. Year-over-year poker revenue for the second half of 2018 was down 48%, so the 28% decline actually represents a significant upturn.
The good news from the US, however, provided the primary silver lining for investors.
The claim of being the market leader includes the combined network of 888 and its US partner, WSOP. The investor presentation included this chart:
In a sense, 888 is not comparing apples to apples.
PartyPoker and PokerStars operate exclusively in New Jersey at the moment. Both 888 and WSOP have NJ online poker sites too, while 888 also powers the WSOP NV site in Nevada and all online poker in Delaware.
Quietly and steadily, 888 has built a dominant position within the US online poker industry.
While the geographical advantage is nothing new, group revenue only overtook PokerStars after Q1 2018. The introduction of shared liquidity between New Jersey and Nevada provided the spark for that shift in April.
Multi-state poker has had a major positive impact on revenue.
WSOP players in Nevada now share tables with those in New Jersey, while 888 players in New Jersey and Delaware also feed into the same pool. US operations for PokerStars and PartyPoker remain limited to New Jersey for now, but both are expected to launch in Pennsylvania soon — along with 888 and WSOP.
The boost from the interstate online poker network is clearly visible in New Jersey.
Monthly revenue reports from the Division of Gaming Enforcement had PokerStars well ahead of 888/WSOP until the expansion. Operators felt the impact of shared liquidity immediately, with May 2018 revenue for 888/WSOP exceeding that of PokerStars for the first time since launch.
There has been some jockeying for position over the last year, but PokerStars has topped 888 only once during the last 12 months.
The success of multi-state poker has not been lost on 888 executives.
Yaniv Sherman threw up another fascinating slide representing 888’s projection for regulated US online gambling in 2025. Green states are those that 888 expects to have legal iGaming by then.
Sherman called this a “bear scenario,” but it still implies gaming revenues 10 times higher than they are today. The slide projects that total revenue in 2025 will put the US second in the world behind only the UK. If the states in blue also legalize online gambling, the US would be the clear No. 1.
Not all of these states will legalize online poker, and 888’s history in regulated jurisdictions demonstrates that the company doesn’t like wasting money. Case in point: it toyed with the idea of launching a standalone poker site in Nevada before ultimately deciding that the revenue didn’t justify the cost.
Return on investment is paramount, and Sherman said that 888 won’t necessarily have a presence in every state with legal online gambling. If taxes and regulatory costs are too high in a given market, 888 may simply not enter.
“We can choose,” Sherman said. “We don’t have to be in all of those states.”
888 is also a major sports betting company, using Kambi technology to power its 888 Sport platform. And its flagship 888 Casino product “still drives the New Jersey market,” according to the presentation.
The decisions as to which markets to enter won’t be made on the basis of online poker. Online casino games in New Jersey generate five times as much revenue for the group as online poker, while revenue for NJ online sports betting — still in its early days — is already approaching casino levels.
What poker does offer is a marketing tool. To make a long story short, poker players are cheaper to recruit than either casino gamblers or sports bettors.
“Poker is an important component for bringing low CPA and higher lifetime value players,” as Sherman put it.
Whatever the reasons behind it, 888’s success in the US should keep it at the front of the market for years to come. Now it just needs to sort out its Poker8 platform and regain some of its lost traffic in the rest of the world.