Seven reasons PA online poker might struggle

To Succeed In Online Poker, Pennsylvania Operators Must Buck The Trend

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Sports bettors and online slots aficionados in Pennsylvania have some new toys to play with. The first regulated online casinos and sportsbooks are open for business and available to gamblers statewide.

Poker players in the state, however, are still wondering when their virtual seat will open up.

The answer is still the same as it has been since July. Online poker in Pennsylvania is coming soon — possibly very soon — but no one seems to know exactly when.

Aside from the timeline, though, the next question on our collective minds is what the product will look like when it gets here. Earlier this week, we explored how online poker could be a big success in the Keystone State.

Let’s turn things around now, and consider some of the hurdles the industry will face in its infancy. Some of these are global issues, while others are particular to Pennsylvania and its operators. We’ll work our way from the general to the specific.

1. Other gambling verticals are bigger

The biggest impediment to online poker anywhere is that the folks most critical to its success — namely legislators, regulators and gambling companies — all have bigger fish to fry.

For online gambling operators, slots typically represent the highest win (followed by table games). Legislators care about these details too, being keenly interested in maximizing tax revenue from the industry.

In Pennsylvania, in particular, officials much want online slots to succeed. The state takes a hearty 54% of slot revenue, compared to a more modest 16% from other verticals. Meanwhile, the intensity of the local fandom and the general US momentum foreshadow a huge impact from sports betting in PA.

For the likes of GVC and 888, poker is increasingly becoming a footnote to other verticals. Even The Stars Group has prioritized sports over poker since acquiring Sky Betting and Gaming last year.

One silver lining in all of this is that poker players can have a lower cost per acquisition than gamblers in some other verticals. And some operators court the segment aggressively with the goal of cross-selling casino and sports.

2. The poker boom is over

Those in the US old enough to remember the days before Black Friday have a rosy view of online poker and its popularity, but times have changed. It’s easy to blame the regulatory landscape in the US, but a glance toward Europe shows enthusiasm for the game is waning elsewhere, too.

In the global dot-com market, player traffic in traditional cash games has declined by double-digit percentages annually for the better part of a decade.

Some of that stems from players switching to lottery sit and gos (like PokerStars’ spin and go), but the total number of hands dealt and net revenue are also tailing off for established operators.

The planets aligned perfectly to spark the boom of the early 2000s, and televised poker from the likes of World Poker Tour and High Stakes Poker was a key component. Novelty helped a lot in that regard, as TV viewers had never before been able to see hole cards alongside the action.

For poker to succeed, the industry needs to find another hook to get the masses excited about the game again.

3. A huge skill gap has opened

The ever-increasing skill of dedicated players also plays a role in the global decline of poker.

A huge part of poker’s appeal during the boom was the idea that anyone with the right combination of knowledge and instincts could get rich playing the game. Although poker was already on the rise before Chris Moneymaker and his 2003 WSOP Main Event win, most players who participated in the boom associate strongly with that event.

Such stories are harder to come by these days.

Anyone doing some cursory googling about online poker will find stories about unbeatable poker AI, complicated aftermarket tools, and the same handful of well-heeled players winning High-Roller after Super High-Roller.

To many, the game has grown dry and inaccessible.

New players who do get into the game often find the experience underwhelming. Competition is fierce online, even at the micro-stakes levels, and life-changing tournaments are few and far between in the US. Many players who experiment with online poker in 2019 do not end up redepositing.

This issue is magnified in emerging markets like Pennsylvania, as recreational players that shied away from unregulated sites have been out of the game for almost a decade. Meanwhile, the local pros that grind the game full-time are practicing and improving on those same sites.

Folks hoping to find the game as winnable as it was in 2010 will be disappointed with the modern state of play.

4. Is more liquidity enough liquidity?

Pennsylvania may be bigger than any other state with legal online poker, but it might not be big enough to sustain its own ring-fenced poker economy. Traffic volume, as you’d expect, impacts every aspect of a poker site’s operations.

A site with low traffic can only sustain low- to mid-stakes hold’em cash games, perhaps a bit of Pot-Limit Omaha, and some limited tournament options. Anything more requires more players.

Pennsylvania poker players might therefore not have access to some features found on sites with strong traffic patterns. Things like aggressive guarantees on tournaments, fast-fold tables and regular action for high-stakes and uncommon games.

Italy is the smallest international market that currently supports a standalone poker industry, catering to a population of around 60 million people. Without liquidity sharing, Pennsylvania has under 13 million residents. Even if all states with legal online poker pooled liquidity, the combined market would still be less than half the size of Italy.

It’ll take the addition of a New York or a California or a handful of midsized states for the US to even compare to international markets.

5. The Justice Department is hostile

The biggest roadblock to shared liquidity and an expanded US poker market is the looming threat from the Department of Justice (DOJ). For whatever the reason, the DOJ is generally opposed to rules that allow states to chart their course into online gambling.

Federal courts, however, have been sympathetic to states in this regard in recent years.

First, the Supreme Court struck down PASPA, which previously made sports betting illegal at the federal level. When the DOJ subsequently attempted to broaden the scope of the Wire Act, the courts vacated that opinion as well.

The department will no doubt continue to fight to regain control, and there’s no guarantee that every court will rule for the states. There are several ways in which the DOJ’s apparent hostility could pose problems for legal online poker down the road.

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6. The software question

Recreational poker players tend to frequent the site that gives them the best experience, and the quality of the software is perhaps the most important factor in that experience.

Even against its established competition, PokerStars holds a big edge in usability.

Partypoker is working to improve its platform, but it still has a way to go to compete in that department. And the WSOP product is notoriously glitchy, including some unacceptable game-breaking bugs in the back end.

Both must do better to challenge PokerStars in PA, especially if they give the leader a head start.

That leaves GAN/Kambi as the wildcards, the two companies providing the platform for Parx Casino. None of the parties involved has a history with online poker, though Parx does devote resources to its live product on property.

Parx Poker could, therefore, hit the market as something innovative and modern, or something misguided and clunky. Its success hinges on how much it’s willing to invest in competing, how competent the teams responsible for the product are and whether or not the group takes on another more-experienced partner.

New operators will play a role in determining the competitive landscape in the state, and perhaps in the US more broadly over time.

Where there’s a will, there’s PA online poker

In a way, that brings us back to where we started. The success of poker in Pennsylvania largely depends on the will of the relevant parties to make it succeed.

If operators fight for market share and other states continue to fight for modernized poker legislation — including provisions for multi-state poker — the PA market has vast potential.

If there’s widespread apathy, it could just as easily fizzle out.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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