Online poker is at a sort of crossroads today. After several years of flying under the radar and often operating in grey areas of local laws, today online poker is in the spotlight of lawmakers in many of its most profitable jurisdictions.
Now is the time for the industry to make some changes that they have avoided in the past. As the industry becomes increasingly competitive the operators who thrive will be those who are willing to lead as well as take risks.
The three biggest challenges facing online poker are outlined below.
Black Friday wasn’t just a black eye for the handful of rooms who were hit by the DOJ. Black Friday was a stain on the entire industry. For proof, look no further than the rooms willing to skirt US law and continue to take on US customers. There has been no massive surge to sign up on those sites because many players lost faith in online poker sites to handle their money responsibly.
The hard core poker players will always find a way to keep playing but recreational players, the real lifeblood of the poker economy, won’t. For them, online poker is just a hobby. They’re not willing to risk losing their money (again).
Online poker operators need to quit pretending Black Friday didn’t happen. Instead of hoping players will forget if nobody mentions it, they should be going out of their way to communicate to the public how they are handling player funds in a responsible manner.
Industry leaders should consider some form of self-regulatory agency (SRO) much like the NASD (National Association of Securities Dealers but now called FINRA, Financial Industry Regulatory Authority) NAR (National Association of Realtors), or even PADI (Professional Association of Dive Instructors) who all have set standards for membership that are well beyond the legal requirements on members.
Perhaps an SRO is too late but the need for the industry to show that it can police its own at a standard that exceeds legal requirements would go a long way in restoring player confidence in operators.
Obviously the online poker industry is extremely competitive but there are many common pain points that online poker operators could be working together on. For instance, fraud is a significant problem for most online poker operators but there’s little or no cooperation between the poker operators on detecting or preventing fraud.
Cooperation in competitive industries is certainly not unheard of. In Las Vegas the legendary Griffin Book was used for many years by casinos to catch cheaters. Casinos reported cheaters they caught to Griffin so that other casinos that subscribed to the Griffin Book wouldn’t also be defrauded. You were helping the competition by helping them avoid losses but you also benefitted by avoiding losses due to cheaters that had already been flagged at other casinos.
Online poker operators can even collaborate on more positive causes as well like establishing a universal code of conduct for operators or even a public relations campaign promoting poker as a game of skill.
Regardless of the initiative, the online gaming industry needs to start setting up the infrastructure to work collectively towards common goals.
The online poker industry has consistently shown itself to be one of the least innovative industries around. Other than Rush Poker, one would be hard pressed to name a significant innovation in online poker in the last five years.
For a variety of reasons, operators seem reluctant to lead the way. They’ve been slow to adopt any new technology or business model.
For instance, while most online poker sites only saw their .NET sites as a loss leader for their real money gaming business, along came a company called Zynga who launched a free poker site (with monetization via optional chip purchases) and eventually ramped up to an impressive 38 million users. Five years later, poker operators are just beginning to talk about social gaming.
Part of the problem is that the most of the industry has blinders on. They see everything in terms of their existing business model. When Zynga first launched nobody paid attention because there was no quick way to convert those players into real money players and stay within Facebook’s rules. So they dismissed the entire market.
After Zynga Poker reported $1.14 billion in revenue in 2011 they finally caught the attention of the online poker industry who is now busy announcing plans to get into the market.
Online poker operators need to broaden their field of vision if they hope to survive in the future. They need to dedicate a portion of their resources to looking at new technologies, new business models, and new markets if they plan on keeping up.
The online poker industry has enjoyed a period of rapid growth and prosperity that will likely never be repeated. Those that have survived need to look toward the future and address the issues above if they want to continue to play a part in the next phases of the industry evolution.