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French Legislators Shy Away From Shared Player Pools as Online Poker Market Stagnates

france-flagAn interesting story emanating from France in recent days involves the stepping away from the possibility of multi-country shared player pools for online poker, even in the face of stagnating player demand for the France-only player market.

If you’ve been watching the news, you’ve been aware that the pooling of players has been a topic of preliminary talks on both sides of the Atlantic pond.  In Europe, France, Spain and Italy, three major European Union nations who have refused to join in open-market allowance of online poker sites, have tentatively explored a pooling of players to help provide liquidity and sustainability.  In the latest news, a prominent French Parliament rapporteur, Razzi Hammadi, has spoken out against any possible sharing of players with Italy and Spain… for all the wrong reasons.

And if one reads between the lines, one can understand exactly why player pooling is likely to be a difficult solution to enact.  Hammadi, a rising French pol, spoke out against the possible player pooling, calling online poker an uncontrollable ogre,” and as several pieces have already noted, failing to recognize the basic economic principles that explain why the single-country sites such as France’s (e.g.: PokerStars.fr) have struggled.  Invariably, these sites have instituted higher taxation, and most online poker players are willing to play on gray-market offerings in order to achieve a significant tax savings on any potential winnings.

Hammadi’s protests, which came in opposition to a pooling proposal put forth by fellow Parliament committee member Damien Abad, also runs counter to the recommendations of French gaming regulatory commission ARJEL.  Arjel’s president, Jean-François Vilotte, has also announced his resignation in the face of French governmental intractability in various gambling matters.

That the French Parliament was ever going to seek a cooperative, long-term solution was the false expectation all involved.  When one realizes that the three European countries who have legislatively forced these single-nation networks — France, Spain and Italy — have done so in defiance of EU mandate and have place onerous restrictions on both players and site operators, it’s easy to see why the ARJEL proposal was likely doomed to fail.  The French Parliament doesn’t care much about long-term growth and responsible, enjoyable gaming; instead it’s about power, control, and a short-term revenue grab.  The same holds for Spain and Italy.

To think that these countries , the ones most willing to inflict a faulty system, would somehow then give up that power and submit to a shared player liquidity — well, it’s not a realistic belief.  The single-nation networks for these countries are struggling because their politicians are stupid and short-sighted, more than any other single cause.  But exactly because they are politicians, that core problem won’t be recognized.

The same holds, , unfortunately, in the United States as well, where preliminary talks about player pooling have also occurred among the three states who have already formally authorized online poker, Nevada, New Jersey and Delaware.  Nevada has clearly tried to position itself as an administrative leader for any large-scale, nationwide poker network, hoping to be the hub in a hub-and-spoke system and garnering plenty of administrative and operational fees as a result.

The problem is, few other state-level political administrations are likely to be too interested in a gambling compact where Nevada has that type of control.  As a result, and despite the fact that such intrastate compacts have been made specifically legal under Nevada law, such talks with other states haven’t gone anywhere.

In Delaware and New Jersey, two tiny, neighboring East Coast states, some preliminary talks continue, but even those have little short-term chance of success.  New Jersey is using an operator-driven model, while Delaware’s online gambling is driven through its state lottery system, so there’s a core disconnect there which would have to be resolved.  There’s only one factor in play which works in favor of any sort of compact between the two states, and that’s that Delaware’s population is so small that the site may be forced to find a deal of some sort or risk writing off all of online poker as a failure.  Delaware really has no liquidity to speak of, and while that’s not an issue for house-banked casino games, it certainly is for poker.

Player pooling sounds great, and it’s certainly workable between private-sector businesses, the sites and networks themselves who are willing to work together to improve players’ choices.  Governments have no such incentive.  That’s why the prospects on both sides of the Atlantic are so poor for player pooling.  It would be a good solution for players, but the players themselves don’t really count.

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