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The (Probable) Demise of Skillbet

Did you know that Skillbet, an online site that caters to US poker players, is legal in 28 states?  So sayeth the advertising for the site, which most players, online or not, probably haven’t even heard of.  And now Skillbet is in the process of pulling back and transitioning, which means even less people will be hearing about them in the near future.

skillbet-logoIt’s as good a place as any to start this version of the Skillbet tale, regarding the site which offers a game based on poker that isn’t really poker in the way most online players think of it, which is part of why Skillbet claims to be legal in the first place.

In Skillbet’s game, two players compete against each either without actually playing each other at the same poker table.  Instead, the players are given the same hole cards at parallel tables, playing against matching tables full of computerized “bots” who likewise receive duplicated sets of hole cards.

The players then compete against their lineup of computerized foes for 30 or more hands, and whichever one of the two real players has performed better is declared the winner, regardless of whether that might be winning more virtual money or simply taking longer to go broke.

The concept, as Skillbet describes it, is that since both players are faced with exactly the same decisions and given the same hole cards, it’s all about the bet-making decisions, and hence, is described as a total “skill” game, and thereby totally legal.

Whether it actually is legal or not is way more than we’re going to go into here.  To those of you who are reminded of a site called Duplicate Poker that existed for a couple of years post-UIGEA and offered a similar parallel-player concept, yes, there are some similarities.

The thing is, Skillbet has attempted to market to online poker players, taking out a paid forum at 2+2 among other expenditures, and yet the site has little traffic.  About a week ago, Skillbet’s designated forum PR rep, Renee Revel, posted the following:

Hi all.We have learned that we are unable to advertise the way poker sites have in the past (e.g., TV). While TV advertisers allowed Stars and Tilt to advertise in the past, they won’t allow us today despite our legal status. Basically, we’ve been unable to persuade them to roll up their sleeves (e.g., spend $25K to hire lawyers, etc.) to confirm our legality.We have concluded that we can’t reach scale necessary for success by advertising on poker sites alone.

So we stopped marketing about a month or two ago (other than what we’d previously paid for here and a few other places). This has caused much lower traffic.

Game Plan: We are going to spend the next 4-5 months developing (what we hope will be) an awesome social play-money game based on SkillBet (sort of a cross between SkillBet and Draw Something or Words with Friends). Our plan is to advertise this broadly and convert people to SkillBet (solving our current challenge) and re-launch SkillBet assuming this plan works.

So for the time being, we are going to put very little effort into SkillBet.

We had props (i.e., people incentived to play and create more traffic like other poker sites and card rooms), but we decided to stop that program yesterday in response to some complaints about the program that surfaced to us yesterday (and our overall desire to put all our energies into this social game). That complaint prompted this post as well.

Similarly we decided to stop Live Chat, but support will continue to be available via email.

Importantly, we have plenty of money (in addition to having all our players’ money segregated) so if you’d like to withdraw, no problem. We will turn around withdrawal request in a few days like we always have.

We are going to put all our efforts into this new game so you won’t see much of me online until we relaunch.

Thank you for your understanding. Hope to see you all again soon!

In other words, Skillbet’s original marketing concept hasn’t worked, and the site is very likely in a world of hurt.  Understanding why Skillbet isn’t succeeding really isn’t that hard, either: Like Duplicate Poker before it, Skillbet has engaged in a form of contrary marketing that simply isn’t that appealing to its intended audience.

Online poker players want to play poker, or at least as close to real poker as the internet can offer.  What most of them don’t want is to play a game that’s like poker, but really isn’t.  That’s something that Skillbet and similar ilk haven’t quite been able to comprehend: the approach is like trying to sell near beer during Prohibition, when people still wanted real alcohol and were willing to go to speakeasies to obtain it.

Even worse is the whole marketing concept.  “Legal in 28 States!” the company proclaims.  Actually, they’re down to 25 these days, having pulled out of New York, New Jersey and Florida in the past month or so.  For being “legal,” they’ve still had problems.

Then they went and peddled that message to US-based online poker players, with the implied reverse of the message every bit as plain: “What you’re doing in playing online poker from the US,” Skillbet’s message implies, “is illegal.”

US-based online poker players, for the most part, don’t believe that.  There are a few states where online poker probably is illegal (in Washington, it definitely is), but legal opinions issued by government officials in the past 18 months are continuing to conform to a message that the playing of online poker has never been illegal under federal law.

State-by-state may be another matter, but to date, no US citizen has ever been prosecuted simply for playing, despite the celebrated million-dollar careers of literally hundreds of high-profile American online poker players.

Skillbet’s message, in other words, has always run exactly contrary to the audience that they’ve been trying to market to.  That’s a really lousy business plan, no matter how you slice it.

Skillbet is also complaining that despite their legality, they can’t convince banking officials to process their transactions.  Well, guess what: Overblocking by banks went on even before the UIGEA was passed and was in fact the primary reason why US Attorney General was compelled to write his late-2011 opinion stating that the 1961 Wire Act applied only to sportsbetting.

The force behind that push was major state lotteries, including Illinois and New York.  Those states wanted to sell lottery tickets online, but felt that without a clarification from the Justice Department, it wouldn’t fly.

If state-authorized lotteries had processing issues, how did a business as small as Skillbet believe they’d somehow receive better treatment?  Again, it’s a lack of foresight in the business plan, with Skillbet’s results today being more predictable than they’d want to believe.

So now the site’s game plan is about to change, and they’re going to attempt to weld Skillbet’s core poker-ish concept to some sort of social-gaming frame that will be offered for free play, from which they plan to convert those free-play players to some form of real-money gaming.

This is all another longshot, with a very slim chance of success.  Giants such as Zynga, with its hugely popular Zynga+ Poker and dozens of other massively popular titles, are still having trouble converting play-money players to spenders of real dollars.  It’s part of why Zynga recently reversed its previously announced plans and went ahead and launched a tradition real-money online gaming site open to US players.

Converting free players to cash spenders in the gaming space is notoriously difficult.  It’s not impossible for Skillbet to do it, but it’s also hard to see how they can succeed where Zynga and others have had so much difficulty.  They’re a couple of years behind the market, and their previous marketing efforts have been misguided.

Add all that up, and it’s not a very rosy picture for Skillbet, whatever game they market, and whether that game is legal or not.

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