Nevada, Delaware Player Pool Union “Imminent”
According to a piece by Steve Tetreault in the Las Vegas Review-Journal, virtual borders will soon finally be crossed in the U.S. online poker market, as the states of Nevada and Delaware are getting set to allow the co-mingling of their player pools. The news came straight from the mouth of Nevada Governor Brian Sandoval, who said the merging of the two states’ player bases is “imminent.”
As you likely know since you are on this website, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) put a hurting on the U.S. online poker market by making it unlawful for financial institutions to process transactions to or from online gambling sites. It did leave open a window, though, permitting individual states to legalize online gambling within their own state borders. States may also team up via interstate gaming compacts to combine their player pools, just like what happens in multi-state lotteries such as Powerball and Mega Millions.
Once the U.S. Department of Justice clarified that the Wire Act only made online sports betting illegal in December 2011, a few states got the ball rolling on legalizing and regulating intrastate online gambling. To date, three states have completed the process: Nevada, Delaware, and New Jersey. The problem for each of them, and Nevada and Delaware in particular, is that when it comes to online poker, internet poker rooms need as large of a potential player pool as possible. Because poker is a game in which players compete against other players rather than the house, sites need players to fill tables and create games. Casino games such as craps or blackjack benefit from more players, of course, but these games are not dependent on having multiple players seated. One player can start a game of blackjack. One player cannot start a game of poker.
So, if a poker room is having trouble drawing customers, regardless of the reason, there are going to be very few active games and very little revenue. It doesn’t stop there, though. If a prospective customer opens up the poker room software and sees that the site is quiet and the game selection is unattractive, he will leave (and possibly tell others about it), resulting in the site getting even less traffic than it already gets. Lots of player traffic can create a snowball effect: a room with tables that are hopping looks attractive to prospective customers, who then signup and play, which in turn increases the traffic of the site, which makes it look even more attractive, etc.
Back to Delaware and Nevada, player traffic is a major issue. Both states are small in terms of population – Nevada ranks just 35th in the U.S. and Delaware is 45th – and since they can only, as of right now, pull customers from within their own borders, they can only get so much traffic to their states’ poker sites. According to PokerScout.com, Delaware’s online poker cash game traffic is almost non-existent, while the one site of any significance in Nevada ranks 38th in the world with fewer than 200 cash game players per day. Their problems likely go beyond just state populations, but even so, they are still limited by their residencies.
As such, Governor Sandoval and Delaware Governor Jack Markell signed the “Multi-State Internet Gaming Agreement,” a year ago, which allows players from one state to play on sites based in the other. The two states were supposed to merge player pools last summer, but according to the Review-Journal article, “technical glitches” caused delays. Governor Sandoval now says that the merge should go live in four to six weeks.
This in and of itself is a good thing as now sites from each state will have larger markets from which to pull customers, but it still might not help all that much because the states are so small. Plus, there’s a good chance Delaware players might just jump to WSOP.com in Nevada, hurting Delaware’s three sites even more.
Fortunately, it looks like the merger won’t stop there. The two states’ sites are also expected to team up at some point. Gaming firm 888, which launched the All American Poker Network (AAPN) in New Jersey (it had just one site, 888poker, for a long time, but has finally combined some tables with New Jersey’s WSOP.com) has said that it plans to get the network going in Nevada. The existing WSOP.com, which runs 888’s software already, will be the first room on the network. The Treasure Island casino will launch an 888-based room on the network, as will 888 itself. The three Delaware rooms also use 888’s software and will supposedly be a part of the AAPN, creating a six-room, two-state network. This was announced a long time ago and no time table for the AAPN launch has been laid out. It may happen when the two states merge their customer bases, it may happen later.
New Jersey, which has had more success with its online gambling industry than the other two states mainly because of its size, will not be joining Delaware and Nevada. There have been some talks about another gaming compact, but discussions have not advanced to anything of real note. Thus, New Jersey’s AAPN will stay limited to New Jersey for the time being.