PokerStars back in business in the US
EGR Intel looks at PokerStars' long journey back into the US market, and asks whether it can repeat its pre-Black Friday success
After years of people saying the PokerStars and Full Tilt brands would never return to the US market – and many arguments over whether they should be allowed to do so – parent company Amaya has finally achieved its goal.
The firm was granted a licence by the New Jersey Division of Gaming Enforcement (DGE) yesterday and, although expected for some time, the news is set to have a huge impact on the future of the market and therefore the success of its rivals.
PokerStars is, after all, the dominant poker site in pretty much every country in the world and the addition of casino to its product range only adds to its allure. If it carries that success into New Jersey and other US states – few would doubt it given its brand power and database of players – it could well dominate there.
A distant memory
PokerStars was one of three major poker operators – along with Full Tilt and Absolute Poker – that continued to take bets from US players after the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006. It was later shut down on 15 April 2011 (known as Black Friday) along with the indictment 11 of the firm’s founders and senior executives, including founder Isai Scheinberg.
And while corporate and personal settlements were later made, when New Jersey regulated egaming in 2013 DGE director David Rebuck suspended PokerStars’ licence application for two years and then conducted one of the most protracted, in-depth investigations in its history.
Of most concern for PokerStars’ rivals, perhaps, is that the DGE’s decision to award Amaya a licence will set a precedent in other regulated or soon-to-regulate states, particularly in California which could have an online poker market worth US$500m.
Despite some of the tribal operators in the state are pushing for a ‘bad actor’ clause to be included in legislation that would effectively block PokerStars and Full Tilt from entering the market by law, PokerStars has joined forces with the powerful San Manuel and Morongo tribes and three of the state’s largest card rooms.
888 executive chairman Brian Mattingly has also been among those detractors, telling eGR earlier this year that it was “absolutely right” that any operator who “flounced the law for so many years” and took “vast sums of money from an illegal territory” be blocked from returning to the market.
But can PokerStars’ critics continue to call it a ‘bad actor’ after New Jersey’s decision? “I don’t think it really matters,” says online gaming consultant Kim Lund.
“There is no logic or reason involved in the process in California. If they want to have an alternative interpretation of what makes someone a ‘bad actor’ they will. I have lost all faith in that system being based on reason, so I don’t think this will matter much.”
Growing the market
On the bright side for its rivals, some believe the return of PokerStars in particular will provide a much needed boost to New Jersey’s flagging egaming market.
Its world class platform and product offering combined with its huge marketing budget, expertise and customer database mean Stars and Full Tilt will quickly become a force to be reckon with, and it will no doubt attract lapsed poker players and new customers to the industry.
PokerStars is also perhaps better placed than most to overcome the challenges posed in the state, including limited liquidity, and in a recent report on the US online gaming market Morgan Stanley said it expected PokerStars’ entry into New Jersey to “accelerate growth”.
Its biggest competitor in New Jersey, long-term rival bwin.party and its partypoker brand, has mixed feelings.
“I don’t think they are a threat,” bwin.party CEO Norbert Teufelberger told eGR. “It is a very welcome addition to the market. When you think how small the poker market is in New Jersey, only around $20m a year, so I assume they will at least double the poker market there.
“They will bring some players back who currently play on unlicensed off shore sites, so I don’t think they are a threat. Overall, I think the big question right now is not what happens in New Jersey, but whether other states will come online or not in the next couple of years.”
And that is perhaps where PokerStars can make the biggest impact. Now that it has joined the ranks of licensed and regulated US operators, its argument for further legalisation in other states like California, New York and Pennsylvania gain significantly more gravitas.
With its own internal goal of doubling the size of the global poker market by 2020, the US provides a huge opportunity not only to meet but smash through that target.