Since the crackdown on the major U.S. facing poker rooms which has come to be known as Black Friday, there’s been a lot of interest among both players and affiliates alike concerning the fate of online poker in the United States, both short and long term. I feel that there is far too much negativity floating around here, and I want to provide you with a more practical outlook on things.
There’s no question that the exit from the U.S. market by Poker Stars, Full Tilt, and the Cereus rooms is a monumental event in the history of online poker. At the very least this compares with the effect of the UIGEA legislation, which caused most poker rooms to exit the U.S. market in what at the time was a pretty shocking development. However, when you consider the sheer number of players who are currently on the sidelines even after all this time, the millions of dollars of players’ money that is still unpaid, and Full Tilt Poker ending up being taken completely off the grid, there’s no doubt that this event is a singular one.
In the aftermath of the UIGEA, there were still plenty of places to go, and some very popular places at that. Most notably, Poker Stars and Full Tilt still welcomed U.S. players with open arms. A lot of people perceived this as operating illegally, but it must be kept in mind that at the time there wasn’t a single jurisdiction in the U.S. that clearly made playing poker online illegal, and the UIGEA only applied to financial transactions involving illegal poker playing. When you add in the fact that these poker rooms are not subject to U.S. law in the first place, then you can see how they felt that this did not rightly apply to any of their actions.
To illustrate this further, and to show that they did in fact act in good faith at least somewhat with the UIGEA, both major poker rooms exited the market in Washington State once the state passed clear legislation rendering online poker playing illegal. So they did show that they did at least care in regard to this particular piece of legislation anyway.
In the end, the main basis of the Black Friday charges ended up being a matter of violating New York State law, who now has legislation where it’s fairly clear that playing poker online is illegal there as well. This legal basis was made fairly clear in the indictments of December 2009, however the only real effect was bank accounts being seized for not a particularly significant amount of money. It seemed that the market in New York State, unlike Washington State, was large enough to justify running counter to this law and risking similar action.
However, as we know, the actions flowing from Black Friday were much more substantial. Shock and awe was the intention now, which was an objective that was well achieved. Now both Poker Stars and Full Tilt made the decision to look to mend their wounds and stand down, rather than to continue to fight an opponent who now showed it was willing to bring out the big guns against them.
In the bloody aftermath, industry leader Poker Stars at least appears to have emerged relatively unscathed. The other two companies were dealt much more serious blows. In the case of Cereus, who operated Ultimate Bet and Absolute Poker, this in all likelihood has been a completely fatal blow. With Full Tilt, they are currently on life support, and while they may end up surviving this, their reputation has been damaged to be sure.
Among the poker sites who still continue to openly offer action to U.S. residents, the challenge of processing payments from this country has become an even bigger challenge. It is far from insurmountable though, and we need to keep in mind that the extent of the recent crackdown was made possible by an informant, and from having worked in the banking industry, I can tell you that it’s not really not all that challenging to set up a workable solution here which would be fairly evasive.
The initial beneficiary of all of this was the Merge Network, although it didn’t take them long to realize that they were going to need to retool their payment processing capabilities to be able to deal with the big migration of Americans that had already begun. So they were forced to stop accepting new sign-ups from Americans until they got a better handle on things. Many affiliates believed that this was a sign of reticence, however my sources tell me that this is not the case at all and the doors could re-open as soon as early August.
The combination of a lot of players’ money being inaccessible, combined with a serious reluctance to re-enter the online poker forum, has only a very small percentage of American players currently playing online. As affiliates, our role is to look to educate them, both in terms of the risks involved, and on the benefits of playing at the alternatives currently available to them.
Poker rooms such as those on Merge, Cake, Bodog, and Everleaf, the top 4 right now, have always provided softer competition and thus higher profitability than the big two sites. For the most part these are well run operations that know how to take care of their players. Being much smaller, they also is much less risk involved in having them busted in the fashion that happened to PS and FTP. Even if they see significant growth, they are unlikely to grow to the mammoth size that would raise the ire and justify the resources thrown at the big poker rooms.
Keep in mind that it’s all about the effects here, and once again, with the inside information they had on the big poker rooms, the DoJ was able to do some very significant damage to them. This information wouldn’t normally be available to them, and they probably would be limited to the mere slaps that they pulled off in late 2009. Plus, in most cases we’re dealing with networks which are only a small fraction in size of what the big rooms were, and there may be 20, 30, or more rooms on the network, so each individual poker site is and probably would continue to be comparatively very small, even if expanded pretty robustly.
As well, we need to look to get players to be willing to accept playing at poker sites with much less traffic than they had been used to. This is really only an issue with those who play higher stakes and those who like to play a lot of tables at once. They need to accept the fact that if they want to continue to play online, they will have to undergo changes themselves.
There’s still online poker available to Americans, and perhaps they will only be able to play one or two tables at their chosen game and stake, or perhaps instead look to move up stakes and get more money in play that way. There are a lot of players who are afraid to move up and would prefer to play many tables at a lower stake, which often isn’t optimal. So it may be time for them to re-think this strategy, especially since the alternative now is not playing at all.
So from our perspective, there’s some real opportunity available, and while revenue share based affiliates may have spilled some real blood here, it’s time to set all that aside and move on, and look to make the best of the situation we are now faced with. Many affiliates are pining away way too much about future regulation in this market, and while that may indeed come some day, and while it does pay to anticipate this a bit, the future is not now, the present is. That’s the time frame we need to focus on here.