GPWA Times Magazine - Issue 27 - February 2014

By Jeremy Enke F or gambling affiliates and operators who follow the U.S. online gambling market closely, 2013 proved to be a his- toric year. Throughout the past decade, the “non- regulated” online poker industry within the U.S. had been plagued with setbacks and disappointment. What started as a booming industry in the early 2000s was quickly dismantled by the United States Department of Justice (DOJ). First, on Oct. 13, 2006, the UIGEA (Un- lawful Internet Gambling Enforcement Act) was signed into law by former presi- dent George W. Bush. The UIGEA funda- mentally changed the landscape of online poker in the United States. Several of the industry’s top online poker sites aban- doned the U.S. market, including Party- Poker, the world’s largest site at the time. After the UIGEA, the U.S. market contin- ued down a path of absolute uncertainty. Numerous state and federal bills came and went with no significant progress being made. And then the second colossal blow to the U.S. online poker market came on April 15, 2011. Dubbed “Black Friday,” what happened on this day plunged a dagger into the heart of online poker within the United States. The top fourU.S.-facingonlinepoker sites (PokerStars, Full Tilt, Ultimate Bet and AbsolutePoker)were seizedby theDOJ, and all player and affiliate funds were frozen. The result for the next two years was a dismal U.S. market, destroyed businesses and the overall desertion of players, oper- ators and affiliates from the U.S. market. But something changed in 2013. All of a sudden, the buzz and discussions about regulating online poker at the federal level, as well as at state levels, were at an all-time high. Perhaps it was because many states had found themselves on the brink of insol- vency after the recession. Perhaps it was the lobbying efforts of the online gam- bling companies. Or perhaps it was the DOJ’s reinterpretation of the Wire Act. It’s hard to say, but one thing was cer- tain: Online gambling operators, as well as brick-and-mortar casinos, were aggres- sively partnering and preparing to launch in the U.S. market. The three states that made U.S. online poker history Nevada The first state to open its doors to regu- lated online poker in the U.S. was none other than the Silver State itself, Nevada. Almost 22 months after Nevada Governor Brian Sandoval signed Assembly Bill 258, making it legal for Nevada casinos to offer online poker, UltimatePoker.com hosted the first real-money poker hand on the virtual felt on April 30, 2013. The second online poker site to become licensed and offer real-money play in Ne- vada was poker’s most iconic brand, the World Series of Poker, which launched WSOP.com on Sept. 19, 2013. While the overall population of Nevada is rather sparse, both brands have seen moderate success in the state, with daily peak players numbering 200-250 per site. Delaware With a population of fewer than 1 million residents, the launch of an online poker product operated through the state lottery in Delaware on Nov. 19, 2013 was, for lack of a better term, a non-event. Since launching, Delaware’s only online poker site has been beleaguered by player liquidity issues. With daily peaks of just 58 players, and an average of only 20 play- ers on the site at any given time, Delaware will need to rely on interstate poker com- pacts in order to sustain a viable online poker market. New Jersey The Garden State was a game changer for the U.S. regulated online gaming market. In a much-anticipated launch, New Jersey, which boasts almost 9 million residents, opened its doors for both online poker and online casino gambling on Nov. 26, 2013. In the first five weeks of regulated online gambling, the state’s Division of Gaming Enforcement (DGE) reported that over 125,000 new online gambling accounts had been created. Online operators partnered with Atlantic City casinos and launched in the Garden State in grand fashion. With a handful of both online casino and online poker sites going live, operators wasted no time ex- panding their marketing budgets. Both television and radio advertisements blan- ketedthestate. Likewise,thenumberofini- tial guaranteed tournaments and overlays at the largest poker sites was astounding. While it’s impossible to analyze market shares of the online casinos in real time, courtesy of PokerScout.com we can ana- lyze the traffic and statistics of the online poker sites operating in New Jersey. And it’s no surprise that nj.partypoker.comand WSOP.com quickly ran away with over 80 percent of the online poker market share. Which other states might follow in 2014? With the initial success of online gambling in these three markets, especially New Jersey, other legislators in cash-strapped states are beginning to take a more serious look at the prospect of online gambling in their respective states. Many industry analysts also expect that giv- en the smooth implementation of regulated “Many industry analysts expect that given the smooth implementation of regulated online gambling in New Jersey, the U.S. may see a ‘domino effect,’ with other states quickly following the Garden State’s lead in 2014.” 29 Online gaming in the USA: Poker’s comeback