Poker Urgently Needs a European Poker Players Alliance
Online poker in Europe is under threat, but because the EU is fragmented by language and lack of multi-nation cooperation, there is no coordinated defense in place.
The threat comes from the increasing prevalence of national regulation—all based on an espoused theory of consumer protection—but in reality it is a thin guise for raising extra taxes.
The time has come to form a non-profit, European version of the Poker Players Alliance (PPA) that can lobby in the EU and national parliaments for legislation that will enable online poker to thrive. Players need it, and the industry needs it.
EGBA and RGA Have Bigger Fish to Fry
The problem from poker’s point of view is that both represent the major industry players who all have much wider interests than poker. Only a small percentage of most operators’ revenues come from poker with the bulk coming from sports betting, casino games and bingo.
Naturally, that is where the main lobbying efforts go—poker lacks a committed representative. Searching the press releases on both EGBA and RGA sites brings up a remarkable paucity of results which include the word poker.
This is shortsighted of the industry—high taxes and restrictions on player pool liquidity have led to significant revenue declines from online poker in regulated markets, and have made it extremely difficult for poker rooms to make any sort of profit from spreading the games.
Taxes Turn Poker Into Gambling
Poker is a game of skill—players are attracted to the game because they can win money as the result of acquiring the skills to beat the game.
When taxes are high, the costs are passed on—sometimes partially—to the player, in the form of higher rake or lower VIP benefits.
The edge a player has at a table is small, and must be pressed many times, for the advantage that skill gives to produce a reliable profit. Not only must a player beat the other players, he must beat them by a wide enough margin to pay the fees he is charged to play—cash game rake or tournament entry fees.
When the fees go up, fewer players can be winners—they can still beat the other players, but the higher rake eats up their profit and turns them into losers.
There comes a point when the proportion of winning players to losers turns the game into one where no matter how much skill is involved, it is impossible to beat over time—it becomes a pure gambling game.
High Taxes and Restricted Liquidity Deter Players
Even in the largest nationally regulated markets such as France and Italy, online poker has seen a precipitous decline. Markets of 60 or 70 million players cannot support more than three poker rooms which offer games at the stakes and the time when people want to play them.
High taxes and high charges exacerbate the problem. Players either turn their backs on poker and do something else with their time or leave the regulated market for black market sites.
Former President of French regulator ARJEL, Jean-François Vilotte laid the blame for the decline in the French market firmly at the feet of high taxes and restricted liquidity. His comments have been echoed on and off the record by other regulators.
The fragmented nature of the EU means that national jurisdictions introduce regulation in a piecemeal fashion. Each time, the poker forums flood with player fears and complaints, but without coordination, without a consistent political effort, these voices are lost in the wilderness, and another domino falls. Players are now ready to act in defense of their interests.
Several cases before the EU Court of Justice (CJEU) are likely to result in rulings that will require legislative changes in countries which already have gaming legislation in place. Where these changes require a new parliamentary vote there is an opportunity for players and industry voices to be heard.
Several countries have been late to jump on the gaming tax bandwagon meaning there is still a chance to influence their plans.
The poker industry now has a dominant new player, Amaya Gaming, which has a vested interest in ensuring that online poker flourishes in Europe—it has big debts to service now that PokerStars constitutes the major part of its business. Amaya will want to protect its investment—it is the one online poker company where poker is not a minority business line.
Other industry players—including Betfair, Playtech, 888 and bwin.party—have recognized the decline of their poker revenues which has arisen from restrictive legislation. One of their business lines is failing to match the performance of the rest of their company-and the fact stands out like a sore thumb.
A PPA Europe should lobby for differential treatment of poker in online gaming legislation. In particular, it should set out the objectives of:
- Establishing a gaming tax rate of no more than 10%—as recommended by a report on European gambling taxes by Deloitte.
- Establishing a pan-European liquidity pool.
- Establishing the right of operators regulated in one EU jurisdiction to operate across the EU—it is ridiculous that Portugal’s new gaming laws claimed that poker rooms regulated in other EU countries represented a money laundering, consumer protection and organized crime risk.
- Establishing a common process for the introduction of innovation so that new games can be added in a timely fashion.
- Establishing common effective player fund protection provisions which can be enforced across the EU.
- Establishing common safeguards against cheating and collusion so that perpetrators can be prosecuted in whichever EU country they live.
- Establishing online tools to detect problem gambling which reflect the characteristics of poker—and providing support for those poker players with problems.
Lower taxes, lower rake and Europe-wide liquidity: better protection for players and their money—many players would be happy to contribute a buy-in at their preferred game to support a PPA Europe dedicated to achieving these things—and it is in the industry’s interest too.