As one of the online poker operators still accepting US customers in spite of the crackdown by US authorities on Black Friday, Winning Poker Network CEO Phil Nagy has little faith that regulation will lead to a big resurgence in online poker.
People think “legalized poker is going to become this big massive thing in the US,” Nagy stated during an interview with OnTiltRadio. “It’s just not,” he said emphatically.
Pointing to the regulated markets of France, Italy and Spain—which most closely resemble the regulatory model used in US states New Jersey, Nevada and Delaware—Nagy notes that “none of them are doing very well.” He identifies “heavy taxation and segregated player pools”—which are consistent factors in the regulatory approach of France, Italy and Spain—as reasons that the overall US market has the odds of success stacked against it.
Segregated player pools reduce the number of users that can play on a particular site. Large player pools are necessary for online poker sites to offer the attractive poker tournament prize pools and wide variety of games and stakes necessary to succeed.
New Jersey, the largest US regulated market, does not share liquidity with any other state or country. In fact, its player pool is subdivided by the existence of two online poker platforms in the market: Players at Borgata Poker and partypoker NJ play together while those on WSOP.com and 888 NJ exist on a completely separate system which results in neither of the two groups benefiting from the liquidity of the other.
PokerStars is the worldwide leader in online poker in large part because it has the largest number of players. If PokerStars enters the New Jersey market as expected, its players there will not be able to play with its players in other countries around the word. Instead, its presence will serve to further segregate the market in New Jersey.
Even if California, America’s most populous state where poker is legal in card rooms and tribal casinos, were to legalize online poker, Nagy believes that the online poker rooms there would not be “any bigger than America’s Cardroom.”
That is almost certainly depends on the number of operators in the market. Online poker data from Poker Industry PRO shows that the European segregated markets yield an average of about 35 concurrent online poker cash game players per 1 million in population. The New Jersey market is also in line with this average.
Assuming California would also be in line with those averages—though an argument can be made that poker is more popular in California than any of the currently regulated markets—at nearly 39 million people, the California market would likely support three networks the size of Americas Cardroom’s network, WPN.
But if Nagy achieves his goal, WPN could be the size of all the California rooms combined.
“We’re going to keep doing what we’re doing,” Nagy said. “And I think, this time next year, you’re going to see we’ll be top five in the world for online poker.”
