Several online poker sites are tweaking the structures and payouts of their lottery-style sit and go offerings. Nick and Mike cover all the latest changes and discuss the implications.
PokerStars PA has been live for a month. The guys take a look at how online poker has been received in Pennsylvania, compare its performance to other regulated markets and check in on the state’s first online poker tournament series, PACOOP.
And finally, find out which two online poker rooms are set to join the partypoker network.
- The Evolution of Lottery-Style SNGs
- PokerStars PA 1 Month in and PACOOP
- 2 online poker rooms set to move on to partypoker
Mike: Hello and welcome everybody to the Pokerfuse podcast. It is December 5th, 2019. This is episode number 36. I am your host, Mike Gentile, along with my co-host, Nick Jones. This week on the podcast, several online poker sites are tweaking the structures and payouts of their lottery-style sit and go offerings. We cover all the latest changes and discuss the implications. PokerStars PA has been live for a month. We take a look at how online poker has been received in Pennsylvania, compare its performance to other regulated markets, and we also touch on the performance, so far, of the state’s first online poker tournament series PACOOP. Finally, two online poker rooms are set to join the partypoker network. We’ve got the relevant details.
There have been a ton of updates to lottery-style Spin and Gos lately. We’ve seen some new structures come out of PokerStars, 888, Unibet. Nick, tell us what’s the latest?
Nick: Yes, so lottery Sit and Gos three-handed winner-takes-all-tournaments, random cash prize at the start. I’m sure if you played poker tool in the last five years, you will be familiar with them. Definitely in 2019, we’ve seen all operators, I mean, they are ubiquitous in the industry now. Everyone has them in some format. And this year, we’ve seen almost all operators iterate or change on what they offer to find the optimal spread of these games. In the last week, we have seen a Unibet release, like, a standalone client. We’ll go into that a bit. PokerStars, just in the last 24 hours, have overhauled their Spin and Go lobby, entirely made some interesting adjustments. And 888 Poker as well, their BLAST lobby has gone from four-handed to three-handed. Mike, which of those three do you want to start with?
Mike: Well, there’s one that interest me the most but I think we’ll save that one for the end, and that is the Unibet one. Why don’t we start with 888 going from four-handed to three handed. Does that— Is there anybody left that doesn’t have three-handed lottery-style sit and gos?
Nick: Yes, so it was interesting. So, a very brief history is, you know, Winamax introduced this five years ago. It was then copied across the industry quite fast. A lot of people copied it in exactly the same way that Winamax had, three-handed, same kind of pay table, these things. And then some operators tried to innovate, partypoker had Sit and Go Hero which would have bounties and was four-handed, 888 had BLAST which was four-handed and with a shot clock, various other like attempts. And what we’ve seen is a regression back to what Winamax had initially. partypoker have just switched to SPINS, much more traditional. Now BLAST, although they’re keeping the game clock, shot clock idea, they’ve gone from four-handed to three-handed.
They were probably the last major operator to try and keep a four-handed table. I honestly think the main reason for this is just games feel faster when it’s three instead of four-handed and you can just get a lot more games played. So if you’re not the biggest operator with the highest liquidity, you just get more action, you can spread more buy-ins. So I think that was probably the main motivating feature. It also just ultimately brings it into parity to know what people expect and you operate it to have which is a three-handed winner-takes-all tournament.
Mike: Yes, that makes a lot of sense. Getting those games to fire off sooner is probably a really big deal for someone the size of 888. You know, I have not personally played the 888 platform so BLAST isn’t something that I’m very familiar with. I was reading your article over at Poker Industry PRO and listening to what you just said about the the shot clock, really, I guess it’s not something that I know a lot about. It’s, at some point, everybody is forced all-in?
Nick: Yes, it’s exactly that. After a set number of minutes, which is defined by the multiplier, actually. We’ll probably get back to this topic because that’s something that PokerStars has done. I can’t remember exactly what it is, but it’s something like if the multiplier is just a 2x, then games only last two minutes. If it’s like 3 to 10x, it’s four minutes, and if it’s a high multiplier, it’s five minutes. Something like that. Ultimately, when the timer runs out, then everyone is forced all-in every hand until you have a winner. It guarantees basically a game will only last X amount of time.
It also obviously reduces the skill element. There’s less play there because you’re going to be limited on how many hands you’re going to get in. That has remained. That’s their one unique feature. The reality is it doesn’t change the play at all. It plays exactly the same except you’re going to get to a point where, okay, now you’re basically ultimately going to realize your chip equity. That’s how it’s going to pan out at the end.
Mike: Well, hearing that they have varying time clocks for the varying multipliers, to me, it sounds very familiar to some of the changes that PokerStars implemented. I see there that they have varying blind levels depending on the multiplier. Is that correct?
Nick: Yes. Similar idea that— And this is a new thing introduced by PokerStars in the last 24 hours. They haven’t promoted it at all. This was just spotted by us and other people on the PokerStars website in the client. They’ve made quite an overhaul, but one of the biggest is this change. So that now the blind levels are faster. Again, I think it’s like two minutes for a 2x multiplier, three minutes for a 5x and then— Before, I think they were three-minute blinds, or four-minute blinds. I’ll bring up the article so I’m not making up numbers.
On the 2x multiplier, the blind levels are two minutes, a three to five multiplier is three minutes, and that’s what it was prior to this change, all games with three-minute blind levels. Then a 10x or higher, you get a four-minute or five-minute blind level. Basically, for the games which are kind of unlucky for everyone, the 2x multipliers, those games are going to be over quicker. And for the games where you’re competing over a much bigger prize pool, the games will actually last longer than before.
I think that’s a good change. You’d have to crunch the numbers to work out whether overall that’s more or less time that you’re getting for the— that you’re paying depends obviously on how many times the 3 and the 5x trigger, and the pay tables have changed as well. I’m sure like regs, these games would have to run the numbers and see. That idea— So, yes, 888 has always had it. And Unibet’s HexaPro since they launched only a year ago, again, we will be talking about them in the segment as well, they’ve always had this and implemented in the same way. The blind levels are faster on HexaPro for low multiplier tournaments.
Mike: Really, these two features, the varying blind levels and the shot clock really serve to achieve the same purpose, is to limit the amount of time that a particular lottery sit and go will last. It is a progressive amount based on the multiplier.
Nick: Yes. It’s the idea of like, for the 2x multipliers, let’s get them over quicker because nobody’s having a good time when you’re fighting over a double blind and then for the high value ones give people ultimately more time so more skill, more hands can be played where stacks are deep enough that you’ll have some post-flop play on those bigger tournaments that you enter.
Mike: What is it— There’s something about the highest buy-ins from some operators where they do something different as well. They split a certain amount of the prize pool?
Nick: Yes. That’s still standard on the absolute big jackpot prizes, everyone at the table will win something. It’ll often be split like 80% goes to the winner and then consolation prizes of 10% each to the second and third people, or it could be graduated first, second, and third different payouts. That’s common on a PokerStars promotional one, and we can talk about this in a second, but when they have their million-dollar tournament, it’s often actually $1 million to first, and then 100,000 to second, and third is consolation prizes. Again, that’s something that’s become standard. I think most operators now have that on their absolute top prizes.
Mike: Okay. Yes, that’s what I was going to ask. All right. Well, why don’t we— Is there anything more that we want to touch on on the PokerStars one before we jump into Unibet?
Nick: Yes. The PokerStars has overhauled it pretty significantly so that their buy-ins have changed. They still— I mean, PokerStars offers so many Spin and Gos and keeping up to date with them so they have their core 8 to 11 buy-ins but it changes. They add and remove micro-stakes and super high roller ones now and then, but broadly they have about 10 standard buy-ins, and then they have all these special— They’ve just finished and they’ve taken down two special ones, one which had a $2 million top prize, the other had a $3 million top prize for really low buy-ins. They’ve been removed. And then they’ll often have these satellite ones as well.
They always have a bunch. What they’ve done is their core buy-ins, the core 10 buy-ins, they still bought 10, but they’ve broadly reduced them all. So there’s no $60 by now, it’s 50. There’s no 30, it’s 25. There’s no 15, it’s 10, the 7 has become 5, et cetera. They’ve all kind of pitched down a little bit and in some cases, the rake has increased. If before you’re playing at $60 and paying 5% rake, you now might drop down to the $50, where the rake is 6%.
Mike: So as we’ve seen these changes, it seems like everybody is getting on the same page. Is there still a significant amount of variety in the offerings from different operators or is everything condensing down to three players, limited times, and distribution of the highest prices to all the players?
Nick: I mean, it’s fascinating to realize how close to what seems to be optimal the original winner max format is, so many of the innovations people have reverted. We went through a period where everyone was going, the top prize is going to be like 10,000 is our standard, is the top promo, but what we’ve seen actually in the last year is most operators reduce the variance of their pay table somewhat so they pay out a bit more in the middle like more 10x and 20x prizes rather than the thousand or 10,000 prizes. I would say we’re seeing more homogenization and more past regression to where it was five years ago.
With that said, so one thing that PokerStars has introduced now is that they seem to, as we understand it, standardized how they’re going to do their special one-off million-dollar top prize tournaments. They’ve always had a smattering of them. As you just mentioned, they had a $2 million and $3 million top prize tournament, which they just took down presumably because last week, someone hit that $2 million top prize, which was, as we understand it, could be the second largest online Poker PRO has ever paid out. We know that the 2010 WCOOP Main Event winner won a $2.2 million prize. This $2 million prize might be the second after that one. The $3 million dollar prize never triggered.
Mike: And what was the buy-in on that?
Nick: $5, I believe.
Nick: So anyway, they always run these now and then low buy-ins, $1 million, $2 million top prizes. They seem to standardize that now. They’re going to take their seven lowest buy-in tournaments, so everything from the $0.25 up to the $60, and they’ll pick one and go— Right now, it’s special edition, and they’ve changed it so it’s got a $1 million top prize, and that will run for a while, and then they will take it down and cycle to another one again. Okay, now this one has got the $1 million top prize. Right now, it’s the $2 tournament, which has got the $1 million top prize.
That can be— I’m just trying to look at the numbers here. That $2 game, again, that’s a 500,000x multiplier to hit that top prize and that triggers one time in something million. The $0.25 game, when that cycles in to have the $1 million top prize, that is obviously a 4 million x multiplier on the buy-in and that will trigger one in 50 million games. It will presumably never trigger or very unlikely to ever trigger.
Mike: Well, the value is going to go up too because of the low buy-in.
Nick: Yes, but 50 million is a lot even for PokerStars. That is a lot. I don’t know how long they were running those $2 million and $3 million prizes and obviously, I’m guessing they plan to run them until one hit and one just did. I can’t remember how long they were running for. It’s hard to gauge how long that took to hit but I mean, another thing that players aren’t going to like is that $0.25. Whenever one of these tournaments goes into the special jackpot, the rake goes up. Most of them got 1% each point, so your regular $2 tournament goes from 8% rake to 9% rake. The $0.25 one goes from an 8% rake to a rather eye-watering 12.5% rake, which is probably the highest the industry has gone for.
Mike: I would also assume that they have to have a deadline, right? They’re not going to— As you said, one in 50 million games. Who knows how long that’s going to take? They’re not going to just leave it until it hits, I wouldn’t think.
Nick: No. I mean, I guess, they don’t really say on the website. I presume, they will be cycling through them at some rate rather than wait for them to hit. But yes, they haven’t revealed.
Mike: Okay. Well, why don’t we jump over and talk about HexaPro, which is Unibet’s lottery-style Sit and Go. They have released a standalone version of this game that is available outside of the Unibet online poker client. Tell us a bit more about it.
Nick: HexaPro, which has only been around a year, as we mentioned before, so they were quite late to the game but they launched it with some interesting innovations. Again, they were the first to go for kind of a more of a middle heavy, so less top prize heavy prize pool, which has since been adopted elsewhere. It’s also just quite stylish and it looks very cool, and that’s been around a year. They’ve talked about it and said it’s been super successful for them but what they have done is they’ve released a standalone client. It’s web-based but apparently works very well on the phone. We’ve been told it works really well in, like, both portrait and landscape mode on the phone, but it is running it in the browser window. This is not going live on unibetpoker.com. They are deploying this on all of Kindred groups, very large, successful casino and bingo brands. Lots of brands that you’re probably wouldn’t have heard of and our listeners wouldn’t have heard of but they are kind of universe bread and butter, lots of big Scandinavian-focused, or there’s a Romanian site. That’s where they make most of their money. This is, for a lot of these brands which have no poker at all, this is their first poker offer and it sits alongside slots and live dealer is Jackpot poker and these casino players can click this tab, fire up a HexaPro game in 30 seconds. That is obviously connected with the global HexaPro player pool. If you’re on unibetpoker.com, you are playing with someone from Flack casino who wants to fire up a quick HexaPro game.
Mike: Or on the flip side, if you’re firing it up from the casino app, you’re playing with people that are specifically playing online poker in that player pool.
Nick: Yes, exactly. You should get a game almost instantly with very little waiting. And the PR for this, the videos and promotion for this, is all like, it’s just like a slot game. It’s a random and you’re playing for this man and here are the rules of poker. So, you know, I think this is-
Mike: But it is still peer-to-peer game?
Nick: Oh, 100%, yes. This is fascinating to me because we’ve always seen it from a poker perspective. This is a game that was introduced into poker clients and probably some people at the time bemoaned that this is more like casino-style of gaming and really, really high variants and the rates are too high for people to play winning poker which was proven not to be true. This was very much if anything poker players being introduced to more casino concepts and some could argue that might cross-sell them from poker into casino games. This is obviously Kindred group which is predominantly sports and casino, doing the opposite and go to casino players and going, “Hey, this is a bit of a poker game, which is very similar to what you’re used to, a slots game, but this is a peer-to-peer poker game.”
Mike: That’s interesting from a player acquisition standpoint. Traditionally, we’ve seen poker being more of an acquisition tool where they would then cross-sell to casino because the cost to acquire a new poker player is considerably lower than it is a casino player. This is going in the opposite direction though it is in line with a lot of things that we’ve seen with the network models such as iPoker, MPN where they want to have ancillary products to offer their casino players and sports players in the event that they want to try something different.
Nick: Yes, it’s 100% now. I think we talked about this on the podcast when maybe the Kindred financials came out for Q3 but you’re absolutely right. Historically, poker, for a lot of companies, was an add-on to their sportsbook and casino brands and a lot of the iPoker skins are like Ladbrokes and Coral are two brands which we’ll be talking about in a future segment. This was like your sports bets, your casino bets, and here’s poker. But then along came like the poker-first companies or originally the poker-only companies, PokerStars, even partypoker, and they had it built up a huge player-base of poker players. Then they either branched into or were acquired by casino operators and then these poker players could be cross-sold into casino and sports. Then that’s why the stars group executives and the GVC executives can talk about, “We’ve got this huge poker player base. We make a lot less revenue per customer at the poker tables, but they can be cross-sold into higher yield games.” Unibet, however, is much more like the original model and that they are 97% make their money from casino and sports, about to split down the middle 2 to 3% is poker. They have a huge number of people playing sports and casino who probably feel that poker is too much. That’s a lot more to learn.
It’s a skill game. You have to learn the rules of poker. They’re not simple. If you’d ever tried to explain a game of poker to people, it’s not a simple game to explain from scratch. Why do this when I can play video poker? This is a very interesting attempt to obviously take perhaps the simplest quickest form. Because the other thing is with lottery-style Sit and Gos is even if you don’t understand the rules of poker, you probably can’t go too far wrong. If you go all-in, like a lot of hands when you see an ace, you probably don’t need to know that much more. If you’re familiar with video poker, you can probably pick it up. I think this is a fascinating attempt to go that different direction to what we perhaps had been talking about more on this podcast about people going from poker into other games.
Mike: All right. I’m going to dig in with some questions for you. Well, really, one topic with several questions. How is Kindred handling this with regulated markets? Are they offering this in segregated markets? Do they operate in those markets? Is there an issue with the shared player pool?
Nick: That’s an easy one because no, they’re not. Unibet only operates currently in France for a segregated online poker room. Recently migrated from— They were an iPoker skin and recently relaunched with their own software in France.
Mike: Right. But what about casino? For example, they’re in New Jersey now with their casino product, are players in New Jersey going to be able to play HexaPro?
Nick: No, for that reason was that the player pool couldn’t be shared obviously. So, of all the brands that we know is launched in overall can be and have connected to the international player pool. The casinos are focused in the Scandinavian markets. I know Romania is another one. But, yes, they’re all markets that can connect to the international player pool and there was no discussion about this launching elsewhere.
Mike: That was my big question. I mean, because New Jersey does have in the regulations that they can’t share with other jurisdictions as long as they have similar regulations and get that stuff approved. The global player base that Unibet operates in is mostly the .com sphere, correct? So that wouldn’t even be an issue. It’s not like they would be sharing liquidity with the UK or with France or Spain.
Mike: All right. Got that. Anything else that jumps out at you about this HexaPro move by Kindred? It’ll be interesting to see how it plays out and I will be interested to follow its trajectory. I’m just wondering what other things should we be looking at to see if it’s been a success?
Nick: Well, if you are a poker player who plays on Unibet and plays HexaPro, you may see your games get quite a bit fishier, you know? That’s obviously what the goal is introducing this to a lot more players who might never play poker before. They have this great three-minute video, which when you first click on the tab next to the casino, play Jackpot poker, it’s got this video that explains what HexaPro is and explains the entire rules of poker from scratch because the idea is these people do not know this game, so you’re learning HexaPro as you learn poker. It seems like a good opportunity if you like playing these games to give them the spin. They might be flush with a new player base for awhile.
Mike: Do you think that the intention behind this is to just provide this extra service for the sports and casino customers, or do you think that they are actively trying to boost their online poker player pool?
Nick: I think both. I think, in many regards, they might see it like just adding another. I think, as I understand it, and we’re certainly not experts in the online casino space, but the number of products, the number of slot titles that you can get through the better is there’s a constant string of new licensing agreements with films and ball games and cartoons and stuff for ultimately a skin on the fairly simple slots wheel spin titles. They just have this constant string of stuff. It’s been presented almost like it’s just another product in their casino portfolio, but it has the added benefit that you’re introducing your customer base in a careful way to a whole new game, which if they’re interested, maybe they can then move on and be playing poker. Now, it’s notable that none of these brands have traditional poker clients. Unibet or Kindred group, I should say, have two poker skins. One is a Unibet. The other one is, I can’t pronounce it, Pokerihuone, which was a brand that came from iGame, I think, which is focused in Finnish market maybe or possibly Swedish or something like that.
They have those two brands, but they’ve decided with lots of their brands not to launch that. Even Stan James, which they acquired and it has a poker room on iPoker, they shut it down and move people over to Unibet. They’re very cautious about expanding their online poker network. This seems like their way of doing it through a side door, in a way, but if it takes off, maybe we’ll see bingo.com or Marriott Casino is another really big brand they’ve got, or Flack Casino launch a full skin of the Unibet poker client.
Mike: When someone joins from one of these casino clients and decides they want to play a HexaPro game, is it branded at all with the Unibet brand or are they— I mean, will they be able to even know where to go if they wanted to play more online poker?
Nick: That’s a good question. Unfortunately, we can’t test it out in real life because there’s nothing in the markets that we’re in but from what I’ve seen, it’s lightly skinned as the casino. Like you would have with any slots title , you don’t want that jarring experience. If you’re now on some different things, it’s at least color-coded with a logo of, if you’re on Maria Casino, it looks like you’re still on Maria Casino. I’m not sure if there is, honestly, if there is like a poker and want to play more, you click here type of thing. Maybe this is a stepping stone too because ultimately this client is the Unibet poker client except on the left-hand side where you have, “Do you want to pay tournament Sit and Gos, HexaPro, or Banzai?” There’s only one option. They just remove that selection and then everything’s in sync. It might be a flick of a switch to also turn on the Banzai tables or turn on the Sunday tournament or something like that. Maybe that’s their plan down the line. We’ll have to wait and see.
Depending on when you’re listening to this, it’s probably, it could be one month, on the nose, the PokerStars Pennsylvania launched fully for real money. It was on the 4th of November that it came online for their soft launch and the 6th of November for their full official launch. We’re one month in. We’ve got one month of cash game data. We’ve got the first week of PACOOP under way. Mike, what are the numbers telling us about their first month’s launch?
Mike: They are telling us that things are going pretty good. I think that if you look at it from the perspective of traffic, they’ve done better than any other regulated online poker room in the US. You look at the PACOOP, the online tournament series, the first one that they’ve run in Pennsylvania, and we’ve seen what has to be considered successful numbers. I think every tournament maybe barring one has met their guarantees thus far. Of that aspect, it’s definitely viewed as a success.
Nick: Yes, we know that when they first released their PACOOP schedule possibly on this podcast and definitely in social media, we said that it was somewhat modest maybe. It had a $1 million total series guarantee, which they’ve run in New Jersey and still run that size in New Jersey. This is obviously a market much bigger than they themselves have a total de facto monopoly, so we thought that was somewhat modest. It turns out it was modest because I think the turnout for the first event was like almost three times the guarantee and PokerStars today credit did respond and increase the guarantees on the schedule.
Mike: Yes, we did note that in one of the articles we did on Pokerfuse that these guarantees were a bit more conservative than we had expected. We had actually expected them to come out with a $1.5 million overall guarantee for the series just based on the $1 million that they did in New Jersey, that was a long time ago, the size difference. We just expected that it would be pretty ambitious or aggressive. And it hasn’t been, but they did raise the guarantees twice, right, since?
Nick: Yes, I think [crosstalk] . We saw them say that it had got up to $1.1 million. We went and counted in, it was already at $1.2 million, I think. So, yes, it’s still— I remember now we talked to this podcast a few weeks ago about maybe they’re giving themselves that space to increase it, next COOP or PACOOP, whatever it will be. They can do a 1.3 or blah, blah, blah. It’s good to see that they’ve up to the bet for sure.
Mike: Do we normally see operators raise the guarantee mid, first of all?
Nick: No, pretty rare. I’d say pretty rare.
Mike: Yes, this is— It’s interesting that they actually made that decision to do that and it will be something to monitor going forward, especially given the ever increasing or escalating prize pool, guaranteed prize pools for these tournament series. You authored a pretty in-depth analysis of the first month of PokerStars that is available over on Pokerfuse. There’s some cool graphs that people can check out that compare what has happened in Pennsylvania with what we’ve seen thus far in other US markets. What can you tell us about what those graphs are telling the readers, Nick?
Nick: Yes. From a cash game perspective, which is tracked by GameIntel, formerly PokerScout and available on Pokerfuse and Poker Industry PRO, we— They almost immediately launched to around 400 concurrent cash game seats, which is very good. I mean, PokerStars going live in Pennsylvania is something of a unique situation. We can absolutely compare it to when they went live in New Jersey. The PA launch was about four times, three or four times larger than it was in New Jersey but, of course, they’re entering a market where there’s huge pent up demand and there aren’t other competitors when PokerStars went live in New Jersey. It was already fairly well saturated with WSOP, 888, Borgata, or partypoker, so they were competing with them.
PokerStars has definitely benefited from that. 400 concurrent cash gameplays is a lot. It’s right up there with, I think, like unibets.com network. It’s larger than mpn.com network. Although some people are saying, “Well, obviously it’s going to be super successful, it could have easily been lowered.” This is— And it’s grown as well. It’s up to about 450 concurrent cash game players today, which I think is fantastic. I think it’s above expectations. If I were to guess, maybe, I would have said like 250, 300 in the first month, something like that. I’d say it’s been— It’s done very well.
Mike: I’m looking for Pennsylvania to buck the trend that we’ve seen in other US markets. While data is a bit scarce on Nevada, because they have a regulation, and if they don’t have a minimum of three operating online poker rooms, they don’t release revenue figures there so it’s a bit difficult to compare, but I think just based on some of the other circumstances that we have seen, you can draw some conclusions about Nevada and in New Jersey, for example, we saw that interest was very high in the first year, and that could be correlated to the amount of money that the company’s putting to promoting this new product.
Then, you see things start to taper off. We also saw that in Nevada where they had multiple online poker rooms and that has since dwindled to just wsop.com. What we’ve seen, the trend that we’ve seen is a lot of interest early, and then things start to taper off. That somewhat was mitigated by the implementation of shared liquidity in New Jersey for the 888, wsop.com sites because they were able to then pool their liquidity with Delaware and Nevada. While the other operators in the market were experiencing year over year or year under year declines, wsop.com and 888 were growing. So when we look at Pennsylvania, it will be interesting to see if they have that initial one year honeymoon period, for example, with the players where they do really well and then things start to deteriorate. I think it’s not going to follow that trajectory. I think they are going to be able to find ways to continue to grow their revenue and their popularity with players but that’s something that we will have to wait and see.
Nick: Yes. I mean, there definitely will be some honeymoon effect, but then that could be more of an offset by— PokerStars doesn’t have zoom tables yet. That’s huge. And also at cash games, they don’t have Spin and Gos, as we were talking in the previous segment, hugely successful. We expect them to be coming in the near future. It’s a modest launch from a product perspective. They’re only just doing their first tournament series. There’s a lot of cumulative buildup they can have. Again, just getting that marketing message out that, yes, online poker is legal and regulated in your state or in the state that you neighbor, and you could nip over the border for a weekend and play. That takes a long time to explain that what you have learned over the last five years is no longer the case. There’s lots of upside, as well, more than offset that honeymoon period. It’s worth going—
Mike: And— I’m sorry, go ahead.
Nick: No, you go.
Mike: I was just going to throw in some anecdotal evidence. Over the holiday weekend, I was out and about and met some people from Pennsylvania. I asked them, “Are you aware that online gaming, online poker, online casino games are legal in your state?” and they had no clue. They said, “No.” They didn’t know that at all. They thought it was still illegal.
Nick: Yes. It’s an uphill battle. I’m pretty sure there’s lots of people in New Jersey who would still say that and it’s what five or six years on. That’s tough when it’s on a state by state basis to explain the things are rolling out in that way. It’s worth pointing out, just going back to the traffic figures very briefly, that no real point in any time in the US-regulated markets before PokerStars Pennsylvania launch, did all operators combine to have the traffic that we’re seeing PokerStars PA have now. When New Jersey first came online five and a half years ago, I think there was like 10 online poker operators launched, or maybe 8 or something like that. Definitely, like four different networks, eight skins, something like that.
Mike: So there’s the three that they have now plus Ultimate Poker.
Nick: Yes, that’s right. I think it start and kicked off at, like, 500 concurrent cash game seats. There’s the spike during the summer then there was a spike with shared liquidity, but even today with WSOP shared liquidity, PokerStars Pennsylvania is more than all of them combined. I don’t know. When people say like, “Oh, yes, this is completely expected.” Even during the New Jersey honeymoon period, where I remember three networks would try to one up each other with million-dollar guarantee tournament series and basically spending a lot of money on customer acquisition on promotions way more than what PokerStars PA is doing right now. Now, there was loads of ramp up, this big coordinated launch where the PokerStars PA was really like nothing happened for months and months and months, and then oh no, we’re going live tomorrow.
It’s already bigger than the US market has ever been. That’s worth taking a step back and reflecting on, I think. I don’t think anyone thought that that was going to be the case.
Mike: Yes. Another thing that I think could add to the resiliency of Pennsylvania is they seem much better situated geographically than New Jersey. If you look on the map, the number of bordering states around Pennsylvania is a lot greater than the number— New Jersey. New Jersey’s on the shore and is limited on that whole side by by the ocean where— I mean, Pennsylvania has Ohio as a neighboring state.
I think we did see plenty of players traveling into New Jersey in the beginning to play tournament series, for example, or to play on the weekend or people that would commute on a regular basis like they would a job. I think that Pennsylvania has a higher potential in that area as well so that could add to the the resiliency of how long we see these revenue numbers last.
Nick: Yes, certainly. It’ll be very interesting to look over the next few months obviously. The other advantage PokerStars in Pennsylvania has is that it’s just going into the peak time for online poker traditionally. So December through to January, you’ll often hit your annual high. Now, the US markets haven’t followed that seasonality so clearly primarily because of the WSOP in the summer really drives traffic, whether that will have an effect in Pennsylvania where obviously the WSOP isn’t, but it might have some kind of halo effect, will be interesting to see. I would expect cash game traffic to continue climbing over the next couple of months certainly when zoom comes out. I think we’re far from PokerStars PA hitting its peak.
Mike: Yes. One thing to look out for in the near term is going to be the release of the very first revenue numbers in Pennsylvania, so those are scheduled to come out probably in the next 10 days to two weeks, and that will give us an indication of how revenue figures relate to the cash game traffic figures, for example. So we’ve seen that they’ve done very well in terms of cash game traffic, let’s see how that translates into revenue. And it’ll be interesting to see what the regulator releases in terms of statistics as well. I’m anticipating that they may require the operators to report promotional dollars put in. I don’t know that for sure, but if they do, that will give us a bit more insight than we have in New Jersey.
Nick: Yes. Could we get a split of cash games and tournaments as well because I think on the casino side, they split between like slots and [crosstalk] ?
Mike: Yes, so slots and table games are actually separate licenses in Pennsylvania. That could be the reason that they have the operators break those out. I’d be a bit surprised if they do offer data or revenue figures on both cash games and tournaments, but who knows?
Nick: Cool. Well, keep your eyes on pokerfuse.com. We love data, so whenever this comes out, we’ll be keeping the site updated with all the links.
Mike: Last week, we talked about skins moving onto the iPoker network from MPN, which is closing down. This week, we have some news about skins or online poker rooms moving off of iPoker. Nick, what can you tell us?
Nick: Yes, so at first, it was told to players directly from Coral poker, a skin on iPoker, that in less than seven days, they will be moving off that and onto partypoker, which is a surprise to some because partypoker is not really known as a network but it is in fact owned by GVC. The parent company of partypoker acquired Ladbrokes Coral, which was another private company, a public company, sorry, acquired them 18 months ago. So they’ve ultimately just solely did announced the time to move that brand over to the partypoker network. We also then subsequently got confirmation that Ladbrokes, obviously the other pair in the acquisition, will also be making that transition sometime early next year.
Mike: It’s, I guess, a bit surprising that it’s taken this long, but in big companies, things tend to— I think, one of the phrases I heard a long time ago was “It takes a long time to turn around a big ship,” and so maybe that’s playing into this 18-month period. We’ve seen partypoker have some of their eggs in the Zynga poker pass get before and how did that work out? Did they ever combine player pools? I don’t remember.
Nick: Yes, it’s a very brief history of partypoker way back in the day when it was part of Bwin Party, a private company, they did run a network. They had multiple third party skins. In fact, one of them was Coral Poker going back 10 or 15 years or something like that. They also had Empire Poker, Gamebookers, and a few others. The company ultimately wanted to go independent. They first made their play pool independent, kicked off the other skins. I believe there was even a court case. Anyway, as I say, this is going back a decade, so [croostalk] .
Mike: Quick question. Was that before the merger of Bwin party or was that after? Because Bwin was on their own for a while.
Nick: Yes, you’re absolutely right. It was part of gaming before that. I think it was before. And this was all before, obviously before UGA even, I guess, which is, what, 2006? I’d be going back 15 years now. Anyway, in the last five years, partypoker has primarily been known as an independent poker group known through the partypoker brand, also known through the Bwin brand, and that’s an equivalent offer. They do have a few other brands that you would not know, but they’re all internal brands. They have a brand in Denmark and a few in Greece through there, an old sporting bet brand, but they’re all internal. You’re absolutely right. A couple of years ago, maybe three years ago, in a kind of a one-off, they smacked Zynga poker and convince them to launch a real money online poker skin on their network. I think it lasted like a year before it shut down. That was not a successful move for either company. So that was one kind of flourish into working with a third party to offer a skin. This, again, is just internal brands, so Coral Ladbrokes owned by GVC they’re just bringing them under that partypoker umbrella.
Mike: Yes, and in similar fashion, they also have the network in New Jersey. It’s a small segregated market, but they have Borgata poker, for example, as a skin on the partypoker network as is MGM. They’ve put that practice into this regulated market which we expect will be something that they expand on once they go live in other states. I know they had recently, I think it was this year, that they got the license in Nevada. I could have been— In the last year, I’m not exactly sure. But yes, we expect that network model by GVC to continue in the US as well.
Nick: Yes. I think perhaps most surprising thing about this announcement was just the timing because, as you say, it was 18 months, and I think it’s probably just a case that through the acquisition was so large that poker is such a trivial thing that it’s low on the priority list, in reality, to put the right heads together to make this migration but what was surprising is that when they do announce it, they announce it with such short notice. And as I believe at the time of us recording this, it’s been delayed the closure of the Coral poker skin on iPoker. It was meant to be Wednesday and they email players and said, “In six days time, you’re going to be moved over. The skin’s going to be shut down. You need to cash out your points and finish any bonuses because they’re not going to migrate.” This is pretty short notice. We got a statement from GVC stating that Coral poker will come online on the partypoker network later this month, which suggested a blackout period between shutting down and opening up, which is far from ideal if you want to be keeping your players and migrating them over. And as I understand it, that has been purport to the closure of the Coral iPoker skin. But all these factors combined tell me that something was rushed here, something was pushed. You don’t spend 18 months getting to this point and then end up having a blackout period and turning your players with six days notice, right?
Mike: Yes. That does sound like something was changed at the last minute.
Nick: If you’re done, Mike, I’m willing to speculate on what that could be.
Mike: Oh, yes.
Nick: I mean, you don’t really know but there are a few things have happened. One interesting thing that happened is that following the Ladbrokes Coral acquisition, GVC ended into a very extended negotiation with Playtech, parent company of iPoker, to continue their services contract. So GVC used Playtech for a lot of their platform, a lot of their casino stuff, maybe the sports stuff. Ladbrokes Coral does as well, and also uses Playtech some of their retail kiosks, as I understand it. So it’s a really big contract that now is a much under one company and they wanted to, let’s talk terms again. This went on for like six months, nine months. It was a big enough deal that both times the companies had earning calls. One of the first things they told investors was, “I was still working on this. We think it’s going to get to completion soon. Blah, blah, blah.” They ultimately came to an agreement six months ago. So up until that point, we had speculated that these brands will surely move over to the partypoker network, but after this deal was announced, they obviously doesn’t mention poker. Again, it’s such a trivial thing, but I kind of assumed at that point, I thought, “Okay, maybe poker is staying there. Maybe the services contract now extends to poker.” Now, potentially it wasn’t. Maybe now that did is finalized and they know where all the chips are going to fall. It’s like, “Okay, poker was that one free thing and we can move that. It’s not part of the deal,” or maybe there’s some component of that deal has been triggered, some clause has been triggered that allows that poker move to be facilitated. Definitely, guesswork going on here. I will say one thing is that this came very close to what we talked about last week, which is Red Star moving over to Playtech iPoker. I wonder if there’s an outside chance that something in that deal meant that GVC wanted to move its brands off the iPoker network.
Mike: The other could have been a trigger in that previous deal that allowed GVC to act.
Nick: Because one thing that we understand that happened is that Red Star is predominantly Russian-focused and Ukrainian-focused, and iPoker does not, until now, allow Ukrainian players. According to Red Star, they will still be allowed to do this. This will be an exclusive thing. The rest that will be allowed to do is bring Ukrainian players to the platform. Could that have been some kind of trigger in this partnership that said that GVC should take its brands or could take its brands or must take its brands off this network? I don’t know the likelihood of that, but it just the timing seems very close. We reported last week that this Red Star move was happening, a few days later, Coral emails had players saying, “In six days time, you’re coming off that network and moving over.”
Mike: Yes. Hearing you talk about it, that sounds like probably the most likely scenario. Maybe they intended all along to just leave them on the iPoker network, but because of GVC’s white market operations around the world, once this happened, that maybe someone up top said, “You know what? We want to remove this risk here. We already have our own online poker network. There’s no reason to have this just laying out there for some regulators somewhere to point to and give them problems.”
Nick: Yes. There’s also other things happening as well. I mean, in general, iPoker might be getting quite a few skins from MPN, which is closing next year, up to like half a dozen could be moving over. So it could be the combination that GVC sees the iPoker is growing in this way and it doesn’t want to continue supporting ultimately what’s going to become a larger competitor. That could be a factor. The other factor is just the partypoker client has been improving. We talked about recently their new mobile client. Maybe they just felt like they got to that point that it’s good to bring in new important brands. We’ve got that solid platform. So they’re just as likely as I think it’s interesting side speculation there.
Mike: Yes. Well, speculation is always fun.
Mike: Well, that wraps up this episode of the pokerfuse podcast. As a reminder, please give us a like and a subscribe wherever you get your podcasts. You can also follow us and interact with us on Twitter. Nick is at @pokerprojones. I am @SpookyBugs. Thanks, everyone for tuning in.