Sunday online poker tournaments with big guarantees are popular with players, Nick and Mike discuss the recent performance of the PokerStars Half-Price Sunday Million, the partypoker Million and the partypoker MILLIONS Online as well as highlight the upcoming Winter Series.

The US online poker market is heating. The guys cover the recent success of PokerStars PA, what that means for online poker in New Jersey and the status of online poker legislation in Michigan.


Full Transcript

Mike: Hello, and welcome everybody, to the Pokerfuse Podcast. It is December 18, 2019, this Episode Number 37. I’m your host, Mike Gentile, along with Nick Jones.

This week on the podcast, high profile Sunday online poker tournaments with big guarantees have created some buzz in the poker world. We break down the performance of the recent Half Price PokerStars Sunday Million, the Party Poker Million and the $20 million guaranteed Party Poker Millions online.

The first ever online poker tournament poker tournament series in Pennsylvania is in the books, along with the first revenue figures for PokerStars PA. We take a look at the success of PACOOP, the state of online poker in New Jersey and how Pennsylvania online poker compares so far.

With the prospect of Michigan legalizing online poker, the US market is finally starting to shape up. We discuss the current state of online poker in Michigan, the potential timeline for when players can expect to make it to the online tables and the current state of affairs for shared liquidity in the states.

High-profile Sunday online poker tournaments with big guarantees

Mike: Sunday is typically a big day for online poker tournaments, and we’ve seen quite a bit of activity around some of the big Sunday tournaments from multiple operators. One such tournament that has got a lot of attention has been the PokerStars Sunday Million, with their Half Price edition that they just recently ran. Nick, what can you tell us about figures in that particular tournament?

Nick: It was very successful basically. Last Sunday, they ran a half price, which to many would be seen as kind of quarter-price. Obviously, 11 months ago, they changed the Sunday Million from the traditional $215 buy-in to $109, and so this Half Price Sunday Million. It’s something that they do once or twice a year and have done for many years, but this is the first time where half price means a tournament around the $50 mark. We think in the history of the Sunday Million, this is the first time they’ve ever run it at what was a $54.50 buy-in, and whether it was the novelty, whether it’s the number of people who prefer the buy-in at this level, it was extremely successful.

They needed $30,000, is that right or $25,000 to cover the guarantee, and it attracted- how many people, something like 34,000, 35,000. The total prize pool was $1.67 million, so it exceeded the $1 million guarantee by two-thirds.

Mike: That is pretty successful. I was looking through an article that we have on Poker Industry PRO that details some of the successes that that Sunday Million, the Half Price Sunday Million brought in. I noticed that it fared pretty well when compared to some of PokerStars other big online tournaments for 2019. Which ones did it beat out?

Nick: Looking at the Sunday Million, since they changed the $109 level, this was by far the most successful outside their anniversary Sunday Million which had the huge- was it $10 million guarantee if I remember, back in April. Yes, a $10 million guarantee and that had a prize of $12 million. It was one of the largest single online poker tournaments ever held. Outside of that, it was by far the most successful. When PokerStars first switched to the $109 level that first Sunday, it was very successful. They attracted over 15,000 entries, built a prize pool of $1.5 million, declined after that, and then they since had a few big bumps when they ran progressive knockout editions.

The highest prize last Sunday was in August, where they had $1.63 million, 16,000 people entered that, but last Sunday’s bested that. Obviously, the number of entries was double, more than double, 33,000 and a price pool of $1.67 million. Their largest single tournament for Sunday Millions and potentially excluding special, like double COOP and SCOOP ones, might be right up there with the largest ever for a Sunday Million.

Mike: Do you think poker stars put some extra efforts into getting players and seats for this one, such as satellites, promotions and stuff, or does this seem like something that the price point was driving the success of?

Nick: It’s combination of both of them, and also I think the novelty factor. They definitely did run more satellites than normal. They ran a special spin and go, which was I think, just a 55 or 60 cent buy-in, which awarded either a ticket directly to the tournament. That was I think the top prize or second top prize. Then lots of the other prizes in that spin and go were tickets to satellites to that tournament. There was satellite starting for less than a dollar. They have that every week for normal Sunday Millions I assume, but there was extra special effort I think. It was double the number of people that needed to get in the seat. They really made the effort there. Obviously, there’s more people who can play a $50 or $100, so it would be a $200.

I think that’s just the economics. The lower you go, the more people, the question is just having it double the number of people. As we said when they first introduced the $109, that got 15,000 entries, built a price pool of over 1.5 million. We’re in roughly the same ballpark. The next eight weeks after that first week it declined and damps the level where it was only just covering its guarantee. It’s hard to know whether like you’re going to PokerStar s looks at that and goes like, “We should switch to the $50.” That’s what they thought when they perhaps when they went from $200 to $100. Of course, after novelty wears down, you end up back at effectively an equilibrium point.

Mike: Looking back at the change to the $109, we can assume that there’s at least a pretty big potential that this may fall off if they were to continue it for several weeks in a row. It’s probably not going to be— Because it’s not double. Is it safe to assume that the amount of money that PokerStars makes off of it is lower than if it were a $109?

Nick: It was if they switched from the $109 to a $55, are you saying?

Mike: Yes, they would still then need to double. They would need to double the number of people and still make the same amount of money, correct?

Nick: Exactly, right. For this occasion, they cut it exactly in the middle. It went from a $109 to $54.50. Their rate percentage, which is 9%, was exactly the same. Of course, when they went from the permanent $215 to $109, and one of the criticisms from regulars at those games was there was an increase there and the rake, $215 with a $15, that’s less proportional rake to a $109 where there’s $9 a rake. If they were to go to the $50 kind of level, they probably wouldn’t cut it directly in the middle. They might make at $55, that gives them an extra little bear cup maybe in a $56, $57, whatever.

With that said, I don’t think PokerStars is considering another dramatic change. I think it was more just a fun thing. They know now this is another arrow in the quiver, something they can do. They had a couple of overlays since switching to the $109, the PKO always kicks it up. They’ve done that three or four times this year. Again, they probably don’t want to do that every time because again, that’s going to saturate. It’s not going to be a novelty. Now, they know they’ve got the half price thing that kicks it up. As long as they’ve got a mix of that, then maybe they— That gives them the confidence to keep it at the $109 and they’ve got those novelties to use when it’s a little bit quieter.

Mike: We also have seen perhaps they’re their biggest competitor Party Poker jump into the fray here and offered their version of a Sunday $1 million guaranteed tournament. What can you tell us about that? How’s it been going? It’s been what, month, two months since they’ve introduced that?

Nick: Yes, the Party Poker Committee, and they’ve actually done six weeks of it now at the time of recording this. I think regular podcast listeners will remember, we talked about this. I think after the first week where they unfortunately had some technical issues which resulted them in them having to process a lot of refunds and compensation to players. Perhaps the biggest thing is since we last talked about it, they have run smoothly. They’ve since run five events that have had no technical problems at all. They have all overlaid and if you’re a player out there, he plays on Sundays and they’re not playing that tournament. I think we’ve got an article on pro, I think we’ve got an article on Pokerfuse or it’s coming soon talking on Pokerfuse coming soon. Have a look at that. It’s talking about it a bit more, but it is overlaying pretty consistently.

Just looking at the numbers here, 10% each week. They’re collecting around about $900,000 in buy-ins in a $1 million tournament. If you just count the operators count on that, the cost of Party Poker is not huge, at least on these top buy-in figures, although we don’t know how much they’re losing with the guaranteed satellites.

Nick: There is a lot of value there each week. Party Poker seems to be pretty committed to running this. As we speak, they are still running the day one’s for next Sunday. A lot of value there, but Party Poker obviously wanted to maintain this as an alternative to PokerStars.

Mike: While you have those numbers up, what’s the biggest overlay that they’ve had? Average, total, give us some top-line figures about these overlays.

Nick: Yes, looking at the table we’ve got here, the numbers I’ve got, the ones I’ll read off if we discount— Oh, in fact, we’ve got both here, so that’s useful. I think perhaps the most rating is if we consider a rake-free tournament. Everything that the Party Poker collects goes back. Then one of the six weeks has actually made a profit of $1,500. Like 1% or 2%. They collected in buy-ins $930,000, but if we add on their $70,000 fee, that just about takes over a million. They’ve had one week where if they took nothing themselves, they just about where they took $1,500.

The others are between a loss of about 15 and, in fact, I think the worst week was the first one, the one that they aborted. Even if they hadn’t aborted it, it was still like an $85,000, $87,000 loss. Last weeks for example, fairly typical. They collected about $900,000. That’s a $100,000 overlay but if we include their fee, that makes it $970,000. It’s a $30,000 loss.

Mike: From a business perspective, it’s not only what they’re doing in this specific tournament, but the opportunity cost as well. This replaced their normal Sunday lineup, correct?

Nick: Yes.

Mike: It was doing well and they were making a profit on it, I assume.

Nick: Yes. Absolutely, and they would’ve had a Sunday major before this, this has replaced it but then. We don’t say whenever you look at it, and I’ve heard smart people talk about these things and say the goal with running these is to either have a very slight overlay or just cover because if you don’t have an overlay, that means you could have made your numbers higher. If you’ve got a huge slate of other Sunday tournament’s running at the same time, keep in mind this event, although it’s called a Sunday event, it stretches the whole week. In fact, one change they’ve made since it launched is I think the first time there were three day ones. Then there were four. I think there are seven now.

This stretches across the whole week. It’s like a weekly tournament. You could basically look at it. While people are playing this, they are also on Party Poker playing other tournaments, playing other cash games. Absolutely the operator, Party Poker could be looking at this and going, “No, this is straight-up making us money. Enough people who come to the site, depositing, playing another game at the same time, that we’re more than making up for it at other tables.”

Mike: I also noticed that they run some lower-priced companion events alongside the Party $1 million. I noticed that those are also overlaying. I’m curious, what are your thoughts on that? It seems that pricing is not a factor.

Nick: Yes, I don’t know. You’re absolutely right. That’s a, I don’t know, perhaps a bit more surprising, but I’m not going to pretend I’ve got a really clear feel on how outlandish these guarantees are to the buy-ins. They each need a 10,000 entries. We’ve got a $20 mini, which has got $200,000 guarantee and then a $2 micro with the $20,000 guarantees. They need 10,000 entries. That’s a lot of people. Again, we just talked about the PokerStars tournament and that brings in 15,000 or 30,000 and a half probably I think. We’re in the tens of thousands entries we’re shooting for. It’s a lot of people for an operator at Party Poker. That’s just a lot of people.

With that said, with all these multiple day ones— I’m not actually sure off the top of my head if you can re-enter them, I assume not, but that’s still, if you’ve got seven day-ones, that seven shots that people can take if they bust out of one. That’s perhaps is a bit more concerning with the smaller ones that they’re not covering those guarantees.

Mike: Has there been any chatter on social media from the likes of the Party Poker ambassadors, or even Rob Young himself, indicating whether or not they intend to keep this going?

Nick: No, I haven’t seen anything. With that said, a couple of caveats there, i.e. perhaps on the Pokerfuse team follow the ambassadors much less than other people. I might not be the one to say, but I would say that there’s been perhaps less chatter about what I think is one of the most ambitious things that an operator has done this year, is this event. I think when it first came out, it generated quite a lot of hype and interest. When we published this article about six weeks of these and their overlays, I think that’s the first time anyone’s written about this in over a month, which for a tournament, which is so big, trying to go head to head with PokerStars, maybe there’s a slight failure on their part to continue getting the word out, that this is out there. There’s a huge amount of value out there as well.

Mike: Speaking of ambitions Party’s never been shy when it comes to that, and that is evidenced in their running of the Party Millions, which we just saw again recently. It’s once again met its big $20 million guarantee.

Nick: The naming is quite confusing. The Party Poker Million. I don’t understand, he refers to their Sunday tournament. We’ve just been talking about the millions online is the $20 million online poker tournament, which they just ran for their second year at that level, at the $20 million level. It’s actually their third ever. The first one was a $5 million guarantee, but so it had double the buy-in of 2018. The party line is to bring it in line with their other live events, which will have $10,000 or pounds or euros as a buy-in. Obviously they only need half as many people to fill seats. Of course it costs twice as much. As you say it covered, unfortunately it did not set a new record, which maybe is a little bit disappointing for them.

In 2018, the prize pool was almost $22 million. It attracted, again Pro— I know she’s done some amazing work with the data there. If you have access and are interested in the numbers, do check that out. I’m cribbing all of that basically, but that attracted 4,370 entries. This year $10,000 buy-in, same guarantee. It surpassed $21 million, which is fantastic. Attracted to 2,109 players. 100 more than needed. I imagine Party, deep down, probably wanted to be able to say it was set a new record because this is the largest thing online poker tournament ever by a huge long shot.

After these two events, the next one is a WCOOP main event with $12 million price pool. This blows them out of the water. Again, of course when you’re talking about these things, when you’re talking about how many day ones they got, how many months, weeks, months of satelliting, and they’re not direct equivalence, but as a headline thing that you want to advertise, this is now the second largest online poker tournament. It’s a shame they can’t say the first, but also I’m sure there was a collective sigh of relief that there wasn’t a big overlay here.

Mike: I think it’s encouraging. They have announced that they will run this event again in 2020. I think that the turnout from this year will give them plenty of confidence that they’ll be able to set a new record in 2020. If you think about it a little bit more on the promotion and from their side, whether it’s running more satellites or firing off a couple of additional promotions would have probably gotten them across that line and gotten the biggest online poker event in history with this past running. I think that as a company, if they set their eyes on that for 2020, that that should be easily achievable.

Nick: Yes, although you could say that that was what they set their eyes on in 2019 and did it. I don’t know, and again, I don’t want to maybe double the buy-in. Maybe they thought that this was even more audacious dress trying to hit the $20 million. In my mind, I think the people who play a $5,000 event play it directly, they would also play a $10,000 event. You’re looking at the same kinds of people where if we just go back, for example, the Sunday Million. I think there’s a very different potential set of people to play a $50 tournament over $100 dollars just because for some people, $50 that’s a fine thing to fire one bullet out on a Sunday evening but $100 isn’t.

I don’t want to be glib, but I think people who go like, $5,000 bullet probably can think I’ll fire off a $10,000. If my back is a happy me playing a $5,000they’re probably happy with playing a $10,000. Again, most of these people are probably firing multiple bullets. I guess maybe some are like I can fire multiples a $5,000 and less at $10,000. I’m not saying it’s exactly the same number of people, but I don’t think it’s twice as difficult fitting a $10,000 over a $5,000.

That’s my position. I could be wrong on that. Party, their position might have been, this is even harder to fill than when we ran the $5,000, that might be the case, in which case they’d done fantastic. It’d be interesting to see if they change it up a tool for 2020. The number of day ones, there’s definitely— One thing that was more difficult is, I believe there was one less day, one in 2019 and 2018. I think that was always the case with the schedule, but they do have a habit of changing these things at the last minute, but the last time I looked, that was the case. You can make a re-entry. You can have more day ones. They could probably go for a $25 million guarantee if they wanted to spend that much in guaranteed sapphires. Anything’s possible. They have just announced that it will run again, no further details. Watch this space, but it’ll be really interesting to see what they plan to do next year.

Mike: Quick question, before we move on. I don’t recall the 2018, 2019 time of year, did they happen around the same time and do we expect that this was the optimal time to run it, and we’ll see it again around the same time in 2020?

Nick: Yes, first week of December. It was the same give or take a few days either side. Yes, it was around at the same time. It’s an interesting time of year to run it. It’s when no one else is doing anything. Everyone’s finished their September, October series. There’s a bit of a lull, maybe a bit of focus on cash games. Then now mid to late December is everyone’s new time to be looking at Christmas tournament series. Something that didn’t really happen three years ago, but a Winter Series, which you can touch on briefly in this segment, PokerStars runs. In fact Party Poker has squeezed in a Christmas freeze tournament series last year in the second half of December.

This period, this first week of December, nothing else really running. Party clearly feels that’s the space they want to get the attention to what they’re doing. The interesting thing is a year ago they said that the Millions online will be part of a larger tournament series. It didn’t happen. They said that again in 2019, it didn’t happen. It was just a single tournament running on its own. I would assume from my perspective, it’s easier to run a bigger series and get more attention. Obviously, they thought that ahead of time and then when it’s come round to it, they’ve decided, “No, let’s just make sure we get the players in the seats of Millions online.” It’ll be interesting to see if they say that, that they’re going to do that in 2020 and whether they actually execute on that. I’d be very surprised if it’s not the same first week of December.

Mike: These tournaments that we’ve been talking about in this segment have all been— This has been a look back. Let’s look forward. You had mentioned a Winter Series come in. What can you tell us about that?

Nick: Yes, very quickly, Winter Series is starting I think Christmas day. In a week’s time, this is their third, I believe, Winter Series. Let me just bring up the details. Again quick plug for pro and all the great work Anuj has done with that loads of data up there. Winter Series, I think it is third— Yes, now it’s huge, basically. $50 million guaranteed, basically wrote up there with WCOOP and SCOOP and nothing else comes close except for one series GG Network has run, which had a $50 million guarantee. These are in a different stratosphere. PokerStars is basically now running three flagship tournament series. It starts Christmas day, runs through the second week of January. It’s a three-week long tournament series. Runs a real spread, no super high rollers, I don’t think, but everything from the low to the high stakes is there. Just a huge spread or tournaments, a huge number of guarantees.

Mike: How does that $50 million guarantee, series guarantee compare with the previous versions?

Nick: Good question. Let me just have a look. I believe it’s up from $40 million last year. That’s just so many—

Mike: Because this is a pretty big undertaking. This has turned into a major online poker series. You just mentioned that it compares right up there with WCOOP and SCOOP.

Nick: Yes, it was $40 million last year. I think they paid out over $50 million. It’s not even rescue for them to be honest. They did it last year without even trying. It’s just amazing how they do this with— Everyone knows WCOOP and SCOOP, if you play online poker. No one knows about poke PokerStars Winter Series, but again, I will say there’s— I’m pretty sure when they say that they have— They’re taking a leaf from the Party Poker book a bit in that they are rebranding some of their weekly tournament’s and calling them part of Winter Series.

I’m not sure to how prevalent that is, to what extent that is. I only know one clear example, which we touch on in a second, but PokerStars’ weekly schedule guarantees how much million, I don’t know, but a lot. There’s always stuff you can do that ultimately like people off playing tournaments. I think most interesting, perhaps it’s gone from $40 million to $50 million this year. Same number of tournaments, 242 which is nominally, I think the biggest schedule they’ve ever run in the .com market, we believe. There’s a crap ton of tournaments. The average guarantee per event has gone from $165 to over $200,000. It’s not just they’ve gone more tournament’s longer time, but the guarantees are down per event. They are increasing the guarantees on average on each event in this tournament series.

Mike: Yes, I think we’ve seen that trend for like over a year now where operators have been rolling their weekly tournament guarantees into a series guarantee that’s running over that particular time or rebranding those weekly ones as part of the series. That’s, I think, something that we’re going to continue to see going forward as well.

Nick: Yes, it’s smart, right? It’s just marketing. Why wouldn’t you say, add them all together, call them a brand and say, “This is how much we’re guaranteeing of this time.” Make sure you’re playing a bit of poker during the downtime and Christmas day and whatnot because we’ve got this massive series called Winter Series that, “Okay, this Sunday tournament was also running last week and it wasn’t Winter Series.” There’s nothing nefarious about that. The only thing is it makes comparisons a bit trickier, and I can’t tell you if 242 tournaments in this case, how many were already there on the schedule before and last year, has that proportion changed?

I don’t know that, but it doesn’t really matter that much, does it? It’s a huge figure. It’s a huge amount of guaranteed. It’s PokerStars’ ninth branded tournament series this year, almost $300 million guaranteed across those nine series, both those figures up substantially from 2018 up at least. It’s gone from $220 million to $280 million guaranteed. Humongous. Perhaps the most interesting, they have main events. They’re big, but the most interesting I think and it’d be interesting to look at the turnout is they have a Sunday Million and a rebranded Sunday Million Winter Series one with a $3 million guarantee. The buy-in has gone back up to $215 for this one off. Yes, four times higher than last week’s half price. Yes, $3 million $215, will be really interesting to see how well that feels.

Mike: Is that the biggest Sunday Million guarantee that we’ve had? I don’t know if they ever raised the guarantee to 2 million, but they were consistently getting $2 million prize pools for quite some time.

Nick: Back in the day they definitely had $2 million prize pools. They absolutely run just one off, $2 million guarantees. They’ve absolutely run $10 million guarantees for anniversary specials. I believe, again during WCOOP and SCOOP, there’s probably a $215 WCOOP and SCOOP event, which looks exactly like a Sunday Million and there’s probably got a large price pool.We can’t even say it’s not special because it’s during Winter Series, which is as big as, WCOOP and SCOOP and whatnot now, but it’s a lot of people. It’s a lot people in a $215. It’ll be interesting to see how players respond with Sunday million going back to that classic buying level for sure.

Pennsylvania online poker success

It’s been a very busy and exciting time for US regulated online poker in the last two weeks. PA COOP has completed and in fact, PokerStars has now completed its first full month in Pennsylvania, and we have the numbers from the regulator there. We also have numbers from New Jersey, and it’s interesting to see the pattern between those two markets. Big news out of Michigan, which is on the 100 yard line or whatever your US terminology.

Mike: Goal line.

Nick: There it is. Mike, take us through these things. PA COOP that is in the books PokerStars first a tournament series in Pennsylvania.

Mike: Yes, it was quite successful. They ended up with a total series prize pool of over a million and a half. Eclipsing their guarantee, which started at a million, I think, and was raised a couple of times, ended up being $1.225 million in the end. That was a 27% surpass-ion. I don’t know, it surpassed it by 27%. Total guarantees, total entries, I should say 12,612 for the series, which is quite impressive. The main event which ended up pulling in 830 runners. Yes, I am reading a nudges article on Pokerfuse, by the way. It was a bright spot.

Nick: We don’t really have any direct comparisons. We can look at NJ COOP, but again, that’s always with the caveat that that would run alongside tournament series that the other operators have. I know NJ COOP has never— Maybe it’s max has been a one point $1.1 million series guarantee. Has it gone higher than that?

Mike: It’s definitely been as high as 1.1, may have gone to 1.2. I know for a while there was the Party Poker network, Borgata, those guys, they were going tit for tat, trying to get recognition as the largest online tournament series in New Jersey for a while. I’m not sure if it made it to 1.2, but it was definitely at least at 1.1.

Nick: Just looking here, the last NJ COOP I think was a $1 million guarantee. At 1.2 and then bringing in 1.5 is obviously a really strong start. Although it was hotly anticipated on this podcast and for a lot of people who follow poker Twitter, for people in Pennsylvania, it probably came out of nowhere that this was even a thing a lot wouldn’t even know that regulated online poker is a thing. There is quite a cold start. Obviously, they had a database of players, but it was a fairly cold start getting people in and signing up. For a tournament series off the bat within the first month, that seems really good to me.

Mike: Yes, I think there’s a lot of factors that are behind the scenes that make this an even bigger success than it might just seem on the face. You point out one very good point there that this is relatively new. We know that one of the biggest challenges in a new market has been getting the word out that this is legal. You look at the neighboring state of New Jersey, for example, they had a coordinated launch with multiple operators. Their pool of marketing dollars was probably a lot bigger, and they were able to spread the word a lot more than PokerStars has been so far all on their own. Just pointing at that factor by itself is pretty significant and I think boosts the good news for the operator in that regard.

Nick: Yes, not to belabor the point, but I think we forget, and I’m sure a lot of listeners on this podcast can fall in the same trap of the average Joe, somebody might just play poker with their friends and their home game who played before black Friday or played before UGA going back however long, explaining now the honestly it is legal and regulated. You have a regulator and PokerStars is back. I imagine huge sways of the population would not be aware of that. That effort to get that message out takes months and years. As you say, when it’s just PokerStars and it doesn’t have half a dozen other competitors, they’re ultimately helping or put out the same message. It’s a long road that they have to walk down.

Mike: We saw as the gaming board released numbers for Pennsylvania online poker for the first time this week we saw that in the partial month of November PokerStars reported just under $2 million in revenue. Looking at New Jersey and how that compares, I know, Nick, that you’re working on an article for PRO right now what can you tell us? How does that stack up?

Nick: Again, with the same caveats that we say it before the situation is different in the sense of the market size, the competitors, and you say it wasn’t a full month, but if we try and take a pro forma number. As if PokerStars had launched it in the beginning of November, it makes it larger than any November that all operators combined have generated in the state of New Jersey. We’ve got six years of day two in New Jersey. Their best November month they had was back in 2016 when they brought in just over $2 million combined. We can say PokerStars PA is probably around the $2.1, $1.2 million pro forma mark.

For one operator from a cold start it’s beaten, New Jersey’s best month. If we look at every single month and obviously it’s important to know the poker is pretty seasonal, and so there is always going to be stronger months. New Jersey has had bigger months. They had when they first launched some three $3.5 million months. January, 2014 their first January hit that level. Still the PokerStars Pennsylvania numbers again on their own— The New Jersey numbers are three operators combined. I think it’s like the 13th or 14th biggest month stacked against New Jersey’s best months ever over the 60, 70 months they’d been running.

I think we talked about this last podcast. I think it squeezed in the cash game traffic that we saw from Pennsylvania. Which PokerStars Pennsylvania their traffic is more than all the New Jersey operators combined by a decent chunk by about 25%, 30%. We’re seeing that exactly in the revenue numbers as well.

Mike: I think it’s even more impressive in my mind, the time of year that it’s running. We’re looking at these revenue figures from November. As you mentioned, online poker is pretty seasonable. We’ve seen a shift in the US markets to once shared liquidity went live, things in New Jersey have played out such that November is probably one of the lowest months for online poker revenue of the year. At the same time, I would have to think that it’s at least got to be similar in a neighboring state of Pennsylvania for the reasons, and for them to perform that well in what is now becoming the traditional low part of the year for online poker in the US is also impressive. I think that it bodes well for the future of Pennsylvania online poker.

Nick: Yes, absolutely. It’ll be interesting to see if Pennsylvania does follow the same trends. Obviously, they probably won’t get the same kind of boost the WSOP does when they have their Summer Series. Still, the New Jersey revenue we’ve just had a release last week, 2019 November was the worst month ever in the New Jersey market. Lower than the previous worse month, which was November 2018. Then the month prior to that that were worse as we go up the the low points were September and October. Absolutely like these months, PokerStars entered in a month, which was definitely a low point, December, January, February are the traditional high globally.

We should see some natural growth there then as you touched on Mike on New Jersey front there can be a bump as well in the summertime. PA COOP, almost all of it was played in December. It wasn’t a full month cold star et cetera. I’d be very surprised if December isn’t significantly higher than November’s revenue when you combine all those factors, potentially beating New Jersey’s best every month or getting close to it.

Mike: One interesting thing that came out of the new jersey numbers was PokerStars. This November would be the first time where they would have both running in tandem operations in Pennsylvania and in New Jersey. They suffered the biggest decline in November, and it turned out to be their lowest month, their lowest revenue month on record since they launched in March 2016. It’s a bit early to try and point at specific reasons why that happened. We could look at some potential reasons. One of them being that there was a contingency of players that live in New Jersey or live in Pennsylvania, excuse me that were traveling to New Jersey to play online poker.

Perhaps those people no longer have the need or the reason to make that trek. Sometimes people, especially if they’re professional players will they travel to work. If they’re close to the border, maybe that’s was part of their daily routine. Another potential reason for that drop could be the attention of the operator has shifted focus a bit, and they’re putting more of their efforts or they were putting more of their efforts into promoting the new Pennsylvania launch. There’s a bunch of potential reasons that could have caused that to happen. It’ll be something that’s interesting to watch going forward to see if there’s any continued knock-on effect from having a neighboring state offering online poker. That is a lesson learned for other operators that are looking to launch in Pennsylvania.

Nick: Yes, it’s a really interesting point. When you just look at the rule figures, Pokerstars made four times more revenue in Pennsylvania than they did in New Jersey for states, which are roughly the same size. Obviously, Pennsylvania is slightly larger, but we’re talking in the same order of magnitude. You’re right, and we’d be very interesting to see whether do we think that its the same team that is operating both. I’m just wondering your point about them switching focus a bit to Pennsylvania? Is it the same team that will be managing both sides?

Mike: Yes, I don’t know for sure. I do believe that they either operate on a corporate level or on perhaps a US level as well. I’d be surprised if they have separate marketing teams for New Jersey and Pennsylvania. I guess it’s possible, I don’t know for sure. I’d be more inclined to think that it’s something US-focused now that they have multiple states.

Nick: It’s probably just worth pointing out as it might sound like PokerStars is like at the bottom of the market in New Jersey. That when we’re talking about they were the worst performers, that’s a year comparison to how they were doing a year ago. PokerStars in New Jersey is still the second largest operator they have been all year. The WSOP 888 Network is the clear number one, then it’s PokerStars, and then it’s the Borgata Party Pokker network. PokerStars had 6% or 7% decline year over year. I think the Borgata Party Poker coming from a lower base was roughly static. I think WSOP was 1% or 2% percentage points down. That makeup of the market is basically the same with a point here or there. It’s just the PokerStars had the worst annual performance.

Mike: Yes, and another thing that we’ve seen coming out of the New Jersey numbers is we’re seeing that market starting to stabilize. Looking at year over year numbers, was difficult last year because we had the start of shared liquidity. All of WSOP’s revenue figures were exaggerated and assuming that they at least took some players away from the competition. The losses of Party Poker and PokerStars were also exaggerated but ever since May of this year, we’ve seen that the year on year accounts for the start of shared liquidity. We’ve seen the gains and losses which have been mixed across the board a lot smaller in magnitude with the majority of them being single-digit gains and single-digit losses. Whereas prior to that, the swings were pretty large because we didn’t have a full year of shared liquidity to compare against.

Michigan online poker legislation and next steps

Nick: Online poker and online gaming in Michigan, there was a bill a year ago that got to the governor’s desk and it was vetoed. A similar bill or the same bill has reached the governor’s desk again, and people are more confident this time that it will get signed through. Mike, what can you tell us about it?

Mike: The most important thing is it has not yet been signed into law, but all arrows are pointing to the Governor Whitmer. Everyone seems to think that she’s going to be on board and going to actually sign the bill this time. The reason they think that is because her administration, her staff has been working with lawmakers to try and address the concerns that she had going in, which have made it a lot more likely that she will sign the bill.

Nick: First question, it’s the same governor a year ago who vetoed it? Is that correct?

Mike: No.

Nick: No, it’s a different government?

Mike: Yes, we have a new governor and while the governor is different, the concerns are basically the same. I believe it was Governor Snyder last year [crosstalk] vetoed the bill on his way out. Governor Whitmer is the new governor. She took over this year. The concerns that they both had were that online gaming would cannibalize the online lottery proceeds that are going to fund schools in the state. There were some concessions made with tax rates, and such to try and make sure that the amount of money going to fund schools from gambling in the state remains constant or remains strong. All indications are right now that she’s going to sign this bill, and we are going to see Michigan become the fifth state in the US to legalize and regulate online poker.

Nick: Cannibalization is a pretty common concern raised by regulators and legislators when they look at these bills. When you look at the tax receipts collected in New Jersey, in Pennsylvania, we mostly talk about the poker numbers but they are tiny compared to the amount— New Jersey online casino and sports betting is off the charts every single month, pretty much. We’re in the tens of millions of dollars in revenue and millions of dollars every month in tax revenue collected. I’m pretty sure that as long as our tax money is directed in the right way, it’s going to be substantially more than some lottery ticket sales.

Mike: That’s the key thing there to note is the traditional narrative that cannibalization is a reason not to legalize and regulate online gaming has traditionally come from the casino operators because they feel like they stand to lose out. What we’re talking about here is the funds going from one vertical being reduced, which would be the lottery because those are specifically by law your mark for schools. The revenue is going to be through the roof. In this particular case, it’s a matter of making sure that a portion of that revenue is directed toward the schools just in case there is a decline in the lottery sales.

Nick: Next question for you. Maybe you can lay my skepticism here, but when I first read about this 10 days ago and saying that it passed all the things and it just needed a government signature. I heard a lot of people saying that this is going to be signed on Wednesday. Tuesday or Wednesday this is going to be signed into law. As we recall this, that was over a week ago, and no one has said or published anything since then. Maybe she’s just got other stacks of paper on her desk, but it seems a little bit odd that everyone was so confident, things have been so quiet that last week.

Mike: Yes, there’s definitely been a lot of crickets in the last seven days. I’m not exactly sure where or why they were so confident that she was going to put pen to paper right away. I know that there was some sense of urgency that this gets approved by the legislature, because they typically adjourn for the year on a specific date, and I believe they’re already gone. But that isn’t usually the case with the governor governor’s in there working and even if her schedule is jam-packed, there’s usually enough time to sign a couple of bills into law if you’re already on board with them. It’s curious as to why it hasn’t happened yet, but I would not yet look at it as a sign that there might be some trouble.

Nick: Let’s talk in the assumption the next time we record a podcast, it has been signed into law, it still seems like the most likely result. What can you tell us very briefly, just about how good this bill is in the tax rates, what can we expect in terms of the timeline for online poker rooms, and whether this is online casino and other stuff, when we can hope this might come online.

Mike: From a tax perspective, as it relates to online poker, it is a bit higher. We had seen that was actually, one of the changes that was made as it went from the House to the Senate is they did up the tax rate there now whether or not that’s going to make a difference for an operator. The difference that it would be would either they would choose not to enter the market, which it’s nowhere near in that range of being that high. The other thing is, would they reduce the amount of rewards that they offer compared to another state? I don’t even think the difference is that high either. I think the tax rate is going to be fine. It’s something to look at long term, but initially, I don’t think it’s going to be an issue.

I think the big question here is, how long will it be before Michigan actually goes online? We have seen a variety of different timelines. When we look back at New Jersey and Pennsylvania for example, New Jersey was up in running nine months after they got the bill signed, and Pennsylvania was closer to two years. Where will this one fall? It’s hard to say, I would imagine that it will probably be somewhere in between. I don’t know that you’re going to have the push that we saw in New Jersey. When New Jersey happened, everything happened at the same time. It was all the poker operators going online. It was an online casino.

The big difference there is they didn’t have online sports betting at the time. Sports betting has proved to be probably the most profitable vertical of all the online games. It only makes sense that operators and regulators would prioritize things based on where they can get the most bang for the buck. Right now I think that is going to be sports betting. Second in line is definitely going to be online casino. If they do take a staggered approach and don’t launch all the verticals at the same time, I think that it’s going to be poker that’s going to be lagging in that regard. I don’t see why they wouldn’t take that approach. It seems like to try and cram everything through all at once would delay the ones that they can get done sooner, which might be the sports betting and the online casino games.

Nick: Yes, it’s probably fair to say that online poker, because it’s a peer to peer game, is a more complex beast to regulate. Not only is it going to— It brings in 10% or potentially even lower than casino or sports, but it has a lot more edge cases that need to be considered from a regulatory standpoint. As you say, can often them be sidelined or put on the back burner a bit.

Mike: We also hope that Michigan can build on some of the lessons learned in both Pennsylvania and New Jersey. There’s plenty of documentation as far as— That they can point to as best practices for regulations for example. They shouldn’t have that overhead when drafting those from scratch. There are some reasons to be optimistic. It’s potentially possible that we could see online poker before the end of 2020, but I’m thinking probably more Q1 2021, maybe even Q2 before we actually see online poker go live in Michigan.

Nick: One thing we could just touch on briefly because I saw some chatter about this, and I think covered in Pokerfuse article really well is that the bill did have language in it explicitly permitting cross-border play and that clause was removed and raising some concern that there was no opportunity for shared liquidity in online poker. This has been clarified that the law doesn’t explicitly say that it can’t happen. It’s just that there is not that explicit mention that it can happen. What we might see hopefully is some clarity around cross-border shared liquidity potentially the MSI GA expanding the multi-state internet— I probably just got all of that wrong.

Mike: No, it sounded like you got it right.

Nick: That agreement could have expanded to Pennsylvania potentially by the time Michigan comes around that the dream scenario is it’s a no-brainer to just have that baked in and they can connect to up to what could be four plus States sharing liquidity in 2021.

Mike: A lot of that information came through, John Pappas, former executive director of the Poker Players Alliance, still very much connected with regard to legislation. He clarified that though that clause had been removed, that it does not prohibit the regulator from suggesting to the governor that this be something that they want to do. Obviously, there’s going to need to be signed off there, but he also pointed to the fact that the intent behind removing it was to limit multi-state slot jackpots and was not aimed at anything regarding online poker. Obviously, the Wire Act and getting that whole case settled with the Department of Justice it makes everything a moot point because it seems unlikely that law makers or legislators, regulators are going to take the leap of faith the chance that they may be in contravention of federal law by allowing their operators to connect to other states.

Nick: We should certainly have clarity, at least on the New Hampshire lottery cases as it pertains to the wire act, which if favorable to New Hampshire may lead to someone like the WSOP with similar claims for clarification, which might lead to— It’s either that or obviously you appoint a new president in your next election to get clarity on the Wire Act. It seems like by 2021, there should be a lot more known about the status of this new Wire Act interpretation.

Mike: For sure, we probably expect to see something before the end of the month, if not in early to mid-January, the next procedural step. It’s not necessarily going to be telling as to how the case will play out, but the next procedural step is due to happen quite soon. That case will progress. Worst case scenario is that it ends up in favor of New Hampshire and the DOJ appeals it, and it gets kicked all the way up to the Supreme Court. They decided to hear it. Trump administration stays in power, so the priorities of the Department of Justice presumably stay the same.

I guess it could drag out for a while, but that seems like it has to be the coming together a perfect storm for that to happen, and I expect that we will see either some resolution to the case or some settlement sometime in the first half of 2020.


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.