- The news that 888 is planning to launch not only its own branded site in Nevada, but also another poker room for Treasure Island, raises the issue of whether the market can support the extra sites.
- The 888-branded site and the Treasure Island skin will be sharing liquidity with the 888 powered WSOP Nevada. This can be expected to add traffic to some extent.
- Establishing 888’s All American Poker Network (AAPN) as a well known brand may be part of a longer term strategy that will reap its own rewards as more states regulate online poker.
888 confirmed last week that it is planning to enter the Nevada online poker market—not just by launching an online poker room under its own name, but by supplying online poker software to the Treasure Island casino as it already does for WSOP.com.
It raises the question—can the market really support more new sites?
A Stunted Market
Barriers to growth thus far have included difficulties processing financial transactions, geolocation issues and bureaucratic hurdles delaying product and software development. But these issues are slowly being resolved as the industry and its processes mature.
The difficulty of gaining traction can be seen by the performance of Real Gaming, Nevada’s third site to launch.
Real Gaming, which has remained in a “soft launch” phase since February, has yet to gain any traction at all in the market.
Profitability for new market entrants looks to be a question of growing the existing market. The 888-branded site and the Treasure Island skin will be sharing liquidity with the 888 powered WSOP Nevada. This can be expected to add traffic to some extent.
It will also increase the pressure on market number two Ultimate Poker, as the larger player pool at the combined WSOP/TI/888 network—assuming the new operators add customers—becomes an attraction in itself. Traffic could drift towards the larger network.
Potential for Market Growth
Cash game traffic statistics from PokerScout on pokerfuse PRO suggest that there is the potential for the market to increase substantially.
Using a seven day moving average measure, 2014 cash game traffic peaked at 213 during the 2014 World Series of Poker. This figure represents a participation rate of 78 cash game seats filled per million of population.
That is the same level of participation the Swedish market has achieved, but global participation rates where there are no national tax and regulation requirements, are much higher—probably in excess of 120 per million.
The opportunity for temporary sign ups from out of state players, and the marketing benefit of being the home of the World Series of Poker, increase the potential size of the Nevada market.
The Bigger Picture
However, even if participation rates could be increased to 150 per million, that would imply maximum average cash game traffic at only 414 seats for the entire Nevada market.
The additional traffic would limit the new rooms’ potential to an additional 200 players or so at cash games, and the proportionally lower additional revenues from online tournament play.
The real potential is in cross-border liquidity sharing. 888 confirmed that the launch of its online poker room and that of Treasure Island in Nevada is only the beginning, and that liquidity sharing on its All American Poker Network (AAPN) between Nevada and Delaware will soon follow.
As a profit strategy, expanding into Nevada appears to be limited—on the other hand, establishing AAPN as a well known brand may be part of a longer term strategy that will reap its own rewards as more states regulate online poker.
