Online poker in Pennsylvania generated just over $35 million in revenue it its first year, according to figures released by the Pennsylvania Gaming Control Board (PGCB) earlier this week.
The $2.4 million in revenue reported by PokerStars PA for the month of October reflects the twelfth month of operation in the Keystone State by the worldwide leader in online poker. The company launched the first online poker room in the state in November 2019 and has remained the sole provider in the market since.
Of the revenue generated, $4.9 million was paid in state tax (14%) and an additional $700k in a special Local Share Assessment (2%), bringing the total that flowed into state coffers at $5.6 million.
With currently just a handful of states that have legalized and regulated online poker in the US, it is important to recognize the different aspects of the markets when comparing them. Factors such as population, the number of poker networks in the market and the existence (or lack thereof) of liquidity sharing can impact performance.
With online poker actively being offered in three other states – Nevada, New Jersey and Delaware – New Jersey is the state that is the closest geographically and in terms of population size. However, the maturity of the market (launched in 2013) and the number of operators – NJ has three active online poker networks one of which shared liquidity with Nevada and Delaware – prevents us from making an apples to apples comparison.
With that in mind, over a similar period of time (PokerStars PA had a designed limited access period in the first days of its opening month), online poker in New Jersey generated slightly more revenue than was collected in Pennsylvania. All operators in the Garden State combined to produce $36.6 million in revenue with revenue from the top network (comprising WSOP.com and 888poker) totaling $15.6 million.
According to the Pennsylvania Gaming Control Board, online poker in Pennsylvania has “operated smoothly” in its first year. “Certainly, having an online poker site amidst the COVID-19 retail poker room closures was beneficial,” Communications Director of the PGCB, Doug Harbach, told pokerfuse. Harbach also indicated that looking forward to year two, the Board does not anticipate any additional challenges.
When asked if the first year of offering poker in Pennsylvania was significantly different from other regulated markets, Luke Staudenmaier, Head of Poker Operations for PokerStars, told pokefuse, “There hasn’t really been too much in the way of surprises.“
“In this case, we expected ring games to make up the majority of traffic and, so far, that has been the case,” Staudenmaier continued. However, he did caution that the addition of shared liquidity in Pennsylvania could shift the balance of interest towards tournaments.
One Year of Tournament Series in Pennsylvania
In total, guarantees of more than $8 million were offered in tournament series during the first year.
To celebrate its first year in Pennsylvania, PokerStars put on a special 1st Anniversary Series that just finished earlier this week. In total, the 35 events attracted 11,181 entries, and $1,103,965 was paid out in prize money.
What to Expect from Pennsylvania Online Poker in Year 2
If the performance of online poker in its second year in New Jersey was an indication of what we could expect in Pennsylvania, online poker revenue would be expected to decline. However, the circumstances surrounding New Jersey’s second year and those applicable to Pennsylvania are so disparate that the factors set to impact Pennsylvania’s second year should be evaluated on their own.
While much of year two will take place in 2021, two months of the busy season for online poker will still take place in 2020.
Four conditions that will strongly influence the trajectory of online poker in Pennsylvania include:
- Sports Betting
- Additional Operators Joining the Market
- Shared Liquidity
It is undeniable that the COVID-19 pandemic increased online poker participation in 2020, and while there appears to be a light at the end of the tunnel, the coronavirus will undoubtedly encourage more people to stay at home over the course of the next three to six months.
This increased time at home will make online poker more attractive to many over that period, but the increased stress on the economy as a result of the pandemic could diminish interest. In the end, healthcare and economic decisions will play a big role in the success of online poker in Pennsylvania in year two.
The popularity of sports betting will continue to positively influence the adoption of online poker. Sports leagues and their media partners have embraced the once illegal and frowned upon activity. With sports betting having become so widely accepted, it can be argued that gambling in general is seen as more socially acceptable as a result.
Add to that the fact that online sports betting has been even more popular than its land-based counterpart, and we can extend that increased acceptance of gambling on the internet to online poker.
More Online Poker Rooms in Pennsylvania
The number of online poker rooms offering games in 2021 will have a significant impact on the market as a whole. Along with additional operators will come more marketing dollars and wider awareness of the legality of online poker. Currently the only online poker room in the state is PokerStars PA, but other operators have already been vetted by the PGCB and are likely to launch in year two.
The top online poker rooms expected to launch in the market’s second year are partypoker PA and WSOP PA. The companies behind both have already had applications approved by state gaming regulators and are likely waiting for market conditions to take a more favorable turn before investing further in the Pennsylvania market.
The likely “keystone” on which the advancement of online poker in its second year in Pennsylvania depends is shared liquidity.
The ability to connect players from multiple states is very appealing to online poker operators and players alike. In New Jersey, the one online poker network that has been able to combine its players across state lines, WSOP NJ, has seen tremendous success compared to both its past performance and to the performance of its competition during the time it has enjoyed the status as the state’s only shared liquidity operator.
Adding another state with a population bigger that all of its currently connected states combined would likely be enough to propel WSOP PA towards a launch in Pennsylvania.
And even though partypoker only operates in New Jersey at the moment, the prospect of connecting those two player pools will be hard to resist.
A condition that will increase the attractiveness of shared liquidity is the impending launch of online poker in Michigan. While no launch date has been announced, the Michigan Gaming Control Board has been working diligently to launch its online gaming market as soon as possible, and that can happen as soon as next month.
However, in order for online poker operators to potentially share their player pools with those in Michigan, lawmakers will need to legalize cross-border access. Currently a measure to do so sits with the Michigan House and is expected to pass by the end of the year.
But shared liquidity in both Michigan and Pennsylvania needs more than just regulator and lawmaker approval to become a reality, it needs a favorable resolution to the Wire Act case.
The US Department of Justice under the Trump administration has sought to reinterpret the 1961 Wire Act in a way that would make most internet gambling that crosses state lines illegal, but thus far, the courts have sided with the online gaming industry’s position that the prohibitions under the 60-year old law do not apply to internet gaming.
Currently, the case is with the US Court of Appeals for the First Circuit, and a decision could theoretically be handed down any day.
The Wire Act case could also reach a favorable conclusion under the incoming Biden administration. Joe Biden was the vice president during the Obama administration that interpreted the Wire Act as not prohibiting online gaming, and Biden has made public comments opposing the Trump administration’s position, making it even more likely that shared liquidity will once again be legal across the land.