With yesterday’s announcement that a group of 13 tribes in California have come to an agreement on a unified online poker bill first reported by OnlinePokerReport.com, I have decided to take a look at what the California online poker industry would look like with and without PokerStars.
The new bill (which can be read here) does contain a bad actor clause, and if it is kept in place it could be a deal breaker for online poker expansion as one of the disqualifiers for a license states:
“(8) Has knowingly and willfully accepted a bet or entered into a financial transaction related to such bet after December 31, 2006, from a person located in the United States on any form of Internet gambling, including, but not limited to, poker, that has not been affirmatively authorized by the law of the United States or of the state in which the person making the bet or where the related financial transaction was located, or has been the holder of a direct or indirect financial interest in a person or entity that has accepted that bet or engaged in such transaction.”
So what we have is 13 of the 14 key tribal interests on board, but will the small bone that appears to allow a company that falls under the bad actor language to fight that designation be enough for PokerStars and its allies, the Morongo Band of Mission Indians, and three of California’s most storied card casinos.
We will have to wait and see how PokerStars and the Morongos respond to this bill, but in the meantime here are my estimations of the California market with and without PokerStars.
California sans PokerStars pre-launch
A California online poker industry without PokerStars would likely be very competitive, with a lot of jostling and with several legitimate contenders for the top spot prior to launch. Marketing campaigns would be almost certainly massive affairs, as each provider attempts to best position themselves for the launch date.
The reason for this is parity.
When it comes to the actual product there is PokerStars and Full Tilt Poker and then there is a bit of a drop-off to the next tier of providers such as partypoker, PlayTech, 888, and so on, but these providers are very close in terms of their overall product.
Without PokerStars (and by extension Full Tilt Poker) the other providers may feel that the status quo is good enough, and devote their time, energy, and money to other areas.
In my opinion this is the wrong approach, as one of the biggest complaints has been the software in place at licensed rooms, and more importantly, at some point they are going to have to compete against PokerStars.
By not addressing the software gap they are just delaying the inevitable, and my personal opinion is that the best software will rise to the top, not simply the best marketer or the best brand. Serious online poker players are not impulse buyers, a strong marketing department will certainly help boost your ranks, but eventually they will migrate to the best product.
California sans PokerStars post launch
Additionally, without PokerStars the fight over California’s massive player base will be chaotic, and players will have plenty of online poker options to choose from. You can expect to see an everything but the kitchen sink as rooms fight for players using different marketing outlets and promotional offers.
Unfortunately, the industry as a whole will suffer as there is unlikely to be that singular room, where even if it’s not your main site, it’s still a place you keep a bankroll because of its big tournament guarantees and for those rainy days when your primary room doesn’t have any good games running.
Instead, as mentioned above, it will be an industry of parity; it will be the NHL playoffs where virtually every team has a shot at winning the title, whereas a market dominated by one or two poker sites is more like the NBA.
California with PokerStars pre-launch
Prior to launch I would expect the other online poker sites to work their tails off to release the best product they possibly can. They are going to want to close the gap with PokerStars as much as they can, and will likely try to trump them in one way or another: Be it customer service, an initial bonus, or a VIP Program.
If they don’t, and they decide to launch with an inferior product, with PokerStars as an alternative in the market, it will be the equivalent of online poker suicide.
In this respect, PokerStars’ presence would likely improve the quality of their competitors. That being said there is also a downside to their presence in the market.
California with PokerStars post-launch
Unfortunately, once the sites launch California would almost certainly be dominated by PokerStars, with the site and its partners accounting for at least 50% of the market and potentially more. Try as they might, there simply isn’t another online poker provider capable of competing with PokerStars at this point in time – which explains why many entities want them out so badly.
What there would be is a lot clawing for second place, but with less revenue coming in the battle would be one of who pinches their pennies better rather than who is the better marketer with superior ideas. We would see a lot of what we find in the global markets where second tier sites simply rely on rakeback grinders or specific niche markets, and don’t really have serious designs on competing with the big dogs like PokerStars.