Predictions for Year Two of Nevada’s Regulated Poker Industry

It’s been a tumultuous year for Nevada’s infant regulated poker industry, marked by precipitous highs, volatile trends and uncertainty. Since peaking just weeks before online poker went live in New Jersey last November, Nevada’s iGaming scene has suffered the ill-effects of a five month long slump; one which saw cash-game volume plummet to its lowest levels since before WSOP.com became the state’s second regulated poker site. To make matters worse, as of the time of this writing, the downtrend continues. Yet, proponents of regulated poker remain optimistic that Nevada’s gaming operators will right the ship, or at least stabilize it before it sinks. And while no one can predict with full confidence where Nevada will stand after another year in the regulated market, we can certainly make assumptions regarding its future. Let’s do just that. In the near-term, WSOP.com will become the only heavily trafficked poker site in Nevada Since overtaking Ultimate Poker as the market leader in early November, WSOP.com has never looked back. WSOP currently controls 60 percent of the market’s cash-game traffic and boasts larger tournament turnout numbers than its sole competitor. Going further, WSOP.com has also established itself as the second largest network, and arguably the most heavily trafficked single site, in New Jersey. That bodes well for WSOP should New Jersey eventually enter into a compact with the Silver State. Moving into the realms of pure speculation now: Should Pennsylvania legalize online poker, it’s likely that WSOP.com will represent Harrah’s Philadelphia. Suddenly, the possibility of WSOP sharing liquidity across three states becomes a distinct possibility. Already, WSOP’s vastly superior poker software and identifiable brand has elevated it beyond Ultimate Poker. Factor in the merits of an increased player pool, and it inevitably becomes a far more attractive option to Nevada grinders. 888 may pose a threat to the very site it services That being said, there is one potential complication. 888 Holdings, which provides the poker platform for WSOP.com in New Jersey and Nevada, operates its own branded site on a separate network – the New Jersey only All American Poker Network. The company also hosts Delaware’s three online poker rooms, all of which fall under the 888 brand. Confused yet? Don’t worry, I’m getting to the point. Due to the distinction between 888 and WSOP.com, it is presumed that 888 will be tasked with launching its own branded poker room in Nevada before it can share player liquidity with Delaware. As a result, WSOP.com would be left out of the U.S. regulated poker’s first interstate compact. Furthermore, with an established presence in Nevada 888 would be in the same enviable position as WSOP.com regarding the possibility of a shared liquidity compact with New Jersey. And thus, the same competition that currently exists among the two in the Garden State would extend into the Silver State. It is possible however, that 888 and WSOP.com will consolidate into one network. From a business perspective this probably makes the most sense. Nevada will enter into a shared liquidity agreement with New Jersey by year’s end In February, a deal was signed that effectively allows Delaware and Nevada to share online poker liquidity. Expected to go into effect sometime in late-2014, the deal marks an unprecedented victory for regulated online poker. As an additional caveat, the deal also lays the framework for other states to join in. At the present time, the only other state boasting a regulated iPoker scene is New Jersey. However, up until recently New Jersey officials have reneged from commenting on the likelihood of the Garden State entering the mix. It was largely believed that New Jersey’s substantial population, relative to the combined populace of Delaware and Nevada, was the driving factor behind NJ’s apathy. But with cash-game numbers spiraling downward in New Jersey, it appears that the state’s reps are beginning to have a change of heart, made evident by a recent statement by DGE consultant Mario Galea to CalvinAyre.com. During the interview, Galea specified that New Jersey’s systems were poised to “share data among states,” emphasizing that the groundwork for an interstate compact has been established in NJ. He also proclaimed that NJ will likely enter into a multiple state compact by the end of 2014. While it’s exceedingly unlikely that New Jersey players will be anteing up against Silver Staters in 2014, New Jersey’s only real shot of keeping up with California’s soon-to-be regulated iPoker market is to make a move – and fast. A compact with Nevada and Delaware seems like a logical first step. Nevada will buck the seasonal trend Generally speaking, online poker volume dips throughout the spring, reaching its low point around June, before steadily climbing throughout the summer and fall months. However, there are several indicators that Nevada will not suffer the same seasonal fate as its industry counterparts. First and foremost, online poker thrived in Nevada last June. However, this could easily be attributed to the unpredictable nature of infant markets. Still, cash-game traffic in Nevada did not enjoy the same heights reached late last June until early October, when there was an additional online poker room in operation. It’s possible that this same pattern repeats itself in 2014. Secondly, the presence of the world’s largest tournament series – the WSOP – will significantly bolster the number of poker players in town, some of whom will be itching to play online during their downtime. Keep in mind that the primary reason why online poker falters in the spring is due to the warmer weather. But summers in Nevada are notoriously oppressive, so much so, that on some days players will rather remain indoors than combat the heat. And finally, tourism in general is higher in Nevada during the summer months. While I can’t necessarily see Joe Average firing up WSOP.com while on vacation with his kids, stranger things have happened. On a side note, if Delaware and Nevada enact their compact sometime earlier than expected, it should provide Nevada with a modest traffic boost. Unlikely to happen, but possible. Gaming operators new to Nevada will not be profitable Nevada is far too small to realistically sustain more than one, or at most two, profitable online poker sites. This may change as players from Nevada gain access to out-of-state players, but for now new operators likely don’t stand a chance. One needn’t look much further than to Real Gaming’s failed attempt to enter Nevada’s iPoker market as a firm illustration of this point. And if you’re saying to yourself, “Real Who?” – well…exactly. Here’s hoping for a prosperous Year Two for regulated gambling in Nevada.

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