Online poker’s Black Friday and what it means for you [Monday Editorial]
Monday, 18 April 2011
It’s amazing how much can change in a day. On Thursday evening I was still reeling from Vanessa Selbst and Jason Mercier making an amazing double-double/repeat-repeat by both defending their respective Main Event and Bounty Shootout titles at the NAPT Mohegan Sun. On Friday morning I took a metaphorical punch to the gut when I read that Full Tilt Poker, PokerStars and Absolute Poker had been indicted with 11 arrests made or extraditions pending.
The Two Plus Two forums crashed as a record 12,000 plus users tried to access the servers at the same time; the Twittersphere exploded as thousands of online poker players, casual fans and those like me in the media tried to work out what was going on and how it could be dealt with. Amidst the “sky is falling” and “pokerpocalypse” Tweets came the likes of Tom “durrrr” Dwan and Phil Galfond, men with bankrolls valued at the price of a small tropical island, telling everyone to make like the t-shirts and bumper stickers: KEEP CALM AND CARRY ON.
Unfortunately, carrying on is simply not an option for the thousands of people in America that make their living from playing poker online. Hours after the indictments, PokerStars and Full Tilt Poker announced that they were ceasing operations in the United States. For the past 48 hours or so, there have been no American players on either of the major sites.
“Well, thank the Lord I’m in Europe reading Bluff Europe,” you are now thinking Europeanly while reading this from your house in Europe. Unfortunately you are just as likely to be negatively affected regardless of whether or not you play on the major US sites. Does anyone remember the gargantuan drop in PartyGaming stock in late 2006? This fall happened after the Unlawful Internet Gambling Enforcement Act, which was slipped in under the Safe Port act in 2006 and effectively banned banks from processing online gambling transactions. Those of you who have been playing poker long enough will remember the fallout of the UIGEA. It was the end of the “golden era” where the highest stakes games played like your local pub tournament and top pair, top kicker was all you needed to take down a five-figure pot. The UIGEA was considered the end of online poker in 2006... and 2007... and 2008... basically, ever since then you can’t go a week without hearing how the games have gotten tougher and that online poker is dying. Well, the UIGEA was just a warning shot. This is the beginning of the battle.
So, to break it down – PokerStars and Full Tilt, the two bastions of US online poker, no longer offer real money games to US customers. Absolute Poker and UB were also included in the FBI shutdowns but are, as of Sunday evening, still offering real money ring games.
I’m not going to sugarcoat it – things will never be the same again. This is the biggest thing to happen to poker since Moneymaker’s win and unfortunately it’s the opposite end of the same spectrum – perhaps a more literal poker “boom”.
The sites in question, believed – truthfully, though the exact definition is debatable – that poker is a game of skill and thus transactions from poker sites don’t qualify as “online gambling transactions”. This, they felt, meant that by setting up shell payment processors and persuading banks to process poker transactions, they were not breaking the law. Whether or not that argument holds up in court is to be decided.
So what’s going to happen now? Is it time to hole up your family in a concrete basement while you sit anxiously by the door cradling a shotgun to guard your tins of beans? Now that the initial panic has died down a bit it seems clear that for those of us living outside the US, online poker isn’t dead. Rumours were circulating that all indicted sites would shut down operations globally within 48 hours of the indictments. Clearly this is not the case as I’m playing $0.1/$0.25 PLO on PokerStars right now. Sick brag.
However, the fallout from this is potentially catastrophic. As much as I’m liking the idea of a Euro-centric poker economy and the opportunities that we’ll get from PokerStars and Full Tilt focussing their energies here, I can’t help but feel that the loss of several hundred thousand American fish is greater than our gain. Briefly, since this editorial is running longer than I intended it (and I would need upwards of 10,000 words to fully articulate everything about this situation) let’s look at some possible negative effects:
Televised poker is largely paid for by poker sites. Poker After Dark will possibly hold onto its timeslot (the best thing on at 2am for sure) in the US but High Stakes Poker and the PokerStars Big Game are likely buried. The North American Poker Tour may have to go and thus the programming that comes with it – ESPN has already removed PokerStars ads from their site and a rerun of the 2007 WSOP was replaced by boxing over the weekend.
Player sponsorships are in jeopardy. Someone like PokerStars’s Daniel Negreanu or Full Tilt’s Patrik Antonius are obviously safe, though they may well have to take a pay cut and be willing to commit to international duties. “B-list” US players, such as those on Full Tilt’s $35 per hour/100% rakeback deal are the most likely casualties.
Live tournaments will be hit hard, perhaps hardest. While the UIGEA didn’t have disastrous impact on the World Series of Poker Main Event that didn’t prevent US players from playing online. This does. I wouldn’t be surprised to see a 2005-esque field of four to five thousand at the WSOP in 2011. As mentioned the NAPT will likely be gone and the Onyx Cup has already been cancelled. The EPT will surely survive, which leads us to...
The silver lining is that Europe is now the poker capital of the world. The European Poker Tour is going from strength to strength and emerging markets in Eastern Europe are growing by the day. Asia is another untapped resource – we’ve already had a tantalising glimpse of their gamble in the record-setting Macau cash games. BUT...
The Great Depression of the early 20th century gave birth to the expression that “when America sneezes, the world catches a cold”. Again, I’m not going to sugarcoat this – it’s bad, no matter what positives you take from it. PokerStars have lost a quarter of their player base; Full Tilt almost half of theirs. Remember the Reid Bill? Well, now we’re in the blackout period proposed, just with no warning. My prediction, based purely on being more of a poker industry insider than the average man:
1 – PokerStars and Full Tilt have to adjust and compete with iPoker, PartyGaming and Merge etc. in a European market. I imagine they’ll have little trouble, especially PokerStars who could well make themselves a dominating EU presence.
2 – The high and mid-stakes games will get harder as the US fish no longer play but the regulars making $100,000 or more a year will move to Canada and the UK to continue making their income. The lower stakes games will be business as usual, just with fewer players.
3 – The PPA and the tens of thousands of American citizens now out of work (not just rakeback grinders but poker media and industry workers) will lobby for regulation harder than ever – we’ve already seen it attempted and even now Washington are planning online gambling.
4 – We see, within one to five years, regulated and taxed online poker in the US. Best-case scenario is global gaming where the poker world plays mostly on HarrahsOnlinePoker.com or WSOP.com; worst-case scenario is poker games restricted to individual states or just the US. I can’t see that happening though, why would the US Government want to miss out on a slice of the world’s rake?
PokerStars is already the market leader for online poker in Europe and we can expect to see them doing OK. However, we need to bear in mind that with $3,000,000,000 owed to the US Government ($1.5bn from Stars; $1bn from FTP and $500m from CEREUS) the sites could still go under. Things could still get worse before they get better.