Online poker became a legalized activity in three states in the United States in 2013 – Nevada, New Jersey, and Delaware. During that time, other states have explored regulation but none have pulled the trigger. Over the next couple of years, several states are expected to begin or continue investigating whether they should offer iGaming to their citizens.
During their debates, they will look at the present regulated online poker market for suggestions and potential best practices for their state. Today we look at five things that other states can learn about online poker and iGaming legislation from states that have already regulated the game.
Stick With Experienced Operators
As we’ve learned the hard way in Nevada and New Jersey, it presently isn’t profitable for a company to start from the ground floor in the regulated marketplace. Ultimate Gaming attempted to do so and was out of business within a year. They just couldn’t carve out a large enough niche for themselves to survive in the market.
Real Gaming is the other ground floor operation that started in Nevada and while it is still in operation, it is doing much worse than Ultimate Gaming ever did in either state. The site presently average 3 players during peak hours and hasn’t average enough players to fill a Sit & Go in over a year. If not for the backing of South Point Casino in Las Vegas, we expect they would have shut down long ago.
Other licensees in regulated markets have chosen to partner with experienced operators such as 888 Holdings and bwin.party to provide online gambling services. This gives them a customizable backbone for their product along with brand recognition that was sorely missing with Ultimate Gaming and Real Gaming.
Abandon the Poker-Only Model
We’ve learned two important lessons in the last two years. First, gamblers want to play online casino games. Next, online poker is not growing on a state-by-state level. Over the last two years, online poker numbers have been steadily dropping and in New Jersey, iPoker is down 22.4% from 2014.
We aren’t saying that online poker isn’t viable but rather that it should be a part of a multi-faceted platform that includes online table games, slots and maybe even DFS. Daily Fantasy Sports is a booming industry and this is the time to get it regulated. States that choose to group DFS in with online poker and general iGaming will have the potential to reap huge rewards.
Set Realistic Expectations for Revenue in the First Five Years
Some analysts and NJ Governor Chris Christie set grossly inflated estimates for the first year of online poker in the state. Nevada also went a bit overboard, but nowhere near the insane numbers that were coming out for the Garden State.
Lawmakers need to look at first year numbers for Nevada, New Jersey and Delaware and adjust them for their market size to get a better idea of what to expect. Again, we recommend that they examine all angles and not just online poker.
What’s proven to be the most impressive feature of the regulated marketplace is the success of Geolocation and remote verification technologies. To date, there’s not been a single instance of underage gambling in any regulated state in the United States.
In addition, states have been able to successfully ring fence players in their state in a way that seemed science fiction just a few years ago. Any technology that can pinpoint players down to what side of a coffee shop they are sitting is pretty impressive.
Regulation is a Slow Process
When a state starts talking about regulating online poker or online gambling, we see a lot of wild claims about citizens being able to gamble online “later this year” or “by this time next year.”
The reality has been that online gambling regulation has taken at least two years to become a reality in most states. From the time an online poker or online gambling bill was introduced in any regulated state, it took at least 18 months before a bill was ultimately approved and games went live.
Keep in mind that after a bill is passed, online poker regulations have to be drafted and then licenses applied for an approved. Afterward, the various sites must be fully tested and approved for live play. This is not a quick process and any state wishing to explore iGaming should realize games will not go up immediately up legalizing the activity.