In a stunning turn of events for legalized online poker in the United States, Ultimate Gaming announced on Friday that they are ceasing operations in Nevada. The Las Vegas Review-Journal broke the story and reported that employees of the company were informed of the decision on Friday morning.
Ultimate Poker became the first legal online poker site in the U.S. on April 30, 2013. After a successful launch, the company struggled to retain users following the launch of WSOP.com in September 2013. The company announced that they will stop taking wagers immediately and will shutdown the site according to regulatory guidelines.
State-by-State Legalization and Lack of Profitability Led to Shutdown
Ultimate Gaming cited a lack of profitability as their primary reason for shutting down the once popular online poker site. Even record-setting months during the summer were not enough to help the company stay afloat.
Tom Breitling, chairman of Ultimate Gaming, also blamed the current method of online gambling legalization as part of the reason for the company’s demise. The current method of legalizing at the state level, he claims, “has created an extremely cost-prohibitive and challenging operating environment.” Station Casinos, the owner of Ultimate Gaming, reported $10 million in losses during their third quarter that are directly related to online operations.
The company had been in consolidation mode for the last couple of months following the shutdown of Ultimate Gaming NJ. Eilers Research gaming analyst Adam Krejcik agreed with Ultimate Gaming’s shutdown, stating, “The (small in population) Nevada market cannot support more than one operator. So it really was just a matter of time and how long a company was willing to withstand losses before closing down.”
Ultimate Gaming Praised as a Model Licensee
Breitling also assured users that the company was working closely with the Nevada Gaming Control Board to guarantee a successful transfer during closure. A.G. Burnett, GCB Chairman, called Ultimate Gaming a “model licensee in every way” in a statement regarding the closure.
Burnett also made several admissions during the statement, including how the current poker environment in the U.S. isn’t optimal for licensed operators. He went on to state that when regulators started moving towards legalizing the game, they knew that several pieces had to fall into place for operators to succeed. As such, he stated that they GCB respected the decision of the company to shut down.
What’s Next for Nevada iGaming
While it is a bit early in the process, one can naturally assume that the Nevada market will take a hit in the short term as users decide whether to fully transition to WSOP.com or Real Gaming. The state is already in the middle of slumping revenues, down 33% since June.
WSOP.com will naturally retain their top spot in the state and should experience growth in traffic. However, one has to wonder what UG’s closure will mean for smaller operators, including Real Gaming.
Real Gaming has struggled to get traffic and during peak hours can only muster enough players for a six-handed Sit & Go. The All-American Poker Network was supposed to launch in partnership with Treasure Island, but will they possibly reevaluate this position following Ultimate Gaming’s closure?
Officials claim that interstate online poker is still on the table and that a platform is still in development. WSOP.com’s back-end provider, 888 Holdings, is working on the interstate platform between Nevada and Delaware. While a novel idea, Delaware will likely not provide enough revenue to make the endeavor profitable. New Jersey and eventually California are the obvious future targets for an interstate network.