Merge has more than doubled traffic in the last year, with the bulk of growth coming post-Black Friday. Has the network, however, become too big for its own good?
PokerStars and Full Tilt, who combined dominated nearly 60% of the international market, have lost 30% and 50% of their traffic, respectively, since the April 15 indictments. Black Friday, however, has provided sites still serving the United States with a unique opportunity to capture market share. The most notable names are prospering: Merge, headquartered in Australia, has seen a 50% increase in traffic, while Calvin Ayre’s Bodog is up 30%.
Merge has experienced the most explosive growth, which had begun before Black Friday, and traffic is up 120% since this time last year. The network consistently has over 10k players online at peak hours for the first time. The unprecedented growth, however, has caused a backlog of deposits and withdrawals. On June 1, Merge called off all new US deposits, with the pause expected to last four-to-six weeks.
Merge says the hiatus will ease the backlog and facilitate US cashouts, which since Black Friday are taking four-to-six weeks to reach players’ accounts. However, the move to call off US deposits may be more about protecting the network against asset and domain seizures. There is real fear amongst Merge skins that the network has become too big for its own good, attracting the attention of the Department of Justice.
Merge was pulling out of certain states and territories before June 1. On May 24, the network announced plans to no longer accept new deposits from Louisiana, Maryland, Missouri, New York and Washington. In May, Merge also bowed out of France, where the network lacks the government-issued license needed to operate a gambling site. Merge skin Hero Poker called off US action on May 25, while Sportsbook and PlayersOnly stopped new US deposits on May 1st.
The news is not surprising. Since Black Friday, a handful of US-serving sites (Victory Poker and BetUS, for example) and their owners have stopped deposits and play, and distanced themselves from the American market. Doyle Brunson left DoylesRoom on May 13 due to potential legal action; less than two weeks later, the site was seized in the May 23 Maryland indictments.
By refusing new player deposits from certain states, and leaving other territories, Merge is clearly taking steps to protect itself from indictments. Some skins are taking further measures to safeguard their sites, such as Lock Poker who have moved to a .eu domain. Others are also making the transition. RPM has a .eu site, for example, though it is not yet fully propagated.
Many analysts say that Merge’s use of banks and companies outside the United States to process payments will help the network avoid— though perhaps only delay—prosecution from the Department of Justice. Merge also shuns the echecks that led to the downfall of The Big Three. To facilitate deposits and withdrawals via electronic bank transfer, Poker Stars, Full Tilt and Absolute Poker had to set up fake companies and bribe banks to handle the transactions. Merge is not taking these risks. The network uses paper checks from non-US banks for withdrawals to American players.
Neteller and other ewallets are more vulnerable, and expose gambling sites to greater risk. UseMyWallet, which was operated by QuickTender, used to be a withdrawal option for Americans on Merge with existing UMW accounts. However, the ewallet went down on May 25 after company accounts were seized in the Maryland indictments.
With paper checks taking six weeks door-to-door, Merge is working to provide an alternative. Many players hope they will be able to cash out via Western Union, which has now become the most common method of deposit. Debit and credit cards have seen success rates for deposits drop below 10% since Black Friday.
Even if the Department of Justice is working to indict Merge, it could take months, even years, to build a strong enough case against the network. The DOJ has been working on indicting The Big Three since the UIGEA was passed in 2006, and the case only made its critical breakthrough after Daniel Tzvetkoff provided vital evidence incriminating the sites as part of a plea bargain to avoid 70 years in prison. Moreover, Merge’s multi-skin structure (all 67 of them) adds layers of complexity. The DOJ may be able to shutdown individual skins, but bringing down the entire network may prove too tough.
So what does this mean for US players and their balances? Here at iPokerVIP, we have recommended that players only deposit and keep small amounts of cash on Merge. It is important to understand the risk of shutdown and seizure, particularly in the current political and legal climate. However, players are in a bind. Even if Merge is shutdown in the next month or two, cashing out now would do little good as withdrawals are taking that long to process. (In the Merge withdrawal threads on Two Plus Two, people who have successfully withdrawn from the network since Black Friday are few and far between).
If Merge is indicted, with domains and assets seized, US accounts may be left in limbo. The network segregates player funds, but a round of indictments against the biggest skins could bring Merge to its knees. The biggest concern if indicted is that the network does not have enough international exposure to survive a shutdown of US operations. The United States makes up as much as 80% of Merge’s player pool, by some estimates.
Almost all sign-ups since April 15 are American. The player composition is unlikely to change. Merge is unable to advertise in the United States, like other poker rooms, as television networks have pulled advertisements since Black Friday. Internationally, the network cannot compete with the likes of PokerStars, Full Tilt, Bwin.Party and iPoker. Merge is not a realistic option for European players; it has become a niche network for American players post-Black Friday.
Whether the network, facing indictments and fines, could cash out players is in doubt. Merge balances may be at risk. However, players will hope several things will keep their money safe: the network’s multiple-skin structure, and the decision to use only banks and payment processors outside the United States. For how long Merge skins can operate without widespread prosecution, however, remains to be seen.
We had hoped to publish a Q&A interview to accompany this piece. Unfortunately, Lock, RPM, Hero Poker and other skins declined to answer any questions. Representatives on Two Plus Two explained that Merge was purposely keeping a low profile. It is unlikely, however, that shying away from the media will prevent the Department of Justice from noticing a network that has more than doubled traffic in the last year.
Disclaimer: Author Godwin Maidment has an account on RPM Poker, where he plays, passing the time, waiting for US legislation.
With Merge stopping new deposits on June 1, Americans playing poker online are left with Bodog, Cake and even smaller, less reputable operators like Everleaf and Yatahay. Here At iPokerVIP, we think it is not the best time for Americans to be depositing on any US-serving site, unless they are comfortable with the significant risk of losing their accounts.