While online poker has returned to three states, the vast majority of online poker played in the United States is on unlicensed online poker rooms based offshore and operating under almost no regulation. Why are so many players still playing offshore?
We’ve seen Full Tilt, UltimateBet, Absolute Poker, and at least ten smaller operators run off with players’ money, and we know there is a risk of the same thing happening with the current crop of unregulated sites. It appears that Lock Poker has done much the same thing and is no longer liquid, and other sites may be headed in that direction. So why are so many players from the US still playing on these sites?
Probably because it’s their only option. People want to play poker, and sometimes they want to do so from the comfort of their own homes and they don’t believe the government should have any say about what they do in their own homes. It’s simple really, but apparently it’s not so simple for lawmakers.
Shutting down all of the online poker sites outside the U.S. that serve Americans would be impossible. Anytime they shut one down, a new one, probably shadier than the last one, will pop up. We’ve already seen this with PokerStars leaving the country. The sites that popped up to replace it are not nearly as legitimate or as safe.
The solution to this problem? As with any prohibition, the solution is to remove the barrier for legitimate businesses to fill the market. They already have massive advantages, and would take over the market quickly if they were allowed in unless they were completely crippled by over-regulation.
If regulated online poker were available in a combined player pool that included even half of the United States, giving it access to around 200 million people, the regulated sites would eliminate their unregulated competition almost instantly. Let’s take a look at the advantages that the regulated sites would enjoy.
This is where the regulated sites really shine. Depositing on a regulated site could be done in literally any way that you can spend money. If Paypal didn’t want to be involved, then Skrill and Neteller certainly would. Western Union, deposits via electronic check, debit and credit cards, and we could even see gas stations and convenience stores getting in on the action like 7-11 has done in New Jersey.
The unregulated sites are constantly dodging the UIGEA regulations, breaking the law in America, and losing tremendous amounts of money on deposit fees and account seizures from the Department of Justice. Depositing on Bovada right now, the largest US-facing online poker site, requires a 4.9% deposit fee and most options won’t work for most people.
They have to charge this 4.9% fee, and still can’t get most deposit options to work, because the United States government is making it tough for them to do business. Even with a huge disadvantage, the Bodog/Bovada poker site is the sixth largest online poker site in the world according to industry resource Pokerscout.com.
Trust and Safety
Regulated sites within the United States can be bonded, are typically required to hold deposits in separate accounts, and are attached to large corporate entities in the gambling world that could pay off their debts if necessary. It’s possible that you could lose your money if a regulated online poker site went under, but it is very unlikely.
Unregulated online poker sites, even those that are well funded and operating in a very legitimate way, have to deal with the fact that unregulated sites have gone broke and lost players’ money before. Everyone thinks they are going to be a winner, and nobody wants to run up thousands of dollars in winnings only to have them disappear into the ether.
Would you rather play on the same site every day, use software you are comfortable with, talk to the same people and make friends, or bounce from site to site as one gets shut down and a new one pops up? Regulated sites win this portion of the battle without a doubt.
Shoot for the Moon
Many of us play poker in hopes that we will win that one big tournament that will make us wealthy and prove to everyone that we are a great player. It doesn’t usually work that way even when you get a big score, but for many players it is the dream of bigger things that fuels their interest in the game.
Legal online sites can run qualifiers to their big live tournaments within the United States, while the unregulated sites cannot. This was a big hit for WSoP.com in Nevada this year as well as for Borgatapoker.com during their recent WPT event. Back in the pre-UIGEA days, there were thousands of online qualifiers to the main event at the WSoP every year. Now the unregulated sites can’t run qualifiers to anything within the United States, which is where most Americans would like to play their big tournaments. This provides yet another advantage for the regulated sites.
Perhaps the largest advantage for the “legal” online poker sites is the chance to advertise real money cash games openly in the United States. If the market opens up in the US, we will see ads during the Super Bowl, constant advertising during sporting events, and taxis around the country with the web addresses of online poker sites stenciled across their doors. The ability to advertise would mean all the difference in the world.
Why Are Unregulated Sites Still Thriving?
There are two major reasons why the unregulated sites are still in this fight when the battle looks so lopsided.
The first is regulation. The very regulation that allows them into the market could cripple them. If the government makes it too hard for the regulated sites to run, they will fall behind and have trouble ever catching up. Red tape, licensing fees, waiting periods, and all kinds of other over-regulation could cripple the US-based sites so badly that they can’t compete even with all the advantages we listed above.
The second is simple availability. Right now there are only three states with legal online poker, and they haven’t combined their player pools. An online poker site cannot survive unless it reaches a critical mass of players that brings in more players and keeps games full. Getting to this critical mass can be tough within a single state, and we have seen that even New Jersey, a state with a significant population that are comfortable with gambling, is having trouble reaching critical mass.
The Fight Rages On
This fight won’t be over until the government decides it is over, and we know how quickly things move in government. When the government makes the right rules, and more states join the player pools, we will see the regulated sites win out quickly and the competition will fade into the background. All we can do until that happens is support the regulated sites in the US when we can and support legalization efforts in our home states.