I said I was going to cover what this all means on a few topics when I got home and as I start to write this it’s 6:07am and I’ve just spent a sleepless night on the bus from Phetchabun so I’ll probably just do a quick draft and finish up after I get a chance to sleep a bit.

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arrow 3 The Fallout From The Full Tilt / PokerStars Pullout

First off, I want to clear up a widespread misconception. Although the people named in the indictment are being charged with violating the UIGEA they’re also being charged with bank fraud and money laundering. Those last two are serious enough to take down Stars and Tilt if they prove to be true. People like the PPA are making flawed statements like this:

“Millions of Americans across the country today are outraged over the U.S. Department of Justice’s clear attack on internet poker. While the government’s focus may be on the companieswho operate these games, this is plain and simple a declaration of war on poker players and poker players’ freedoms. Not only are the over 10 million online poker players left without a place to play the game they enjoy, and from which many earn their livelihood, but they also haveconcerns over the availability of their funds. The PPA believes that no players’ money should be jeopardized by this prosecution.”

Yeah, that’s all good and all but they’re being charged with bank fraud and money laundering. What should the DOJ do? Let them continue to take money from US players while engaging in a alleged crime because it might inconvenience some players? What if their companies were a front for drug smuggling or human trafficking? Should poker players’ “right” to play poker trump all else?

Don’t get me wrong, I wish this hadn’t happened as much as anybody else but you don’t help the cause by trying to gloss over the fact that they’re being accused of some pretty serious crimes. Yes, it is the position of the DOJ that they were also in violation of the UIGEA and offering illegal gambling BUT the DOJ probably would have never done what it did without the money laundering and bank fraud charges. If they did what they are accused of doing, it is Full Tilt, PokerStars, and Absolute/UB who are the ones who have taken away online poker from players via their illegal actions involving money laundering and bank fraud.

The PPA and poker players should be focused on the fact that the UIGEA forced these companies into taking such drastic measures and that a fully regulated and legal online poker scheme would eliminate the need for such activities. That’s the message they should be delivering to the media and to lawmakers. You can’t just ignore that they broke a bunch of laws (allegedly) because people want to play poker.

Another widely accepted opinion I disagree with is that Stars and Tilt might be able to walk away with this with a fine. I don’t think so. They might be able to buy themselves out like Party and Anarag Dikshit did but that was for offering illegal gaming in the US prior to the UIGEA. That’s a whole separate case. Plus, again, it doesn’t take into account that neither Party or Dikshit were indicted on money laundering or bank fraud charges.

Keep in mind that the DOJ is looking for “at least $3bn in civil money laundering penalties and forfeiture from the poker companies and the defendants.” “At least” is a pretty scary word because that’s the starting bid.

Anyway, with that out of my system . . .

Affiliates

I think Jeremy Enke said it best in his blog post about what the fallout will be for affiliates. In summary, affiliates probably shouldn’t be worried about criminal charges. We aren’t payment processors and that’s what the indictments were targeting.

Obviously, this is going to hit the revenue streams of a lot of people though. But just like any other market shakeup it will produce winners and losers. Some people will adapt and some people won’t.

The biggest issue is that few sites are going to pay for US players and that is the bulk of the earnings for many affiliates. Anybody who hasn’t at least been dabbling in non US-facing traffic is going to have a bit learning curve to get over.

In the meantime, I think the biggest question is what happens if I send a player to PokerStars.eu? Does it get tracked or do I need to set up a new affiliate account? Stuff like this is happening way too fast for sites like Stars and Tilt to respond but it needs to get cleared up soon so affiliates know.

WSOP

I saw someone on 2+2 (sorry, no link as it’s buried in a 5 zillion page thread) compare the impact on the WSOP to the impact that the UIGEA had on the WSOP. In other words, little or no real impact. I disagree. When Party left the market it was months prior to the WSOP (October 2006) giving the market time to respond. And when Party left Stars and Tilt were more than happy to step in and fill the void.

But who will fill the void now? I don’t see many people having the balls to try to send 500 or 1000 US players to the WSOP Main Event. Not when people expect a hospitality suite, onsite handling by the room, etc, etc.

I also don’t think Stars or Tilt are going to be very active trying to sign up final table players like they have been in the past. In fact, I wouldn’t be surprised if they didn’t send anybody even remotely connected to the company to the WSOP. If nobody from either Stars or Tilt has been arrested or extradited by the WSOP the DOJ might just want to send a message about how serious they are by nabbing an employee to drive home the message that Stars and Tilt are finished in the US. I don’t think they can make much stick on a low level employee but it will send shivers up a few spines across the pond (and South of the border).

Players

Players are screwed. Everybody already knows how hard it was to get payments processed with US players and few operators are going to take the risk. There might be some fly by night operators thinking they can cruise under the radar but just like back in the early sports betting days you may never see a payout.

There are still a few sites like Cake and Merge that will handle US players and many US players will flock over there but I don’t necessarily think you’ll see non-US players following suit like they did when Party left the US market. I think many non-US players will gravitate towards quality and iPoker, Party, and other sites will see an increase in non-US players.

As always, even with Cake and Merge, the bottleneck is going to be payment processing. When you don’t do many payments you can fly under the radar but if players start flocking to those sites then a lot of money is going to start moving around the system and somebody is going to notice and, poof, there goes another payment option.

True professional players are going to need to leave US soil if they want to continue playing online. Thailand is great this time of year, folks.

Televised poker

Other than ESPN’s WSOP coverage look for a lot of this market to dry up too. Many of the programs we all love are what is called, advertiser funded programming (AFP). That means the online poker sites are basically funding the shows. Stars or Tilt either agrees to buy most of the advertising or pays to slap their name on it.

They may still be willing to continue this model in Europe and other markets but if they can’t sign up players from the US there’s no reason to purchase the advertising or brand the show so there won’t be much activity going on here.

Legalization

This may actually accelerate legalization and regulation of online poker. Yes, I know, I know, it’s not illegal now, blah, blah, blah. Well, guess what, the DOJ just fired a warning shot over the bow saying it is illegal so unless any of these guys wants to come to the US and fight it out in court it’s basically illegal whether a law exists or not.

And that may be what wakes up some lawmakers. When they see the magnitude of the industry and truly grasp how serious of a business this is it may influence them to act more quickly in getting a bill passed.

It may also clear the way for companies like Harrah’s or MGM to push for legalized gaming in the US now that the two biggest competitors in the poker space have effectively been banned.

It could also fire up poker players. Before it was, “Meh, as long as I have a place to play I don’t really care much whether it’s legal or not.” But now many professional players are out of a job and millions of others who enjoyed the game recreationally have had all/most of their options taken away.

On the other hand, if the allegations about money laundering and bank fraud are even remotely true it could well sink online poker in the US until people forget.

Poker news/media

I think Pot Committed says it best on this one. If you work in the poker news/media space . . . you probably don’t for much longer.

The vast majority of the poker news/media is funded by affiliate revenue the news/media sites generate. No US players means a huge cut in revenues which means . . . cutbacks.

Cashing out

Stars and Tilt have plenty of money and I’m sure they don’t want to make their problems worse by also having to deal with hundreds of thousands of players who have money tied up on the sites. They don’t need the class action lawsuits, bad press in the markets they can still operate in, and overall headache. They’ll find a way to pay out US players.

Should you keep your money on these sites? Should you cash out as soon as you can? I don’t know. I probably would cash out as soon as possible if I was a US player. They’re not going to let you play there so why leave your money there?

Stock prices

I think overall this is going to be a plus for many of the publicly traded that were forced out of the US market (or were never in it). I see Party is up nearly 11% on the news and I would assume if they can follow through and get some of these customers that will be in play as Tilt and Stars lose some of their huge liquidity advantage they could perform quite well.

Regulated Markets

This might come back and bite Tilt and Stars in the European regulated markets. Some gaming regulators might not take too kindly to indicted figures at the helm of a regulated poker site. If it does become a problem you could see people stepping away and new management coming in.

And Then . . .

But all of this is sort of the short-term view. The long-term outlook is actually quite interesting. As Kim Lund says About Time! As Kim and I have both worked for companies that had to operate with one hand tied behind our backs I think there is an overall feeling amongst the non-US facing rooms that Tilt, Stars, and UB/Absolute finally have to compete on more even footing.

And that should not be taken to mean that I’m happy any of the people have been indicted. This is merely a statement about reality of online poker since Oct 2006. If Stars, Tilt, UB/Absolute, and everyone else left the US they would have had to battle it out with Party, iPoker, and the rest of the non-US facing operators. The market would be much more even and there would be more competition. And, I believe, we would already have legalized poker in the US since Stars and Tilt wouldn’t be shipping so much money to politicians to oppose bills that don’t suit their fancy. They would have jumped on board the first chance to get back in the US regardless of the terms.

Yes, I know many people will lose their jobs. I feel for those people. Believe me, as someone who derives their income from the same pool they drink from I know I’m going to take an income hit as well.

But for five long years Party, bwin, 888, iPoker, and everyone else has been playing by the rules and every quarter they report declining poker revenues because Tilt and Stars keep pouring the high profits they’re making in the US market into other markets and driving out the competition. Believe me, there’s a lot of celebrating going on in Gibraltar and Malta right now. Not that people have been indicted but that Stars and Tilt are going to have to play by the rules like everyone else.

I don’t feel great about what is going to happen but you can certainly understand why many people are pleased to see Stars and Tilt forced to operate on the same level playing ground as they’ve had to. Though I know that doesn’t bring comfort for those who will be out of work.

I know. I’ve been there. I started at Party in Sept of 2006, the week the UIGEA was passed by Congress. And I was in Hyderabad, India on a company-wide conference call when Mitch Garber announced that they were shaving hundreds of jobs. I got lucky. Many others didn’t. And the same happened at 888 and many other companies.

The same will happen again. It might be painful for individuals but I think overall it will be good for poker. Having two sites dominate the entire industry was never good for the overall poker market. Players certainly weren’t benefitting from the economies of scale.

For all of the hundreds of millions (or even billions) Stars and Tilt hardly made a single innovation (other than Rush Poker) in the five years they owned the worldwide poker market. That’s a pretty sad record for all of the money they raked in (pun intended).

My hope is that this fast tracks legalization in the US and puts some innovative companies into the mix on a playing field that allows people to have a fair shot at competing. More competition will breed innovations that will benefit the players. Sucks for Tilt, Stars, and all of the people who have come to rely on their money to employ people but, in the end, it’s probably the best thing that could happen for poker players if you’re taking the longer term view.

As Kim Lund says:

The US market did not just die. It rebooted. CTRL. ALT. DELETE. And it will reboot much faster now. The void left by this raid is too juicy for the government not to want to taste. Tomorrow. Hopefully some of the ridiculous lobbying is now silenced and things can proceed in the quickest possible manner. Dear PPA, shut the hell up.

Sometimes you need a shakeup to move forward.

 The Fallout From The Full Tilt / PokerStars Pullout

About

Bill Rini has been working in the online poker industry since 2004. He was a product manager for poker at Full Tilt and was the poker room manager at PartyPoker. Currently, Bill is the Head of Online Poker for WSOP.

 

Bill has been blogging about online poker since 2003 and is considered one of the leading authorities on the online poker industry.

 

“I like What Bill Rini said in his blog” – Doyle Brunson

 

“In other news, we had Bill Rini write an absolutely home run blog.” Daniel Negreanu

 

“Industry insider Bill Rini has one of the most popular blogs in poker, with thousands of subscribers and fans regularly coming back for his universally respected insight into the industry” – Barry Carter (News editor for PokerStrategy, Co-Author: The Mental Game of Poker)

Ship It Holla Ballas!

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About Author

Bill Rini has been working in the online poker industry since 2004. He was a product manager for poker at Full Tilt and was the poker room manager at PartyPoker. Currently, Bill is the Head of Online Poker for WSOP.

 

Bill has been blogging about online poker since 2003 and is considered one of the leading authorities on the online poker industry.

 

“I like What Bill Rini said in his blog” – Doyle Brunson

 

“In other news, we had Bill Rini write an absolutely home run blog.” Daniel Negreanu

 

“Industry insider Bill Rini has one of the most popular blogs in poker, with thousands of subscribers and fans regularly coming back for his universally respected insight into the industry” – Barry Carter (News editor for PokerStrategy, Co-Author: The Mental Game of Poker)

(43) Readers Comments

  1. People can also play for free, for the mere enjoyment of the
    game. Despite the efforts of US lawmakers to prevent the spread of online
    gambling, it’s one of the biggest segments of the Internet, with millions of gamblers trying their luck whether it’s legal or not.
    It’s hard to picture it today, but flash back to the early 1990s and consider the options that were available for people who enjoy recreational gambling.

  2. i willl not stop playing poker
    i will not and i am not going to stop playing or fighting for my right to play Zynga Poker sucks
    i dont why your wasting your time playing there.

  3. I AM NOT LETTING OBAMA GOV, DOJ OR ANY OF THEM STOP ME FROM PLAYING POKER.
    THE WAY I FEEL ABOUT IT IS IF USA CANT PLAY THEN NO ONE SHOULD BE ABLE TO PLAY.
    IF THERE GOING TO TAKE OUR FREEDOM TO PLAY POKER AWAY THEN TAKE IT AWAY WORLD WID.
    THAT GOES FOR THE LOTTORY BINGO AND ANY KIND OF GAMBLEING

  4. is also a big reason Stars and Tilt left UB and Cake in the dust even though the latter duo had access to the US market (the other being more effective marketing campaigns).

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  6. Heh, nice speech, only problem is I’ve heard it sooooooo many times, always coming from players with ZERO skills, using this jingle in order to cover up their lack of poker knowledge. It’s called BAD BEAT, look it up, I’ve seen it in live tournaments too, but there nobody complains, all players in there where real players, not losers with a blog :)
    You have your American truth, which only belongs to you and it’s only preached by you, we have the Rest of the World reality. We play and win ( I know I do), you stay and point fingers to a phantasy only you believe in. Your precioussssssssss country did something similar years ago, closed down some sites, the sites filed a lawsuit and won. But you’re right, you’re America so you’re always right. Errr… nope, you’re not!!!

  7. You are totally missing the point, not only has Pokerstars or should I say Riverstars committed the above crimes they have also cheated millions of hard working people out of their money by rigging the deal. Do you honestly believe that the billions of dollars they made was not by a carefully constructed computer scam? Anyone that knows the slightest thing about poker and odds knows what online poker is doing makes no sense what so ever. There is a site called Tigergaming that ran for years with tons of “free” prize money offered in freerolls. Nobody played the stake games hardly so did it survive that long? By doing the same thing Pokerstars has done. CHEAT

  8. @Alex: You seem to be one of those people have a difficult time distinguishing between the way you think things should be and the way things are. It doesn’t matter if France or Italy made poker illegal. It was not legal in the US. Now you can argue all day long about how it should have been but there are tons of pot smokers who are in jail who think marijuana should be legal too. Wanting the laws to reflect your opinions does not change the laws.

    And that has been one of my main points since 2006. If the PPA, Stars, Tilt, the poker media, all kept telling people that it was legal. That created a certain degree of lethargy within the US poker playing community. Instead of spending the last 6 years trying to change the law, poker players have been content to sit back and wait for the laws to change since it really didn’t impact their ability to play.

  9. Errr… France, Italy and several other countries asked PS to come get a license. They never banned online poker. Just made a deal, set up specific mechanisms to ensure they get paid and kept on going, while getting nice taxes from the companies. Which US didn’t… They just came like some higher being and said stop, effing their own citizens and not getting any money out of this. OK, let’s close this dialogue here, it’s not going anywhere, although deep down you know I’m right, you keep preaching what the DOJ retards said. We’ll pick this up again when the real US government interests behind this Black Friday fiasco will be revealed, probably next year.

    Cheers

  10. @Alex: Uhm, please explain that to France and Italy that opted to fence off their players and make operators apply for country specific licenses even though they’re part of the EU and there are no requirements for country level gaming licenses.

    This is no different than California having laws that require a state gaming license.

  11. Local gaming commission? As in a gaming commission for each state? Who are you to request more Catholic services than the Pope? Either you give them a license for all US, or let other countries enjoy the taxes they get from PS and others.

  12. @Alex: All laws are open to a certain degree of interpretation. Otherwise there would be no need for appellate courts. I’ve also found that many of the people who dismiss the indictments (and even the UIGEA) like to ignore inconvenient facts.

    For instance, the UIGEA specifically says that if you break state gambling laws you are in violation of the UIGEA. Many people argued that this didn’t apply to online poker because there were no state laws prohibiting online poker. But that wasn’t true. Washington state had laws explicitly outlawing online poker (making it a Class D Felony). So once you factor in that piece of information, it is undeniably clear Stars and Tilt were in violation of Washington state law.

    The other part that people tend to overlook is the fact that even in states where there is no law against online poker, they do have laws saying that a gambling business must hold a license from the state’s gaming regulators in order to accept bets from residents. Tilt and Stars (and probably the high-level lawyers you’re referring to) seemed to think that having an offshore license negated all local laws. However, that is simply not how the law works. You can’t open a casino in Los Angeles because you have a license to operate a casino in Las Vegas. You have to apply for and be approved by the local gaming commission. Something no online poker room even bothered to attempt.

    I would suggest you read this other post I wrote in which I reference views expressed by gambling legal expert Chuck Humphrey.

    http://www.billrini.com/2011/05/05/online-poker-is-illegal/

  13. @Bill: I hear what you say, but I have to believe first what several high level lawyers from DC said. And they agree with me (well, I agree with them), the indictment wasn’t even worth the paper it was printed on… NONE of the items on the act would hold water.

  14. @Alex: If you look at how the laws work, it doesn’t matter where the server is located. The person playing is physically present in the US. Even under most international laws, that is all that matters.

    For instance, Google has gotten in trouble in places like France and China for presenting content that those governments deem to be illegal. Google can’t just avoid the law by not putting any servers in France or China. Google’s execs would be arrested on sight if they touched French of Chinese soil.

    And this really isn’t a point of debate. Remove the “online poker” aspect (to remove the emotional aspect) and go do a little research on how cyber-laws work. Basically what you’re going to find is that the laws presume that if you’re engaging the residents of a country you are considered to be doing business in that country and are thus subject to their laws.

    Like I said, and going back to your example, if all you had to do was locate your servers outside of the jurisdiction of the country you want to do business with in order to avoid their laws, why isn’t the net overflowing with Dutch websites selling weed? According to your argument, if some Dutch company sets up a server in Holland and sells weed online to UK citizens resident in the UK and that is entirely legal, the tube stations in London would be plastered with ads for coffee house websites in Amsterdam.

  15. @ Bill: I agree with you, but you forget that the servers where all the playing took place were in UK. No physical item or person from PS came on US soil to sell stuff. US players accessed PS UK based servers. So they came in a virtual Amsterdam to burn a virtual fatty, on UK soil.

  16. @Alex: Sorry, hit the “Submit” button too quickly.

    You seem to be confusing how the laws operate. If you go to Amsterdam and burn a fatty, you are physically located in a jurisdiction where getting high is legal. That’s okay. But the Bull Dog Cafe can’t sell you that same fatty while you are physically located in the United States without breaking the law.

  17. @Alex: The only problem with your argument is that it’s not how laws work. See, it would be illegal for me to sell liquor to someone in Saudi Arabia. That’s the point. The players were in the US. Had they been sitting in a cafe in Amsterdam, they can play as much online poker as they want and the DOJ wouldn’t have the slightest problem with that.

    It’s no different than if you sell goods from one state to another. You can’t simply ignore the laws of another state while transacting business in that state. When US poker is legalized, if it happens on a state-by-state basis and Nevada legalizes online poker but California does not, a Nevada casino cannot just start taking California customers because online poker is legal in Nevada.

    And if you live in Holland, you can’t set up an online weed shop and sell to people in the UK or any other country where marijuana is illegal.

  18. Bill, I haven’t had time to read all of your posts, but I have to disagree with you: PokerStars did nothing wrong. Since when one company completely outside the US has to respect US INTERNAL laws? The only “criminals” were the US players, those who came to PS to play poker, knowing it’s illegal in THEIR COUNTRY, not in UK!!! If it’s illegal to drink alcohol in the Arab states, and you seat next to an Arab dude in a NY bar, would you stop drinking because 10,000 miles away this is illegal? Or, if smoking weed is illegal in my country, do you think I would get arrested if I burn one in Amsterdam, where this is legal? The entire thing was a nonsense, an idiotic attempt on DOJ’s part to… well, I don’t know to what, not sure they know either… Probably they tried to get some leverage for when they’ll seat down with PS and decide how much taxes they want from the players’ money…

  19. FULLTILT POKERSTARS AND THE OTHER DID NOTHING WRONG.
    THE DOJ GOV. AND ALL GOV. OFFICES NEEDS TO GET OUT OF THE POKER WORLD. IT IS NOT illegal TO PLAY POKER.
    IT IS NOT A SIN TO PLAY POKER.
    GIVE US BACK OUR POKER SITS.
    YOU HAVE NEVER WON THE SO CALLED DRUG WAR AND YOU NEVER WILL. YOU CANT STOP US FROM PLAYING POKER WETHER IT IS ONLINE OR OFFLINE. IF POKER IS illegal THEN SO IS BINGO AND THE LOTTO.
    SRATCH OFF TICKETS.
    IT IS GAMBLEING AS WILL.
    IT ISD NOT RIGHT FOR USA NOT TO BE ABLE TO PLAY POKER WHILE THE
    REST OF THE WORLD IS.
    WE HAVE THE RIGHT TO PLAY POKER AND I FOR ONE WILL FIGHT FOR MY RIGHT TO PLAY,.

  20. I play Zynga Poker for free on Yahoo. After April 16th Yahoo no longer offers Zynga. Now will I be able to transfer my points/ Or do I have to start all over?

  21. our so called gov. did this not the poker sites.
    and no ppa is not going to shut the hell up.
    WE HAVE THE RIGHT TO PLAY POKER.
    JUST LIKE ANY PLACE IN THIS WORLD.
    OUR GOV. HAS NO RIGHT TELLING ANY OF US WHAT WE CAN DO AND NOT DO IN OUR OWN HOMES. THEY DO NOT HAVE THE RIGHT TO TELL US WHAT WE CAN AND CANT DO WITH OUR MONEY THAT WE WORK FOR.
    THE GOV. NEEDS TO STICK TO FIGHTING THE DRUG WAR AND THE TEREST AND CRIME GOING ON . AND STAY THE HELL OUT OF OUR PERSONALY BUSINESS. GIVE US BACK OUR FULLTILT AND POKERSTARS AND THE OTHER SITES. WE HAVE THE RIGHT TO PLAY POKER. WE ALL DO INDEED NEED TO FIGHT FOR THAT RIGHT.THEY SAY THIS IS LAND OF THE FREE. WILL SO FAR THAT STATMENT HAS BEEN A JOKE AND A LIE. WE ARE NOT BY NO MEANS FREE.WE HAVE HAD FREEDOM TAKEN AWAY FOR US NOT GIVEN TO US.

  22. As I recall it was closer to 15k to 10k in favour of Party over Stars at the time of UIGEA. The gap had been closing and I think that with the growing strength of the EPT at that time that gap would have narrowed much further within 12 months.

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  24. The Brick and Mortar guys paid Harry Reid a lot of money to get re-elected…he owes them big time….Obama needs 1 Billion dollars to run for re-election….what a coincidence this is going to be when they legalize it and it’s Reid’s old pals who happen to get the license…..Ceaser’s , Harrah’s etc….

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  26. @David: Zynga might be one. I’ve written about why Zynga won’t be the next PokerStars but that doesn’t preclude them from having any impact on the market. WPT (for real this time). Yahoo Games. Google. SEGA recently experimented with online gaming in Japan.

    Part of it is this is that we don’t know where the next competitor can come from. Once the legal issues are removed a challenger can come from anywhere. And a lot of these challengers might bring with them a vision that isn’t caught in today’s current paradigm of how people look at poker.

    For years, I’ve been saying that it almost seems criminal that no online poker rooms attend or exhibit at conventional gaming exhibits. Don’t you think the industry might benefit from mingling with people like EA, SEGA, etc? I do. Not necessarily partnering with them but just letting some of their expertise rub off on them.

    In a completely legalized US market you never know who might want to take a crack at it.

  27. @Ben: I’m talking about within the US. The entire subject of this post is in regards to US laws and US regulations. What they are or have done in Germany is beyond the scope of this particular post but might be topic for another post.

    I was encouraging them to move to Thailand more or less tongue in cheek.

  28. @Kim: And Full Tilt had moved to Dublin for the purposes of pursuing their own IPO.

  29. @Shane: I’m not denying that they were doing well. It’s just that Party was still twice the size of Stars at the time if my memory serves me correctly. Closing the gap suggests it was a much closer race.

  30. @Shane: We’ll have to agree to disagree on that one. I really don’t think Tilt would have been able to exist had they not stayed in the US. If you looked at Poker Scout at the time their peak time numbers during European prime-time were lower than most poker rooms.

    I also think you might be going off selective memory here but Party had launched a major European initiative some 12 months or so prior to the UIGEA. Stars was not attacking the European market at that time.

    I don’t mean to talk up Party and talk down Stars or Tilt. It’s just that I’ve seen very detailed stats which don’t jive with what you’ve written.

  31. Bill – Obviously things were speeded up by the Aussie falling into their laps. (Incidentally, I don’t believe that it was Pstars and FTP that tipped off the U.S. to his location. If they were going to pursue a civil claim against him, the last thing they’d want is for the guy to be arrested on criminal charges in a jurisdiction that doesn’t share their interests. ) I do think that MGM, through Reid, wanted things stepped up on the criminal investigation once the legislation failed.

    Admittedly this is all speculation and I could be way off-base. Regardless of how it played out, I still don’t see a scenario where more than two big players emerge for legalized online U.S. poker sites. Could you tell us who you see throwing their hat into the ring besides MGM and Harrahs, and why? Thanks.

  32. You shouldn’t perpetrate the myth of Party and others “obeying the rules” when their biggest market is Germany, and you are encouraging poker pros to live in Thailand.

  33. Regarding theories of what would have happened in an UIGEA free world, I’d like to kindly note that at one point (can’t exactly remember when) Pokerstars was up for sale… and by the time UGIEA hit, they were about to do an IPO.

    Different ballgame.

  34. First Bill, great article.

    I, however, have to echo Robert’s thoughts re PS and FTP in the world market. By 2005 Party was already feeling the pinch created by their competitors in the US, hence their mid-2005 statement to investors concerning earnings. One reason for this was Pokerstars basically co-opting the WSOP brand by snagging Moneymaker, Raymer and then Hachem as their public faces for PS. The UIGEA just helped to accelerate the momentum already generated by PS and FTP when Party pulled from the US in 10/06. Additionally, from a longterm online player point-of-view, the interfaces on PS and FTP are to this day the cleanest I used.

    As a first time reader, I will certainly be back to read a number of your articles.

  35. @David: Don’t worry, you sound like a conspiracy theorist. :-) Do you really think the DOJ could turn around such a huge and damning indictment in a week or two just because Wynn and Station announced deals?

  36. “The same will happen again. It might be painful for individuals but I think overall it will be good for poker. Having two sites dominate the entire industry was never good for the overall poker market. Players certainly weren’t benefitting from the economies of scale. ”

    Assuming there are eventually options for U.S. players, do you really think they’ll be more than two major sites for them to choose from? Imo, instead of PStars/FTP, it’ll be MGM/Harrahs.

    At the risk of sounding like a conspiracy theorist, I wouldn’t be surprised if this had something to do with Wynn and Station Resorts making deals with the respective big two online sites. MGM’s online poker bill (the one Sen. Reid put his name on in exchange for the huge donations he got from them) mandated a 15 month window where no online poker would be legal in the U.S. That meant the offshore sites would have a choice: stop serving U.S. customers for that time, or not be legalized regulated when MGM was ready to roll out their online poker site.

    The bill failed, but this is even better for MGM than the bill passing. Competitors don’t get a leg up by making deals with established online sites, and now those online sites definitely won’t be allowed to compete if/when online poker is legalized and regulated.

    I’m not as optimistic about a rapid rush to legalization, if for no other reason than it’s not a high profile issue for most of the public and Congress. And even if it does happen, I don’t see the market flooded by lots of companies. MGM/Harrahs will probably have any inside track.

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  40. great summary.
    it is a sad day for poker players but they should not blame the doj, but rater the companies taking their money while knowing the risk.

  41. @Robert: I would disagree about Stars closing in on Party at the time of the UIGEA. And Party made its own blunders in how they dealt with customers and such which had more to do with any other site’s success than anything else.

  42. Apart from their access to the US market, Stars and Tilt led the way in software playability. I’ve played on the main non-US sites for years (I live in Canada) and there isn’t a single one that can match the software quality of the big two. Quality of software was an important reason why Stars was closing the gap fast on Party before UIGEA and also for the speed at which Tilt built itself up from zero to become a major player.

    It is also a big reason Stars and Tilt left UB and Cake in the dust even though the latter duo had access to the US market (the other being more effective marketing campaigns).

    I think that without UIGEA, Party’s advantage would have slipped away over the years (but we’ll never know). And I still think Tilt and Stars will continue to lead the way in Europe and Asia despite losing their US customers.

  43. As usual Bill you hit this perfectly. I disagree with a few minor details but overall we are on same page. I moved to Las Vegas hoping that regulation would come sooner rather than later. It looks like I may get my wish. In the mean time the B&M games should be great.

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