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Posted by on Oct 1, 2015 in Blog, General Poker, Personal | 0 comments

One Small Step for PokerStars, and One Giant Leap for Online Poker

 

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From 2004 through 2006, I served as Director of Communications for PokerStars.com (Rational Gaming Enterprises).  The views expressed herein do not reflect the opinions of my past or present employers or associates in any way.  My views are entirely my own.

 

All I could think about last night, upon hearing that PokerStars.com had finally been approved to operate legally on U.S. soil for the very first time was what must have been going on in the mind of Isai Scheinberg — the founder and pioneering force behind the company that I served loyally for nearly three years.

Somewhere out there, he must be smiling.

What many probably do not remember and may not know is that Scheinberg desperately longed for the defining moment when this day would finally come, when the online poker company he and his son Mark tirelessly constructed from the ground up to eventually be one of the most successful gaming businesses in the world would finally be legitimized in what was once its biggest market of all — the United States.  Unlike virtually all other start-up ventures that become successful companies that typically try to avoid government regulation and taxation, Scheinberg absolutely begged for the day when he and his company would be subject to regulation and paying corporate taxes.  He never ran away from government oversight.  Instead, he pleaded for it.

There’s unmistakable honor in serving a company that wants to do the right thing, a characteristic I observed firsthand repeatedly over the years I was near the top of that hierarchy.  Scheinberg, once a senior programmer for computer giant IBM, never liked any degree of uncertainty.  Contrary to the type of business he was in, he wasn’t a gambler, at all.  He didn’t like the notion of maneuvering in gray markets and operating under clouds of legal uncertainty.  And so Scheinberg authorized millions of dollars to finance various public relations teams, advertising agencies, lobbying firms, political contributions, and expensive legal campaigns all coordinated in an effort to move step-by-step towards the day when PokerStars.com would be every bit as legitimate in America as McDonald’s or Chevrolet.  Finally, that day came — although a bit late.

Scheinberg didn’t survive in his role as founder of PokerStars to throw any parties or massive celebrations for what September 30, 2015, represents on not only the historical timeline of online poker but the personal struggle to achieve both legitimacy and validation.  It’s the culmination of 14 painfully long years of working, waiting, and wondering.  It’s the end of one journey, and likely the start of another.

Amaya Gaming, which bought PokerStars last year becomes the beneficiary of this defining moment.  No doubt like Scheinberg, they are smiling, too.  Amaya is now primed and in the perfect position to invest heavily and grow a sector of the gaming economy that frankly could use a major boost.  Short of legalization in California, New York, or Pennsylvania (which could be on the horizon in the foreseeable future), the state of legalized online poker inside the U.S. had come to a stalemate.  Hence, PokerStars’ entry into New Jersey and presumably states behind it could and should set in motion some rapidly tumbling dominoes.

We poker players and those closely affiliated with the industry haven’t had much to celebrate since the darkest days of UIGEA and Black Friday, two disastrous defeats for online poker in the United States.  While much credit should go to companies including Caesars Interactive Entertainment (WSOP.com) and 888poker for establishing a firm beachhead in three states so far (New Jersey, Nevada, and Delaware), the arrival of a new poker giant onto the landscape should swell in a new tide that shall lift all boats.

So, what comes next?

PokerStars.com has already signed an agreement with Resorts in Atlantic City.  The ramifications for their deal will be seen and felt both online and on a land-based platform.  PokerStars undoubtedly has the existing technical and management infrastructure to build trust and solid brand loyalty in New Jersey.  Now, they can expand upon that by investing heavily in statewide marketing, hosting land-based events in Atlantic City (giving some measure of a boost to that lagging economy), and most important of all — elevating the poker player market to the point where observers outside the state begin to take notice, point to New Jersey’s online poker success and tax revenue generation and try to emulate that business and regulatory model in other states.

A recent poll in New Jersey revealed some staggering statistics that about 60 percent of the residents of the Garden State still are not aware that online poker/gambling is legal.  Despite numerous marketing campaigns and a flood of advertising, a majority of citizens have no idea they can play poker legally on their computer.  One expects that given PokerStars immense success cultivating and growing immature markets in numerous foreign countries over the past decade, with such vast resources they should have little trouble jump-starting New Jersey’s online poker market into overdrive.  Moreover, I don’t foresee cannibalization at all happening.  PokerStars.com’s own competitors are very likely to benefit just as much from having a new powerhouse as a market force, both short and long term.

In the short term, PokerStars operating in New Jersey is going to reignite public awareness and spark greater enthusiasm for the online poker product, which has gotten lost in the shuffle as other forms of online gambling (notably — daily fantasy sports) have usurped the allegiances of the much-coveted 21-35 male demographic.  Consumers who might have tried online poker and given up, will in some measure be curious and give the cash games and tournaments another try, especially once a bombardment of advertising begins.  Furthermore, PokerStars left a sizable loyal customer base in New Jersey behind when they pulled out of the market in 2011.  While many players went on to sign up at other poker sites, some left and never returned.  Given that PokerStars likely maintains its old database, these players can (and likely will be) encouraged to play with deposit bonuses, guaranteed prize pools, and other special attractions.  PokerStars will also most certainly run and sponsor a major tournament at some point in Atlantic City — perhaps something as huge as the PCA held every January.  Not immediately, mind you.  But that’s certainly on the drawing board.

Of course, the ultimate prize is much wider and greater legalized online poker across the entire United States, which brings us to the long-term ramifications of this news.  If and when New Jersey meets and then exceeds player and revenue projections, it’s only a matter of time then before neighboring states with large populations that can generate their own critical mass among players — most notably Pennsylvania and New York — take a seat on the online game and the cards are dealt to a much larger number of consumers.  Then, once that happens, intrastate pacts become viable and liquidity is all but guaranteed.

This is a genuine Neil Armstrong man-on-the-moon moment for online poker in the United States.  That’s one small step for PokerStars and one giant leap for online poker.

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