The A-Bomb was dropped. And as a few days have now passed, we’ve assessed the damage.
Grab a cup of coffee and block out some time, here’s our take on the New Poker World OrderTM.
Black Friday = Reid Bill (-Indictments)
First, revisit your notes from the Reid BillTM. This freeze-out may be a little chillier than it would’ve been had Senator Harry Reid not backed off his bill in December to regulate online poker, but the principles are the same. There won’t be online poker in the U.S. for some time, but legislative branches across the country have been working quickly in 2011 to change that. Maybe they move more quickly now, maybe they don’t. We don’t know. But if Caesars and MGM really need Harry Reid to make good on getting him re-elected, now would be the time to apply some pressure.
Simply put, we’ll see what kind of juice Caesars/MGM/et. al. really have now.
For the industry, there really isn’t much time to mope, it’s just time to move on. At the end of the day, the SDNY put together about as solid as a case as they could. Read the indictments. It’s all there. And notice who they left off. And notice when they unsealed the indictments (Friday afternoon). SDNY is putting faceless people (to the mass public) to these crimes so there will be no outcry about it. They did this towards the end of the weekly news cycle so it didn’t get much mainstream coverage. They know what they’re doing.
We agree with Bill Rini’s take, the UIGEA counts are somewhat secondary. They’ve apparently got the Big 3 U.S. operators on money laundering and bank fraud. That’s all they need. Settlements will be made. A few people will do real time. And the rest of the industry will scramble to pick up the pieces.
Who lost the most? Who stands to gain the most? As always, here’s our Winners & Losers.
PokerStars: With around 30% of their business coming from the U.S., PokerStars has diversified enough of their customer base that they won’t suddenly buckle and collapse. They’ll still make piles of money. It’s their reputation that’s soiled. Stars was the “good one.” They did things the right way. But the money laundering and fraud chargers is a stain that’s going to be hard to wash off of them. And those charges will make it–regardless of what their settlement is–difficult to come back to the States in a regulated environment. If we all agree that brick & mortar casinos will be the major licensees, what major B&M is going to touch Stars? We don’t think it’s a lock that PartyGaming gets back in the U.S. market, so Stars has quite the uphill climb. It’s a shame. They’re a good company (sans the alleged money laundering) with some smart and good people. They could’ve helped usher in a wealth of jobs (and a wealth of wealth in general) to the States quickly through their now defunct Wynn partnership. Now…well…they’re a dog to ever get back into the States.
Full Tilt: Yeah, yeah. Obviously the two major online operators are losers. But Full Tilt relied on a greater share of their customers domestically than Stars did (closer to 50%). The pain will be felt more. Plus, it’s their CEO, Ray Bitar, that will likely be the only one from the Big 3 that actually sees the inside of a U.S. courtroom and jail cell. Like the now defunct Stars-Wynn partnership, Tilt and the Fertittas is over, and reentry to the U.S. market pretty much is too.
Mid-Level Pros: Scroll down the Full Tilt roster. Every Jordan Morgan or Steve Brecher (or Dennis Phillips and Victor Ramdin and maybe even Barry Greenstein on Stars) has little to no value any more. These type of mid-level deals though kept the poker economy somewhat stable. To some degree, it helped the mid-level pro earn a better living and play in more events–which in turn helped sustain tours and field sizes–which in turn helped employ many in the poker media. Whenever there’s an economic recession in the U.S. economy, who is usually hit the hardest? The middle class. Same principles apply here.
Poker Media: No way around it, this will hurt BLUFF, Card Player, Poker News Daily, and to a lesser degree, Poker News (good thing they’re available in 25+ languages), as well as many other poker media outlets. And major events that generated revenue (be it as a service provider for the sites or via affiliate sign-ups) like the NAPT and ONYX Cup are gone. WSOP fields (and consequently, the need to cover those fields) has diminished. A lot of friends–good workers who deserve better–will be forced to take their talents elsewhere.
Poker Productions/441: Poker After Dark? Doubles Poker Championship? Poker Stars Big Game? Million Dollar Challenge? To paraphrase Clemenza, we won’t be seeing them no more.
PPA: Listen, we’re not saying they had any influence whatsoever on the DoJ and ever would. What we are saying is watching their responses to the DoJ and inability to develop a coherent and effective legislative lobbying effort has only been underlined by what happened on Black Friday. Look no further than this video: no suit, in a bedroom or living room, general cluelessness in form, message, and execution. Ladies and Gents, the PPA!
Caesars/MGM: Wow. They got what they wanted from the Reid Bill–but without probably ever having to worry about Stars & Tilt reentering the market. Here’s actual video of what Caesars/MGM management have been doing all weekend. Now, that doesn’t mean that any of the B&M’s are guaranteed to become the new Stars or Tilt in a regulated environment, but it does mean that their chances to do so just got much better.
SMGs: How good does it feel to be Zynga Poker today? If you’re a SMG and have a viable platform, your evaluation price just upticked a few [hundred] percentage points. Bottomline is B&M’s are likely going to go with the safest platform options (from a legal perspective) available to them, and SMG platforms (that have achieved at least some level of critical mass) would fit the bill.
Bodog: How about that? Bodog had fallen off the collective poker radar the past few years, and their numbers post Black Friday have suddenly surged. They’re the most secure option for getting money off and on available to U.S. players today. Calvin Ayre is doing cartwheels.
Online Poker Players: This is probably +EV for 90% of the players out there.
WSOP/WSOPC: Sure, the WSOP will see a drop-off in numbers this year. But their brand is now the unquestioned strongest in the market–and their competition in the U.S. has been annihilated. Same goes for the WSOP-C. The numbers at Circuit events would suggest it to have been on life-support, but now, they’re one of the only options for tour players (particularly at the Regional level).
HPT: Speaking of only options at the Regional level, the Heartland Poker Tour was already killing it in the local, lower buy-in event market. With massive TV distribution, loyal brand following, independent/agnostic affiliation, and an untarnished rep, the HPT can be a long-term winner in all of this.
World Poker Tour/PartyGaming: If PartyGaming is allowed to operate in the U.S. in a regulated environment, the WPT will become the U.S.’ version of the EPT. Huge potential win.
FS+G: Some times, it’s better to be lucky than good. A week ago, they were an irrelevant tour that none of the sites wanted to back who were already scrambling to adjust their schedule to “accommodate” players and tweak their invite list so the durrr‘s and Patrik Antonius‘ of the world weren’t left out. Today, even though they have no TV partner (and may not get one–it’s hard to run a poker program when you have no advertisers left to support it) and a business plan emptier than Jeffrey Pollack‘s suit, they’re one of the only options left in town. If their plans to partner with the Palms include eventually launching a real money gaming site–then the field has significantly cleared for them to do just that. Yeah, they put words of wisdom from Aristotle on their website that even high school seniors would think are too cheesy to include as their yearbook quote, and they may literally burn a mountain of money like the Joker trying to figure out what they’re doing, but hey, at least they’re spending, right?
The reset button has been hit. It’s 2002 all over again. Blank slate. New market. New world poker order can take form.
The vultures are already circulating. When an extinction event like this occurs, smart people will find the opportunities. And there are plenty.
For now though, all of the action, the jobs, life as we knew it will only exist in Europe.
The U.S. is pretty bleak. You’re not going to make money playing online, or getting players to play online. In the U.S., it’s all about planning for the future and positioning yourself to take advantage of regulated online poker when it comes.
Let’s just hope that day is sooner than later.