Here’s How The New Jersey Online Poker Market Might Consolidate Into A Single Network

October 15, 2015
Here’s How The New Jersey Online Poker Market Might Consolidate Into A Single Network

The imminent entry of PokerStars in New Jersey will have far-reaching implications, both in the immediate and the long term. 

In the short run, a successful PokerStars launch will see the NJ online poker market expanded from two operators to three. As a result, liquidity on the state’s current networks (Party/Borgata and WSOP/888) will likely be stretched even more thinly than it already is. Existing operators may struggle to survive.

That alone may be good enough reason for NJ operators to consider jumping on the PokerStars bandwagon.

Beyond this, an alignment with PokerStars in New Jersey places existing entities in a far more favorable position if U.S. iGaming expands into states with more sizable populations like Pennsylvania. More and more, it seems like PokerStars will be actively involved (and dominant) in every state where online poker is regulated.

In short, it may not be long before the NJ online poker market consolidates to a single network.

Here’s a look at how that possible scenario might go down.

Caesars sells WSOP to MGM, who then partners with PokerStars

In early 2013, struggling Caesars Entertainment allegedly offered to sell the World Series of Poker, along with the Rio All-Suite Casino in Las Vegas, to PokerStars. It was suggested by Caesars that the acquisition would enhance PokerStars’ chances of receiving a license in Nevada.

PokerStars reneged, citing that the company was not actively looking to acquire a brick-and-mortar casino at that time.

Since, Caesars’ financial troubles have only worsened, prompting the casino operator to file for Chapter 11 bankruptcy protection last January. Shortly thereafter, it began selling some of its physical assets.

It’s therefore plausible, if not likely, that Caesars is still willing to part ways with its trusted poker brand, and Borgata half-owner MGM Resorts International may prove to be a willing buyer.

MGM Resorts is something of a natural fit for the WSOP, as the operator owns several Las Vegas casinos that could reasonably house the annual event — Mandalay Bay comes to mind. Also, the Borgata is currently in direct competition with WSOP.com in New Jersey. By purchasing the WSOP, MGM Resorts will consume its online rival.

That eliminates one opponent in New Jersey, but another one looms: PokerStars. Instead of choosing to go head-to-head with the online gaming behemoth, MGM may propose a strategic alignment.

It’s difficult to see PokerStars not being tempted by such an offer, as its current iGaming partner in New Jersey, Resorts Atlantic City, is owned by the considerably smaller DGMB Casinos. MGM’s reach, on the other hand, extends well beyond New Jersey, and even the U.S. for that matter.

Caesars sells WSOP to PokerStars, who then partners with MGM

In a similar scenario, PokerStars could reconsider Caesars’ offer and purchasethe WSOP.

For PokerStars, there are a few added benefits to purchasing the WSOP now as opposed to two-and-a-half years ago:

  • WSOP.com is the sole successful iGaming operator in the Nevada market.
  • PokerStars will acquire what stands to be one of its chief rivals in New Jersey.
  • PokerStars is that much closer to being reconsidered for an online gaming license in Nevada. Currently, a tainted asset clause forbids PokerStars from operating in the Silver State, but Nevada legislatures will meet in February 2017 to discuss repealing covered assets.

Going further, PokerStars appears to be planning a revitalization of the North American Poker Tour. Should PokerStars also purchase the Rio, the casino could conceivably act as a stop.

Of course, if PokerStars partners up with MGM, that won’t be necessary, as suddenly the operator will have a bevy of Nevada-based options, not to mention options in Mississippi, New Jersey and Michigan, in which to host events.

Are NJ players better off playing on a single network?

Yes.

The growth prospects afforded by a PokerStars/Borgata/WSOP partnership in New Jersey are undeniable.

Having each one in possession of a PokerStars-branded skin that utilizes the operator’s proprietary online poker software will undoubtedly increase liquidity, and unify what would otherwise be a heavily fragmented market.

Not to mention, the cross-promotional opportunities are nearly endless.

One potential drawback is that tournament grinders, who tend to maximize their EV by playing both existing major schedules, may have a few less playing options.

To compensate, the PokerStars NJ network will have to take an exceedingly aggressive stance with regards to its tournament schedule, both in the number offered and their guarantees. Considering how aggressive the operator has been throughout its 14-year existence, I don’t see that being much of an issue.

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