Delaware and 888 Biggest Winners in Poker Compact

John Mehaffey February 26, 2014
Delaware & Nevada Gaming Compact

Delaware and Nevada agreed to share online poker player pools. This was created through the launch of the Multi-State Internet Gaming Association. The announcement was made on Tuesday.

Delaware comes out as the biggest winner, at least in the short term. The Delaware online poker network peaks at around 50 cash game players each day and averages about 16 at any given time, according to PokerScout. It posted rake of $88,390 in January. This is certainly not the amount of revenue Delaware and its online partners had in mind when launching online gaming. It needs all the liquidity it can get to be competitive with the live poker rooms in the state.

888 is another big winner in the liquidity agreement. It holds a monopoly on the state’s online poker business. Delaware’s three racinos network into 888. This agreement would give 888 access to Nevada’s player pool, where it holds an Internet poker license. This network could launch with a 50-player peak head start that none of Nevada’s current three sites had the luxury of having on the first day of operations. The Delaware peak would be three hours before Nevada’s prime time due to the time difference. This would help even out the nightly peak.

Two of 888’s partners – Golden Gaming and Treasure Island – also hold licenses in Nevada. Wynn previously announced that it would join the network. Those plans are up in the air after Steve Wynn voiced opposition to online gaming.

How Does Nevada Benefit?

Nevada does not receive much in the way of immediate benefits. The Delaware player pool is too small to make a difference to Nevada sites that would need to get licensed in a different state.

The tax situation in Delaware is not conducive to expansion either. The Delaware Lottery receives the first $3.75 million in annual revenue from online poker and casino games in the state. Revenue would fall short of that number by more than half at its current pace. More poker liquidity and a better casino game selection may help, but the fact remains that revenue is falling short of expectations.

The tax rate on revenue after the $3.75 million threshold is still as high as 54 percent. That is quite the deterrent for Nevada companies that are accustomed to paying just 6.75 percent to the state.

Ultimate Poker may come out as the biggest short term loser in this. The 888 Delaware traffic would either arrive on a new competing network or on the WSOP platform.

Long Term Goal is Clear

The long term goal here is to demonstrate that interstate online poker is feasible to states that have yet to consider it. Ideally, these new states would adopt Delaware’s regulations for a lottery-based model and Nevada’s for one that caters to commercial casinos. This would allow new states to tap into the interstate player pool from day one.

What about New Jersey?

New Jersey does not need to compact for online poker liquidity. At least not while it is the largest state with Internet gaming. It appears that New Jersey is waiting on the sidelines to see how this works out before making its own move. Whether that means joining the Multi-State Internet Gaming Association or creating its own version remains to be seen.

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