Prediction: PokerStars Will Not Dominate New Jersey Market

John Mehaffey August 12, 2014 1453 Reads

It seems that PokerStars receiving a New Jersey interactive gaming license in New Jersey is a sure thing. Its sale to Amaya Gaming, a company already licensed in New Jersey, helped paved the way. The transaction involved the exit of company founders that were the subject of the suspension of the original PokerStars licensing attempt.

New Jersey online poker players are excited that their beloved PokerStars software and management may only be a few months away from reality in the state. There is also hope that the buzz of a PokerStars launch could help stimulate an industry that has not met most expectations.

While PokerStars is certain to find success in New Jersey, it will not run away with the market. PokerStars has a few things going against it.

Competitors Will Have One Year Head Start

By the time PokerStars is live in New Jersey, its competitors will have about one year of experience in the market. This one year head start is a major advantage. It allowed existing sites to work out the kinks with software compatibility between payment processors, player verification companies and geolocation services.

The sites already live in New Jersey have also had a chance to brand themselves in the market. Borgata/Party Poker and WSOP.com have spread live tournament series that are of major interest to players.  Resorts, the Atlantic City partner for PokerStars, does not currently have a poker room at all.

There has been enough time to build loyalty through VIP programs. Players have put substantial time into obtaining tiers with satisfactory returns. The players that are happy with their win rate and returns will have no reason to move action to PokerStars. Players aiming to reach an annual tier will need the last couple of months in the year to hit that goal.

On the other hand, PokerStars could match tiers from competitors and roll out a program far superior to other New Jersey sites. This would be great for New Jersey players, even those that choose to stay loyal to their original online poker room, as it could force a price war.

The existing New Jersey sites have also built a database of online poker players that are active today, not 3.5 years ago. PokerStars may have access to the Resorts database, but many of these players are not the target audience. Many New Jersey online poker and casino players were new to the casino databases. Caesars stated that 91 percent of its online customers in New Jersey were new to its Total Rewards program.

Can New Jersey Sustain Another Poker Platform?

New Jersey appears to only be able to handle three poker sites. Borgata/Party, WSOP.com, and 888 are the only three with reasonable cash game traffic. A fourth major site could cannibalize the existing business more than it helps draw new players. It is also possible that WSOP.com and 888 could join forces like they are planning to do in Nevada.

Interstate Poker May Create Competitive Problems

While New Jersey does not have a bad actor clause, Nevada does. Proposals in other states also include this provision that is aimed to keep PokerStars and its assets out. This could hamper the ability for PokerStars to expand into other states, adding to its New Jersey liquidity through interstate agreements, unless it can convince regulators and lawmakers that it is an entirely different company under Amaya Gaming’s control.

The company could also try to fight any future bad actor clauses in court, although prominent gaming attorney I. Nelson Rose does not like their chances.

Strong Local Brands

The PokerStars brand is strong throughout the world and to avid poker players in the U.S. Locally, there may be stronger brands. Borgata generates a majority of the players on its platform shared with Party Poker. Its brick-and-mortar casino is the flagship of Atlantic City.

WSOP.com has a branded poker room and is the most well known poker tournament series in the U.S.

One could argue that both of these brands are stronger in New Jersey than PokerStars, which has been out of the market since April 2011.

PokerStars Will Find Success, Not Dominance

None of this is meant to discount the importance PokerStars will have in a market. However, there is ample evidence that PokerStars is not going to enter the market and destroy all of its competitors overnight like it seems many are predicting.

The competition will force existing sites to improve. This may mean adding features or offering better bonuses and VIP programs.

There is no doubt that PokerStars would enter the market with aggressive first deposit bonuses and loyalty programs in an attempt to be relevant from its first day.  Existing sites will be watching and willing to match pricing to remain competitive.  This will make for a well balanced market that will benefit players in the short and long term.

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