2 Ways To Combat Liquidity Issues In Small Online Poker Markets

Steve Ruddock August 27, 2015
US online poker liquidity

One of the biggest impediments regulated online poker markets in the U.S. are facing is how to combat the lack of liquidity created by ring-fenced markets.

This isn’t exclusively a U.S. problem, as European markets have been hampered by the same issues, but the situation is exacerbated in the U.S. where the population in these ring-fenced markets is just a fraction of European markets.

Even in New Jersey, the largest legal U.S. market, there are only so many table options available when dealing with a population of fewer than 9 million people. This lack of liquidity makes it difficult for online poker operators to market their full slate of products, as many tables and game types are essentially ghost towns.

This doesn’t mean these sites are destined to fail or that these games will never run.

Yes, it presents a number of problems global online poker operators don’t have to contend with, but there are ways for operators in these smaller markets to increase liquidity, or at the very least, increase the perception of liquidity.

Online poker liquidity explained

Poker is the outlier of the gambling world.

Players can walk by an empty blackjack table, sit down and gamble. No other players are needed.

Likewise, slot machines are a 1-1 gambling outlet. If you want to play you simply sit down. On the other hand, a poker game not only needs multiple players, but it needs multiple players who want to participate in the same game at the same stakes.

Furthermore, even if the game type and stakes are identical, not every game is the same. A player may be willing to play in one $1/$2 No Limit Holdem table but pass on another.

Therefore, the more players a poker room has, the more games it can offer. And provided there are not long waits to be seated, the busier a poker room is, the more appealing it is to potential players.

In the poker world we call this liquidity, and liquidity is one of the most important factors in a poker room’s failure or success. This is why small poker rooms often have open seats and empty tables and large poker rooms often have long waiting lists.

Now that I’ve established the importance of liquidity, let me explain the two different types of liquidity.

There is total liquidity, the total number of players on the site at any given time. And then there is individual game liquidity, which measures the player pool at a specific stake and game type.

Individual game liquidity is the more interesting part of the equation for operators in small markets, and it’s also the liquidity number their policies can directly influence.

How much liquidity can we expect in New Jersey?

Historically, segregated online poker markets can expect somewhere between 50 and 100 average cash game players per million residents.

Generally speaking, the smaller the market, the closer to the 50 liquidity number will be, and in extremely small markets (such as the U.S.) it can go below 50.

New Jersey currently has an average of roughly 300 cash game players (about 35 players per million) on its regulated sites, which is well below the historical average.

However, even under the best case scenario, New Jersey’s online poker sites are only capable of hitting an average of 900 cash game players, and a more reasonable estimation of New Jersey’s ceiling is about 600 average cash game players.

Solutions

Even though the liquidity is simply not there, here are two ways an online poker site can boost its liquidity in individual games and stakes.

Remove stakes

The easiest way to boost liquidity at a particular game is to remove similar but not identical games and stakes.

For instance, instead of an online poker site offering No limit Holdem games with blinds of:

  • $.01/$.02
  • $.02/$.05
  • $.05/$.10
  • $.10/$.25
  • $.25/$.50
  • $.50/$1
  • $1/$2

It could pare the offerings down to just:

  • $.02/$.05
  • $.10/$.25
  • $1/$2

Likewise, if cap games are eliminated and 4-handed games, and so on, the number of players in each individual game’s player pool increases dramatically. Instead of 30 players at each level, games now have 70 players at each level.

The reason this works is because the players who were playing in the eliminated games have to go somewhere, and they will most likely adjust by either moving up or down in stakes. As you can see, a player only has to move up or down a single level, even though we eliminated four of the seven limits.

One way to make up for the missing stakes is to offer PLO games at the now missing No Limit Holdem limits:

  • $.01/$.02
  • $.05/$.10
  • $.25/$.50

This change won’t impact overall liquidity (at least not immediately), but it does bolster the perception of increased liquidity at certain games and stakes.

Introduce fast-fold poker

Another option that would require regulatory approval, and a baseline liquidity number, to implement would be the introduction of fast-fold poker.

Fast-fold poker allows players to enter a pool of players instead of the standard procedure of joining a specific table. Fast-fold tables radically distort the perception of a site’s liquidity. A pool as small as 50 players will keep players in action 100 percent of the time, and constantly facing new opponents and lineups.

Furthermore, every entry into a fast-fold player pool is the equivalent of playing two to four normal tables in terms of hands per hour. A fast-fold player pool of 50 players can easily support someone playing two or three entries, allowing him to play the equivalent of up to ten tables.

In normal games, 50 players would never account for more than five tables, and a player would have likely have to wait to join all five tables. Basically, one fast-fold pool of 50 players is likely equivalent to 100 players on ten standard poker tables.

The question with fast-fold is can the market support it without decimating its other offerings, and is there enough total liquidity to have multiple fast-fold player pools running? In New Jersey, the answer to this question is a resounding no at the moment.

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