U.S. Online Poker Subscription Sites are a Tough Sell to Players

December 26, 2013
U.S. Online Poker Subscription Sites are a Tough Sell to Players

LiveAce became another failed venture in the U.S. online poker subscription market. The company closed its virtual doors without any notice last week after making some major changes in the weeks before the site went offline. LiveAce was just another failed subscription model that hoped to find a way around federal and state law by creating an online poker site that fell under state sweepstakes laws.

LiveAce offered two ways to play on the site. There was a basic membership that allowed players to reload chips daily.  That changed on December 6 when basic players were only allowed to top-off chips once per week.  There was also a $19.99 premium monthly subscription that allowed more frequent chip reloads.

LiveAce lowered its payouts to players one week before closing. The original prize structure awarded $4,500 in cash each week. This was lowered to $1,400 seven days before the site went offline. This cash was dispersed in auctions where players priced chips. The best bids were paid.

Players that paid the monthly $19.99 subscription for a premium membership had a better chance of cashing in during the auctions, however, basic members could also sell chips.

The monthly prize pool at LiveAce was $19,285 based on a 30-day month for most of its run. That would require 965 paying members each month just to meet the guaranteed prize pool. This number does not include the site’s overhead such as advertising, payment processing fees, server space, legal fees, labor and costs associated with software development. The site probably needed 2000-3000 monthly subscriptions to break even. That would have been quite an accomplishment considering it was only available in 31 states and Washington D.C.

Subscription sites must find a way to operate under sweepstakes laws. One example allows a patron to send a postcard every month to company to receive a free membership. The fact this option is available is usually buried in the terms and conditions of the site so most players do not know about it.

Skill-based poker sites have not found success either. Skillbet and Duplicate Poker are examples of skill poker sites that experienced a short life span.

There are a couple of success stories in the subscription poker industry. ClubWPT, backed by the World Poker Tour brand, has been in business for years. PurePlay also has a long history of subscription-based gaming. Most of the tournaments on these sites would appeal to low rollers as the expected value is often under $1 per tournament buy-in.

There is also a question about the legality of this business model. Sfexaminer.com interviewed PurePlay CEO Jason B. Kellerman.  He insists that the company’s product is legal in the states where it is offered. He also stated there had never been a government inquiry about PurePlay’s business. The newspaper reached out to the California and U.S. justice departments to get a legal opinion on subscription-based gaming. Neither government attorney’s office would comment.

It appears that when poker players want to play their favorite game over the Internet they want to play it in a traditional format. The solution is not to create a backdoor to skill games or sweepstakes laws. That development money should be spent furthering the online poker legalization cause at the state and federal level.

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