Friday, April 15, 2011

Online Poker's Black Friday

The poker world was shocked today when the Department of Justice announced indictments against the top executives at the three leading online poker sites -- PokerStars, Full Tilt Poker, and Ultimate Bet/Absolute Poker. The sites are going to fight back with a slew of lawyers, but by this evening, they had all stopped allowing Americans to play for real money, causing some panic and a lot of questions about what happened and what's next.

Rather than rehash the basics here, I'll direct you to Poker News, which has a good summary of the FAQ.

Several people have asked if Dennis and I are going to do a special edition of our Final Table show tonight, and the answer is no, we'll wait until our regular Tuesday broadcast, because we're waiting to see what develops in the next couple of days. We don't want to engage in idle speculation about the effects of the government's actions, both short- and long-term.

There are a few things that are certain, however:

  • All those young poker pros who are making their living playing online poker are going to have to find another way to support themselves. I hope that means they bring their action to brick-and-mortar poker rooms, which is where I've always preferred to play. It'll be interesting to see if those who have specialized in multi-tabling (playing several screens at the same time) can sit still for a single game at a single table.
  • The closure of the sites means that attendance at this year's World Series of Poker Main Event will be way down because, in the last few years, some 20-25% of the players (and 100% of the winners since 2003) have gotten there via online satellites.
  • Pressure will be ratcheted up on Congress to pass a law that licenses and regulates online poker, finally setting up a legal framework that keeps the government from interfering with how Americans spend their recreational dollars, while establishing a system to tax the sites' profits and create some much-needed revenue at both the state and federal level.
  • None of this means the end of poker in the United States. The game has been around for over a century, and will continue to be played by tens of millions of Americans in casinos, basements, retirement communities, college dorms, and at the kitchen table.
There's one interesting bit of media fallout to watch. Full Tilt Poker is the primary sponsor of "Poker After Dark" on NBC. PokerStars is the primary sponsor of "High Stakes Poker" on GSN and has its own shows, "Million Dollar Challenge" and "The Big Game," on Fox affiliates across the country. ESPN garners a huge amount of revenue from both sites for its coverage of the World Series Of Poker. Now that those sites have barred US players, it seems unlikely that they'd continue to spend the marketing dollars necessary to sponsor those shows. Can those networks find replacement sponsors elsewhere? If not, poker on TV may have to take a hiatus until the legal climate is cleared up.

Last year, during the lame duck session of Congress, there was a bill floated that would have begun the process of regulating online poker. One of its provisions was the existing sites would have to cease operating for a specified blackout period, after which certain operators would be licensed and the online action could resume. That bill never got out of committee, but the DOJ's actions effectively mean that the blackout period began this afternoon.