Long before sports betting, online poker was the online gambling product everyone wanted to legalize. But poker’s paltry revenue compared to sports betting and online casinos has made the product an afterthought in statehouses and corporate headquarters.
Meanwhile, poker players continue to pine for the good old days when tens of millions of poker players worldwide could log in and find nonstop action at multiple online poker sites. That is impossible in the current legal, regulated landscape with its ring-fenced player pools. The good news is the landscape has never been better positioned to undergo a radical shift.
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In Poker, It’s All About Liquidity
Poker is unlike any other casino game in that it is played peer-to-peer. And as anyone who has tried to organize a home poker game can attest, you need players to make it happen.
Online poker’s advantage is its accessibility, and the larger the player pool it can pull from, the more games a site can offer, and it becomes easier to sustain those games. That is particularly the case if the players are in different time zones.
Historical analysis provides two key takeaways:
- The tipping point for a sustainable online poker industry is a population base of roughly 40 million. That can vary based on structural and economic conditions and the gambling culture, but 40 million is a good jumping-off point.
- In a sustainable market, you can expect an average of 50-100 poker players sitting at online poker tables per million residents. The smaller the market, the more that number will drop.
Legal U.S. online poker is slowly moving towards these benchmarks, but the pace could quicken thanks to recent developments.
The (Almost) End of the Wire Act
The Wire Act has been a significant impediment to legal online gambling for nearly a decade. Sheldon Adelson used the existence of the Wire Act and how it could apply to online gambling beyond sports betting as a cudgel against online poker and casinos. Adelson’s campaign (which included the threat of a federal rewrite of the Wire Act) didn’t stop legal online casinos and poker. Still, it slowed it down, including several states’ willingness to enter interstate gambling compacts.
That threat is all but over. Sheldon Adelson died in 2021, and Las Vegas Sands has dropped its vehement opposition to online gambling, going so far as to form an online division.
The all-encompassing vision of the Wire Act that the DOJ put forth in 2018 has also been defeated in court. First, losing against the New Hampshire Lottery, and then taking a second defeat when IGT won its case to ensure they wouldn’t be retroactively targeted by a future DOJ.
Eyes Turn Elsewhere After Sports Betting’s Success
States are always looking to raise revenue, and gambling is one of the wells they constantly pump. Of late, that meant legalizing sports betting. But legal sports betting’s rapid proliferation across the U.S. has left few viable candidates. Considering the widespread availability of land-based casinos (44 states), state lotteries (45 states), and now sports betting (35 states), the only unexplored frontier remaining is online casinos (six states) and its little brother, online poker (seven states).
Bottom line: Because they’ve pumped the gambling well many times, lawmakers will have to look elsewhere, which means online casinos and poker.
2023 Could Be a Big Year
If online poker hopes to return to something resembling its former glory, we should see inklings of this throughout 2023, with no less than five positive developments achievable.
Michigan Joins the MSIGA Party
Michigan joined the Multi-State Internet Gaming Agreement (MSIGA) in May. The MSIGA is an interstate agreement between member states that allows online poker operators to pool players across state lines.
The state and operators have been very tight-lipped about a potential go-live date, but even if it is announced in the next couple of weeks, we can still call it a 2023 development for the purposes of this column.
Michigan’s entry into the MSIGA is a massive deal for two reasons:
- The state’s population (roughly 10 million) nearly doubles the current player pool of the three MSIGA states, bringing the total to 23 million.
- Coupled with the Wire Act developments, Michigan’s entry should ease any lingering legal concerns other states might harbor.
Pennsylvania RSVPs For 2024
As noted, Michigan joining the MSIGA is likely to pave the way for Pennsylvania, which has erred on the side of extreme caution when it comes to the Wire Act, to join, too. Pennsylvania will likely wait to see how things go in Michigan before announcing it will also join the MSIGA, setting the stage for a late 2023 or 2024 go-live date.
Adding Pennsylvania’s population would boost the MSIGA player pool to around 36 million.
Connecticut and West Virginia Come Off the Sidelines
Two other states that have legalized online poker have yet to launch, Connecticut and West Virginia. Both states have small populations that aren’t conducive to the liquidity demands of online poker.
The Peculiar Case of Arkansas
There is an eighth state that has sort of legalized online poker, or at the very least, has the mechanisms in place to approve online poker if it so desires. That state is Arkansas.
When Arkansas legalized sports betting, it included interesting language in Rule 5 about interactive poker (beginning on page 77):
6. “Inter-operator poker network” means a pool of authorized players from two or more operators collected together to play the game of poker on one interactive gaming system.
The question is, will Arkansas authorize online poker? Just because it can, doesn’t mean it will. However, its chances will only improve with every new state in the MSIGA.
Legalization in Indiana, New York, or a Darkhorse State
The big wildcard in 2023 is the possibility of legalization in Indiana, New York, or some other state.
With so few states with legal online poker, every win is big.
Indiana is the strongest candidate in 2023 and would provide a very nice boost to U.S. online poker. New York, with 20 million residents, would be an absolute game-changer.
The New York Senate has passed numerous online poker bills over the years, and Sen. Joseph Addabbo (Gambling.com’s Policymaker of the Year recipient) seems intent on passing another in 2023. The hurdle is the Assembly, where online poker bills have gone to wither and die.
Legal online poker in the U.S. has several opportunities to make significant strides in 2023.
If the MSIGA can onboard enough states to eclipse the 40 million threshold outlined above, we could see a renewed interest in online poker in many other states.
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