On Saturday I wrote a column explaining why I felt PokerStars needed to take a step back from the US market. From the outside looking in, their involvement in California seems to be gumming up the works, and could very well threaten whatever chance an online poker bill has of passing, or at the very least, appear to be doing so.
But don’t misinterpret this as thinking I am against PokerStars.
I want PokerStars in the US.
PokerStars is one of the most experienced operators and has a track record of success, integrity, and reliability. In the tumultuous days, weeks, and months following Black Friday PokerStars was the glue that held the online poker world together, preventing a major catastrophe from becoming a cataclysmic disaster — I shudder to think what would have happened had PokerStars been as mismanaged as Full Tilt Poker or as scandalous as Absolute/UB.
Personally, I think PokerStars inclusion in the market is a win-win for everyone. But, since not everyone is of the same opinion –land-based card-room and casino interests and by extension the lawmakers in these districts– I don’t want them at the expense of the advancement of the US poker industry, particularly in a state as important as California.
This is why in my previous article I posited that PokerStars should withdraw from consideration at this time. I am more interested in seeing online poker advance than I am in who is leading the charge –which is admittedly a selfish stance to hold.
You can read PokerStars’ statement from Head of Corporate Communications Eric Hollreisser regarding the current situation in California at the end of this article.
Ok, enough of rehashing Saturday’s column, let’s get to today’s topic, here is why California and any other state looking into online poker should consider licensing PokerStars, and the first reason is that…
PokerStars is a doer
I certainly don’t think PokerStars could have solved the geolocation and payment processing problems in New Jersey, but I’m quite certain the company would have been front and center trying to clear them up and would be doing a better job of explaining precisely what is going on to their customers.
The reason I say this is because PokerStars is proactive, very rarely has the company been reactionary. I’m quite sure they would be working on innovative ways to help alleviate the impact of geolocation and payment processing issues.
Furthermore, PokerStars has always been top-top in the online poker industry when it comes to player outreach and education, and if there was ever a market that needs that right now it’s the US market.
Based on their track record I have little doubt that if PokerStars was licensed in New Jersey they wouldn’t stand for the disconnect issues and other minor problems that are still occurring. Again, based on their track record they would go above and beyond when it comes to compensating players who are experiencing these issues.
Furthermore, PokerStars would make other sites do the same because…
PokerStars would force their competitors to be better
With PokerStars in the mix every other provider would have to step up their game.
Software would need to be upgraded, marketing efforts would need to be taken to a new level, rewards and promotions would have to be better to compete, and customer service and outreach would have to improve.
PokerStars would force their competitors to spend money or they simply wouldn’t be able to compete; they are for all intents and purposes the New York Yankees of online poker. You can’t compete with PokerStars with an inferior product.
A California without PokerStars will lead to a situation like the two we have in New Jersey and Nevada. Yes there is competition, but nothing near the direct competition we saw when PokerStars and Full Tilt used to battle head-to-head for the US market share.
In fact, I would argue that the current legalized markets in the US look more like instances of soft-collusion than outright cutthroat competition, as each site (with some exceptions) has similar reward programs, bonuses, and rake –nobody has really shaken the tree yet.
Real competition would lead to a more player-friendly market.
PokerStars competitors would also have to contend with the fact that…
PokerStars is the best known name in the game
No offense to partypoker or 888, but these companies have not been a part of the US market since 2006 (we’re talking a seven to eight year absence when you get right down to it) and they are simply no longer well-known entities outside of the closed online poker community. Most casual players have probably never heard of 888, and have only a partial understanding of partypoker’s history and former place in the hierarchy.
On the other hand, anyone who played online poker in the US up until April 15, 2011 more than likely did so at PokerStars. As I’ve stated in the past; absence may make the heart grow fonder, but a prolonged absence leads to a memory wipe.
Is perception reality?
Will any of this matter?
Probably not, because for most people perception is reality.
The perception of PokerStars among some lawmakers is one of a “bad actor” (the company certainly has some fleas from their days servicing the US market) as the company remained in the US market post UIGEA until Black Friday, when along with Full Tilt Poker and Absolute Poker they were slapped with civil cases while several key individuals at the sites were indicted by the Department of Justice.
The perception of PokerStars among their competitors and potential competitors is of a veritable Goliath, and at this time no David’s want to step forward to take up the challenge.
On the other hand, the perception of PokerStars by the poker community is on the complete opposite end of the spectrum. To players, PokerStars is the model online poker site. PokerStars is the most reputable name in poker, and it’s not even close. Partypoker has a similar track record of remaining scandal free, but PokerStars handling of Black Friday, followed by their Full Tilt Poker bailout cemented the site as a trusted brand –no other site has the poker communities unequivocal stamp of approval.
So we have a strange situation where the customers want one thing, but the people making the decision want the opposite –unless of course they can partner with Goliath. No wonder California online poker legislation is getting so messy… as if it wasn’t already.
PokerStars Statement
The following is a statement on pending California online poker legislation by Eric Hollreiser, head of corporate communications for The Rational Group, which operates PokerStars.
PokerStars shares the belief that a future licensing framework for online poker in California should be based upon the highest standards of suitability that maximize consumer protection and consumer choice. We have consistently met those standards in jurisdictions around the world, where we hold 11 licenses – more than any other company, including licenses in leading European jurisdictions such as Italy, France and Spain.
PokerStars has not, will not and need not request any changes to the California gaming regulations. Most regulatory frameworks around the world leave the assessment of suitability to qualified expert regulators. The same position has been taken by the legislators in New Jersey. The California Gambling Control Commission has a 15-year history of successful consumer protection and is more than qualified to continue to determine suitability.
The only parties seeking to change this are certain groups who want to use the Legislature to gain a competitive market advantage and to limit competition. Their efforts are not in the best interest of consumer choice or consumer protection.
These groups are misrepresenting the Unlawful Internet Enforcement Gambling Act (UIGEA) and PokerStars’ past U.S. operations serving only to exclude PokerStars from the market in order to avoid what should be fair competition. The fact is that UIGEA did not make illegal any gaming that was not already illegal before its passage. This has been confirmed by the U.S. Third Circuit Court of Appeals and by the U.S. Department of Justice (**see below). PokerStars operated under legal opinion that its offering of online poker did not violate U.S. law before 2006 and maintained that opinion following the passage of UIGEA.
PokerStars looks forward to demonstrating our suitability to the regulator just like any other company seeking to operate in California and investing in a fair and well-regulated market.
** 1) Brian Benczowski, Principal Deputy Assistant Attorney General (Justice Department), wrote in a letter to Rep. John Conyers, Chairman, House Committee on the Judiciary on July 23, 2007 – “[T]he UIGEA itself does not make any type of gambling legal or illegal; rather, the statute is focused on regulating the methods of payment for already-illegal gambling.” 2) The United States Court of Appeals for the Third Circuit held that the UIGEA “does not itself outlaw any gambling activity, but rather incorporates other Federal or State law related to gambling.” Interactive Media Entertainment & Gaming Ass’n v. Attorney General, 580 F.3d 113, 116 (3d Cir. 2009).
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