Online Poker in US Faces Many Challenges despite Recent Improvements

Many predicted online poker to be a sensation in the US, however reality shows that is not the case as many improvement are needed.

Despite financial projections indicating that online gambling industry is on the rise, gambling news reports that the previous year has seen some decreased activity in the US market.

Some states have been successful in overturning the US gambling laws pertaining to online gambling. Delaware, New Jersey and Nevada currently enjoy the right to offer their residents internet gaming services, however when it comes to online poker sites the results have shown lower than expected revenue streams.

Many players like to use sites like PokerStars or Full Tilt to play their favorite card game, but they haven’t performed as expected. Investors that have significant interest in the online gaming market have expressed concern if the industry will actually see a growth in the near future. Considering the current gaming trend, it may take a while before that happens.

Disappointing results for online poker

• Nevada, Delaware and New Jersey have regulated online markets

• Only 10 more states have shown online gambling ambitions

• Pool-sharing deals between states looks promising

Although sites can operate from Nevada, Delaware and New Jersey, it does not stand as a representation for the level of perceived popularity. Poker sites in Nevada are not even recording $1 million in monthly revenue earnings.

The trend in Delaware is so dire that since the launch of online poker in November last year, the state has not even managed to see a revenue inflow of six-figures per month. The state’s driving force is the fact that they have other internet gaming options as back-up besides poker, so they have secured nearly $250,000 in monthly revenue since April.

New Jersey has experienced the greatest success out of the three states, despite raking in lower number than initially anticipated. The Eastern state brings in around $10 million from online gambling operations on a monthly basis.

Before the legalization in the respective state, many analysts and industry experts strongly believed that online poker would carry the industry and rake in billions in revenue. Nevertheless, there is hope as some new development look quite promising for the industry.

PokerStars to enter US market imminently

A week ago, Canadian gaming equipment supplier Amaya Gaming brokered a deal to purchase PokerStars Inc. and its popular Full Tilt section for an amount rumored to be $4.9 billion. The acquisition will ensure that PokerStars goes through a smooth transition into the US online poker market, as it has previously encountered much resistance from officials.

Before the introduction of the Unlawful Internet Gambling Enforcement Act of 2006, PokerStars already maintained a significant market share in the US. The bill posed some legal problems for the mobile betting site, however they continue to provide the same online service as before the law got passed.

The US Department of Justice overturned the law by lifting the ban, however PokerStars still had to pay out a substantial penalty fee as they were found guilty on money laundering charges. The site’s owner, Isai Scheinberg, is still wanted by the many US government officials for a number of other charges.

The good news is that the transfer of ownership spells out a future for PokerStars in the US market. Government officials were reluctant to do business the firm as long as it was linked to Scheinberg, but now that is about to change as new owners are at the helm of the poker giant.

Although the imminent introduction of PokerStars is definitely a sigh of relief for the overall health of the industry, there are still many obstacles to overcome before it becomes a stable business.

Long way to go to realize success

Delaware and Nevada suffer from a lack of online players, as many believe that there aren't big enough games to attract large number of customers. The two respective states joined forces in efforts to increase the level of earnings. They combined their player pools, however it is uncertain whether this will be a sustainable model over a longer period.

Morgan Stanley predicts that revenues of online poker sites in the US can reach $3.5 billion by 2017. The problem is that many states will have to take a massive undertaking to achieve that projection. Many states will have to legalize internet poker and create pool-sharing deals with each other to reach Morgan Stanley’s expectations.

Currently, only about 10 states have expressed strong interest in introducing a regulated online poker to their states. Additionally, some states like Pennsylvania want to charge high taxes on internet poker services. This is something that drives companies away from establishing a poker sites in those states, as high tax rates don’t make the business worthwhile.

If the US is ever to see a successful online poker industry, the government must ensure there are no road blocks for companies trying to set up the business that has vast possibilities.