New Jersey Unlikely To Sign Interstate Online Poker Agreements…For Now

Steve Ruddock Updated on March 7, 2015

Word around the water cooler is Nevada and Delaware are on the verge of launching interstate online poker through their partnership in the Multi State Internet Gaming Association (MSIGA) – an interstate agreement the states’ governors signed in February of 2014 that would see the pooling of online poker players in member states.

As interstate online poker moves closer to becoming reality, many online poker players are wondering if and when New Jersey might jump on board and join MSIGA, and start pooling players with Nevada and/or Delaware.

Beneficial for the industry; detrimental to many operators

An interstate online poker agreement would certainly help the New Jersey iGaming industry increase player liquidity (likely by more than 150 average players), considering liquidity is widely believed to be one of the biggest determinates in driving even more players to your online tables.

Last year I made the case  that the interstate agreement between Delaware and Nevada would have a larger impact than many people believe. The growth will be far more than simply adding one state’s player-pool to the other, as the increased liquidity in Delaware (from the more than 100 players Nevada averages) will bring many new players into the mix.

As I noted, New Jersey and Nevada are only slightly below historical industry averages for online poker participation rates, whereas Delaware is drastically underperforming in this area. And if more Delaware players start showing up this will then improve the curb appeal of Nevada’s online poker sites, creating a self-reinforcing cycle.

While this is true between Nevada and Delaware, interstate online poker would be less impactful in New Jersey.

Remember, it’s the small state of Delaware that is significantly underperforming. But even if the impact was somewhat minimal, New Jersey, along with Delaware and Nevada, would certainly see some benefit from player pooling.

The online poker industry as a whole in New Jersey would see a nice boost, but the problem is, while player pooling would help the New Jersey online poker industry, it would not help all of the operators, only some of them.

In fact only one operator (Caesars and 888) would get any benefit from an interstate online agreement, as interstate agreements require the operator to be licensed and operating in both states in order to pool players.

The reason for this is simple: Player-pooling occurs across platforms only.

So, when we discuss the possibility of New Jersey joining Nevada and Delaware, it’s a lot like checking in on the relationship status of your crazy friend on Facebook, it’s complicated, which, at present, it’s not in Delaware and Nevada.

Monopolies in NV and DE gave MSIGA a window

Following the demise of Ultimate Poker, there are only two online poker operators of any real consequence in the United States: partypoker and 888.

One, 888, would welcome interstate agreements, considering they are major players in all three regulated markets. The other, partypoker, would rather they didn’t occur at this point in time, as their only presence is in New Jersey.

Because of these dynamics, the forthcoming interstate player pooling between Nevada and Delaware won’t meet with much opposition, considering 888 is the only software operator of note in either state (sorry South Point, but your Real Gaming online poker site has been a flop). As it currently stands, 888 is the sole online poker platform in Delaware and also provides the software for WSOP.com in Nevada.

However, this monopolistic environment doesn’t exist in New Jersey. in New Jersey there is a second major online poker operator, partypoker, and partpoker will not see any benefit from interstate pooling (they will in fact be hurt by it as it will bolster their competition), which will certainly cause them to fight against it tooth and nail.

In order for partypoker and their iGaming partner, MGM/Borgata, to be amenable to interstate player pooling they would need to launch a Nevada online poker room – which doesn’t seem like it’s going to happen anytime soon. Until that happens I just don’t see New Jersey joining the MSIGA.

Furthermore, there are multiple online casino operators in the space, and none of them have much of a chance to form interstate online poker partnerships – once again, it will help one of their competitors and do nothing to help their bottom line.

And then there is PokerStarsPokerStars is still expected to launch in New Jersey, and I wouldn’t expect them to sign off an interstate agreement that would only help their largest competitor.

New Jersey’s competitive environment will actually prevent (or at least stall) the state from entering into an interstate agreement.

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