Barring any last-minute hiccups, the state of Pennsylvania will kick off regulated online casino gaming in mid-July, including traditional peer-to-peer online poker.
It’s not yet known which platforms will launch in July, but regardless of who begins running games then, it will be a historic moment not only for PA but for U.S. online poker in general. Pennsylvania will be the most populous state yet to launch real-money online poker. But even a population of about 12.8 mm isn’t enough to get the warm and fuzzies about the market.
“I think when Pennsylvania launches there will be a decent amount of traffic to start, but unfortunately with only approximately 12 mm people, I don’t think it will be all that special in the long run,” Greg Merson, the 2012 World Series of Poker Main Event champion, commented to PocketFives. Merson, who has won more than $11 mm lifetime playing poker tournaments, plays online in NJ’s stagnant market.
Pennsylvania is the nation’s fifth most populous state, which could provide momentum for other states to consider regulating online casino/poker. PA should eventually overtake NJ as the nation’s No. 1 online casino gambling market, an upcoming success that other states will surely notice, especially ones that are embarking on mobile sports betting, a natural segue into other forms of iGaming.
In the meantime, here’s a brief look at some open questions about the upcoming and long-awaited ring-fenced Keystone State online poker market.
What will PA’s market look like out of the gate?
The first full month of NJ online poker (December 2013) saw the online poker sites collect about $2.8 mm in rake. Poker revenue was just $1.9 mm last month, more than five years later. New Jersey online poker began with a relative bang, propelling 2014 full year iPoker revenue to $29.06 mm, a figure that remains the best year to date for the NJ market.
The year 2014 was only three years after online poker’s infamous Black Friday. There was more residual interest in poker back in 2014. Pennsylvania is home to about 3 mm more adults than the Garden State, an advantage for PA, but that population superiority could be negated by less enthusiasm for the game than there once was. Nationwide attention and intrigue is on sports betting these days, which doesn’t help poker because many of its potential customers fall within sports betting’s demographics. Both are considered skill-based games.
The open question here is whether the first full month of PA online poker (which should be August) will beat the $2.8 mm NJ saw in month No. 1. There is some pent-up demand for online poker in PA, but if you also factor in that mobile sports betting will likely launch a month or two before online casino/poker, it’s safer to bet against PA beating $2.8 mm in its first month.
Still, PA online poker is poised to overtake NJ relatively quickly, thanks to NJ’s decline (which might not have bottomed out yet) and live poker being bigger in PA. One would be hard-pressed to call that a major accomplishment, but a new No. 1 online poker market would be a welcomed development.
Can iPoker help the struggling live market?
The Keystone State’s 10 poker rooms raked a combined $55.69 mm in 2018, down about 6% over 2017. It was a poor year for Pennsylvania poker. The debut of revamped poker rooms at Parx and Sands Bethlehem failed to have a positive impact. Revenue was up about a percentage point in 2017.
Online poker in the mix in NV and NJ has failed to rejuvenate their respective live games, and that’s more than likely to be the case in PA. The synergy between online poker and live poker isn’t strong enough yet.
It wouldn’t be shocking if a brick-and-mortar poker room closes in the near future, with Presque Isle Downs Casino (seven tables) and Mohegan Sun Pocono (18 tables) likely being the most vulnerable given their small sizes and the fact that neither filed for an online poker permit, unlike other casinos.
While regulated online poker isn’t driving hordes of players to the live poker tables yet, brick-and-stick poker rooms without an online offering likely will find themselves with a material disadvantage.
Which operator will start off as No. 1?
It’s a safe bet to assume that the online poker platforms with experience in NJ will hit the ground running in PA relative to their rivals. That would be Harrah’s Philadelphia (a Caesars Online Casino property), Mount Airy (PokerStars’ partner), and Borgata (MGM). The latter doesn’t have a casino in PA, but it was allowed under PA law to petition the state for online gambling.
MGM is No. 3 for iPoker in NJ, and without a live poker room in PA it’s unlikely that online poker under MGM will lead in market share. That leaves Harrah’s and Mount Airy. The former is more committed to poker with a 27-table poker room, while Mount Airy has just nine tables. There’s more incentive for Harrah’s to try to drive online players to the brick-and-mortar casino.
Prior to Caesars’ NJ network (powered by 888) enjoying liquidity sharing with NV and DE, PokerStars NJ enjoyed the top spot in the market. Harrah’s won’t have that shared-liquidity advantage in PA, so it could be a dead heat between the iconic WSOP and PokerStars brands.
By far the most dominant live poker room in the state belongs to Parx Casino, home to 48 tables. The Parx poker room generates more than four times more revenue than Harrah’s, and it controls about 30% of the PA live poker market. Parx, which partnered with GAN for online poker, could eventually emerge as the top iPoker operator in the state, but it would take some time.
It’s worth noting that PartyPoker, which is trying to make a U.S. online poker comeback after being the dominant platform in the early part of the mid-2000s poker boom, could also propel its partner Valley Forge to have a competitive online poker offering. Boyd Gaming is the owner of Valley Forge. Boyd not long ago owned half of the Borgata in Atlantic City, so it has experience with iPoker.
How many sites will be left standing in near-term?
PA online casino operators may find themselves incentivized to promote table games more so than their counterparts in New Jersey, thanks to the fact that the PA iCasinos will have to fork over 54% of their online slot revenue back to government entities. They will pay 14% on table games and poker.
Still, given the potential intra-state market size, it’s hard to see eight licensees offering the online poker vertical two or three years from now (assuming they all launch in the first place), unless PA can eventually share liquidity with other states. NJ has seen online poker rooms fold. The first couple of years of PA online poker will likely feature operators jockeying for position in the market. The results of that battle would end up determining which online casinos keep the peer-to-peer poker offering.
The following PA casinos (and one NJ casino) petitioned the PGCB for online poker. Their partners are also listed. It’s worth noting that casinos are allowed as many skins (brands) as they want for online poker.
- Parx (GAN)
- Harrah’s Philadelphia (WSOP/888)
- Mount Airy (The Stars Group)
- Hollywood (IGT)
- Sands Bethlehem (TBD)
- SugarHouse (Rush Street Interactive)
- Valley Forge (PartyPoker)
- Borgata/MGM (PartyPoker)
As mentioned, it remains to be seen if all of them actually pull the trigger on launching online poker.
When might PA share its player pool with other states?
This is the million-dollar question. With the PA launch, around 26 million people will be exposed to regulated online poker. West Virginia should launch sometime next year after legalizing earlier this year. West Virginia has fewer than 2 mm people. Michigan was on the verge of legalizing online poker last year, before the governor vetoed the bill. The Wolverine State is moving full steam ahead with basically the same bill this year. Michigan is home to about 10 mm people.
Currently, just Nevada, New Jersey, and Delaware share online poker players via a network controlled by Caesars, but that liquidity sharing is potentially in jeopardy thanks to the DOJ’s Wire Act memo in January. NV, NJ, and DE have not indicated that they plan on stopping online poker player sharing, as the legal challenge to the Wire Act opinion plays out in court. A federal judge recently said that the Wire Act, which is a law that dates back to 1961, will “likely” end up before the U.S. Supreme Court.
Pennsylvania gaming regulators are a cautious group, making it extremely unlikely they would allow the state’s poker platforms to include players from other states until there’s a favorable resolution to the Wire Act fiasco. It took NJ more than five years to see the overturning of PASPA, so a Supreme Court ruling on the Wire Act, if it ever comes, is likely several years away.