The Future of Online Poker in Canada

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The online poker market is shifting globally and the buzz word these days is “regulation”. In Europe, regulation is coming in several different forms depending on the country. Player liquidity pools which were once thriving on several online poker networks, are now becoming segregated and this approach may only work in larger economies, but it defeats the advantage the internet offers of being able to play globally.

The end result of regulation is a hefty collection of taxes from poker operators but this cost is ultimately passed down to the end consumer or poker player who either sees a considerable rake increase as in countries like France and Italy, or a decrease in poker incentives such as bonuses and rakeback as in countries like Denmark where the tax rate is 20% of gross revenues from poker.

When poker players pay more rake, this diminishes any advantages they have at the tables and they have to work harder to earn a profit from poker.

Regulation in the largest global economy, the United States, has been slow coming over the past 5 years but how far is it and how effective will it really be? The word is that online poker will be introduced at the state level with several states expressing an interest in regulating. The promise of a country wide regulation, the choice that makes most sense, appears to be a distant one because of differences of opinions. Save for 2 or 3 of the most populated states in the U.S., it is virtually unperceivable to be able to operate a true online poker business that can offer anything close to what American poker players had pre-Black Friday.

Yes you can run cash tables much like you would in an ordinary local poker club, but the true thrill of having tournaments with gigantic prize pools which can be made affordable to even players with the smallest poker budgets is inconceivable. Pooling is what State and Provincial lotteries do both in the Unites States and Canada in order to create larger jackpots that will in turn attract more money spent on lottery tickets. Will we see this in poker? Probably not for years to come.

Unlike what’s happening in European countries, online poker is becoming fragmented in Canada. There are no clear laws prohibiting online poker and of course the market is dominated by some of the largest offshore licensed poker companies in the world.

In 2010, two of the provincial lotteries representing Quebec and British Columbia have decided to combine forces to create a joint poker network “the Canadian Poker Network” which appears to show some respectable poker traffic, but with Canada’s largest province by population and overall wealth, Ontario, opting to take a regulatory approach rather than that of an online poker operator, this will definitely hurt the Canadian Poker Network’s ability to scale up, especially since they are competing with poker networks that are investing heavily in software innovation.

BC’s PlayNow have already announced a white label arrangement with Manitoba Lotteries, but even combined, they would represent 40.3% of the total Canadian population whereas Ontario as a single province still represents 38.4% but a much higher percentage in terms of wealth. Other Canadian provinces are divided and not as hungry to enter into the online gaming space.

Ontario will offer gambling licenses to anybody who applies and meets to criteria. They will collect gaming taxes from these operators. Established foreign operators will likely invest in obtaining an Ontario gaming license. Companies such as Party Poker, PokerStars and 888 will surely be among those who will seek a gaming license in Ontario in 2013. Another one expected to do so is Caesars who already operate a live casino in the province.

Since the AGCO (Alcohol and Gaming Commission of Ontario) have already signed memorandums of cooperation with several key foreign gaming jurisdictions, this would suggest that there is the possibility that they will accept cross border poker networks, meaning that players from Ontario would not be restricted to playing against only other players from Ontario and would have access to worldwide player liquidity. In doing this instead of maintaining a segregated pool of players, the Province will surely offer a more attractive proposition to players and attract more operators for a gaming license and definitely collect more tax dollars because players will play more poker and generate more revenues on a network with ample liquidity versus one with limited games. Players would also have the option of playing in large tournaments with life changing prize pools.

An argument can be made that if BC and Quebec had followed a similar approach, at least for poker, they could be collecting a lot more tax dollars off poker because sites like PokerStars and Party Poker have more players. Players from those provinces will continue to play on offshore poker rooms because of the value propositions that they offer and innovation in software.

With Ontario regulating, you will surely see cooperation between land-based casinos and online poker rooms, something that was considered taboo in the past by land based casinos and which has unfortunately hurt their ability to attract more players to land based tournaments in addition to possibly generating sponsorship revenues to fuel higher guaranteed prize pools and TV opportunities. We will see major events within that province fueled by these elements and by affordable online poker satellites. If the poker borders are open to international poker players, we could see players from other countries winning tournament packages to local major events instead of the reverse.

Thanks to Ontario regulating, you can also expect the blocks lifted by certain banks on credit card payments and possibly the return of former gambling epayments giant Neteller.

What will Canadian poker players look for?

Poker room liquidity will always be a key driving factor to attracting more clients. It’s almost like passing by outside two restaurants, one with a line up and the other one looking empty. Even though we know there is going to be a 30 minute wait, we most often choose the restaurant that has the line-up. Round the clock traffic is a plus, especially since we have 4 different timezones.

As consumers in a tech world, we are also looking for the latest and greatest and it’s no secret that the larger poker sites are constantly innovating. Innovations like speed poker and mobile poker clients have become big selling features. Having different game varieties other than Texas Hold’em is also important, but only a handful of websites have enough liquidity to be able to offer enough tables at those games to make it interesting for someone to play.

The tournament prize pool factor is probably the most important at attracting new players. Canadians and poker players in general want to play for big prizes, even life changing prizes. A site that can offer this will carry a huge advantage.

Canadian poker players will have some choices to make because on one hand they will have the choice to play on government regulated sites yet on the other hand, poker players looking to make a profit are like shoppers and they have to search for value propositions.

 

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