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Wednesday, October 7, 2009

PartyPoker Enters US Subscription Online Gaming Market Party On Or Party Over?

Recently World Poker Tour (WPT) was purchased by PartyGaming. The press associated with this purchase has focused on the sale as a brand purchase by PartyGaming for the purpose of growing Party's business in Europe. Very little press has focused on the fate of ClubWPT.com WPT's US subscription based online poker property. This part of the purchase may have more significant impact on the PartyGaming bottom line and the online gaming industry then WPT brand leveraging in Europe.

ClubWPT operates a US subscription online gaming site. They are allowed to do this legally under US state sweepstakes law. ClubWPT.com is one of a number of US online poker sites operating in this manner. Clubpogo.com, Pureplay.com, and Spadeclub.com are just a few of the other operates running legal US online gaming businesses using the alternative method of entry legal model sweepstakes model.

Although these sites are popular their subscriber base is small relative to the true size of the US online poker market. It is estimated that 10 million US players are still playing online poker either as free players or pay to play players. In point of fact, the real numbers are much higher because the UIGEA legislation enacted in 06 has discouraged US players from engaging in online poker. The numbers could easily be closer to 20 million.

PartyPoker.com, PartyGaming's online poker property has the email addresses for the majority of these players acquired prior to the implementation of the UIGEA and have continued to accumulated e-mail addresses post UIGEA through their free play site. So, what will happen if they decide to drive all of their US players to ClubWPT.com?

PARTY ON SCENARIO - If they decide to leverage ClubWPT.com, PartyPoker.com will become the largest and most profitable US based subscription site dwarfing any other subscription poker site in the US.

From a strategic perspective this could also set the stage for their dominance of the US online poker market if the US government does decide to consider poker as a game of skill and not chance. They will have already re-captured the majority of the US poker players in their subscription model business and will have re-established their brand in the US prior to the legislative change. I slight flick of a bit or byte will allow these players to upgrade to real gambling when the legislation changes.

PARTY OVER SCENARIO - PartyGaming draws attention wherever it does business. If it does decide to enter the US subscription online poker business under the ClubWPT brand it will raise the eyebrows of the Department of Justice and state attorney generals. These lawmakers could decide to tighten the definition of sweepstakes law that would result in online poker being excluded under sweepstakes law. This would spell doom for the existing US online subscription poker operators and would force Party to wait for a redefinition of poker as a skill game to enter the US market.

If Party successfully launches a subscription based online poker site in the US, and is unchallenged by US law makers, then the existing US based online subscription poker businesses would be buried by Party. It will be very hard for the other players to compete given Party's war chest. Party will out spend the other contenders and own the market.

Party's move into the US under the sweepstakes model could also jeopardize the UIGEA being overturned. If the US legal authorities are seriously considering redefining poker as a legal gaming model any attempt by Party to enter the US market prior to this decision could result in the authorities backing off.

PARTY ON OR PARTY OVER -Party is certainly contemplating these scenarios, counseling with attorneys and no doubt probing the US state and federal authorities to sort out what they will do. Their decision to entire the US subscription online gaming market may depend on the likelihood of the UIGEA being overturned and if it is to be overturned when it will happen. Either way all of the potential competitors have a stake in the Party decision and should also be considering what they will do based on the PartyGaming/PartyPoker move.

1 comment:

powerofnic said...

Well it is good to see that ClubWPT operates a US subscription online gaming site. this is allowing to do this legally under US state sweepstakes law, which is safe and quite good as well.so all n all it is good.