Despite a general worldwide decline in online poker traffic, there is one market segment that continues to grow – and it is being driven by US poker players.
There is no argument that – worldwide – online poker is in decline. Cash game traffic at the “world´s largest online poker site” has fallen by 30% in the past six months, and the world´s #2 and #3 poker networks regularly fail to meet tournament guarantees or have to give away thousands of seats in order to fill the events up.
There are several contributing factors to the decline. These include more attractive online options being available to the post-millennial generation, the prohibition of online gambling in former poker strongholds, and the desire of online gambling operators to cross-sell players into their more lucrative casino games.
However, despite these contributing factors, one market segment continues to grow – “offshore” poker sites. These are poker sites that operate from jurisdictions not subject to US law and, although most offshore poker sites are licensed by their respective jurisdiction, the supervision of the poker site operators is not as rigid as in jurisdictions where online poker is regulated.
Why do Players Play at Offshore Poker Sites?
Some industry observers have attributed the existence of offshore poker sites to the failure of individual states to regulate online poker, and suggest players use them because they have no regulated alternative. That´s not quite true. Offshore poker sites were around a long time before Black Friday in April 2011, when PokerStars and Full Tilt were closed by US authorities.
A more reasonable explanation is that it can be hard to distinguish between domestic, regulated poker sites and offshore unregulated poker sites. Research conducted in Europe has shown that many players unwittingly choose to play at offshore sites because they don´t know there is a difference. In the US, an online search for poker sites often places offshore sites higher in the results than domestic sites.
Why Hasn´t Offshore Poker Traffic Declined?
So, if it is difficult to distinguish between domestic regulated poker sites and offshore unregulated poker sites, why hasn´t the offshore market segment suffered the same decline in traffic as the regulated market segment? To answer to this question, you need to look at what is happening in various countries throughout the world.
Offshore poker sites have benefitted from both regulation and the lack of it. As countries ring-fence their markets (Europe) or threaten to ban domestic online poker (Australia/Brazil), players see opportunities at offshore poker sites they cannot get at home. By attracting players from all over the world, offshore poker sites have more liquidity, more off-peak action, and more valuable tournaments.
The Benefits are Not Lost on US Players
These benefits of playing at offshore sites have not been lost on US poker players – even in jurisdictions in which regulated online poker is available. Whereas it is true that a new US-based player starting their online poker experience may unwittingly choose to play at an offshore site because they don´t know there is a difference, many more are knowingly playing at offshore sites through choice.
In states where online poker is regulated, players pay more rake for lower rewards, struggle to find a game outside of peak hours and play in highly competitive tournaments for modest rewards. Many are abandoning their domestic regulated sites and taking their action offshore in order to take advantage of the opportunities the regulated sites are unable to offer.
Evidence of the Exodus is All Around
The phrase “there are three kinds of lies: lies, dammed lies and statistics” is often used when statistics are used out of context, but in the context of the exodus from regulated poker sites to offshore poker sites, the statistics tell a compelling story. Year-on-year cash game traffic is down in all three regulated states, and the only state to publicly release it revenues from online poker just experienced its worst month on record.
At the same time, cash game traffic at offshore sites has typically increased by 30% or more. One of the major offshore poker networks is in the middle of a tournaments series with more than three times the money on offer than PokerStars can offer in the largest regulated state, while another offshore poker network is about to embark on a series of poker tournaments with more than six times the guaranteed prize pools.
First hand testimony also supports the perception that players are abandoning domestic regulated sites for the better opportunities that exist at offshore poker sites. Respected industry observer John Mehaffey recently commented on an article bemoaning the decline of online poker in regulated states – drawing on his own experience of poor customer service at the World Series of Poker. In a Tweet, Mehaffey wrote:
If @wsopcom in NJ is anything like it is in NV, that’s probably another reason. Many Nevadans play at BOL and ACR because of the problems.
— John Mehaffey (@John_Mehaffey) August 7, 2017
Mehaffey also commented that if a player had a bad experience with a regulated online poker site (and there have been plenty of bad experiences reported across the poker forums), they would be unlikely to give another regulated poker site a chance. All the time that offshore poker sites continue to outperform regulated poker sites in opportunities, in rewards and – in Mehaffey´s case – customer service, offshore poker sites will continue to attract US players.
