Will PokerStars Have a Place in Pennsylvania?

August 14, 2014

PokerStars has this way of establishing its presence in districts where it sees value.

In New Jersey, it not only was one of the first gaming operators to apply for an iGaming license, but also went so far as to work out a purchasing arrangement with the now defunct Atlantic Club Casino before eventually partnering with Resorts.

And who in the online poker industry hasn’t heard of the blockbuster deal that aligned Stars with The Morongo Band of Mission Indians, the Commerce Club, the Bicycle and Hawaiian Gardens Casino – a partnership which led to a fierce debate over the inclusion of a suitability clause in California’s iPoker bills.

Even in Florida, a state likely several years away from passing iGaming legislation, PokerStars has made its presence known – this time through a partnership with the state’s most influential tribal casino in the Seminole Hard Rock.

Which begs the question: “Why on earth haven’t we heard anything about PokerStars in connection with Pennsylvania?”

Pennsylvania is arguably the next state most likely to roll out an iGaming operation – one that could include both online poker and casinos. Its market is approximately 25 percent larger than New Jersey’s, its brick and mortar casino poker rooms are on the upswing and its the second largest gambling market in the United States, trailing only Nevada.

Yet not a peep.

The dreaded “bad actor” clause serves as major deterrent

In State Senator Edwin Erickson‘s latest proposal to regulate online gambling in Pennsylvania, he made his position towards unsuitable licensing candidates abundantly clear. As per section (13B08), “presumption of unsuitability:”

“The board may not issue a license to or otherwise find suitable any prospective licensee or significant vendor…,who has at any time, either directly or through a third-party whom it controlled or owned in whole or in significant part, knowingly or willfully: accepted or made available wagers on interactive games using the Internet from persons located in the United States after December 31, 2006…”

Alright, but with Amaya’s purchase of PokerStars, wouldn’t Stars be able to get around that clause? Doesn’t look like it:

“Purchased or acquired, directly or indirectly, in whole or in significant part, a third party described in paragraph (1) or will use that third party or a covered asset in connection with interactive gaming.”

The fact that Pennsylvania’s iGaming bill specifically addresses the case where a candidate is purchased or acquired, and still deems the acquired company unsuitable if it violated the UIGEA, all but shuts the door on PokerStars chances of gaining entry into Pennsylvania.

But really, when has proposed language ever stopped PokerStars from bullying its way into a market where it perceives value? Not on my watch.

There’s also an issue with branding

In my reading of PA’s iGaming bill, I stumbled upon the following clause:

“To ensure that actual control and supervision remains with the licensed entity, the licensed entity’s publicly accessible Internet website or similar public portal must be marketed and made available to the public under the licensed entity’s own name and brand and not the brands of third parties.”

The way I’m seeing it, this clause would prevent PokerStars from becoming the front facing brand name of any Pennsylvania casino it aligned with.

So instead of PokerStars.PA, we’re looking at something more like ParxCasinoPoker.com powered by PokerStars.

Doesn’t quite have the same ring, does it?

PokerStars is a very proud company, and rightfully so. It’s by far the number one online poker provider in the world, the sponsor of many a live tournament poker event and just the mere mention of its name inspires nostalgic sentiments from the U.S. poker community. I can’t imagine it would feel too enthusiastic about entering a market where its name wouldn’t be emblazoned in bold faced type.

And if PA online poker rooms are represented by the casino, and not the gaming brand, what does that say about the prospects of sharing liquidity with other states? Seems like a hurdle to me.

Finding the right partner

Part of any relationship, gaming or otherwise, is finding a partner who shares similar goals. Yet, given the tepid to antagonistic attitude of Pennsylvania’s biggest brick and mortar casinos towards online gambling, I’m not sure PokerStars would be able to find its dream mate.

Its best bet would be to partner with the biggest name in PA poker – Parx Casino. Representatives of Parx, most notably Robert Green, have expressed ambivalence towards online poker, and at recent senate hearings has advocated a cautious approach.

Still, should online poker go live in Pennsylvania, Parx has no intention of letting opportunity pass it by, evidenced by the impending launch of its simulated online gaming site in Q4 2014.

The two other PA casinos that boast sizable poker operations are Sands and Harrah’s Philadelphia. Seeing as Harrah’s already has a branded WSOP poker room and relations with 888/WSOP in New Jersey, I can’t imagine it teaming up with anyone else. And as for Sands,well, that won’t happen.

Other PA casinos either feature middling poker rooms, none at all, or are struggling to expand their operations to include poker (SugarHouse).

What does this mean for PokerStars?

As of now, there are far too many hurdles blocking PokerStars entry into Pennsylvania. Compounding matters, the potential benefits of setting up shop in Pennsylvania are probably not worth Stars’ time, which is probably why it instead set its sights on Florida and California.

Time will tell, but I can’t envision a scenario where PokerStars would be a Day 1 launch site in Pennsylvania’s iGaming market.

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