A significant development for U.S. online poker came to light last week, as the Michigan Gaming Control Board (MGCB) issued operator guidance for interstate online poker pooling. The MGCB guidance points to the Wolverine State closing in on an official announcement that it has entered into an interstate online poker agreement with one or more states.
It appears Michigan is trying to join the Multi-State Interstate Gaming Agreement (MSIGA), currently comprising Nevada, Delaware, and New Jersey.
According to PokerFuse, Rebecca Satterfield, iGaming Manager for the Delaware State Lottery and the current Manager for MSIGA, confirmed Michigan has requested to join the compact and submitted suggested amendments, but the addition of Michigan is still under review.
“Upon MGCB’s review of the current agreement, suggested amendments were drafted to streamline the process for future states to join the association,” Satterfield told PokerFuse.
What Does 40 Million Get You?
The addition of Michigan would boost the current population total from 13 million to 23 million.
More importantly, Michigan’s entry could be the push three other online poker states, Pennsylvania, Connecticut, and West Virginia, need to follow suit. West Virginia and Connecticut operators haven’t even launched online poker sites, and several operators are holding back in Pennsylvania and Michigan.
Pennsylvania would boost the total population to 36 million, with Connecticut and West Virginia pushing the tally past 40 million – an all-important number.
I have long believed the number of residents needed to sustain a U.S. online poker market is around 40 million. That market would support 3-5 operators, with average cash-game traffic in the 4,000-5,000-player range. A pool of 40 million-plus provides enough liquidity for a handful of sites to compete with offshore operators and run decently sized guaranteed tournaments and promotional offers.
As the former head of commercial developments for 888 Holdings, Yaniv Sherman, once told me:
“Countries that have between 30 or 40 million people in Europe have trouble maintaining that critical mass. In the U.S., I think it’s different. A smaller population can maintain critical mass.”
The reason? According to Sherman, “Poker is much more embedded in the culture, and you don’t need to explain the game or go through the education process. Everybody plays poker here. It’s part of their everyday life.”
What the Guidance Says
The MGCB guidance is pretty straightforward.
Importantly, it only covers interstate poker agreements in the U.S. It does not cover international pooling, nor does it extend to games other than poker. And while it doesn’t expressly mention it, it’s safe to assume “poker” is limited to peer-to-peer games, not house-banked casino poker games, as the definition from the Michigan Lawful Internet Gaming Act reads:
“(ee) “Poker” means the traditional game of poker, and any derivative of the game of poker as approved by the board, in which 2 or more authorized participants play against each other and wager on the value of the cards in the authorized participants’ hands.”
The MGCB lays out several paths an operator can take now or in the future, should it sign an agreement with another state(s) to share online poker liquidity.
- An operator that does not currently offer poker in Michigan may decide to launch multistate poker… via a partnership with a new platform provider, via a new platform provided by an operator’s existing platform provider, or as a new game or remote gaming system (RGS) added to an existing platform.
- An operator or platform provider that currently offers poker may introduce a new platform in Michigan to support multistate poker or may migrate its entire poker operation to a platform located in another state (e.g., New Jersey).
- An operator or platform provider may continue to utilize its current platform while connecting to poker platforms in other states via a remote gaming system (located in Michigan or another state).
- As it relates to games, an operator or platform provider may submit new game software or may conduct multistate poker using game software that is already approved by the board.
If an agreement is in place, operators must meet the above MGCB requirements and receive approval from the regulatory body.
Time to Launch
When Michigan would link up with other states is unknown. As New Jersey Division of Gaming Enforcement Director David Rebuck often says, “it’s just not a matter of flipping a switch and saying, we’re going to turn on the Internet today.”
There are inter-state regulatory hurdles to overcome, as different states have different rules and requirements. There is also testing that needs to occur, particularly with operators that aren’t already sharing liquidity in multiple states.
Previous timelines took 13 months and seven months, respectively, from an announcement to actual pooling.
- Nevada and Delaware announced the formation of the Multi-State Internet Gaming Association in February 2014. The two states wouldn’t link their respective player pools until March 2015.
- New Jersey joined the MSIGA in October 2017, with player-pooling going live in May 2018.
That said, the timeline shrank considerably between the first and second instance, and there’s cautious optimism that the next state would be closer to “flipping a switch” and pooling players now that the infrastructure exists.
888’s Interstate Monopoly Comes to an End
Up until now, 888 is the lone interstate operator, as it’s the only online poker site active in Nevada and Delaware. 888’s WSOP.com is the sole survivor in a Nevada market that has seen two other operators fail, while Delaware’s industry is structured as a lottery-run monopoly, with 888 winning the contract back in 2013.
With Michigan in the mix, two other companies will have the opportunity to merge their New Jersey and Michigan player pools, PokerStars and BetMGM, ending 888’s reign as the sole interstate online poker operator. Of note, 888 plans to launch its WSOP.com online poker site in Michigan, on March 28.
THREE. MORE. DAYS. $50 FREEPLAY PLUS MAIN EVENT FREEROLL AT SIGN-UP. 100% DEPOSIT MATCH to $1,000. $50k GTD Sunday for $100 buy-in. Seats to the 2022 WSOP Main Event.
GAME ON MICHIGAN. pic.twitter.com/cQu1FmW2J0
— WSOP – World Series of Poker (@WSOP) March 25, 2022
That said, Michigan will significantly level the playing field and likely result in PokerStars ascending to the top spot in the U.S.
Average cash game traffic in the U.S., per PokerScout.com:
- WSOP/888 interstate network – 220 players
- PokerStars NJ and MI – 260 players
- BetMGM MI and partypoker NJ – 180 players
With WSOP.com/888 losing its interstate population edge, there is a strong likelihood that they will lose many New Jersey players to partypoker and PokerStars. So not only will the other networks gain players, but 888 will almost certainly shed players.
That will become a severe problem if Pennsylvania joins, as PokerStars PA has an average cash game traffic of 220 players, while WSOP.com PA averages 75 players.
