What at first seems like an extreme disadvantage for the site, entering an already-established market two years after the fact, may very well turn out to be a blessing in disguise for the site, as PokerStars is avoiding all of the early issues that plagued the New Jersey market.
“PokerStars is going to get a free ride.”
Those were the words used by former bwin.party Director of Poker Jeffrey Haas when I spoke with him back in October of 2014 about – what was thought to be at the time – the imminent launch of PokerStars.
Haas’s “free ride” comment was describing the advantage PokerStars would have by entering the New Jersey online gaming market now that many of the kinks have been worked out. “We got these systems (KYC, geolocation, payment processing) up and running,” Haas said, “and now it’s a much smoother process.”
It would actually be another year (nearly to the day) before the New Jersey Division of Gaming Enforcement approved PokerStars’ license, and a further six months before the site launched (which it did on March 16), but Haas’s words are just as true today as they were in early October of 2014.
And PokerStars’ launch earlier this week confirmed Haas’s suspicions.
First movers left a sour taste
The reputation of all of New Jersey’s online gaming sites took a hit due to the early problems (some self-inflicted and some unavoidable) the industry faced.
Part of the problem was New Jersey’s aggressive nine month timeline from passage of its online gambling law to launch caused a slew of headaches.
First, geolocation in New Jersey was extremely difficult in the early months of the industry. A conservative approach led to many false-negatives (as much as 5 percent) from the state’s massive border population. Geolocation also suffered because of its overall effectiveness (a good problem to have) and multi-layered approach, as players with weak wifi signals, or the wifi on their computers turned off were often greeted with messages that they could not be located and therefore could not log on to the state’s licensed online gambling sites. In the eyes of the geolocation system, these players were not located in New Jersey… even if they were just a few feet from the actual server.
Second, when the industry launched credit card approvals were in the single digits, and with a lack of alternative funding options players found what should have been an extremely simple process of funding their accounts frustrating and in some cases near-impossible.
Third, the bold timeline for launch, and the novelty of online gaming regulation, gave the DGE little opportunity to fully test and/or approve software features, so in many cases the first movers launched with bare-bones, stripped-down versions of their software.
These early issues led many to believe nothing had changed with online poker, and left an extremely sour taste in many people’s mouths.
Perception is reality
And now, here comes PokerStars, sans the problems other sites had to deal with.
Over the past two years, all of the above issues have been worked out, or at least greatly improved, so the disillusioned New Jersey residents who might give online gaming another whirl (after a frustrating first experience that had them swearing to never play at site x, y, or z again), PokerStars looks like the first company to enter the market with its act together.
What a lot of these people won’t realize is that it was the resolution of the very issues they lamented back in late 2013 and early 2014 by the first movers in the market that allowed PokerStars to have such a successful launch two years later.
The first-mover advantage has long been overrated
It wasn’t just New Jersey’s early problems from its accelerated launch timetable that have allowed PokerStars to have a far more successful debut. All along the first mover advantage was likely overstated.
This was perhaps the most evident in Nevada’s online poker industry, where unlike in New Jersey, where the industry had a coordinated launch, online poker sites in Nevada used a staggered launch.
On April 30, 2013, Ultimate Poker became the first licensed online poker site in the United States when it went live in Nevada. Ultimate enjoyed a six-month monopoly in the Nevada market, but its rush to be first ended up being more of a burden than an advantage.
Shortly after the launch of the more polished WSOP.com online poker site, Ultimate Poker’s first-mover advantage all but evaporated, and WSOP.com ascended to the top of Nevada’s small online poker industry. Before the calendar was flipped to 2015, Ultimate Poker was out of business.
As long as PokerStars handles its business, it should have a lot of success in New Jersey compared to the first movers. The environment PokerStars is entering is far more conducive to success than what the likes of 888, WSOP.com, partypoker, and Borgata were faced with.
PokerStars should be able to build on the improvements that have already been made, and hopefully for the companies that went through this trial by fire, lift the entire industry up.