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NEWS 11 July 2016
What a UK liquidity agreement could do for New Jersey
By David Cook
The latest significant development for the US online poker market was a report that New Jersey is once again looking into the possibility of a liquidity sharing i-gaming agreement with the UK.

According to Global Gaming Business, the state’s Division of Gaming Enforcement (DGE) has sent letters to all of New Jersey’s online gambling platform operators that are licensed in New Jersey and the UK, asking for advice on how a liquidity-sharing system can be put in place.

DGE Director David Rebuck is quoted as saying: “With nine million people in New Jersey, and more than 63 million in the United Kingdom, this would mean a massive increase in liquidity for New Jersey operators.

“Even when you discount children and non-gamblers, it gives us access to a market that is very familiar with online gaming. That number is one-fifth of the total US population.

“We’d still have to figure out lots of issues: specific regulations, how the tax rate from each jurisdiction would be applied, player ID and geolocation issues, and other things we probably haven’t even considered yet. But you have to start somewhere.

“We’ve talked to Nevada but the fact we’re limited to one operator makes it a difficult proposition to make to our other operators.”

This is not the first time reports on this issue have surfaced, as Rebuck has previously mentioned talks that have taken place with Nevada and Delaware, including in an interview with Gambling Insider. In that interview, Rebuck also said he was not opposed to making a deal with the UK, which had previously been reported.

Nevada and Delaware, the only other two US states to have regulated online gambling, currently have a liquidity-sharing agreement in place for online poker. New Jersey’s online market is ring-fenced to players within that state only.

Where a New Jersey agreement with the UK may differ from the set-up between Nevada and Delaware is that it could later be expanded to include online casino games, according to a DGE spokeswoman. This is not possible for Nevada and Delaware, as Nevada offers online poker only. How New Jersey and the UK could create pools for online casino games is another issue entirely, but here is why the idea could work in principal:

What can the UK actually bring to the table for New Jersey?

Let’s start with poker. The latest Gambling Commission (GC) statistics show online peer-to-peer GGY as being £103.4m for 1 November 2014 to 30 September 2015. In comparison, the latest year-to-date online poker revenue for New Jersey stands at $10.5m (£8.1m, post-Brexit vote), with May being the latest month where figures have been reported. Peer-to-peer can mean any peer-to-peer casino game, but we’ll assume that poker makes up at least a large share of that total.

Based on those numbers, this means that New Jersey would be opening itself up to a market almost 13 times its current size. However, it should be taken into account that the New Jersey figures are slightly skewed by the fact that PokerStars relaunched in the state in March and has allowed Resorts AC to already move past Borgata/BwinParty and Caesars/Harrah’s/888 in the online poker revenue rankings.

If the agreement were expanded to all other casino games, then this would open New Jersey up to a market worth a total of £2.4bn for the latest GC reporting period. This is more than 62 times the size of New Jersey’s online casino market worth $49.8m (£38.6m), according to the latest year-to-date numbers.

What it is not possible to work out though, is what this would equate to when taking into account the UK online casino and poker operators that are also operating in New Jersey.

Useful experience

One plus point for the plans is that getting through the paperwork to allow players to play on sites in both countries would be assisted by the fact that all of New Jersey’s online poker operators are in some way linked to the UK market through their online partnerships. PartyPoker, 888 and PokerStars, all partnered with the three New Jersey i-gaming licence holders that operate online poker, are active in the UK. The platform for UK players is already there and waiting for New Jersey. 888 has already launched a liquidity sharing system between Nevada and Delaware too.

With PokerStars and 888Poker occupying the top two positions of the PokerScout worldwide cash game traffic rankings and PartyPoker placed in fourth, it is likely that the three operators contribute significantly to the UK total.

Where the market can grow to

The New Jersey i-poker market has already seen a spike in monthly revenue to over $2.5m for the two full months that PokerStars has been back in the state, with May’s $2.57m total being the highest since April 2014’s $2.59m. If Amaya’s 71% worldwide online poker market share as of Q1 2016 is reflected in the UK, then it would have generated £73.4m from UK players last year, just over nine times the size of the entire New Jersey online poker market, based on current year-to-date figures. These could be exciting times if the state can eventually strike a deal.
RELATED TAGS: Online | Casino | Poker
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