ON LINE POKER IS OUR WHORE - Uber post

And it's a smart bitch as well! She really knows how to roll the customers. Get the most out of your wallet, and yes... We are the Johns. Jonesing and Jonesing for some "strange". The more times we get it, the more times we want it.

KenP's last piece tells the story of how On Line poker drastically changed when the UIGEA came about and how those changes basically saw the sites that benefited from that law basically ignored US players. That's not such a true statement when you consider the strategy.

Ken starts with Poker Stars and some emails he received as examples. I like the piece. GO READ IT HERE.

But I think it lacks a history to reveal the real motivations of the sites. Don't get me wrong. I think all the sites are pretty much cutthroat. But as a business person and part time psycologist, I completely understand why. And in no way am I trashing Kens Post. I liked it. I did. However, I think it is written from the good ole "consumer rights" handbook. I'm not defending the sites, I'm just clarifying some points so that you, as a consumer, can now be more educated. I'm just giving a different perspective.

Who am I to be writing this anyway? Where do I get my info? Well, if you need qualifiaction, I can tell you that there is virtually no one in the country that was more adversely affected by the UIGEA outside of those in the actual industry then me. That's right people. It's all about me. But that's another story. First off, let's start with the history pre UIGEA.

As Ken stated, Party Poker was number #1 in the industry, and Stars was #2. I also believe that 888 gaming (pacific poker, paradise, and they had another one) was #3. But I don't have the required documents to defend that so we'll forgoe that right now. Not that it matters. What does matter is the gap between 1st and 2cnd.

Party was TWICE the size of Stars. That's right. TWICE. Stars was a punk compared to Party. And they were positioned to be extremely competitive with Party before during and after the UIGEA. I knew/ know people at Stars and they were more than excited to sling a stone into the forehead of Party. But to truly understand what was at stake you had to know the industry numbers. That was, at the time an 80 billion dollar market. Of which 80%.... soak that number up... 80% came from the US Market. Let that sink in for a minute. 80% of 80 billion was told they could no longer play online poker. Once more... 80% of 80 Billion was told they could no longer play online poker anymore.

Ok, now take off your consumer rights advocate hats, and put on your Business persons hats. This is going to take a while.

When all this went down, it went down in a very quick, super fast, lightspeed (I'm running out of adjectives) hurry. As in 30 M1 tanks stuffed into a shipping container and pushed off of a high ledge hurry.

I know this because I had a deal with Party Poker at the time. A very big deal. It took us 6 months to complete due dilligence, and in that time, I had a complete education on the online poker industry. Where it came from and where it was going. Thanks to math (yeah Math!) the future was plotted out. There were intangibles, of course (which is why I was getting a deal) but the future was well plotted out. We could tell which way the demographics would go, we could tell who would be around, who would be most likely to be bought, etc. The threat of the UIGEA was there for quite some time, but no one ever thought much of it. No one thought the US government would ever pull the trigger. But they did. (I wrote about it here on several occasions. Just don't have the time to find the link).

And when they did, it was on a saturday. To understand the surprise and speed of how this went down, I had a conference call on Friday. It was a good call. Talk about flights to London in two weeks, dinners, parties, etc. By Monday morning, I had a phone call that all deals were on hold until this was sorted out. Party was pulling out of the US (as well as others who traded publicly on the London exchange).

Party left because they had shareholders to account to. Stars and Tilt did not. They were (and are) privately held enitities. Which is also why you will never get an accurate number of what they make (want the number? :) ).

But those people at Stars (and others) weren't stupid. They understood that Party basically perfected the industry. They held at least twice the market share as Stars and now that they were gone. Where were US players going to play? Well, hell that was an easy one. Stars or Tilt. Basically they were the only two who had equity in the US market with their marketing campaigns. But there were other things to consider as well.

One was, at the time, how long was the UIGEA going to last, and more improtantly, how much was it going to affect the player, not just the company. There were some in the industry who thought it wasn't going to be around that long. And even if it was, how the hell could the government even enforce it. Then of course, the other side of the coin had the notion that maybe US players WON'T be able to play at all. Maybe the US Government would just be able to actually shut it down.

There was complete panic and total exhileration at the same time on the part of Stars and Tilt. On one side, it was, w00t! We have open access to a gabillion players! On the other side it was... FAWK!!! How do we even begin to compete in the international (which was widely untounched) with Party now focusing their Herculean marketing capabilities on it before we even have a chance.

When Stars and Tilt saw that US players were jumping to wherever they could get money on, it was like Christmas. Both sites saw massive increases in playership. And they got this new consumer growth almost free. See in the industry they calculated "conversions" by cost. A conversion was basically what a new player cost to get. Those parameters were based on a new player depositing $50 and playing "X" amount of hands. Pre UIGEA that number was $450. That's right. It cost the sites $450 everytime they got a new depositor. That cost was figured by counting the amount of marketing dollars, rake back, bonuses, etc that it took to lure new players onto their sites. Only this time around, Stars and Tilt were getting them a lot cheaper.

Sure, if you're a smart enough consumer, you can think that those savings could/ should be passed onto you. And they kinda were. Tilt went from $250 to $600 in deposit bonuses. But the sites had other things to worry about as well as a business.

Right about the time of the Netteller bullshit, yet another panic hit. Remember, no one was sure of how this thing was going to pan out. They scrambled for processors to be able to accept deposits, and the biggest one was siezed, bound and gagged, and basically raped. They had no idea how this was going to pan out. And even though they still had US business and growth at an alarming rate, they foresaw the need for the international market.

They also saw the emergence of rake back. And how every single player on the planet wanted to get in on it. They had the "rule" in place for other reasons. That is one account per person. It was initially put there for integrity reasons. But when they realized that a lot of players were opening up new accounts to get the benefits of rake back, (hence costing them more money), they decided to pull the hole card. Multi accounts are not permitted. If you weren't smart enough to get rakeback the first time, then you can't open a new account just to do so now.

See they had already paid their "conversion" for you once already. Rake back costs them more than the rake. It costs them the dollars they paid to sites that offered that rakeback. That's right. Affiliate programs cost the sites a lot of money. Costs that are already factored into the "conversion" equation. They certainly didn't want to have to pay it twice. So they weren't being mean or consumer non-friendly. They were protecting their bottom line. As any business would do.

I digress...

When Stars entered the Euro, and Latin market, they did so in an attempt to garner marketshare with what could have been the only place to do business. Remeber, everyone was worried about the US becoming a market where you couldn't do business. It wasn't pressing because the thought of that was almost unimagineable. But the threat was still there. And if you do nothing about it, you're dead. As silly as that sounds now, it was true. And that's what us business type do. Worry about devastation.

That and the fact that they were getting their growth there by default with the largest competitor pulling up stakes, getting the jump on the international business was paramount to their survival. At least until the UIGEA went away. Which I will tell you will go away. Hold out hope. Just as I have predicted that CK would win a blogger event to get into the TOC, and that she would go deep in the O/E WSOP tourney, and that Hoy would final table the WSOP event he would play in (instead he played the Venetian Deepstack and won $50k), I will tell you that the UIGEA will be overturned.

Basically, KenP writes his post from a consumers standpoint. Which is ok, because we ARE consumers. But as consumers we also need ot be educated. When we take something at face value and with the viewpoint of entitlement as consumers we do ourselves a disservice. It angers us. But when we understand why they do things, it makes it a little easier to swallow. You understand that the owness is on us.

What I have failed to do in this post up to now is explain why they continue to do the things they do. One of those reasons is the fact that we play. Continuously. Without remorse, or regret. No matter how bad it gets. We play. Just like the whore, they know they have what we want. And we will continue to pay no matter how bad it gets. Because we need our fix.

The way things have gotten is because of how the market, the UIGEA, the competition, and the supply for the consumers have shaped the industry. If you haven't read between the lines, the US players have basically paid for the marketing programs of these sites into the international market.

I have a whole other post about where I think this is going, and how this will pan out WHEN the UIGEA is overturned or re-written. This will come shortly. Maybe a day or two. But for now, I fish.