WOGLR March 2014 pg 14 .pdf

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The importance of poker
liquidity for regulated markets
Poker business is collapsing in France, Spain and Italy
Over the last five years, Italy, France, Denmark, Spain and
Belgium have all regulated their gaming markets and allowed
online poker operators to apply for a licence in order to offer
their services to 190 million potential customers.
Even if it was the European Commission that took action to
force countries to open their online gaming markets, every
country was allowed to set up their own rules for operators to
comply with in order to be granted a licence.
This approach has resulted in a lot of differences between
Member States: taxes are calculated on turnover in France and
on gross gaming revenues everywhere else; poker rooms have to
separate their local players in France, Spain and Italy, whilst
Belgian and Danish players can compete against international
players; operators require the bank details of every customer in
France; and tax rates can double from one country to another...
The European Commission has pushed for EU markets to
open to ensure the freedom to provide services and the freedom
of establishment is maintained. The main objective was to
improve player safety and gaming security, but side objectives of
the Commission include the need to allow fair competition
between operators and to generate revenues from the gaming
Gaming operators welcomed this change even if it meant that
they will have to pay more taxes. Guaranteeing their customers
a safe experience, being able to efficiently forbid underage
customers playing online, fighting against gaming addiction,
and getting access to more communication channels are key to
business growth.
Now that those markets have been regulated for a couple of
years, what can we see?
Poker business is collapsing in France, Spain and Italy with
poker revenues showing a decline between 12% and 20%;
several operators are closing their regulated websites, even big
guns such as 888, Barrière or Partouche in France, and Poker770
in Spain; only two or three operators per country have a market
share of over 15%; most operators have an uncompetitive offer
and the large majority fail to be profitable at the end of the year.
One factor gaming authorities have clearly underestimated is
the importance of player liquidity. The difference between poker
and casino or sports betting is that in playing poker you are
playing against other real players. When you want to start a
sit‘n’go, you have to wait for other players to sign up. The more
players connected to the software you are using, the less time
you have to wait to play and the more revenue generated for the
operator. When you start a multi-table tournament, the more
players that sign up, the bigger the prize pool and the more
attractive the tournament. When cash game tables are begun,
you can play on several tables, but only if enough users are
playing on the tables you want to join.
The poker industry has known for a long time that liquidity is


essential for poker, that there is a minimum number of players
needed to make a decent enough online offering to players and
that the more players you have online, the bigger the revenues.
Even on the international poker market (.com), several poker
rooms are sharing their liquidity by using the same software
provided by poker networks such as iPoker, Ongame or
Microgaming. This is the only way to survive.
On regulated markets, even if operators use the same
software in numerous different countries, even if all those
players are verified, they cannot play together. Why is that?
One of the reasons is that governments have to be sure of the
identity of every player. If Spain, Italy and France were to share
their poker liquidity, this objective would still be achieved as
every country has strong legal requirements regarding player
verification that every operator who has been granted a licence
must adhere to.
The other reason stems from the need to accurately tax online
poker in a given country. Even if the taxation isn’t exactly the
same in those three countries, it’s fairly easy for operators to
share their offering and potentially make users pay a different
amount of rake depending on their location. It is also pretty
simple for the authorities to track their users and to calculate
the amount of tax operators owe them.
Everything can be done in the back-end and therefore will be
invisible to the player, using tools built for the Danish and
Belgian poker markets, where local players are facing users from
the global market, both operators and authorities are able to
collect rake and taxes correctly.
Software used in Italy, Spain and France is already the same for
a large majority of operators. Allowing liquidity sharing will
instantaneously result in a better player experience for users: less
waiting time, bigger prize pools, more tables to play on, and
more features…
Liquidity sharing will also increase the revenues generated by
players and therefore the taxes collected, players will have more
choice with six to seven different websites providing a
competitive offering, and it could serve to bring back some
players who are currently using unregulated websites to the
regulated offering.
Especially with the current market trends in Italy, Spain and
France, which are still suffering an ongoing decrease in online
poker, it is urgent for governments to understand the key issue
of liquidity for the online poker business. As decreasing taxes
isn’t an option considering the overall economic context,
sharing liquidity is the only way to change the trend and keep
this market alive.
Michael Donteville Head of Poker – France, Spain and Belgium
Contact via the editorial team

World Online Gambling Law Report - March 2014

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