For those non-Canadians out there you may find this article a bit overly specialized. However, I think all poker players can benefit from learning how regulation may affect their markets. I talk about PokerStars Licensing and/or potential departure from the Canadian market in this post, but there are many parallels with other countries that can be drawn. I initially wrote about PokerStars Leaving Canada a couple of weeks ago and found myself somewhat surprised at the response. It was glaringly apparent than many serious Canadian poker players had failed to consider the distinct possibility that Canadian online poker liquidity was about to decline significantly in Canada. Since that initial story, there have been some significant developments, and unfortunately the news is not good.
Before going further I should clarify that when I talk about PokerStars leaving Canada, I do not mean they will have zero presence in the country. So to all the naysayers who say that PokerStars will still be around. Maybe, but for players it will feel like they are gone. Their involvement in the Canadian gaming market will look nothing like it does today in a short period of time. If PokerStars is licensed to offer gaming services in one province and those players are segregated the result is the same or worse than fully pulling out. The only difference is PokerStars keeps making money, but that is not especially relevant from a players perspective. Furthermore, it is my opinion that these developments will be highly disruptive and problematic for a large number of Canadian poker players who rely on PokerStars (in its current form) for their income. I wish this were not the case, but it appears to be so. “The Industry” also appears to be leaving readers in the dark as to what’s occurring, and has failed to report these developments with a critical eye. It is important to read between the lines and question. Now consider some of the recent developments…
The “good” news for PokerStars is that Amaya Gaming has some significant connections in the gaming industry in Canada. In fact, Amaya has been providing significant assistance to Espace Jeux (The Quebec Gaming Website) for years. This relationship may well be providing dividends for PokerStars since it is now apparently in talks with Loto-Quebec to reach some kind of licensing agreement.
We now know licensing is a decent possibility. This has been widely reported in the gaming industry and conveniently arose not long after the news of PokerStars potentially leaving Canada. Coincidence? Perhaps… Perhaps not…. Either way, many players are clinging to this in hopes that it is a good sign for poker in the country. At first glance this appears positive, but there are some major problems…
This is the question we should be asking… This is what players want to know. There are no clear answers as of this moment, but in my opinion a licensed Stars in Quebec will likely be terrible for serious Canadian players. Why? One of the big issues is how does the revenue get shared between Quebec and PokerStars if players are mixed in with a global player pool? Segregation is the most likely outcome. Quebec will likely not be ok with their players being mixed in with the global player pool as is currently the case. Why not?
1) Possible major capital outflows if Canadian poker players are net losers. It is rare to find a government that is in favor of large sums potentially leaving their jurisdiction
2) Flat fee or revenue sharing based on the rake generated by players from Quebec is possible. However, the government may feel they are not getting enough back from PokerStars in this scenario. It is easy to start squabbling over the value of players etc. Within the gaming industry it is well known that some players are “higher value” than others for a network (the fish). This makes dividing the spoils a bit challenging and may lead Quebec to opt for a segregated network. Easier to justify politically to your constituents as well.
The likely result of provincially segregated player pools? Massively diminished Canadian online poker liquidity and a dearth of mid/high and mixed games. This is terrible news for a large number of Canadian poker players. Even if PokerStars was able to get a license from every province and could convince them all to share revenues nicely there are still major issues…
Did we forget to mention this ten ton elephant in the room? For those of you who are not aware, Playnow.com is the Canadian regulated poker room that includes players from British Columbia, Quebec, and Manitoba. It has very strict responsible gaming software that at last check limits deposits to $3k per day, requires users to input daily/weekly stop loss points, and as a result games rarely run above 200 NL. If you exceed your stop loss, the software will close all your tables for you, and the website provides an update every 30 minutes of how your session is going with an offer to close all tables. While responsible gaming is certainly important, these restrictions are incredibly limiting for the online poker community. Does PokerStars really want to be a part of that?
Is PokerStars considering instituting these kind of responsible gaming policies for all players worldwide? No, and it will be difficult to reconcile those differences while trying to stay in the Canadian market (in a licensed fashion). Every province has its own quirky rules, too. I believe Ontario has a cap on the total amount that can be wagered in a hand… Ontario also happens to be the biggest and most populous province in Canada, so that is a pretty big deal. There is very little wiggle room in the responsible gaming area within Canada. This is a politically sensitive topic that provincial governments will not want to rock the boat over. Most Canadians are okay with gambling, but only in a responsible manner. If they feel their government is promoting reckless gambling directly or indirectly (through Stars) this could quickly become a political hot potato. Nobody in the industry would benefit from that.
As you can see, the future does not look good for online poker in Canada. As I warned in my last article it is best to have a backup plan. I don’t believe players should panic because when it comes to government most changes occur at a glacial pace, but it is best to look ahead and be prepared. If poker is your main source of income, expect a big drop in liquidity going forward and consider looking elsewhere. Many Americans were devastated by Black Friday, and I would hate to see a repeat of that here in Canada. Stay vigilant my friends! In the meantime best of luck at the tables and be sure to check out my recently released book Exploitive No Limit Holdem where I share a wealth of experience and knowledge about how to crush online cash games.