Editorial: New Jersey Liquidity Issues Need More Than a Shell Game

Coming up on its second anniversary, the New Jersey online gaming market has been able to slowly build some speed. Along with Delaware in being the only operations that offer intrastate online casino gaming (Nevada only offers online poker), the Garden State earned well over $100 million from its online casino gaming industry in 2014, outstanding considering it was a year that saw five of its physical casinos fail. It is expected that the performance by the operations still standing in the New Jersey online casino gaming industry will perform even better, but there’s a small problem:  online casino games are continually showing growth while online poker is flat to falling.

Part of the problem with the New Jersey online poker system is in the simple issue of liquidity. With a population of only 9 million people, New Jersey lacks a substantive enough population pool to be able to provide for a thriving online poker scene. As such, some are proposing what to do about improving that liquidity but the ideas suggested are but a shell game

Poker journalist Steve Ruddock took on the subject of New Jersey’s poker liquidity earlier this week and some of his facts were pretty on point. When it comes to a segregated market, Ruddock points out that market can expect to average between 50 and 100 players per million residents that are available. He also accurately points out that the lower the population, the closer to 50 the average will be. For New Jersey, Ruddock estimates that it would be able to support a 600 player system, far beyond the 300 (WSOP/888 averages 180 players and Borgata/Party 120, according to PokerScout.com, and not counting for duplication) that are currently on the felt.

Where Ruddock goes a bit offline is in the two solutions he proposes for fixing the liquidity issues for New Jersey.

Ruddock’s first suggestion is for the online rooms in the New Jersey online poker industry to remove some of the stakes that they offer to players. For example, instead of offering these stakes:

$.01/$.02
$.02/$.05
$.05/$.10
$.10/$.25
$.25/$.50
$.50/$1
$1/$2

Ruddock believes that these stakes should be offered:

$.02/$.05
$.10/$.25
$1/$2

In addition, Ruddock believes that through eliminating cap games (games with a cap on the limit a player can bet per hand regardless of the round of betting) and shorthanded games, the number of players will increase – he uses the example of “instead of 30 players at each level, games now have 70 players at each level.”

The problem here is that you haven’t changed the number of players overall that you have on the site, you simply have shifted the numbers around in a shell game. For example, instead of 30 players each at seven levels (210 players), you’ve now just made it 70-70-70 (210 players) in allowing for only three levels of play; that isn’t increasing the liquidity, it is simply manipulating the numbers. This also isn’t accounting for the players who like the lower levels to play recreationally that would more than likely quit playing the game rather than spend more money on it. Liquidity isn’t changing at all in this action.

Ruddock’s other suggestion probably wouldn’t work either. Ruddock proposes the “fast fold” games (think Full Tilt Poker’s Rush Poker or PokerStars’ Zoom Poker) be introduced into the New Jersey online poker industry but, once again, this won’t make a significant difference in the numbers (Ruddock at least mentions here that fast fold poker “radically distorts the perception of a site’s liquidity). Online poker sites that have introduced “fast fold” games have actually seen a decrease in the numbers of players on their regular cash game tables, although profits have actually risen because of the rapid number of games that are played in the “fast fold” format. By introducing a “fast fold” format, New Jersey online poker rooms would more than likely hurt their liquidity rather than help it.

So what can be done to improve the liquidity of New Jersey online poker rooms? Short of compacting with other states (not looking likely soon) or the doors suddenly being thrown open on a “New Age” for U. S. regulated online poker (even less likely), New Jersey officials unfortunately only have two stalwarts to stick with:  advertising and “coming of age.”

Many have admitted in the New Jersey online casino gaming scene that advertising the factor they even exist has fallen way short. But there is only so much advertising that can be done before you completely saturate the market and cannot reach any more players than you already have and New Jersey officials have to determine where they are regarding that issue. It is a fine line between getting the best “bang for your buck” and overspending on the audience that is available.

In looking at those players “coming of age” – those becoming 21 during the year that can participate in online gaming and poker – it isn’t a huge crowd in New Jersey. Approximately 22% of New Jerseyites are under 18, so let’s say that the under-21 market is at least 25%. That is roughly 2.25 million of New Jersey’s population and, if 1% of them are turning 21, that counts for 22,500 potential new players. Using Ruddock’s previously stated estimations regarding potential players, that number is quite insignificant (5 to 10 new players) in players coming out due to being legal.

In some cases, you’ve just got to take what you’ve got and try to maximize the experience, attempting to increase your revenues along the way. Barring a massive compacting between those entities running online gaming or some other seismic explosion that changes the game (PokerStars, anyone?), there isn’t much that can be done for New Jersey to rapidly increase the liquidity of their online poker rooms. In the short term, maximizing advertising and drawing in those that are newly available are the best methods. The worst part is when suggestions are made that are simply a shell game, shifting the numbers around to give an impression of more players when in actuality they are still the same.