Ultimate Poker launched about thirteen months ago, becoming the first legal, regulated online poker room in the United States. Things started out well enough and even though Ultimate Poker was small, it wasn’t unexpected. But after some growth the first few months, results have been disappointing.
The latest bad news: the April numbers released by the New Jersey Division of Gaming Enforcement (NJDGE). Ultimate Poker, which was already lagging behind its competitors in the state, has almost been pushed out of the market completely. Its market share is down to 1.9 percent from 3.12 percent in March, with revenues falling to $49,252 in April from $100,289 the previous month.
Overall online gaming revenues in New Jersey also dropped in April. The sum total for all sites was $2,591,839, down 19.27 percent, or $618,824, from the previous month.
In a recent video posted on YouTube, Ultimate Gaming co-founder Tom Breitling addressed the disappointing results to date, though he focused more on the market as a whole, rather than Ultimate Poker specifically. As such, he put the blame squarely on external factors. “…our company was pushed off balance just a little bit by the revenue projections that existed for the legal online gaming market in its first year,” he said.
He continued, first criticizing the projections (which, in his defense, have been pointed at as being too high):
We all know that the only ones living and breathing the actual business twenty-four hours a day is us, the operators. Everyone from analysts to reporters were prognosticating at the size of the market with numbers and trends and predicting penetration in the market and average spends per customer. Well, the revenue estimates were too high. And there were some very good reasons for this.
Those reasons? “When regulations enter the picture, there are complications that cut into the size of the market,” Breitling said. “I learned a long time ago in my Expedia days that each computer click you ask someone to make during the e-commerce process turns away about ten to twenty percent of those customers. Looking at it another way, you lose one in ten customers with every click.”
Brietling proceeded to complain about how online poker rooms are required to ask for so much information, including social security numbers, that the process now feels burdensome. “It was like asking people to take their shoes off and step through a metal detector at the airport after years of walking straight to the gate,” he said. Many, he believes, are sitting on the sideline, waiting to see how things work out.
He called it “friction.” “This friction impacts the user experience and affects revenues.”
In the end, Brietling still seemed optimistic about online poker’s future, noting that the three states where it is legal – Nevada, New Jersey, and Delaware – account for only four percent of the U.S. population.
“We believe that the breakthrough is a matter of education and innovation and that it’s right around the corner.”
