Traffic sharing is a hot topic in legal online poker. Once upon a time, the whole world was a single market for online poker. Many countries still have access to that shared traffic pool, but not the US.
Now, it looks as if Canadians, or at least Ontarians, may soon find themselves in the same boat.
There are efforts underway to move back towards larger player pools, however. New Jersey, Nevada and Delaware have a traffic-sharing compact. As of April, Michigan has now joined them, though the start of traffic sharing may still be weeks or months away. Hopefully, this means that Pennsylvania will now consider following suit.
What’s Happening: As Of July 2022
- Apr 6, 2022: Michigan has been approved for entry into the Multi-State Internet Gaming Agreement. That makes it official that it will join New Jersey, Nevada and Delaware in sharing traffic, but the process may take several more months to complete.
- Apr 4, 2022: Ontario’s new ring-fenced market is now live, though some operators, including PokerStars, are temporarily remaining offshore and global until approved for launch by the regulator.
- Mar 24, 2022: WSOP has launched in Michigan. Its delayed entry is likely due to wanting to wait until shared traffic is imminent.
- Feb 8, 2022: Entain has pulled Partypoker out of Russia to show its commitment to regulatory compliance. Part of the reason it’s doing this is to maintain its good standing with Nevada regulators, perhaps with the intention of including the Sagebrush State in a future BetMGM Poker US Network.
- Jan 31, 2022: iGaming Ontario confirmed that regulated Ontario poker sites will not be able to share traffic with sites outside the province.
What’s The Big Deal About Shared Liquidity?
There’s no online gambling vertical more impacted by market size than online poker. Having access to twice as many potential players usually means an online casino or sportsbook will do twice as much business, but the effect for poker is much greater. Without enough players at the tables, games dry up, so operators in smaller markets have a hard time offering a wide variety of formats and stake levels. Tournament guarantees also get larger the bigger the market is.
What all that means is that more traffic is itself a selling point for poker rooms. That’s a problem for the nascent US online poker market, where gambling legislation happens state-by-state. For smaller states in particular, it can make online poker an impossibility; even if they legalize it, they may not have the population necessary to make it worthwhile for a site to launch.
One solution is to share traffic between states, but that’s easier said than done. It requires the states in question to agree on terms for how that will work, and to do so in compliance with federal law.
Nonetheless, the concept is slowly catching on in the US. At the moment, three states have formed such a mutual agreement, although only one operator – WSOP – has been in a position to take advantage of it. The hope is that in the near future, more states and more operators will begin such interstate networking.
Nevada And Delaware Join Forces For Online Poker
Delaware was the first state to legalize online poker in 2012, and Nevada followed shortly thereafter. The two marketplaces began independent of one another.
In March 2015, though, the state’s governors signed a deal to share online poker liquidity. State revenue was to be retained based on the players’ location, but everyone would be playing in the same pool. The Multi-State Internet Gaming Agreement was the first of its kind in the US.
Although it didn’t really affect either state’s revenue, it did establish the framework for further interstate expansion.
Multi-State Internet Gaming Agreement
During the legislative process, Delaware positioned itself as a hub for interstate gaming. Partnering with other states was always going to be a necessity for a state of less than a million residents.
As part of the agreement with Nevada, the Multi-State Internet Gaming Association was established within Delaware.
The MSIGA created a uniform set of rules and the system for governance of them. It has open membership, and each state that joins is given one seat on the group’s board.
At the time of its inception, the Association had two members.
New Jersey Online Poker Joins Interstate Agreement
New Jersey also legalized online gambling in 2013, becoming the third state to do so.
It was also the largest, about three times as large as Nevada. As such, it had enough liquidity to (mostly) support an industry with a handful of licensees. Online poker has not grown quickly as the honeymoon phase has worn off, though.
In October 2017, Gov. Chris Christie added his signature to the MSIGA, creating a three-state pact.
In April 2018, WSOP announced plans to launch its multi-state platforms on May 1. The pooling went live a day early, on April 30. The timing allowed New Jersey players to compete in four online bracelet events from home this year. Matt Mendez won one of the bracelets from New Jersey in 2018.
It’s too early to tell what the exact benefits will be for all three markets, but total liquidity stands to see a significant boost.
Pennsylvania Drags Its Heels
Late in 2017, Pennsylvania pulled off the surprise of the year in the gaming industry and finally passed a sweeping online gambling package. The Keystone State became the fourth to legalize online poker.
PokerStars was the first to go live with a poker room in the state. Since then, BetMGM Poker, Borgata Poker and WSOP joined in. Meanwhile, the question on everyone’s mind is whether Pennsylvania will join the MSIGA. The state has a Top 10 population, and the addition of those players would make the US iPoker market much healthier.
Regulators haven’t taken a public stance on the issue, but the expectation is that Pennsylvania will join the interstate agreement eventually. Officials have already been working closely with New Jersey, and the gaming director said early on that they’re going to “strike hard” with Pennsylvania. However, more than two years into the market’s operation, there’s still no official word about whether and when it will happen.
The language of the law allows for interstate pooling as long as the servers are located in Pennsylvania. New Jersey has similar language in its own regulations.
Michigan Looks To Become The Fourth
In 2019, West Virginia and Michigan became states number five and six, respectively, to legalize online poker. West Virginia did so in late March, and Michigan beat the buzzer in December, just before year’s end.
Michigan went live with online poker in January 2021 with PokerStars. BetMGM Poker launched as the second online poker site in the Great Lake State in March 2021. For now, the state is on its own, although a law passed in December 2020 has the wheels turning for Michigan to join MSIGA. The Wolverine State was slated to join multi-state online poker in 2021.
In May 2021, Henry Williams – executive director of the Michigan Gaming Control Board (MGCB), told us there were a few issues holding that multi-state online poker launch back. He said MGCB representatives were meeting with their counterparts in other states, because they had to agree to allow Michigan into multi-state agreements. Plus, operators have to offer the product, which only one does now.
No online poker rooms have yet gone live in West Virginia. The Mountain State already has some online sportsbooks and casinos active. However, with fewer than 2 million residents, it is definitely a state that needs shared liquidity to sustain a poker room. That should make it eager to join the MSIGA, but the West Virginia Lottery, which acts as the state’s regulator, has been silent on the subject.
Connecticut is another mystery
In the first half of 2021, Connecticut became the seventh state to legalize online poker, along with online casinos and sportsbooks. Whether it will join the MSIGA, or have online poker at all, is a mystery.
It’s a very limited market which will allow only two iGaming brands in total: FanDuel and DraftKings. Neither has a poker product at the moment. However, DraftKings is rumored to be working on one, and FanDuel is owned by Flutter, which also owns PokerStars, so it could potentially launch a poker product using that technology.
Connecticut’s iGaming rules lump online poker in with live dealer casino games. However, the rules’ provisions for out-of-state simulcasting for such games allow it only on a limited time basis until March 2022. If the state does plan on joining an interstate compact, it would need to update its own rules first. Meanwhile, with a population of about 3.5 million, it’s larger than West Virginia, but not as large as any other state currently offering poker without interstate traffic.
New Jersey eyeing national, international markets
In November 2017, Sen. Raymond Lesniak introduced a bill that would pave the way for expanded agreements across borders.
Lesniak aimed to repeal the portion of New Jersey’s gaming code that requires servers to be located in Atlantic City. By removing that roadblock, the state would be in a position to partner with out-of-state and international operators. Essentially, it could open the world back up for online poker players in New Jersey.
Unfortunately, Lesniak retired at the end of the 2017 legislative session without the bill gaining any movement.
Department of Justice moves to intervene?
In March 2021, it appeared as though the First Circuit Court of Appeals‘ ruling on the Department of Justice’s (DOJ) memo would stand. The court disagreed with a Trump-era memo that opined that interstate gambling, including poker, fell under the purview of the 1961 Wire Act. Prior to that memo, the law only applied to sports betting.
It’s possible, though not likely, that the case could be appealed to the US Supreme Court.
With that memo, the DOJ Office of Legal Counsel reversed its standing interpretation of the 1961 Wire Act, reverting to an older stance that covers online gambling more broadly. If the revised interpretation is enforced to the fullest extent, interstate liquidity sharing such as currently exists between New Jersey, Nevada and Delaware would be prohibited. This would seriously harm the viability of online poker in less populous states like Delaware and West Virginia.
The good news is that before the compliance deadline arrived last summer, the New Hampshire Lottery Commission (NHLC) filed suit against the DOJ. Its fear was that the new opinion would make lotteries with interstate jackpots illegal. The outcome of the case was that US District Court Judge Paul Barbadoro sided with the lottery, and the opinion was vacated.
The DOJ took the case to First Circuit Court of Appeals. It fought Judge Barbadoro’s decision on two fronts. It challenged the correctness of the opinion, but also whether the issue should have been brought to court in the first place. The DOJ claimed that it never instructed the NHLC to cease interstate iLottery activities; and thus, the court was ruling on a nonexistent threat.
That case hit one final wrinkle in late 2020, when one of the three judges presiding over it died. Fortunately, the remaining two were in agreement and were thus able to arrive at a verdict without him. They ruled against the DOJ, upholding Judge Barbadoro’s decision.
In principle, the DOJ could have appealed the case again and brought it to the Supreme Court. However, President Biden had indicated that he would discourage that course of action, and indeed, the DOJ allowed the time window for an appeal to expire with no action. 26 state Attorneys General have petitioned the DOJ to go one step further and formally retract its opinion, but it has not done so.
Even so, it looks like the threat from the Wire Act is at an end, making it all the more likely that states like Pennsylvania and Michigan will join the MSIGA in the near future.