Aftermath: Black Fridays Impact on Online Poker


the impact of Black Friday on the online poker community


Much of the discussion post-Black Friday concerned the migration of the indicted sites' players - just who would benefit from the controversy of April 15, 2011?

ON APRIL 15, 2011, the Department of Justice dropped a nuclear bomb on the US online poker industry. The wave of indictments and seizures on 'Black Friday' dealt a crippling blow to a thriving market as PokerStars and Full Tilt Poker, the dominant two sites in the industry, immediately moved to pull out of the US. While some online poker players have found their way to other sites still serving Americans, many have seemingly stopped playing altogether.

The 'big two' get a haircut

Withdrawing from the US market did serious damage to PokerStars and Full Tilt Poker (see Table i). However, those sites had built up a solid international player base and, as a result, they were not hurt as badly as they would have been just a year or two ago. After taking the initial hit, losing between 25% and 40% of their traffic, the 'big two' quickly stabilised as their European player base held firm. Full Tilt Poker even managed to rebound a bit from its initial 40% loss and is now down 32% from early April.

While most of the industry has begun to settle into the 'new normal', some sites are still experiencing fallout from Black Friday. Cereus Network and Merge Gaming Network have been the most heavily affected, although in opposite directions (see graph).



Cereus trouble

For Cereus Network, the fallout from Black Friday has proven to be highly radioactive. The network's traffic once ranked as high as fifth in the world, but that has changed dramatically since mid-April. Cereus relied heavily on US traffic and, as a result, the network now finds itself struggling to stay alive. Unlike PokerStars and Full Tilt Poker, Cereus did not move quickly to bar US players from real money games, probably because the network's traffic would have dropped to almost nothing overnight. Instead, network executives seem to be stalling for time, but with rampant rumours of debt default, problems with their customer support contractor, police raids in Costa Rica, and employees and pros being laid off en masse, it is not clear what its survival strategy could be.

Despite the recent announcement of an agreement with the Department of Justice, in which Cereus agreed to bar American players, the network continues to allow existing US customers to play. This means the network's traffic has even farther to fall once the promised US ban goes into effect.

Moreover, unlike the deals reached by PokerStars and Full Tilt, Cereus' deal with the Justice Department does not provide for the return of seized domains, including UB.com and AbsolutePoker.com. Without these primary domains, the network will find it difficult to recruit the new players needed to survive. Meanwhile, US players and affiliates who stuck with the Cereus network are waiting for word on the fate of their funds, with many players hoping that the new agreement with the Justice Department will eventually allow them to cash out their accounts.

"Overall, the worldwide online poker market shrank by 18% in the wake of Black Friday. The US market has been virtually destroyed, as nine out of ten players have simply stopped playing, at least temporarily"

Merge emerges as a winner

Only a small handful of sites and networks still accept American players. Among them, Merge Gaming Network has managed to capture the lion's share of traffic from US players seeking out a new poker venue. Merge's player counts, already on the rise before Black Friday, have increased another 77% in the weeks since. This has pushed the network up from 20 th to ninth place in the worldwide rraftic rankings.

Bodog and Cake Poker Network also saw an initial influx of players after Black Friday. Their momentum quickly stalled, however, as players latched on to Merge as the US market leader. Bodog and Cake have not seen significant gains since the week after Black Friday.

The major European sites and networks have also attempted to take advantage of increased player mobility in a time of flux, but they
have not been especially successful. PartyPoker's traffic has grown 10%, but this may have more to do with the site's recent aggressive promotions, such as the Gladiator, than any real success in recruiting new players.

The big picture

Overall, the worldwide online poker market shrank by 18% in the wake of Black Friday. The US market has been virtually destroyed, as nine out of ten players have simply stopped playing, at least temporarily.

Although this is a serious blow, it is hardly the end of online poker. In retrospect, this may be viewed as simply another painful step on the long road toward regulated Internet poker markets around the world. If the events of Black Friday help pave the way to outright legalisation in the US, then online poker may be headed into a future that is brighter than ever.

 
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