French regulator ARJEL has published its. This wouldn’t normally result in much excitement, but a curious thing is happening in French — it’s growing.
Operators in the French market are now in their sixth straight quarter of expansion. The first four years of nationally controlled online poker were thoroughly miserable, with the original 22 license holders whittled down to just five.
The market now consists of:
WinamaxPokerStars FrancePartyPoker FranceBwin FrancePMU FranceHigh taxes were toxin for French poker rooms
A five-year reviewstated that eight out of 11 surviving operators had lost money in each quarter since regulation began.
The key issues were identified by the operator as high taxes, equal to around 37 percent of gross gaming revenue, a lack of liquidity as the market was effectively segregated, and a paucity of licensed game types.
Since then, taxes have not changed, but the regulator has expanded the matches that are available, so Omaha can now be played.
Most importantly, liquidity has increased., , and all enabling them to create a frequent player pool.
Shared bandwidth is the magic bullet
Italy has not yet joined the shared liquidity pool, but on Jan. 16 this season,became the first operator to place Spanish and French players together at the same tables.
On May 23, Portugal’s poker players joined in, making a single online poker market for a combined population of 124 million.
That is more than the combined population of, Texas, Florida, and , the five most populous countries in the Usa.
If Italy pulls the trigger and places its player pool together with the others, then that would be the equivalent of adding, Ohio, Georgia, North Carolina, and half of .
The revenue results have been impressive
ARJEL reports that in the first half of 2018, online poker revenues came in at $129 million ($150 million), up six percent on 2017. Cash game revenue increased by 14 percent and tournament revenue rose by 12 percent.
Both Q1 and Q2 revenues from poker were the greatest since 2013.
Not all of the profit can be attributed to the enlarged player pool. The growth in revenues began in the past calendar year, so there are other factors in play. Right across the regulated gaming sector revenues have risen.
revenues of $328 million ($381 million) were up 61 percent compared to the first half of 2017. Even discounting the effects of the FIFA World Cup that is still an impressive growth rate.
Nonetheless, the new international shared liquidity has been an important revenue driver.
Poker operators are expanding their companies
During the earnings call for their, The Stars Group said that they had seen a 33 percent growth in revenues since the introduction of shared liquidity.
PokerStars might be expected to be the greatest beneficiary of shared liquidity because it had the most significant player pool in all three nations. However, it’s not alone.is also seeing the benefits, and on July 10 French operator Winamax started operations through its newly licensed Spanish enterprise.
Unpalatable lessons for the US
The French tax prices are brutal, but they aren’t much better in Spain, and Portugal brought in law with tax rates at the very top of the European selection.
The turnaround in the popularity of online poker has happened despite these high tax rates.
It is a reasonable hypothesis to suggest that the negative effects of high tax rates might be partially neutralized by sufficiently big player pools.
It might be that after a certain tipping point, player pools get big enough for promotion strategies and bigger tournament guarantees to become more effective.
The chance to win six-digit tournament prizes might be a self-reinforcing mechanism for attracting players away from the unlicensed black market websites and encouraging more people to take up online poker.
From the US we now haveinvolving , Delaware and New Jersey, although only can truly take advantage, as it’s the sole operator in Nevada.
When online poker eventually gets up and running in, and supposing that it joins the shared liquidity pool, the population served by the shared pool will nearly double. The market will still be small compared to the France/Spain/Portugal pool, but Pennsylvania could be enough to provide a tipping point of its own.
Adding Pennsylvania players might be enough to create a participant pool which will encourage increased participation not only from Pennsylvanians, but also from New Jersey residents.
The corollary of this is that other states looking to introduce online poker, especially larger states like New York and California, may look at the European experience and decide that they also can levy high taxes, and compensate by sharing liquidity.
Pennsylvania has enforced outrageously high license fees for online gaming. Buthas set up $10 million for the 3 license package for internet gambling. Sports gambling tax rates of 36 percent are shortly to be tested in the harsh reality of the marketplace.
If Europe and Pennsylvania can create a thriving internet poker and sports betting market with such high taxes, other states must inquire if they could do the same.
It’s great to see the French internet poker market growing, but the implications for the industry might not be quite what it expects.