PokerStars and Full Tilt Poker Remain in the US Market
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October 2006
After the passing of the UIGEA, many of the big players in the online poker sector immediately left the US market. Specifically, all of the publically traded poker rooms, such as PartyGaming, owners of Party Poker and 888 Holdings, and the owner of Pacific Poker, had to leave immediately, as they would be more easily liable to prosecution. A few of the smaller and privately owned poker rooms did keep offering their services to the American market, most noticeably Full Tilt Poker and PokerStars. The fact that they are privately owned offers the sites much more flexibility in comparison to publically traded companies, in regards as to how to react to such a crisis.
Full Tilt Poker, which was a site founded by professional poker players, among others Howard Lederer, Andy Bloch and Phil Ivey, was launched in June of 2004. Full Tilt poker’s popularity grew quickly once it was founded, and within a few short years it became one of the best places to play poker online. Full Tilt Poker’s slogan “Play Poker with the Pros” is truly lived, as it’s the site with the largest amount of sponsored pro poker players playing.
PokerStars was originally a Costa Rican company, Rational Enterprises, majority owned by the Scheinberg family of Israel. The site was launched in September of 2001. The company was subsequently moved to the Isle of Man, a British Crown dependency. The move was driven by the establishment of a 0% corporate tax rate, and the removal of rules barring companies from accepting casino and poker bets from America. PokerStars holds its license with the Isle of Man Gambling Supervision Commission, and is also licensed in Italy by the Amministrazione Autonoma dei Monopoli di Stato (AAMS). But staying with the business of the American Players was taboo in light of the UIGEA. As of date, PokerStars continues being privately owned, and its IPO has been valued by experts to be around $2 Billion.
These two sites had two main things in common:
1) At the time of the UIGEA, both Full Tilt Poker and PokerStars were privately funded. This allowed them more freedom to take big decisions.
2) Both of these sites only offered poker, and other card playing skill games, as their services. No sportsbetting, no odds, and no other pure-casino games such as roulette or slots.
These characteristics proved to be pivotal. Both of these sites claim, up to this day, that their services included only poker and nothing but poker. Poker, the sites argued, was not considered gambling inasmuch as it is a skill game, just like chess or tennis. The best player in the long run would always win over the weak player, and this has been demonstrated time and time again. This is common knowledge, but it is not necessarily legal knowledge, as poker as a game is still in its infancy. People plainly did not know enough about poker, and much less about the subtle intricacies this game offers.
Because these sites are standing firmly on their “poker is not gambling” argument, both of these sites continue to offer their services to American customers, despite the dreaded UIGEA having been signed into law. Both Full Tilt Poker and PokerStars only offer a variety of poker games, and not any other kind of gambling. Party Gaming PLC, for instance, also offered Part Bets (Sportsbetting), Party Casino (Slots) and PartyGammon (backgammon) to all its US customers. It is unclear that if Party Poker would separate its Poker playing arm and only offered poker games to American players, if it would still be in the American market.
One thing is clear though, both Full Tilt Poker and PokerStars did iron while the iron was hot. These sites emerged as the two largest ones post-UIGEA, and keep adding new players every day. Full Tilt Poker has peaked at 120K players on busy days, while PokerStars does 250K without breaking a sweat. All the other online sites, including former giant Party Poker, come in way way waaaaaay short of these numbers.
What does the future hold for these sites? At the moment we do not know, but one thing is for sure; they have emerged as safe stops for American players in the post-UIGEA online world, and keep attracting new players daily. We may be close to a day when Americans will be allowed to legally place bets online again, but until then, rest assured there are paladins putting up the good fight.
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