PokerStars And Full Tilt Feel The Wrath Of US LawmakersJuly 29, 2010 10:07 am
Following the historic passing of Rep. Barney Frank’s HR 2267 Internet gambling bill in the House Financial Services Committee yesterday, the world’s two biggest online poker sites were sent a clear and unequivocal message that their time could soon be up.
One of the key amendment to the bill which helped secure a 41-22 vote by the committee, was a stipulation that any sites which have been flouting the UIGEA law since its introduction to the States in 2006, will be excluded from receiving a business license to operate within the country, in the eventuality of legalization.
Up until 2006, PartyPoker was the world biggest online gambling operation and held a dominant position in the US online poker market. However, the site then agreed to end its operation in the US and agreed a $105 million forfeit for breaking US gambling laws.
Both PokerStars and Full Tilt Poker, however, instead of stopping their acceptance of US players after the UIGEA was introduced, decided to take advantage of the bill to acquire a whole flood of players no longer accepted by compliant sites, such as PartyPoker.
Consequently, PokerStars and Full Tilt Poker have now captured a 70% market share of the US industry, and 50% of the international market. They also earn around $1 billion in revenue from the $30 billion wagered every year on illegal US online poker sites.
Although the decision to exempt them from any future operations in the US could spell the death knell for their businesses, it is still doubtful whether Uncle Sam could actually force them out of a market they mostly own.
Firstly, their expertise has been mostly responsible for developing and revolutionising the online poker market, and secondly the US government would risk fracturing and losing taxes on their already massively established customer bases.
At the very least, as one anonymous industry expert explains:
“Full Tilt Poker and PokerStars would likely be acquired. A U.S. company would want to buy most of the software, perhaps Facebook or a similar enterprise.”
One thing for sure, though, is that this story has a lot further to run before anything becomes certain.