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Harrah's Online Poker Room Debacle

THE WEEKLY SHUFFLE, 2009-09-27, by Ozone

There was some drama in the poker world this week as Phil Hellmuth suggested in an interview with Hardcore Sports Radio that some online poker rooms might join together to form a tournament series that could make the WSOP "worth nothing". Normally when Hellmuth opens his mouth you have to take anything that comes out as a grain of salt. This time, however, the poker brat might actually be on to something.

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The reason for Hellmuth's renegade spirit is that Harrah's, owners and operators of the WSOP, are apparently planning to open or acquire an online poker room. If they did so, Hellmuth and other top pros fear that Harrah's wound disallow players from wearing the logos of competing online poker rooms at the WSOP.

If Harrah's does indeed go down this path, they are taking a legitimate risk at losing much of the value of the WSOP. Poker professionals like Hellmuth and countless others have lucrative sponsorship deals with online poker rooms contingent on appearing on TV wearing a company's logo. If Harrah's, in a move to establish their own online poker room, were to banish the wearing of competitor logos at the WSOP, it would cost sponsored players and competing online poker rooms alike.

In his interview this week, Hellmuth suggested that it is the players, not Harrah's, who are in the position of power in this situation. It appears that he may be right.

Consider This Scenario

Following the acquisition of an online poker room, Harrah's tells poker players that they are not allowed to wear the logos of competing online poker rooms at the WSOP. Enraged, a collection of the largest online poker rooms come together to form their own tournament series. This tournament series could conceivably be held in Vegas at the same time as the WSOP. They tell all of their sponsored players, who together make up pretty much all of the famous poker personalities, "if you participate in the WSOP in any fashion, we will severe our contract with you." Because they're not idiots, all of the world's top pros boycott the WSOP and instead participate in the new rival tournament series.

ESPN, fully aware that their high ratings for poker broadcasts are contingent on the appearance of the game's top personalities, decides to start airing episodes of the new tournament series and drop WSOP coverage. Sure, there will be some lawsuits and contract disputes, but in the end, ESPN will not waste tons of precious airtime to show a bunch of unfamiliar faces playing at the now-defunct WSOP.

To seal the deal, the major online poker rooms, who now control the world's foremost poker tournament series, tell players that the entry fees to their tournaments will be a small fraction of what Harrah's charges to play in the WSOP. Perhaps they even offer an overlay in their championship event to cement the downfall of the WSOP. And like that, the WSOP is worth mere rubbish compared to its once glorious past, all because Harrah's got a little too greedy.

The new tournament series thrives and the poker world collectively agrees that winning one of these events is just as prestigious as having won a WSOP bracelet in yesteryear.

The Harrah's Online Poker Room

The above scenario actually has a pretty decent likelihood of being realized if Harrah's both a.) acquires an online poker room and b.) banishes the wearing of competitor logos at the WSOP. As to whether or not they will acquire or launch an online poker room, the consensus seems to be that they will. That just leaves one question mark: will they allow players to continue wearing competitor logos at the WSOP?

If they don't, they will in effect be surrendering the value of the WSOP, which Hellmuth stated is worth an estimated $200 million, all in pursuit of a billion-dollar online poker room pipe dream. And it is a pipe dream.

For a few reasons, a Harrah's-owned online poker room will never gain a dominant market share. First and most importantly, they will not be able to accept U.S. players. Harrah's management, like most poker players, have probably deluded themselves into thinking that there will be some type of legislation to legalize and regulate online poker in the U.S., but as we've said on countless occasions for years now, that won't be happening anytime in the foreseeable future. Poker players thought that a Barack Obama presidency would lead to regulated online poker. We're now about 1/6th of the way through his first term and there hasn't been a mouse-fart worth of pro-poker noise out of the White House.

Without being able to cater to Americans, Harrah's would just be wasting their time trying to start a poker room. First of all, their brand is incredibly weak outside the United States. There are no "Harrah's" outside the U.S. which means they can't advertise their online poker room to casino patrons. Secondly, the online poker room market is over-saturated outside the U.S. Starting a U.S.-facing room could actually make some sense since players only have a few options to choose from. Outside the U.S., there's just too much competition and not enough potential customers to justify lighting the WSOP on fire.

It's pretty simple: If they can't allow U.S. players on their site, which they won't be able to, then they shouldn't start a site.

The Weekly Shuffle is our Sunday column with our observations and commentary on the poker world. Have an idea for an article? Leave a suggestion on the feedback page.

 


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