The Insiders: CEO Jim Ryan on Online Poker Legislation, Sponsorship, and More

The Insiders

The race for legalized online poker is heating up in the U.S. in 2012. As several states consider bills to regulate and eventually implement an online gaming platform, operators are preparing to capitalize on an exciting and potentially lucrative new market. digital entertainment figures to be one of the major players once the space opens up. Last October, the world's largest publicly traded online gambling company joined forces with MGM Resorts International and Boyd Gaming to form an online poker venture in anticipation of legalized online gambling in the states, joining several rival companies with similar ambitions. co-CEO Jim Ryan recently sat down with PokerNews to discuss the company's plans once online poker is legalized in the U.S, how it can further use its acquisition of the World Poker Tour, and more.

Last week, we saw two of your partners comment about online poker legislation in the U.S. Keith Smart at Boyd Gaming said regulated U.S. e-gaming is further off than he had hoped. Jim Murren at MGM said he still believes that federal online poker will pass this year. What were your thoughts about those comments?

Well, I guess our perspective is really quite simple. For many years it was a question of if the U.S. government — either at a federal or state level — would regulate online gaming. We don't think that's the case anymore. We think it's a question of when.

Why do we think that? Let's take a look at some of the industry players in the United States. We saw Caesars make an announcement about acquiring a poker platform. We've seen the IGT and Entraction deal. We've seen the Fertitta Interactive and CyberArts deal. And as you probably know, we've been in the process of marketing Ongame Network, and all the interested parties in that particular asset have been coming from the United States.

You take that level of activity and combine it with various state efforts that have been initiated since the Dec. 23 DOJ opinion. We've seen five states introduce poker bills: New Jersey, Iowa, Hawaii, Mississippi and California. We've got Nevada which actually passed a law in December. And then we've had much conjecture that there very well could be a federal bill kicking around.

That's a pretty impressive list of events that would lead one to believe that we're likely going to see poker be legal in the U.S. in some way, shape or form. We can't predict whether that's going to be at a state level or federal level. Either are good. Certainly our preference would be for a federal solution. We think it's all very positive for poker and for organizations like ourselves.

When signed the deal with MGM and Boyd in October, did you have a prospective date that you wanted to have an online gaming platform up and running?

It's very difficult for us to have determined a date because the launching in the market was going to be determined by a couple things. It was going to be determined by technical standards that we would have to integrate into our platform. We've seen that throughout Europe as markets have regulated. Italy had its own set of standards, as did France and Denmark. Those are a couple of the regulated markets that we have recently launched in. And just before the end of last year we got ready for the Spanish market. Each market had unique technical standards.

And then there will be a period where organizations are allowed to get their business affairs in order. That means getting a technical platform ready and going through a suitability review. I think a realistic perspective is that a 2013 launch is pretty sound. At the very least there will be a few states that will have it available at that point in time.

Do you think online poker can succeed at the intrastate level long term?

I think it'll be a function of the size of the population in the state. I also think it'll be a function of whether the states that do in fact regulate it allow for cross-state arrangements. Poker is a liquidity game, so the smaller the population the less exciting it will be for the consumer. But we think there are a number of states where it will be a very attractive proposition. Nevada is already there. And California is one of the most logical states to get something done. That's about 38 million Americans right there. That's a pretty compelling market.

With PokerStars and Full Tilt presumably out of the U.S. for the foreseeable future, do you feel PartyPoker is now the largest brand name in that market?

We did a brand awareness survey in California, Texas, and New York, and we went to the consumers and listed all of the existing U.S. and former U.S. poker brands. That included the likes of PokerStars, Full Tilt, PartyPoker, and World Poker Tour. Unsurprisingly, PokerStars and Full Tilt were No. 1 and No. 2 in terms of being the most recognized poker brands. What was fascinating to us was, despite not having advertised in the market for over five years, PartyPoker was No. 3. And not by a great gulf, either — the brand recognition was significant. No. 5 was the World Poker Tour. Poker Room was No. 8. So when we go into this market, we go in with some pretty strong assets, and nicely positioned.

If and when online poker is legalized in the U.S., do you think PartyPoker could regain the same brand power it had before it pulled out of the market in 2006?

We're certainly going to have a lot more competitors — at least in the early phase, when there will be a scramble for market share. I think PartyPoker and the World Poker Tour are going to attract a very significant market share, but it remains to be seen what that will be.

It won't be the 50 percent that PartyPoker once had. I don't think that's practical to expect given that fact that you're going to have mainstream brands like MGM, like Boyd, and like Caesars with the World Series of Poker. It's going to be a very new competitive set, but I think we can all be fairly confident that, given the brand strength that we've had, combined with our willingness to go in and spend aggressively in marketing, we're going to have a very meaningful liquidity pool.

(WPT CEO) Steve Heller told us this month that ClubWPT would look into expanding its subscription site to offer real-money games if poker was legalized in the U.S. Would you consider combining your resources and major brand names to create a superpower for real-money online poker?

That's already been contemplated in the arrangements we have with MGM and Boyd Gaming. Specifically what we've done with those organizations is we've formed a joint venture, and the brands we'll have in that joint venture are going to be PartyPoker and the World Poker Tour. It is absolutely in our strategic objective to take advantage of the World Poker Tour and its brand awareness in the U.S in the real-money gaming environment.

PokerStars and Full Tilt Poker hired numerous pros before Black Friday to help build their brands, but PartyPoker has gone with a small team of high-profile players like Tony G, Mike Sexton and Kara Scott. Can you talk a little bit about that strategy?

Using professional poker players has long been the strategy for the industry. It's not new, but I don't know that it resonates the same way it once did. We have a select few poker players that we use. We have Kara and her big mass appeal, especially in the Canadian and U.S. market. Mike — How could you not use Mike and his connection to the World Poker Tour? If I take you back in history when PartyPoker was No. 1, Mike was an ambassador for Party, so there was a natural connection that existed between the two. And Tony's important to us because he has that bad boy image that resonates within the community. And he's viewed as being one of the most compelling poker players to follow. You either love him or you hate him, but everybody follows him.

Will that strategy expand when we get into the U.S.? I'm going to reserve that to the team that's going to run that group. I have my own views as to how compelling it is to build a staple of professional poker players. What will resonate will be our product and our branding and making this much more of a social appeal to the consumer base — bringing maximum entertainment value. Whether that incorporates poker pros is a secondary objective.

The World Poker Tour was falling on hard times when you acquired the company in 2009. Are you pleased with the progress the tour has made since then?

I think Steve Heller, Adam Pliska and the team have done a phenomenal job. First and foremost, they've truly made the World Poker Tour a world event by expanding into the European marketplace and expanding the number of events. We have more televised events, and we've got more regional events which aren't televised but they give the players who see the WPT on TV a chance to build their skills at a regional event.

What we have seen since we've taken over is a growth in the number of players buying into the events, which is great. The European connection has been fundamental in terms of Steve and Adam's objective to take this thing around the globe. The TV viewership of the 10th season is up significantly from the prior years. If you go to a land-based event, Vince and Mike are now physically at the event — that wasn't the case before. You've got the Royal Flush Girls who bring a bit of the bling and sex appeal to the event. So it is about entertainment.

We've also got a subscription business that has grown very nicely in the United States and the team is taking a look at the opportunities to take that particular model outside of the U.S. We're building a very nice real-money poker business with the WPT brand in Europe and that seems to be growing at a really nice rate for us. And then the MGM/Boyd partnership has positioned us to exploit the WPT brand in the U.S. when it opens up for real-money poker.

What are some of your plans for and the World Poker Tour in the near future?

Our plans are to continue to accentuate and invest in all of the items I just listed. It is about having events that are truly global so it is a world poker tour. It's about producing entertaining content and getting the viewership and the number of players at land-based events up. It's about exploiting the subscription model in the current market and other markets that we're able to do so. And ultimately, when the U.S. market opens up for real-money poker, it's about taking that brand into the U.S. along with the Party brand. We've got two very powerful brands that will seek to drive and grow in the U.S. and the real-money European market.

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