Any good internet card player will tell you, to make money, you need a good online poker strategy. The same could be said of Europe’s ring-fenced markets in France, Italy and Spain, where operators would love to see more of a profit – or any profit at all, in some cases – but they seem to be wasting their time on the wrong approach.
Just recently, regulators in those jurisdictions began talking about opening their tightly-wrapped fences to the concept of shared liquidity among other members of the European Union. From an outlying perspective, that sounds like a great idea.
Pooling the players helps sites become more attractive, ultimately generating new player sign ups. And more players means more rake is taken, more taxes are collected, and everyone is happy. Unfortunately, there’s an underlying layer to the story, and it’s all-but guaranteed to leave discussion at an impasse.
Regulatory Puzzle Pieces Don’t Fit
The issue is the variable regulatory framework and taxation imposed by each EU member.
Italy, for example, charges a lower tax rate than France. If Italy increases its tax to meet that of France, Italian players will inevitably jump ship and take their games to offshore websites. On the other hand, if France lowers its taxes to meet those of Italy, it’s operators won’t be able to survive.
According to the 2015/2016 annual report from French regulator ARJEL, only two of the state’s online poker operators are actually turning a profit as it is. These include France’s most popular brand, Winamax, and the world’s largest internet poker supplier, PokerStars. Their competitors, PartyPoker and the numerous skins operating on the iPoker Network, each reported losses.
This situation already arose once before, prior to the UK’s 2014 imposition of a point of consumption tax for online gambling operators. UK players were welcomed at French poker sites before that, but when French operators found themselves having to pay levies in two jurisdictions, it left no room for profit. Thus French regulators put an end to UK player acceptance.
It wouldn’t make much sense for France, Italy and Spain to walk straight face-first into a similar predicament. They will simply have to come up with a new online poker strategy to increase revenue for their operators – one that doesn’t demand so many alterations to the existing rules and regulations imposed by their respective governments.
Similar Trouble with New Jersey/UK Deal
Earlier this year, similar talks erupted between regulators in New Jersey and the UK. Talks of shared liquidity garnered excitement throughout internet poker communities along the US east coast, but even NJ’s Division of Gaming Enforcement Director David Rebuck had to admit a lot of faults within the plan.
“We’d still have to figure out lots of issues,” said Rebuck. “Specific regulations, how the tax rate from each jurisdiction would be applied, player ID and geolocation issues, and other things we probably haven’t even considered yet.”
That was nearly four months ago, and it’s worth noting, there’s been no movement whatsoever on that front since.
One of the major issues here is that the UK allows residents to play at websites all over the world, while New Jersey (like France, Italy and Spain), maintain that players can only use websites located within their own borders. Thus attempting to build a revenue-increasing online poker strategy based on shared liquidity will eventually run into the same dead end.