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Black Friday and the WSOP: An in-depth look at the poker economy

1 July 2011

LAS VEGAS – Just 47 days before the 2011 World Series of Poker got underway, the owners of the three largest online poker rooms that allowed Americans to play real-money games were indicted on charges of money laundering and bank fraud, and PokerStars and Full Tilt Poker subsequently shut their doors to U.S. players.

In the years since Chris Moneymaker won the 2003 Main Event, the WSOP has benefited a great deal from the existence of online poker. Main Event registrations skyrocketed, peaking at 8,773 in 2006, more than ten-fold larger than the field Moneymaker beat in 2003. The Unlawful Internet Gambling Enforcement Act (UIGEA), which passed late in 2006 as an attachment to a Safe Ports bill, put a small dent into Main Event registrations, as online sites could no longer directly register satellite winners into the series’ seminal tournament. But as a whole, the WSOP continued to grow. Last year, Caesars Entertainment, Inc. (formerly Harrah’s) saw records break in both player registrations (72,966 in 57 tournaments) and prize money awarded ($187.1 million).

While online poker still exists outside America (and to a much smaller degree inside the States on sites unaffected by the indictments), there were many questions about how “Black Friday” and the events that followed would impact attendance at the world’s biggest poker series.

With just a handful of events left before the Main Event begins next week, it appears that those questions have been answered, at least for this year, anyway.

Through 53 events, there are 44 tournaments which can be compared “apples-to-apples” (tournaments of the same game type with the exact same buy-in). In those 44 events, registration is up 7.5 percent, and the prize pool is up 6.2 percent. With final numbers on five events yet to be determined – including the Main Event, which drew 7,319 players last year – it appears that this year will once again be a record-breaking year, both in terms of attendance and prize money.

Many events this year have been won by former online pros, who may have decided to play more tournaments as playing online was no longer an option for them.

The sputtering economic recovery has almost certainly also played a role in the increases as well. While economic indicators still aren’t booming, the recession is “officially” over, the stock market is up, unemployment has decreased a bit and job numbers have generally been positive for the last year.

The WSOP has also benefited from an influx of talent from overseas. And while some countries are considering taking a stance similar to that of the U.S. in regards to online poker, many nations are either already regulating the industry or considering regulation.

But questions remain about whether those numbers are sustainable should Americans continue to be locked out of the largest online poker sites. While international participation is increasing, the vast majority of players at the WSOP are Americans. And while a select few have secured their future in the game with a significant bankroll boost (at least for the time being), one has to wonder how many players had the same plans to move from online to live play without the same success. And there's no way to know if those players will return next year.

Without a doubt, the low- and mid-level buy-in events have carried this year’s WSOP. There have been 18 events with $1,500 buy-ins that had a corresponding tournament last year; those tournaments have increased in size by 8.9 percent, or an average of 120 more people and $163,127 more awarded in prize money in each $1,500 event compared to last year.

The $2,500 events (there have been eight that are directly comparable) have also increased, although at a much lower rate (up 2.5 percent in registrations, 1.4 percent in prize pool). The increases would be similar to those of the $1,500 events if it were not for a 10.7 percent drop in registrations for the only straight-up no-limit Hold’em event at that price point.

At the $5,000 level, the number of players and the prize pool in the three directly comparable events is up 15.5 percent. Without a doubt, that number is most influenced by a 28.9 percent surge in registrations in the six-handed no-limit Hold’em event.

In fact, shorthanded no-limit Hold’em appears to be the big success story at this year’s WSOP – at least for Caesars. Six-handed play became popular thanks to online poker, and without the ability to play the game on PokerStars or Full Tilt, it appears that many Americans sought out the game at the WSOP. Three tournaments (one each at the $1,500, $2,500 and $5,000 buy-in level) saw increases of a whopping 35.4 percent in combined registrations, with the prize pool jumping by 17.9 percent. (Incidentally, Caesars made an additional $121,800 on six-handed no-limit Hold’em events this year, up 18.2 percent from last year. Expect to see more of these events next year.)

However, things aren’t all sunshine and butterflies. Despite these large gains, there’s one category of tournaments that has an ominous dip from last year – the $10,000 buy-in events.

These high buy-in “World Championship” events take place in a variety of poker disciplines, and were created in response to suggestions from the Players Advisory Council, which is made of up high-profile professional players, such as Daniel Negreanu.

While the rank-and-file player lost the opportunity to post a big win online after Black Friday, many celebrity poker players lost their primary sponsor.

Before online poker, the “poker economy” was really the exact opposite of the “trickle down” theory of economics. The low-stakes, low-skilled players would lose money to more skilled players, who would move up limits and lose money to even more highly skilled players, until eventually the best players who played the highest stakes had all the money. Online poker allowed the high-profile players to bypass the system, as they directly profited from the rake generated by every player at every stake level. With that system now in jeopardy (at least for U.S.-based pros), it seems it might be harder for the high-stakes players to come up with the cash to buy in to these high-stakes events.

The 2.6 percent drop in the eight directly comparable $10,000 events isn’t enormous. But when compared to the overall growth of 7.8 percent in both registrations and prize pool in events with buy-ins of $5,000 or less, it’s certainly worth noting.

Only two $10,000 events (2-7 no-limit Lowball and pot-limit Omaha) saw an increase in registrations, while two events (Seven Card Stud and limit Hold’em) were down more than 10 percent. The big buy-in events bring out the top players, and some of those top players have either been staying home or playing in lower buy-in events.

So it appears that there are just two questions left to be answered in regards to Black Friday and the 2011 WSOP. There's the one that everyone’s been asking since April 15: How many people will turn out for the Main Event? We’ll have to wait until July 10 to know the answer to that question.

But for those who want to know what next year will bring, perhaps the more interesting question will be answered tomorrow: How many big-name pros will turn out for the $50,000 Poker Players Championship? Will registrations eclipse last year’s total of 116? Will it be roughly the same? Will it fall below 2009’s record low of 95?

The answer may be telling for the future of poker in general – at least until the U.S. regulates the game. Is a drop in high-stakes registrations an indication that we’ll see a drop in the numbers in lower buy-in events next year, as the players who didn’t achieve success this year drop out of the poker economy entirely? Only time will tell.
Black Friday and the WSOP: An in-depth look at the poker economy is republished from Online.CasinoCity.com.
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Best of Aaron Todd
Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.

Aaron Todd

Home-game hotshot Aaron Todd was an editor/writer at Casino City for nearly eight years, and is currently the Assistant Director of Athletics for Communications and Marketing at St. Lawrence University, his alma mater. While he is happy to play Texas Hold'em, he'd rather mix it up and play Omaha Hi/Lo, Razz, Deuce-to-Seven Triple Draw, and Badugi.