Online poker off to solid start in Michigan but faces challenges

Tony Paul, The Detroit News
·9 min read

Apr. 20—Online poker went live in Michigan in late January, and it quickly has come up aces against the competition.

But the widespread popularity of virtual card rooms remains a long way from reaching the heights enjoyed before the infamous "Black Friday" on April 15, 2011. That was the day a federal court shut down the essentially regulationless big poker-site operators. In doing so, the game was stripped from online card sharks across the country.

As regulations have beefed up, some states are starting to allow online gaming, including poker again. But the process has been slow as Legislatures wrestle with the merits of trying to make up for lost revenue amid the COVID-19 pandemic and the moral dilemma of offering too much temptation to many communities already struggling financially. Michigan, this year, after months of debate, finally took the leap, joining Pennsylvania, New Jersey, Nevada and Delaware in offering online gaming, including poker.

And Michigan, long a popular poker state, became even more enamored in recent years with Joe Cada (2009) and Ryan Riess (2013) winning the coveted World Series of Poker Main Event. The state has become the leader in online poker numbers, eclipsing Pennsylvania on one platform, and rivaling New Jersey on another. Still, the metrics are minimal, compared to the heyday.

The biggest difference between now and pre-Black Friday: The fields are much smaller, and thus so are the stakes and the prize pools. That's because Michigan is an intrastate online poker state, meaning Michigan players are only able to play against other players in the state. That severely limits the player pool and, thus, the earning potential. Pennsylvania and Delaware allow interstate play. Nevada and New Jersey have a compact, meaning Nevada players can play against New Jersey players.

"Michigan is a big state, a big poker state," said Jessica Welman, a poker analyst for PlayMichigan.com. "It took less than a week for Michigan to have more players filling seats day-in and day-out than Pennsylvania.

"The appetite for poker in Michigan certainly is there, it's a strong local market with a good history, with Joe Cada and Ryan Riess. It's a good state for poker players.

"But until you get compacting, we're not going to see anything remotely close to before Black Friday."

Michigan has two online poker operators — PokerStars, and BetMGM Poker — which offer low- to medium-stakes options for cash games and tournaments. Texas Hold 'em and Pot Limit Omaha are the two most-popular games.

On PokerStars, it's not unusual to see 1,500 to 2,000 seats occupied. Those are "seats," not people. Many poker enthusiasts play multiple tournaments simultaneously. Still, those numbers quickly pushed Michigan past what Pennsylvania, a state comparable in size, was seeing in the virtual card rooms.

BetMGM Poker, part of the PartyPoker network, launched in late March and drew 12,000 players on its first live Sunday, March 28. Ray Stefanelli, director of poker for BetMGM, said those numbers equaled its Borgata Poker crowd in a New Jersey market that's had online gaming since 2014. Michigan had more cash-game players than all three of its PartyPoker outlets in New Jersey combined.

BetMGM Poker in Michigan has seen its fields for the $40K Sunday Guarantee tournaments rise from 260 for the first (March 28) to 375 for the April 4 tournament to 464 for the April 11 tournament. That's a 78% increase in the span of two weeks. Its April 12 Grand Online Main drew 1,130 entries, at $109 each, for a $113,000 prize pool, far exceeding the $100,000 guarantee offered by BetMGM Poker.

"We knew there was a clear demand for an engaging, reliable and fun poker offering," Stefanelli said. "So far, our launch has exceeded expectations.

"Michigan is a poker-hungry state, just as other states with regulated online poker once were."

The poker boom in the United States dates to 2003, when an amateur named Chris Moneymaker won the WSOP Main Event and its $2.5 million first prize. Entries for the WSOP's summer circuit in Las Vegas exploded, pushing the Main Event top prize higher. Cada of Shelby Township, won $8f,547,042. Riess of Clarkston, won $8,361,570.

The online poker surge was real, too, particularly on sites like PokerStars and Full Tilt. It wasn't unusual for there to be million-dollar guarantee prize pools, especially for Sunday tournaments.

Now, what's up for grabs is a fraction of that. The action is enough for some, but not for others, including Riess, who leans toward high stakes.

"Here we are, 10 years later, and it's still not there," said Riess, 30, speaking of Black Friday. "They have had 10 years to figure out a way to just regulate and tax it and do what they want to do. In this day and age when you can bet on sports anywhere in the country, pretty much, on one site or another or at a casino, and you can't (play poker on a wide scale), it's pretty shocking."

Riess remembers Black Friday well. He was in school at Michigan State, and said he probably played the day before things got shut down. He thought it'd take a few years, four max, to get it back to what it was. In 2011, the United States District Court for the Southern District of New York ruled poker-site operators in the United States had violated the Unlawful Internet Gambling Enforcement Act, committing bank fraud and money laundering in transferring funds. The decision essentially put the laws on the states.

Nevada legalized online poker in 2013, Delaware followed, and New Jersey came in 2014, signing the compact with Nevada. Pennsylvania approved it in 2019, and Michigan in January.

If you don't live in one of those states, you can play in another country like Mexico or Canada. Cada used to own a condo in Canada just so he could play online poker. Another alternative is to play offshore, though that's a big risk because it is unregulated and your funds are not secure.

Meanwhile, other states are close to approving online gaming. But as far as full interstate compacting, that could still be a ways off. Interpretation of the federal Interstate Wire Act of 1961 leaves some jurisdictions skittish.

What's available in Michigan is fine for Paul Mattioda, 35, a pro poker player from Lansing. He said there still are five-figure paydays to be had. He recently had one. There are advantages to the current setup, he said, especially for seasoned pros. The smaller the fields, typically the less-experienced. A good pro takes advantage of that. Mattioda calls it "smaller and softer."

"The action is pretty amazing in the tournament setting, to be honest," said Mattioda, who plays mostly on PokerStars. "Last night, I cashed out $3,100 to PayPal, I went to the bathroom, and it was in my account before I even got there. It's really cool to have everything run legitimate.

"If it stays within the state, it's still really good, and even bigger odds."

While Mattioda plays professionally, most of the PokerStars and BetMGM Poker players are recreational, logging in at nights after a long day at work.

It's proved to be a nice option for the diehard poker fans, many of whom aren't yet comfortable returning to live poker settings at the casinos. MGM Grand Detroit opened its poker room in January, Greektown followed in February, and then MotorCity in March. All employed increased safety measures (constant cleaning of chips, decreased capacity and plexiglass dividers). Some rooms in the state have yet to reopen. FireKeepers in Battle Creek isn't reopening its poker room until May 1.

Larry Warren, 59, of Bloomfield Hills used to play live poker anywhere from four to five times a week to once every couple weeks. With kids and grandchildren in the house, he has no interest in going to a casino amid the pandemic. Online poker has proven a fun — if not frustrating — alternative.

"It is," said Warren, who had an $861 tournament cash last month. "Just to get my fix in.

"It becomes an addiction very quick. ... It's a lot easier to walk away when you've gotta get in a car and drive. If you're running crappy, all you have to do is push a button and you always have that assumption, that gambler's mentality, that it's gotta turn."

In the United States, 34 states have bricks-and-mortar casinos, and 20 states offer sports betting, with another six states coming. But online gaming, including online games like blackjack, roulette, slots and poker have proven a more-difficult sell for Legislatures. Sports betting, by some, is considered more skill and less gambling, which is why it's met easier approval, Welman said.

Interestingly, as the online-gaming legislation slowly moved its way through the Michigan Legislature and to Gov. Gretchen Whitmer's desk, the state was running the Michigan Lottery app, which allowed players to gamble in games like Keno, "scratch-offs" and games that looked an awful lot like slots. Other states without online gaming, like Illinois, have similar state-run lottery apps, many even using the same technology provider that some of the online-gaming sites use.

Michigan's online-gaming bill, which included sports betting, was signed Dec. 20, 2019, after many months of debate, and the gaming went live Jan. 22, 2021. Nothing happens fast when governments and regulations are involved, which is why nobody knows when poker might be compacted. One big hangup is the Wire Act, which addresses interstate transfers. Another is figuring out which states get what piece of the tax pie if everyone's playing together.

The Michigan Gaming Control Board releases overall Detroit casino, online-gaming and sports-betting revenue and tax figures on a monthly basis, but doesn't release poker numbers. Welman said for Michigan, the taxable revenue is about $3 million to $4 million per month. Poker sites make money off "rake," which means a portion of tournament entry fees or a small, capped percentage of each pot in cash games.

"If you can get Michigan and Pennsylvania (in a compact) with the other states, that's going to be huge," said Welman of PlayMichigan. "Then you're talking about the size of a European country.

"But anything like before 2011 will be wishful thinking."

tpaul@detroitnews.com

Twitter: @tonypaul1984