Could a professional poker tour give Federated Sports and Gaming the pocket pair of a network TV deal and a big-time online following?
The West Hollywood company hopes so. It will launch Epic Poker League in August, with the goal of creating a new type of professional poker tour.
The league unveiled its name last week, but the concept was spawned in 2009. That’s when Jeffrey Pollack, a former commissioner of the World Series of Poker, left Las Vegas-based Caesars Entertainment Corp., which still operates the event, an annual $10,000 buy-in tournament. Pollack joined entrepreneur David Goldberg, poker pro Annie Duke and three others to create the startup, seeing a professionals-only circuit as filling a void.
“In any other endeavor there’s the chance to see the best of the best compete,” he said.
This isn’t the first attempt to develop a professional league. World Poker Tour, a Miracle Mile company, started the Professional Poker Tour in 2006, but it folded after Travel Channel declined to pick it up for a second season. World Poker Tour still organizes and televises its amateur-friendly events, and ratings for its ninth season are up 35 percent over last year.
Federated is trying to find a broadcaster that will televise the pro tour. But a federal shutdown in April of three major Internet poker sites that were big advertisers, including Full Tilt and PokerStars, has dried-up revenue for poker shows, forcing some off the air and possibly creating an opportunity for Epic.
“A lot of those shows were ad buys by Full Tilt and PokerStars,” said Lou Krieger, editor of PokerPlayerNewspaper.com, an Inglewood-based website. “There’s a hole on television for people who want to watch poker.”
Pollack said Epic Poker League will be selling ads to consumer goods products and so won’t be affected by any potential bans on advertisers associated with Internet gambling.
Federated has a multiyear deal for events at Palms Casino in Las Vegas. At five events a season, the top 200 or so ranked professionals will compete for prize money. The players qualify for membership in the league based on lifetime earnings and performance on other circuits like World Series of Poker and World Poker Tour.
“There’s an overlap of competition because there are only so many ad dollars and hours of poker viewers,” said Steven Heller, chief executive of World Poker Tour, which is now owned by Gibraltar-based online gaming company Bwin.party. “But what’s good for poker is good for the poker industry. We all in some ways would like to see a tour like this succeed.”
Online poker has been illegal in the United States since 2006. In April, three of the most popular online gambling sites for U.S. users, which had continued operating after 2006, were indicted by the Justice Department on charges of money laundering and other alleged criminal activity. But the door is open for individual states to legalize, regulate and tax online gambling. Washington, D.C., has passed such legislation. State Sen. Lou Correa, D-Santa Ana, has authored a similar bill for California, called the Gambling Control Act.
Federated’s website will only offer online poker as a social game, which can be played for free. However, players will be able to buy a few bucks of credit for virtual chips and gifts, but won’t be able to cash out the modest winnings until gambling is legalized.
“You’re playing for fun and entertainment, for virtual martinis,” Goldberg said.
But analysts say that social gaming poker could be about more than virtual libations.
“They’re likely trying to build a database in advance of the potential, sometime in the future, that online poker becomes legalized,” said Jacob Oberman, a gaming analyst at CB Richard Ellis Inc. in Las Vegas.
“I would be most surprised if they were not building player databases for future exploitation,” wrote Bill Eadington of the University of Reno Institute for the Study of Gambling and Commercial Gaming in an e-mail.
Federated, which has an office in D.C., is active in lobbying the California and federal governments for legalization of online poker. Pollack denied that the company is targeting future players in the United States for real-money games. The company does have similar plans abroad, however.
“We’re only focused on the launch of the pro poker league and the social media game,” he said. “If and when laws change, we’ll address real-money gaming then.”
The social media gaming site will bring in revenues through online advertising. But the potential pool of gamblers could be where the real money is. The California Online Poker Association, a coalition of American Indian tribes and casinos for the legalization of online poker, estimates that about 2 million people in California wager roughly $13 billion a year in illegal online poker games.
Analysts are already looking at how those dollars could be spread around in the event of legalization.
An April Moody’s investment report on online poker predicted that if the game were legalized, Caesars Entertainment would be “likely to capture solid market share given the popularity of its WSOP brand.”
But Federated could be in a position to gain on Caesars, along with social gaming company Zynga, which operates a popular Texas Hold ’em mobile app.
“I would put more money on the embedded user base of Zynga,” said Scott Painter, tech entrepreneur and co-founder of Beverly Hills-based U.S. Digital Gaming, which services digital gaming sites. “But Epic is perfectly positioned as a newcomer. They’re aware of what it takes to build a player community. To say Pollack understands it is an understatement. He created it at the World Series of Poker.”
