In early 2000 the online poker craze took off and then died down just as quickly. This article will analyze the rise and fall of online poker because it is a fascinating phenomenon. Studying the rise and fall of a business can help you learn from past mistakes and predict future trends.
Online poker was born in the early 2000s and really took off around 2007. I’m not that interested in analyzing the reasons for growth; there are many. Maybe the financial crisis had something to do with it. A lot of people lost their jobs and tried that new career.
I have actively participated in this trend; I have played mainly heads-up one-on-one. Poker is a game of skill where luck plays a small role in the long run. An expert player with a good mindset can beat any beginner in the long run. It was a profitable profession for many.
In finance and trading, poker rooms and brokers earn on commissions. The poker room held 5-10% of the total amount available to be won by the players.
A few years later, dozens of poker rooms were born, and sponsored poker players became famous. Even TV and movies have begun to take an interest in the phenomenon, and more and more new people are approaching the game.
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The rise and fall of poker were pretty fast. Maybe because of greed, maybe because of the government. Let’s look back at the business that exploded like a supernova.
Advertising and Hollywood movies
The game became really popular; within a couple of weeks, everyone was playing poker. The internet was growing dramatically, and social networks and advertising pushed more people to play.
The poker rooms advertised themselves through their pro players’ teams. Most professional poker players were invented and improvised, a bit like many fake influencers today.
The story was almost always the same: ordinary people became rich and famous by playing online poker.
The message was that all it took was a computer and some money to get started. In reality, the real pros were playing 20-30 tables at once, not a bigger live event in the spotlight. The sponsored players were mostly gamblers who didn’t know much about the game.
When the game started to get on TV, aggression and showiness mattered more than technique. The spectator was entertained by the risky moves and the strokes of luck. Texas Hold’em is a technical game based on statistics and probability, but people wouldn’t watch a chess game on TV.
A lot of people approached the game like gamblers, copying the highly publicized losing models.
Hollywood also helped create the poker player’s myth; “The Rounders,” starring Matt Damon and John Malkovich, was one of the most famous films.
“Lucky You” was a different film, starring Eric Bana, Drew Barrymore, and Robert Duvall. It was based on live tournaments in Las Vegas.
Poker books and forums
As always, many side projects are born around the main business. These so-called “professional players”, for the most part, failed gamblers, started writing books and selling courses. Sound familiar? Online trading has evolved the same way. Everyone is selling online courses; everyone is writing books on how to make money.
For example, some interesting books about the game have been written:
- Sit ‘n Go Strategy: Collin Moshman
- Harrington on Holdem
Even the beginners were getting a feel for how the game worked, and the level was slowly rising. Players who worked from home on multiple tables found more prepared opponents, and the game evolved.
Forums, another interesting phenomenon that maybe I’ll analyze in another article, have helped increase Texas Hold’em’s culture. People learn by reading online forums, asking questions, and studying their hand histories.
Twoplustwo.com has been the most important forum for thousands of players. People learned how to play and decreased profits because they taught others. The online forums were trendy in 2007; today, they have almost disappeared, and Reddit has destroyed them all.
Regular players were everywhere, and you couldn’t avoid them at every table. New services and software began to emerge to track results, recognize regulars, or track statistics. The more this kind of service increased, the more complex the game became as the level rose.
The newbie started to get the hang of the game, which made the regulars’ work more challenging every day.
History of poker’s affiliate programs
The poker rooms got a lot of help from the regulars at the time when they were expanding. A lot of regulars open 20-30 tables at a time, creating a lot of traffic. A player playing 20 tables is like 20 casual players with only one table open. All this traffic meant many commissions and a lot of action for those approaching the poker world, and therefore, new customers.
Poker rooms gave cashback programs to their high-volume players. They pampered their regulars. Thanks to the cashback, many regulars could recover the losses they were experiencing on the tables.
The poker rooms got a lot more traffic after they started offering cashback programs. The poker rooms weren’t regulated, and they were based in tax havens like the Isle of Man.
New poker rooms popped up all the time, and they competed for affiliates by offering cashback. In the trading industry, the same thing still happens today with almost all CFD brokers, where you can refer a person and earn commissions based on their volume.
It also became a profession to introduce new players. I know tons of people who made a lot of money introducing players. They did all this on forums or other sites.
Even though the average player’s skill had improved tremendously, the sharks survived because of cashback and special deals. It was pretty much impossible to beat at 6-person tables with five regulars waiting for a fish.
The competition had become mainly between regulars, and they now generated most of their profits from cashback and affiliations. How long could it last?
The regular players’ mass suicide
The game got tougher, the regulars were too many, and the random fish disappeared. A lot of poker players became teachers to keep making decent money. Some teachers charged by the hour; others did it for free in exchange for affiliation.
The player agreed to play for a certain number of hands per month to be taught how to play better.
I can imagine the competition was sky-high at this point. Players needed the software to analyze every hand and table with statistics for each phase of the game. It took months of study to reach a decent technical level to survive.
The random player was bored, there were too many professionals, and he realized it, and the profits for the poker rooms fell.
There were some big crashes like Full Tilt, which caused quite a stir at the time. After these events, many governments took action to regulate or ban online poker. The game was banned in much of the U.S. and around the world. Each government made its own regulations.
In Europe, poker rooms could only accept players of the same nationality, so different PokerStars sites were born in different nations.
The traffic dropped significantly because the game was enjoyable because there were players from all over the world. Limitation and prohibition were devastating. The gambling fees became enormous because the various states taxed part of the poker room’s profit.
Many pros moved to places where they could still play on PokerStars.com, but the game field was still too high for them to survive.
The game is now a lottery for players
The smaller poker rooms shut down pretty quickly. The largest survived, but, of course, a change was needed.
Poker rooms started kicking out regulars. Luck became more important than skill in the new game modes.
The tournaments were getting faster. Poker rooms turned Texas Hold’em into a lottery for gamblers. These days, you can even find one-handed tournaments where everyone goes all-in on the first hand.
People are still trying to find any way possible to beat the game, but these rules make it nearly impossible. The Texas Hold’em world has disappeared. Today, poker rooms offer poker alongside betting, slots, and other casino games.
This is the story of how online poker was born and how it died. Who to blame? Probably the biggest mistake was creating armies of affiliates that became regulars. This army of professionals has riddled the few fishes involved in the game. There’s an important rule in business: you can shear a sheep many times, but you can only kill it once.
Online poker was one of the stupidest mass suicides of the last 20 years.