For months now, we’ve been hearing about the effects of Black Friday on the industry and how it supposedly levelled the playing field for operators who exited the US Market post-UIGEA. However, there’s one major issue that was brought to the forefront on Black Friday which has hardly been discussed in the media, which is surprising since it benefits the operators who left the US market the most.
That issue is transparency. Before April 15th 2010, PokerStars and Full Tilt Poker were highly regarded among players as two of the most trustworthy operators – companies who would ‘put things right’ if things went wrong, who you could trust with your money, and who were accountable to governments and reputable regulators if the worst happened.
But then Black Friday arrived, and shone a light on the extraordinarily complex web of companies that comprised PokerStars, Full Tilt Poker, and the Cereus network, with the DOJ indictments naming businesses throughout the world that players never knew existed, and listing bank accounts in more countries still. But the DOJ indictments barely scratched the surface. According to a court decision in early 2011, the PokerStars group consisted of at least 23 separate companies throughout the world, providing a variety of services including poker training, treasury management, live event sponsorship, and marketing. Furthermore, since Black Friday players themselves and popular poker blogs such as Subject:Poker have uncovered the complex corporate structure of Full Tilt Poker and the many faraway companies involved.
Online poker businesses have this complex corporate structure because it allows them to have their cake and eat it too. If you were building your perfect poker site from scratch, you might put your HQ in the Isle of Man (so you can take advantage of the respected licensing regime and 0% corporation tax), your marketing company in London (where marketing and TV production talent is easily available) your software development company in Dublin (which is rich in IT talent due to its high concentration of technology companies, and also has low corporation tax) and your treasury company in Switzerland or on an island somewhere in the Caribbean where nasty lawyers and taxmen can’t get to it. Maybe you’d start up a few additional companies to get licences in Europe, or in different time zones so you can provide 24-hour support. Oh, and you’ll need a holding company or three for all of those, obviously.
You can see how the massive corporate giant builds! Having a structure like this allows you to get the best of everything – you can be as tax efficient as possible by putting your big money-making companies in the most tax-friendly jurisdictions, while still being able to employ the best staff by not forcing them to move to inconvenient locations in the Mediterranean.
This sort of structure makes sense to accountants and lawyers (and frankly, I’m surprised that more online poker companies don’t have similar structures) but, to a player looking in from the outside, it looks suspicious. Many players find it difficult to trust online poker companies at the best of times, but when they find out that they’re not actually dealing with the brand directly but one of a myriad of confusingly-named subsidiaries, their level of trust plummets still further.
First and foremost, players want online poker sites to be accountable. If I go into Tesco to buy milk and get charged for a trolley load of things I didn’t buy, I know that if all else fails I can go to Tesco PLC to complain. If I buy a television from Amazon.com and it’s never delivered, I know that if I can’t work things out with their support team or my bank, I can complain to Amazon EU SARL. If my case is really serious and I’ve exhausted every other avenue, I can even sue one of these companies.
But with online poker companies, that’s not always the case. It’s not necessarily clear which of the many companies you’re actually doing business with, what country that company is based in, and what they are responsible for. Players can feel powerless if they have a trivial support problem, let alone if they have a serious dispute over a significant amount of money. Starting with the poker site’s regulator (if they have one) is a good beginning – but what if you don’t know how to contact that regulator – or what if you don’t speak the language of the country where they are based?
That feeling of powerlessness is extremely frustrating, and sites can do a lot to ease it by being transparent about who the player is dealing with and where they can go if they have a dispute.
But it’s not just powerlessness. When something goes wrong for an online poker company, often that company will shut down all communication for fear of saying the wrong thing. If the company does speak, it’s through lawyers or sponsored professionals – or the communication is written in such a guarded, corporate way as to sound more like a press release than something that really addresses the issues. Even in the best of times, online poker sites often communicate with their customers through anonymous media like internet forums or Twitter, using pseudonyms and not real names.
Pseudonyms, screen names and anonymity do not go hand in hand with transparency and accountability. Players want to deal with a real person – a public face of the company, and will forgive and even empathise a lot easier when they see a fallible human being is at the reigns. Somebody who knows what they are talking about, who has the power to solve any issues they might have, and who doesn’t patronise them with corporate bullshit. A sponsored pro isn’t enough here – it has to be somebody who has real power to change things, and who can get them done without going through endless layers of approval. Frankly, I’d rather have Jeremy Clarkson fronting my poker site than some anonymous, corporate, trying-to-please everyone shill – because love him or hate him, most people respect honesty and straightforwardness more than they do spin and buzzwords.
So why is this so rare? Public companies like bwin.Party and 888 should be making a big deal out of the fact that their financials are published for all to see and their board of directors are real people with real faces. Their employees have nothing to hide and should be proud to put their real face and name behind their product. But they’re not – and really the only person who has got this right in the past is Lee Jones when representing PokerStars and the Cake Poker Network. Jones was able to build a real rapport with players over the years, and despite the fact that the businesses he’s represented have had the occasional scandal, he is still highly regarded and his reputation is intact.
In the post-Black Friday era, all online poker operators are going to come under more scrutiny from players, governments, regulators and the media. Those who are able to do business in a transparent way, who hold themselves accountable for their actions, and who are able to provide a trustworthy public face should have a distinct advantage in this new, ever-more suspicious environment. Will your business be one of them?
This article originally appeared in InsidePoker Business, Nov-Dec 2011.