Shuffle Master Failed to Look at the Long Term in Failed Ongame Deal
Yesterday, the announcement was made that Shuffle Master was backing out of their deal to purchase the Ongame Network.
I wish I could say that this surprised me, but when I read the news, it did not.
If you would have polled Shuffle Master, or any company related to online poker in December or January about what the state of online poker in the US would be by now, and I think you would have gotten responses ranging from "full legalization" to "numerous states" either having legalized or close to legalizing online poker.
It is now the end of June and there are exactly 2 states that have legalized online poker and only one on the horizon with a legitimate shot of doing so by year's end.
Furthermore, only one of those two states will go active by the end of 2012. Maybe.
The other state is really insignificant in terms of size to making an impact on the online poker world, at least with their current potential player pool.
As such, you have one state that will have a limited number of slots for online poker companies to jockey for services. This has to make Shuffle Master and other companies very nervous.
The problem with this is that Shuffle Master, as seemingly admitted to by their statement, was looking too much at the short term. Online poker legalization will come in the US, but the predicted rush to legislation is not going to happen.
We might see one, maybe two more states legalize online poker by the end of the year. After the election, we will get a better idea of what the real pace of legislation will look like at the state level.
Any company that enters into an agreement with Ongame or any other company needs to have a long term view on online poker legislation. Sure we want the states to make snap decisions and get us online and playing, but that isn't realistic in this case.