Ultimate Beginning

Backed by the men behind the Ulimate Fighting Championship, UlitmatePoker.com looks to make more than an impression in the world of legal online poker.

Once upon a time, 38-year-old Dave in Minnesota would come home from a day as a self-proclaimed “cubicle monkey,” have dinner with his family, put his two kids to bed, pour himself a Cap’n and Coke, and screw around playing online poker. Some days he won. Some days he lost. All days he managed to blow off a bit of steam and entertain himself.

Antonio EsfandiariDave in Minnesota’s little form of harmless entertainment came to a grinding halt on April 15, 2011, the day that the U.S. Department of Justice unsealed indictments against the three largest U.S.-facing online poker sites. From that moment forward, resistance was futile. Online poker in America was over.

What followed for recreational players like Dave in Minnesota were frustrating nights of so-called “social” poker games like Zynga Poker, where players played as if the chips weren’t real money — because they weren’t. It just wasn’t the same as playing for old-fashioned greenbacks.

There’s finally some good news for Dave in Minnesota, and every other U.S. online poker player who didn’t have the luxury of relocating out of the country after Black Friday. The real-money version of the game they love has made its triumphant return to the country in which it was born.

On April 30, 2013, at 9 a.m. Las Vegas time, UltimatePoker.com dealt the first regulated, officially sanctioned, fully above-board hand of real-money online poker in United States history. Ultimate Poker’s launch wiped away two years of frustration with a regulatory process that, at times, seemed as if its sole purpose was to ensure that nobody in the United States — not Dave in Minnesota nor Akiko in New York — ever played online poker again.

Online poker is back, and it has a new name: Ultimate Poker.

First out of the gate

“I love the fact we are a product-focused company — we have to deliver on the gaming experience,” Ultimate Poker co-founder Tom Breitling recently said. The gaming experience he was referring to? Online poker, of course.

Breitling’s online poker site is Ultimate Poker (no relation to the scandal-plagued UltimateBet site, thank you very much). It’s the first online poker site in history to operate with a license issued by a U.S. regulatory authority — in this case, the Nevada Gaming Commission.

The site only is available to players within Nevada right now, although that may change as states that have legalized online poker negotiate player-pooling agreements with each other. More importantly for Ultimate Poker, it’s also the only site in Nevada with a license that is far enough down the regulatory compliance road to offer real-money gaming. It’s expected that other sites, including WSOP.com, will go live in Nevada with their own real-money online poker operations in the third quarter of 2013, but for now Ultimate Poker has the first-mover advantage.

In short, Ultimate Poker is the only site in all of the U.S. right now with the ability to give online poker players — residents and visitors of Nevada — what they want: real-money online poker. Ultimate Poker, as the first entrant in the market, is hoping to acquire as many of those players as it can.

“It’s a new day in online gaming,” Breitling said on the day of the launch. “Nevada is first, and Nevada should be proud. Nevada took the leadership position on this.”

Nevada may have taken the leadership position, but the operators are the front-line soldiers who have to prove that it can work. Breitling’s fledgling poker site is the first licensed online poker site to operate anywhere in the United States, which ratchets up the pressure to succeed quite a bit.

The stakes are high. The success or failure of Ultimate Poker on a micro level could get writ large on online poker regulatory efforts across the rest of the country. If Ultimate Poker falters and fails to produce the revenue that analysts anticipate, state legislators around the country may have second thoughts about the viability of plugging budget holes by legalizing online poker. Given how long it has taken to get the regulatory train moving as far as it has, nobody in the industry wants to see anything that could cause the slightest derailment.

“It’s time!”

To ensure the best chance of success, Ultimate Poker enters the market with a backstop: two of its four founders are the Fertitta Brothers, owners of the Stations Casino chain and the Ultimate Fighting Championship from which Ultimate Poker takes its name. The Fertittas are making a big bet not only on online poker in its own right, but also that the cross-promotional opportunities between MMA aficionados and recreational online poker players will give Ultimate Poker all the marketing muscle it needs to quickly become a success story.

The typical UFC fan, like the typical online poker player, is a young male who is incredibly tapped into social media and the Internet in general. UFC’s Twitter account has 1.1 million followers, its Facebook page has 10.5 million “likes,” and its YouTube videos have garnered more than 300 million views. Those numbers would make any marketing director’s mouth water.

Ultimate Poker believes strongly enough in the cross-promotional opportunities between the UFC and online poker that they pursued poker player-turned-MMA fighter Terrence Chan for most of a year before he agreed to join their team. Chan, who is doing a little bit of everything at Ultimate Poker, doesn’t just bring a dual love of poker and MMA to Ultimate Poker though. In what must seem like a different lifetime at this point, he was affiliated with another online poker startup you might have heard of: PokerStars.

“I thought back to my PokerStars days and how much fun it was to be part of a poker startup, to watch a business grow from infancy into something massive and awesome,” Chan wrote on his blog when he announced his decision to join Ultimate Poker. “I know from experience that being part of a startup is crazy work. Stuff always goes wrong and there are always challenges and hurdles you didn’t anticipate. But more than anything I’m excited. … There’s so much talent here, all channeled towards the same goal, that I can’t imagine anything other than success and good times.”

Brass tacks

But what about the site itself? It looks and feels an awful lot like online poker.

To be fair, the lobby layout and the table design lack some of the polish that players have come to expect from sites like PokerStars. Remember, however, that PokerStars has had a dozen years to invest in and refine its product. The site launched (improbably enough) on Sept. 11, 2011.

If Ultimate Poker were so inclined, the company could probably spend another two or three years and several tens of millions of dollars creating the Lamborghini of poker clients. After two long years without online poker, that’s not in anybody’s interest.

Instead, Ultimate Poker launched with a client that is highly functional and more than adequate but that lacks some of the bells and whistles of more established sites. For example, to start, Ultimate Poker launched only with No-Limit Hold’em and Fixed-Limit Hold’em. Omaha and Stud fiends will have to wait a while longer before they can join the party.

Limits were also capped $3-$6 NLHE to start (though they were subsequently increased to $5-$10), and most tournaments and Sit and Gos are in the $10 to $25 range. It remains to be seen how integrated the Station Casinos “Boarding Pass” loyalty program will be with the site.

All of these things are a starting point as Ultimate Poker gradually refines its product and its processes and prepares to eventually enter into larger markets.

“We’re going to work really hard to provide the best possible product,” said Chan. “Other than that, it’s just a matter of continuous improvement.”

Ultimate Poker really shines with how easy it is for players to deposit funds on the site. One of the big stumbling blocks for online poker in the U.S. after the UIGEA was passed was that moving money onto and off of U.S.-facing sites became progressively harder and chased away many recreational players.

On Ultimate Poker, on the other hand, depositing is as simple as entering your credit or debit card number. For the first time in almost 10 years, players can deposit funds to a poker site via credit and debit cards (in addition to Instant Check, bank wire, paper check and deposits made directly at a Station Casino cage). For now, Ultimate Poker only accepts MasterCard but even that lone offering is leagues better than the hurdles over which U.S. poker players used to have jump to move money onto an online poker site.

Those hurdles created the implicit sense among recreational players that online poker wasn’t kosher and instilled in them a difficulty trusting the sites. That problem was magnified later by cheating scandals and the total implosion of two of the three largest online poker sites, Full Tilt Poker and UB.

Liquidity could be another early challenge for the site. Online poker sites in New Jersey should join their Nevada brethren toward the end of the year but at first players from the two states will remain ring-fenced from each other — that is to say, players in Nevada will only play against other players in Nevada and likewise in New Jersey. Inter-governmental agreements allowing players from both states to be pooled have yet to be hashed out.

A matter of trust

At this stage of the game, flashy software and ease of depositing aren’t the unique selling points that are going to make or break Ultimate Poker’s success. Liquidity, while helpful, won’t turn off the diehards who know that it’s just a matter of time before other states come on board. The true litmus test will be whether or not players trust the site.

“We’re hoping that by being forced to conform to really stringent regulation that people will realize that you can trust your money with us and trust that you’ll get a fair game,” Chan said.

“Everyone knows there is a pent-up demand,” Breitling said. “Everyone knows this is a real business waiting to happen. It’s just a matter of the states legalizing what is a new environment of trust.”

“We like to think of it as the day that trust returns to online gambling in the US,” CEO Tobin Prior was recently quoted as saying. “Now you can visit a site and be fully certain that your money is safe and that you’re dealing with people you trust.”

Trust, trust, trust. It’s a word that gets thrown around a lot these days. There were multiple cheating scandals during the era of unregulated online poker, and several high-profile poker sites imploded along with the player funds they were supposed to be holding. Combined with difficulties moving money onto and off of sites, it’s all contributed to a perception among recreational players that online poker isn’t safe. Re-establishing that trust is one of the primary tasks of the first-to-market poker sites like Ultimate Poker.

Chan and all-time WSOP money winner Antonio Esfandiari are the faces of the new site — two men whose reputations are spotless and who cater to different segments of the poker community. Esfandiari is the smoothie, well-known for his appearances on poker TV programs like “Poker After Dark” and “High Stakes Poker.” Seeing his face on the site could make recreational players who used to watch poker on TV feel like they’re reconnecting with an old friend. Chan is the thinking man’s poker player, known for his uncanny Limit Hold’em ability, his fledgling MMA career and his willingness to be brutally honest with everyone, most of all himself. The site could not ask for two better endorsers from a trust perspective.

The customer is always right

From a customer service perspective, Ultimate Poker has done everything in its power to make sure that players have a pleasant, satisfying online poker experience, from deposit to table to cash-out. As issues have arisen since the site’s real-money launch, Ultimate Poker has responded swiftly and decisively.

For example, the site relies on a user’s mobile phone as one of its tool for verifying a player’s location within the state of Nevada. Right after launch, players with Verizon and T-Mobile phone service were unable to be location-verified by Ultimate Poker, frustrating players with pent-up demand for online poker. UP officials worked closely with Verizon and T-Mobile in the days after launch to iron out the issues. Both services will now correctly location-verify Ultimate Poker players if they are within the state of Nevada.

The site also found itself enmeshed in a minor uproar tied to the UB cheating scandal of 2003-07. At the time of its real-money poker launch, Ultimate Poker was using CAMS LLC to provide geolocation and player verification services. CAMS, in turn, was subcontracting some of the work to iovation, a company spun off of UltimateBet that was headed up by Greg Pierson, an UltimateBet founder.

Days after Ultimate Poker’s launch, a former employee of UB publicly released secret recordings from 2008 of Pierson and other UB executives discussing the cheating scandal. On the recordings, Pierson is directly implicated in trying to cover up the scandal as much as possible.

Ultimate Poker wasted no time addressing the issue. One day after the recordings were released, the site released a statement on popular poker forum TwoPlusTwo indicating that it had cut ties with iovation.

“As of late Thursday night, May 9th, Ultimate Poker discontinued the use of all services from iovation. We understand that there were concerns among some of our customers, we hope this makes our players feel more comfortable.”

Ultimate Poker has also been highly responsive to individual player requests and concerns. Emails are answered promptly and satisfactorily, and the company is highly engaged with individual users through both its Facebook page and its Twitter feed, @UltimatePoker.

Long time coming

Although the launch of real-money gaming on Ultimate Poker and the drive to build trust in the site’s players was swift and sudden, Fertitta Interactive, the company behind Ultimate Poker, didn’t spring up overnight. It was formed back in 2010 as a meeting of the minds between two pairs of highly successful entrepreneurs: Lorenzo and Frank Fertitta, and Tom Breitling and Tim Poster.

The connections among the four men ran back to the early 1990s when all were students at the University of San Diego. The Fertittas went on to become early investors in the Ultimate Fighting Championship and to purchase the Station Casinos chain in 2006; Breitling and Poster started Travelscape, a 1990s online travel booking service that they sold to Expedia, and owned the Golden Nugget casino in downtown Las Vegas for several years.

When the Fertittas, Breitling and Poster formed Fertitta Interactive in 2010, there were two major obstacles to offering online poker. First, the company didn’t have any kind of online gaming platform. The founders set about to solve that problem by acquiring Oakland-based CyberArts, an online gaming solutions company that had enjoyed some success in the social gaming space, in 2011. At the time, Breitling noted that, “Online poker is a convergence of traditional casino gambling, Internet marketing, technology and entertainment. The combined management team at Fertitta Interactive/CyberArts is uniquely positioned to meet the challenges of the online gaming industry.”

The second problem was more intractable: the U.S. did not have any kind of regulatory framework for online gaming, either at the federal level or at the state level. Although it seemed like the country was heading in the right direction in late 2010 when the four men formed Fertitta Interactive — the excitement surrounding the failed federal Reid Bill in December 2010 created optimism that legalization was just around the corner — Black Friday put a serious damper on things in April 2011.

It took a few years to get things moving in the right direction once again. Nevada, Delaware and New Jersey have all signed up for the ride; legalization of some form of online gambling (including online poker) is pending in California, Illinois, Massachusetts and Pennsylvania as well. It looks like the industry is finally back to the tipping point that it thought it had reached in late 2010 and early 2011. The launch of sites like Ultimate Poker may finally help shove us all over the edge.

Online poker 2.0

That brings it all back to the present, where Ultimate Poker remains the only licensed online poker site in what will undoubtedly become a much more crowded market over the course of the next year. The site passed a 30-day stress test of its network and software with flying colors and is likely to make an aggressive customer acquisition push during this year’s WSOP before the WSOP launches its own online poker site later this summer.

Ultimate Poker represents what Online Poker 2.0 will look like in the United States. It’s a start-up endeavor run by long-standing casino interests (in addition to the Fertittas’ ownership of the Station Casinos, Breitling and Poster at one time owned the Golden Nugget). It will look to leverage a brick-and-mortar loyalty program to acquire its initial customers. When other states get their own online poker regulations squared away, sites like Ultimate Poker will lobby hard for player pooling arrangements among the states similar to the Powerball lottery.

After two long years adrift at sea, online poker has finally returned to the land of its birth. Where it goes from here will rest largely on the stewardship of sites like Ultimate Poker.

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July 2013