NLOP Cashes in on U.S. Gaming Ban

For the last two-and-a-half years, a Massachusetts-based online poker site appears to have been operating within the law, guaranteeing thousands of dollars in prizes and capitalizing from the online gambling ban imposed by the United States government.

National League of Poker is not a subscription site like PurePlay or ClubWPT.

Michael Clebnik, its chief executive, prefers to call it an "advergaming" site or a "social gaming" site.

"The majority of our players play for free," Mr. Clebnik told IGamingNews by telephone on Tuesday. "People come to NLOP and have an opportunity to play for over $50,000 in prizes and not have to pay a dime."

All of NLOP's prizes are underwritten by advertisers and sponsors, and its software and platform were created in-house. The company spent 18 months, in fact, developing the fully customizable platform before the site launch in June 2006.

"Poker software is easy," Mr. Clebnik said. "What we really created was this advergaming software. We have the ability to create private brand and tournament experiences for our advertisers and sponsors. So, for example, if Goodyear Tire came to us and said: 'Gee, we'd really like to run a tournament on your site where we give away four Goodyear tires or seats to a Nascar event, or something like that,' we can create a specialized tournament for them where the entire game table and the interface around the game table is customized so that it looks like Goodyear. Goodyear is on the table. Goodyear ads run around the table. The backdrop is all Goodyear.

"So, what we're trying to do is go out to advertisers and say: 'There's more to Internet advertising than just banner ads,'" he added.

With a professional background in advertising and marketing, Mr. Clebnik has successfully started up five companies, including three Internet companies. Previously, he ran a fantasy sports company, an online mall and he created software for land-based merchants that wanted to go online but lacked HTML skills.

In conceiving NLOP, Mr. Clebnik said advertising formed the base for the site and poker came in to serve as compelling content.

"Back when we were running our fantasy sports company, and we were looking at vertical and horizontal expansion -- and this goes back to late 2003 -- and with the growth in online poker, we were looking at poker as content. And the fact is that poker was one of the stickiest forms of content on the Web," he said. "Today, our average user session is 67 minutes in length. Our average logged in user spends five hours on our site. So it's the content that gets people to come and stay for long periods of time."

Prior to its launch, the people behind NLOP had the foresight to find out what American online poker players were doing.

"We had already looked at the market -- the offshore sites -- and had seen that the majority of people were not depositing money in the dot-coms; the majority of people were actually playing on the dot-nets, which is interesting because there's nothing to win and nothing to lose on the dot-nets," Mr. Clebnik said. "Really, they were just feeder mechanisms to the dot-coms, and we all understood what those were. But what was interesting is that people were spending a lot of time on dot-nets playing poker, and we thought that we could provide a much more compelling experience for people in a free-to-play environment.”

Four months after NLOP's launch, the United States Congress passed the Unlawful Internet Gambling Enforcement Act, forcing the American online gambling market out of the country -- which turned out to be the best thing for NLOP.

"UIGEA just put an accelerant on our business," Mr. Clebnik said. "We launched in June of 2006, and by February of 2007, we were already hard at work on the second version of our software because we were having such an uptake in adoption that we started building version 2.0 of our software, which is the current version out there. It can scale, in its current network topography, to about 30,000 concurrent users."

NLOP was founded by entrepreneurs Alan Miller and Roy Evans under the company name Power Play Development Corporation, and its in-house software division was called Poker Creations. In September, Power Play was acquired by Zen Gaming, a Las Vegas-based holding company, taking it from a public to a private company.

"We had done a reverse into a public shell late in 2006," Mr. Clebnik said. "We were a pink sheet shell at that point. We had some investment backers, but we were really looking to move up onto the bulletin boards because you don't want to stay in that pink market for very long. It's a very transitory type of stage. By the end of 2007, we were already seeing the 'recession' that we're in today, and the problem with being a public, or pseudo-public company, is that venture capitalists by their charters can't invest in you."

Zen Gaming has two operating divisions: NewPoker L.L.C., a games developer, and Advergaming L.L.C., under which NLOP operates. NLOP will be rolling out two new-style poker games this week developed by NewPoker L.L.C.

NLOP does have a premium membership area where, for a monthly fee, customers have access to enhanced features to use on the site, such as the ability to play at private tables; the ability to customize their own avatars and a shopping rewards program.

And Mr. Clebnik said the premium membership is particularly attractive to customers who might not even have an interest in playing poker.

"We actually have people who belong to the premium area of our site who don't actually play poker at all," he said. "They just find the value added benefits worthwhile enough to pay that monthly membership fee."

NLOP also boasts one of the largest social networking sites for poker players where some 7,000 people have signed up. Mr. Clebnik believes that the next evolution in social networking is going to be niche social networking sites.

"So, we're much more than just about poker," he said. "We've got people who've set up player profiles; they've put up pictures, videos, blogs and chats. And that is very much outside of playing the game itself. This is about finding other like-minded people who enjoy the game of poker and people are creating friendships and relationships."