The online poker industry has tripled in the last year!
Two years on from the online poker explosion, the industry has grown from U$D 100,000 globally in gross rake per day in Jan-2002, to between a staggering U$D2.0 and 2.5 million per day. While online gaming itself continues to grow at a dramatic pace, the online poker industry has more than tripled in the past year, according to statistics provided by PokerPulse.com. The top operators are earning around $200 million per year, while an estimated $16.0 billion was wagered at online poker sites in the last year alone. In that time, many gaming companies, web and lifestyle brands have entered the poker space, particularly in the UK.
Worldwide, there are now some 300 sites, around 20 networks or stand alone rooms, and there are still more commercial and gaming brands planning to launch a poker room.
Significantly for both betting exchanges and poker operators, the industry has gone through a rapid change. With the demise of Sporting Options in Nov-2004, the third largest betting exchange, building liquidity in P2P markets is a huge challenge for new betting exchange operators in the face of two giants that dominate the market. While in poker, the purchase of Paradise Poker (one of the four largest poker companies) for $297 million by Sporting Bet in Oct-2004 has set a mind-blowing precedence. Since last July, Paradise has continued to experience substantial growth in rake and tournament fee income. In recent months, Paradise's aggregate monthly rake and tournament fee revenue has risen to over $7.0 million and is reported to have over 721,000 registered customers and over 97,000 active players.
Temptation is everywhere, from consumer, gambling and men’s magazines, stadium billboards, shirt sponsorships and celebrity endorsements to full-blown 30-foot billboard advertisements. The ease of Internet betting has led to the huge rise in gambling. It is easy to think that poker has reached saturation, but actually this is far from correct. There may be a large number of branded poker rooms, but it’s still a very small percentage of the gambling population that is actively playing online poker.
So where next for online Poker operators? In Europe, poker is just starting to take hold. Currently British players make up about 80% of the European market and it’s interesting to note that between 30% and 40% are female players, compared with only 5% of women players in the offline World. Therefore, apart from other markets such as the Far East, the rest of Europe is now really beginning to open up. At the moment, less than a handful of poker operators provide local languages; sites like Empire and Ladbrokes for instance. While many Europeans speak English, local languages and local currencies are going to be fundamental to penetrating these markets. Some would argue that local currency might not be as critical round the tables, but operating a multi-lingual poker room will be. Of course, poker is universal with its own language and terminology, so using local language applies to the operation of the site and not so much the game play. Localization for each country is important, not least for customer service. For example, if you look at the way local ISP’s operate in each country, you will see very different environments apart from the language; so for landing web pages the design, graphics and software content should be taken into account. Customers notice these subtle differences.
In Europe, there are already huge armies of poker players. Scandinavian counties in particular have a strong base of players. In the offline world, there are many poker clubs in Europe. Germany and Austria have a large number, and it is noticeable there are several new card rooms opening in Dublin, for example. Of course poker is popular across many borders throughout both EU and non-EU states. Eastern Europe also has huge gambling communities, and the online mania is set to spread to the furthest corners of mainland Europe. Therefore, many operators are ready to exploit the accessibility of the Internet, especially those with large customer databases. The onslaught is virtually unstoppable!
The biggest expansion will come from the large online poker operators who will be promoting huge offline tournaments across Europe. Last year, Victor Chandler staged one of the largest poker championships in the UK, with a half a million pounds in prize money. 2005 will see an explosion of both online and offline tournaments, with ever greater prizes. Ladbrokes are re-launching the Poker Million 2005 tournament, which will be one of Europe’s richest televised poker events with $855,000 in the prize pool and a further $400,000 of bonuses to online qualifiers, while Poker Stars are staging a pan European Poker Tour (EPT). The televised EPT includes events in Barcelona, London, Paris, Vienna and Dublin. The Grand Final will be held in the famous Casino Monte Carlo, with prize money expected to be more than EUR 2 million for the final event and more than EUR 1 million going to the winner.
But are there any hidden dangers lying in wait for online poker operators? The recent debates over cross-border betting and previous directives by the European Court of Justice regarding the prohibition of foreign (EU-based) betting services are areas that should be carefully watched. Over the past year, the general view has been that, slowly but surely, these barriers are being broken down, but the majority of online casino and poker operators have not yet come under this scrutiny. In Holland for instance, participation in offshore games is allowed under the Dutch Gaming Act. However the Dutch authorities take the view that Dutch citizens may not participate in any online casino or poker game wherever the operator does not hold a valid gaming license in Holland. The Dutch Minister of Justice has recently announced that the authorities will intensify prosecution of illegal betting/gambling, will restrict advertising and will impose a stricter regime. Whether other separate EU states will take their own steps against offshore operations is difficult to assess. Of course, playing poker isn’t illegal anywhere in Europe, but as online gambling is set to spiral, what, if anything, will EU countries do to control or prevent its citizens from gambling over the Internet? All eyes are focused on the UK Gambling bill and whether the rest of Europe will follow UK Government’s open minded approach.
Certainly, the popularity of playing online poker has grown at an incredible rate. The rise of so many poker celebrities and the expansion of TV coverage have also contributed to this rapid increase. With the increase in offline tournaments for the hardy, seasoned poker professionals and a few new guys giving up their daytime jobs, it has never been a better time to be a poker player. Actually playing online has many distinct advantages. For instance, not seeing nor sometimes knowing who some of your opponents are has a great appeal to some ordinary players. As Paul Newman once said, “If you are in a game of poker and you look round the table and haven’t figured out who the sucker is, then it’s you!”