Punters warm to online poker

Big bucks in growth industry

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Industry comment Steve Cook from poker experts Tribeca Tables Software Development reviews the online poker industry and why the new igaming zone (ICEi) at the International Casino Exhibition in London’s Earls Court 2 between 25-27 January will be a hive of activity for poker companies.

In the two years since online poker first tempted punters, the industry has grown from $100,000 in gross rake per day in January 2002 to between a staggering global $2m and $2.5m 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 $200m per year, while an estimated $16bn was wagered at online poker sites in the last year. In that time many gaming companies, web and lifestyle brands have entered the poker space, particularly in the UK. 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.

The phenomenal growth rate of the industry has led to many poker software suppliers participating in the new ICEi zone. Companies such as Tribeca Tables, Prima, Poker Network, 24hr Bet, Chartwell, Playtech, Boss Media, IGlobal Media, and Real Time Gaming will all offer poker solutions. As well as international visitors, the ICE show has always traditionally attracted a lot of European visitors. It is also interesting to see that another P2P growth area are the betting exchanges with both Betfair and Betdaq participating at ICEi for the first time. Betting exchanges and poker share a close synergy with very similar models.

Significantly for both betting exchanges and poker operators, the industry has gone through rapid change. With the demise in November 2004 of Sporting Options, the third largest betting exchange, building liquidity in P2P markets is a huge challenge for new betting exchange operators. They face two giants which dominate the market.

The purchase of Paradise Poker (one of the four largest poker companies) for $297m by Sporting Bet in October 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 $7m and it is reported to have over 721,000 registered customers and over 97,000 active players.

In Britain temptation is everywhere; from consumer, gambling and men’s magazines, stadium billboards, shirt sponsorships and celebrity endorsements to full-blown 30-foot advertisements on London’s tube stations. Recent reports in the daily national newspapers have indicated that the UK is now the fourth largest gambling country in the world, and could very well top the league when the new gambling laws are introduced.

Temptation everywhere

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 UK’s gambling population that is actively playing online poker. This number will undoubtedly continue to grow in the UK, although predictably not at the same pace as in the past year. In fact, in the last few months, we have seen a slight dip in revenues compared with a year ago.

Across Europe, there are already huge armies of poker players. Scandinavian counties in particular have a strong base of aficionados. In the offline world, there are many poker clubs in Europe. Germany and Austria boast plenty of poker clubs, and it is noticeable that there are a number of new card rooms opening, for example in Dublin. Eastern Europe also has huge gambling communities.

However, online poker is just starting to take hold in continental Europe. Currently, British players make up about 80 per cent of the European market and it’s interesting to note that between 30-40 per cent are female players, compared with only five per cent of women players in the offline world. Therefore, apart from other markets such as the Far East, the rest of Europe is only now beginning to open up.

Currently, only a handful of poker operators provide local languages - sites like Empire and Ladbrokes. While many Europeans speak English, local languages and local currencies are going to be key to penetrating these markets. Some argue that perhaps local currency may not be as critical round the tables, but operating a multi-lingual poker room will be. Of course, poker is universal, with it’s own language and terminology, so using local language is relevant more to the operational side of the site than to the game play. Localization for each country is important, not least for customer service.

By far the biggest expansion will mainly come from the large online poker operators that 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 is re-launching the Poker Million 2005 tournament - which will be one of Europe’s richest televised poker events offering $855,000 in the prize pool and a further $400,000 of bonuses to online qualifiers - while Poker Stars is 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 Monte Carlo Casino with prize money expected to be more than €2m for the final event and more than €1m going to the winner.

Hidden dangers?

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. Although in the past year the general view is that slowly but surely these barriers are being broken down, the majority of online casino and poker operators have not yet come under this scrutiny.

In the Netherlands 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 the Netherlands over the internet 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 more strict regime.

It is difficult to assess if other EU states will take their own steps against offshore operations. Of course, playing poker isn’t illegal anywhere in Europe, but 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 online poker has grown at an impressive 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 guns giving up their daytime jobs, it has never been a better time to be a poker player. Indeed, playing online has many distinct advantages. For instance, not seeing your opponents, nor perhaps even knowing who they are has great appeal for some 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!” ®

Steve Cook is European managing director for Tribeca Tables. Tribeca’s poker software is managed and operated by the Apex Poker Network that includes many brands such as Blue Sq, Victor Chandler, and Golden Palace.

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