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House of Cards Yahoo! has officially joined the online gambling goldrush: its British version has begun offering poker games for cash.

Just when American companies would make a move to tap the regulated European gaming market has been a topic of considerable speculation in the online gaming world for quite a while now, and in that respect Yahoo! is only following the lead of the Las Vegas Sands Corporation - an American corporation seeking to cash in on the online gambling boom by investing abroad. However, the arrival of a major media company with an established casual gaming platform could well be a bigger threat to the online gambling sites than the arrival of the major land-based companies.

A quick check on site traffic says it all. Yahoo! is on Boss Media’s International Poker Network (IPN), and according to a report in Casino City Times, the online poker tracking site www.pokersitescout.com counted an average of 1,603 players per day for IPN last week, which makes it the 12th largest online poker network in the world below industry leaders like PartyPoker and PokerStars, which averaged about 5,000 to 8,000 players per day. By way of contrast, at the time of writing, Yahoo! UK had over 43,000 players on its game site.

Of course, only about 700 of those were playing in the poker room, and the site does not break down statistics for casual vs. money games, but the poker room has just gotten started. Regardless, the distinction between casual gaming and money gaming has always been pretty artificial – many of the games played are the same, and it’s frequently the same software providers crafting the games. Up to now, major media companies like Yahoo! and MSN have used casual gaming to generate advertising revenue and site traffic, but that will probably change for good with this move by Yahoo!.

The Sands partnered up with Cantor Gaming back in December to provide online gambling services to the European market, but previous efforts by the big American gambling companies to penetrate the European market have been half-hearted at best, and it could well turn out the media companies have a better feel for what your average consumer is looking for in online entertainment.

Up to now, the online gambling world has been a web of interlocking smaller players, linked like the IPN to provide increased player liquidity. Yahoo! is dithcing this affiliate concept to rely on the enormous traffic generated by its universally recognized brand. Even if the hard core players stay with established online sites like PartyGaming, Yahoo! or MSN could well clean up on the nickel slot crowd, which in the end is where the real volume money is – just look at how much floor space in Vegas Casinos is devoted to cheap slot machines.

Neither the Sands nor Yahoo! is offering its gambling services to American customers, but the emergence of deep pocketed American companies in a fragmented market of smaller players will change the online gambling market for good. If Yahoo! does it, will MSN stand idly by?

And why stop there - why not console gaming? Microsoft pulls revenue from embedded advertising on the Xbox live platform, but what is to prevent Microsoft, for example, from offering real money gaming tournaments of all kinds on the platform to European customers? The potential has always been there, but the legal minefield of American gaming law has kept the American companies sitting on their hands.

However well Yahoo! does with its new poker room, American companies are sure to find ways into the expanding European market. Another wave of consolidation in the online gaming industry might help, but for established players such as PartyGaming, the ground is about to shift under their feet.®

Burke Hansen, attorney at large, heads a San Francisco law office.

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