Interpreting Poker Industry Numbers

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Posted on Nov 22nd 2010  -  Subject: Interpreting Poker Industry Numbers

One of my current daily responsibilities is to peruse the worldwide poker news, both from a poker player’s and poker industry perspective. Scanning across many sites and sources, I come across numerous poker numbers about where poker has been, is presently, and might be going in the future. I thought it might be helpful for the casual player to get a sense of the current numbers and happenings in the global poker environment.

1) Global online gaming market has now reached roughly $30 billion. Europe is said to be the biggest at $12.5 billion, which is more than double the size of the US market estimated at $5.4 billion. The Asian market, though not clearly defined shows the most promise for growth and interest in poker and online gaming. (source - American Gaming Association)

2) Online traffic reports for the major poker rooms show that one year ago, FTP had growth rate of 110%, and Stars was at 50% growth. The market overall had increased 40% in the preceding year. Currently, Poker Stars is growing at just 3% and Full Tilt and most if all other sites/poker rooms are in decline. (Source - Poker Scout)

3) There has been increasing market segmentation (i.e. France and Italy) where countries are creating ring-fenced networks which now account for some 18% of worldwide traffic. Numerous EU countries are exploring regulated environments. (Source - Poker Scout)

4) The US market is in limbo. On the national front, previous progress towards legislation and regulation, in the form of H.R. 2267, has been stalled in the wake of recent electoral results and the lame duck session. On a state level there has been both positive and negative news. Just today, the New Jersey Assembly passed a veto-proof majority on the framework to become the first state to license and regulate online poker. Washington state, on the other hand, has become the first state to make playing online poker a felony and depriving all citizens from playing legally. More states are struggling for income and tending towards a regulated New Jersey solution than the Washington direction. New Jersey estimates their 20% take of selected companies online gambling revenue would be around $50 million annually. (Source - OnlinePoker)

5) Harrah’s shelves big IPO, in wake of strong IPO’s for MGM and GM. More likely a reflection on Harrah’s leveraged business than overall economy.

6) In one of the few niche poker room success stories, over the last four years PKR has experienced growth of 356% from 2007 to 2010, with revenues increasing nearly 100-fold in that time-frame (from £347,000 to £33 million) by focusing on innovation and a specific 3-D software platform. (source - Sunday Times)

7) Despite global economic and national legislative obstacles, online gambling sites continue to see increased traffic boosted by online poker tournaments, sports betting and interest due to the very same legislative debates on the subject. For US traffic in October, the online gambling online sites drew nearly 32 million visitors during the month, up 114 percent versus September. FullTiltPoker captured the top spot with 4.7 million visitors, followed by PokerStars with 2.5 million visitors. UB.com drew 1.8 million visitors with its month-long ‘Perfect Play’ promotion. Kingolotto came in fourth with 1.7 million visitors followed by Absolute Poker with 1.6 million and Sportingbet PLC with 1.4 million. (source - ComScore)

8) Steven Wynn, CEO of Wynn Resorts, indicated in his third quarter conference call that “we’ve seen the bottom in Las Vegas and I don’t know how fast it’s going to get better, but I don’t think it’s going to get any worse.” He feels Macau and Singapore are doing superior jobs of fostering the right environment for growth and success of the gaming industry. (source - KDW)

My Analysis:

1. Despite global, national and state obstacles, online gaming is a popular economic format and growing in popularity, even if at a slower pace than in the past.

2. We’ve hit the bottom as far as the negative economic conditions, although it will be a longer and slower recovery than originally anticipated.

3. Given the right economic and legislative environment, online gaming would accelerate it’s growth considerably.

4. It is peculiar to me that individual states are given leeway to dramatically differ in legislative strategy or criminality when these issues of access should affect everyone in the US equally.

5. The poker industry has proved resilient despite efforts to limit or minimize it.

 

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