PartyGaming is down 56% in early trading in London. No one wanted to believe that this would pass, but the Internet Gambling Prohibition Act has now basically been passed by the Senate. It’s a no-brainer to shove this into a popular piece of legislation as no elected official is going to be turned out of office by poker players. But what happens next? What does this mean for the industry, as well as you and me? See London Times article on the impact on the market there.
First, let’s take a look at expected results for the industry in the next fifteen months (one man’s opinion):
- 8,773: That is the number of entries in the WSOP Main Event, and that will be the largest field ever for a World Series event, at least in the next five years. The Main Event is an online poker tournament, with a significant number of players winning seats through online poker sites.
- Media collapse: Look for CardPlayer to survive in a skinnied-down version, but most of the other publications will cease to exist. CardPlayer has a symbiotic relationship with online poker sites, from FullTilt advertorials to all of the ad pages bought up by sites. The online sites make money both through advertising as well as affiliate relationships. This will all shift heavily to European and Asian advertising.
- Goodbye, WPTE: The World Poker Tour’s days are numbered. Ratings are down 25% already on the Travel Channel, and with the deep pocketed online poker sites turning their back on the US for their marketing spend, the Travel Channel will no longer be interested in forking out cash for this show.
- Asia is King: Europe is the most mature secondary market for online poker, but the future for gaming is in Asia. With the new casinos being built in Singapore as well as the China market further opening, all of the attention will lie in Asia. The Wall Street Journal has a story this morning on the prospect of Harrah’s going private, which would allow them to take short-term earnings hits to further work on catching up in Asia.
- Marginal Sites are Dangerous: Online poker sites are significant cash cows, spitting out cash like a counterfeiter would. For Party, PokerStars, and the major sites, they’ve long learned the Dutch Boyd lesson and kept player funds segregated from operating funds. The rake is plenty to fund player acquisition through advertising and sign-up bonuses. For sites with low player traffic and new on the scene, be very careful.
- Vegas Poker Seats to Decline: Already, many poker rooms in Las Vegas struggle to keep players in the seats most of the time as the rush to exploit the poker boom has created a glut of poker in Las Vegas. Look for several poker rooms to close including one of the new big ones by the end of 2007. Best guess for candidates would include Caesar’s and Mandalay Bay.
- Hello Thailand: Look for a chunk of top young online players to move to places like Thailand or other low-cost locales. They don’t make their cash from low-stakes fish like us, and it’s hard to see all of these big players between the ages of 18-25 just drying up.
- Short-Term Chaos: The sky is falling everywhere, with players panicking about getting their money out of different places. 2+2 has threads on Neteller, as well as a whole host of issues on this. Neteller has new terms and conditions, basically stating that you can’t use the site for illegal activities. Lee Jones at PokerStars has a reassuring response on 2+2, including: “Your money is completely safe at PokerStars. It’s kept in a segregated account at one of the largest banks in Europe. You do, and will, have 24/7 access to your account funds. You will always be able to get to your money. We have not made a decision one way or another as regards closing our American accounts.”
For serious players, this is a blow to the gut of huge proportions. For the masses like us, I’m assuming the coming months will be about seeing how all this pans out and what happens next. I for one will get in some play today. If I win, then it means that there is no problem in the online poker world. If I have a losing session, then it may be a sign that there are serious problems afoot:). More later.