Games
Online Poker
Poker is one of the world's most popular card games. Whilst the exact origin of poker remains a point of debate, what is not in doubt is that it has been around in various forms for decades, if not centuries.
The popularity of poker has increased substantially in recent years due to several factors, including the televising of high value tournaments such as the World Series of Poker and the World Poker Tour. As well as large prize tournaments, many of which are widely broadcast on television channels around the world, the growth in the popularity of poker has also been fuelled by the strong growth in online poker in many countries and also by the investment by many land-based casino operators in large poker rooms.
According to The Economist¹, "there are an estimated 60-80m regular [poker] players in America and perhaps 80-100m elsewhere." The continued growth in broadband penetration and the popularity of the internet as a gaming medium have combined to deliver strong growth in the number of people playing poker online, the total amount wagered and the total amount of revenue captured by online operators. Global Betting and Gaming Consultants estimates that approximately $3.0 billion of global gross gaming yield was generated from online poker in 2007 (if the US is excluded from this figure the total falls to $1.7 billion - an indication that despite the enactment of the UIGEA, the online poker market in the US is still a large and valuable market). This represents an increase of 114% compared with the $1.4 billion that was estimated to have been generated in 2004.
Whilst poker remains smaller in absolute terms than sports betting and casino, it has been one of the online gaming sector's fastest growing segments in recent years. The shifting regulatory and legislative landscape around the world means that predicting future growth rates is challenging. Whilst it is expected that the historic hyper rates of growth seen in online poker since 2000 will continue to trend to more modest levels, excluding the US, GBGC estimates that the online poker segment will still grow at a CAGR of over 13% per annum between 2007 and 2012, compared with 150% per annum between 2003 and 2006.
Success in online poker
The historic high rates of growth and high margins in online poker initially attracted a large number of online poker operators into the market. However, the Group believes that long-term success requires a number of important attributes:
Player liquidity - players want to be able to find games offering the stakes they want to play for and with plenty of other players to make it interesting. Player liquidity is therefore an important factor in attracting and retaining customers.
Marketing expertise - Being able to attract and retain players is critical for long-term success. Whilst historically, television advertising has proven to be one of the most effective routes for attracting new players, restrictions on television advertising for online gaming in certain territories requires operators to develop other marketing channels as well as invest in new, alternative and innovative marketing strategies.
Quality of product - Having attracted a player to the site, being able to offer a quality product is also important. Software needs to be constantly updated and improved in order to maintain players' interest through the addition of new games and features, to keep pace with changing consumer tastes and to stay ahead of the competition.
Payment processing expertise - People want to be able to deposit and withdraw funds quickly and safely. This instils trust and confidence and is a vital part of the overall player experience. By making a number of different options available, an operator can cater for players' differing payment needs as well as ensure that payment processing options remain competitively priced.
Excellent customer service - If a customer encounters a problem or has a query with the service being provided, the online consumer of today expects to be able to contact someone at a personal level, either via email or phone to address the issue in a timely way. The global nature of the online gaming market means that being able to provide 24-hour support in a variety of different languages is becoming increasingly important.
¹ The Economist, 22 December 2007
Market statistics supplied by Global Betting and Gaming Consultants - May 2008
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