The popularity of poker and playing it online has been widely talked about, written about and assessed by market analysts. New magazines, television programmes and channels have been launched. Online gaming operators, mainly on their poker play figures, have taken or are considering taking the IPO route to the Stock Exchange. The poker fashion, craze, fad has hit countless headlines in the media over the last months, and now questions are being raised about whether the popularity of poker is declining.

Ten weeks after PartyGaming became London’s biggest floatation for years and a candidate for the FTSE 100 index, the company saw US$3.7 billion wiped off its value yesterday. A statement from the company that figures since July had only shown 4% growth caused widespread losses to share value in the online gambling sector, and may cause problems to future online casino floatation prospects. PartyGaming’s sudden 33% downturn will make institutional investors wary of putting pension fund money into online gambling, with the ghost of the .com bubble apparently present at the feast.

Not very long ago many analysts were forecasting that online poker could double in size this year and continue with a steep growth curve for several more years. PartyGaming is highly exposed to the vagaries of the US market, as the vast majority of its players are Americans, and a delay in televising this year’s World Series of Poker tournament is apparently taking its toll. The holiday period starting with the Independence Day celebrations on 4 July probably can account for some loss in revenue and drop in the yield per player per day, as can the recent events that have had Americans glued to their televisions, back-to-school expenses and rising fuel costs.

If the poker bubble has burst then more businesses than online poker will feel a cold wind. Sector publications, television programming and all the new poker rooms at casinos may find their client numbers dwindling. A fashion by its very nature is transient but online gaming is far from down and out. Figures from July can indicate a trend but longer-term results will be needed before it can be judged whether the market knee-jerk reaction yesterday was justified. On the face of it, PartyGaming remains good value with interim results for operating profits showing a 76% rise to US$258 million.

All indications so far are that online gambling operations will continue to grow. In the future poker may revert to being just one of many games on offer, but online gambling globally is in its infancy and the market is immense. Growth may adjust from being astronomic to a less glamorous and newsworthy steady, but it is more likely that the US legalizes online gaming than that the industry folds. (E-09.07.05)

© Copyright 2005 CasinoCompendium



>>> return to archives
>>> return to frontpage