UbiSoftologist
Member
According to Barron's, an authoritative financial magazine on Wall Street, the answer is:
Online poker.
If Barron's is correct, T2's deal with WPT Enterprises will be lucrative in the foreseeable future. (For discussion of the T2-WPT alliance, please go to this thread: http://forums.gaming-age.com/showthread.php?t=36195)
The following is an excerpt from the article ''Full House'' published in the latest weekend edition of Barron's:
Online poker.
If Barron's is correct, T2's deal with WPT Enterprises will be lucrative in the foreseeable future. (For discussion of the T2-WPT alliance, please go to this thread: http://forums.gaming-age.com/showthread.php?t=36195)
The following is an excerpt from the article ''Full House'' published in the latest weekend edition of Barron's:
AMERICANS HAVE FALLEN in love with poker -- around the kitchen table, on television and now, inevitably, on the Internet. Fueled by the public's newfound fascination and the success of televised tournaments like the World Series of Poker, online poker has become one of the biggest, hottest, most lucrative games in the global gaming business.
Consider the numbers: More than 200 online poker sites collectively are generating about $2 billion a year in revenues, equal to 40% of last year's $5 billion in gambling revenues from all of the Las Vegas "Strip". An estimated 1.7 million players are active online, meaning they've played in the past six months. And about 150,000 people play on an average day, according to PokerPulse.com, which tracks the online poker market. Americans are thought to account for more than 70% of all players.
Nearly all online poker companies are privately held, which means financial data are hard to come by. The top six sites, which control about 75% of the market, may boast operating profit margins of around 60%. The economics of a successful poker site are compelling, because the operator takes a cut of each pot, called a rake, or, in the case of increasingly popular online tournaments, an entry fee. The rake -- 2% to 5% of the pot, or the total amount of bets in a single game -- typically ranges from 50 cents to a maximum of $3. Tournament entry fees range from $1 to $20 per person.
Unlike casino gambling, in which players bet against the house, online poker players gamble with one another, just as in the home games played by millions of Americans. The poker site provides a virtual table for play, a random-number generator to deal the cards, an accounting system to track winnings and a carefully monitored chat feature that allows players to communicate with one another -- but not to discuss their hands.
The industry's low-risk business model is eBay-like in its power and simplicity, and puts bricks-and-mortar gambling ventures to shame. Whereas Steve Wynn, chairman of Wynn Resorts, is spending $2.7 billion to erect yet another pile of glamorous bricks and mortar in Vegas -- Wynn Las Vegas is slated to open in April -- an online poker company needs nothing but a Website. PokerStars, the No. 2 site, took in about $37,000 in entry fees from a single tournament Feb. 13. In contrast, a poker table in a casino might generate $60 to $70 per hour in revenues, and that's before labor and overhead.
The growth of online poker has been explosive. Industry revenues have doubled in the past year, and are up more than tenfold in the past two years. The number of players tripled in 12 months, and continues to grow by about 10% a month, says Dennis Boyko, who runs the PokerPulse site.
Is this a fad? Time will tell, but it hasn't paid yet to bet against the growth of the gambling industry. "The poker market around the world is colossal," says Nigel Payne, chief executive of Sportingbet, a British online-gambling company that owns Paradise Poker, the No. 3 poker site. "We believe there are 100 million poker players worldwide today, and only about 1% of them play online. You don't have to be a rocket scientist to see there is the potential for very significant growth online, indeed."
An estimated 60 million to 80 million Americans play poker, and the game is growing in popularity in Europe.
The online poker industry was born about five years ago, but didn't take off until the summer of 2003, when an unknown but aptly named player, Chris Moneymaker, won the World Series of Poker in Las Vegas, taking a $2.5 million prize, after qualifying for the tournament on PokerStars. ESPN televised the event, which became an unexpected ratings hit......
......Thanks to TV broadcasts of the World Series of Poker, Celebrity Poker and the World Poker Tour, millions of Americans now are playing Texas Hold'em, the most popular game among poker pros, and on poker Websites. In Texas Hold'em, players initially get two cards face down, and then form their best hands based on five subsequent community cards. What's more, certain poker phrases are entering the vernacular, including going "all in," or betting all your chips.
Online poker is popular among college students and has a strong following on Wall Street, where analysts and traders often play at the end of the work day or at home. Most players are believed to be men, between the ages of 18 and 45. Poker pros such as Phil Hellmuth, Annie Duke and Scotty Nguyen, meanwhile, have become celebrities.
Skillful poker players often can win big money, especially in online games where many novices play. This contrasts with casino games such as blackjack and craps, in which it's tough to beat the house. "In blackjack, you bet before you see the cards," says New Yorker Jack Lau, a regular online-poker player. "In poker, you bet after you see the cards. That's a big difference."
Online poker also is less intimidating than casino poker games, which often draw hard-core and mathematically astute gamblers.
Successful online players try to gauge opponents' betting patterns, and seek to play the odds by calculating whether it pays to play out a hand or fold. Poker sites say they have sophisticated software to identify players who are colluding or using "bots," special software to guide their betting. Such players are banished from the games.
Size increasingly is important for a poker site, because much of the industry's growth has come from tournaments. They allow players to bet $1 to $600 and go up against as few as four or as many as 5,000 players. The prizes are large and the playing field is level. Each tournament entrant puts up the same amount of money and starts with an equal number of chips, so deep-pocketed players don't get an edge. Once a player loses all the chips, he or she is out of the tournament.......
......UNLESS A CARD PLAYER can count cards in black-jack, it's nearly impossible to beat the house over the long run at a casino. The beauty of poker, however, is that a good player consistently can make money, especially in cyberspace, where there are beginners and outright bad players waiting to be fleeced.
That's why many skilled poker players have been drawn to the Internet. "Poker is paying my rent," says Aaron Pzena, a 22-year-old Washington D.C.-area resident who has played online since he was a student at the University of Michigan.
"The ESPN broadcasts of the World Series of Poker turned it into a phenomenon," he says. "Everyone wants to play now."
Indeed, Texas Hold'em, a deceptively simple game, is popular now among high-school boys who play in their parents' homes on weekends. Pzena suspects many high-school kids are using their parents' credit cards to play online and test their mettle.
Some skilled online poker players prefer continuous games, while others like tournaments. Pzena prefers small tournaments of five to 10 players. "In a tournament of five or six people, there are probably two players who don't know what they're doing," he says. Consequently, he usually can win money in small games......
......Jack Lau, a New Yorker who plays online, tells friends good poker play involves work, and isn't fun. "I'm taking money from people who are having a blast," he says. Many online players will play for eight hours at a stretch, and others are so hooked that they'll play three or four games simultaneously in multiple windows on their computers.......
Lau says it's a challenge to win money at poker games at casinos in Atlantic City and elsewhere. "Those players generally are good," he notes. "Many have been at the table for seven hours already when you sit down. You need a streak of luck to beat seven good players."
It's easier, he says, to do well online. No wonder the industry is booming.
