Death of the 'Big 4'

[MicroBob]

Just like smaller poker-rooms in the US (in California or anywhere else) you don't need THAT many players tobe profitable.


I am guessing that if Party somehow got 95% of all online-poker players to come to their site (which seems pretty ridiculous to me) that Stars or Paradise could still be profitable even with only 1,000 players on during their peak hours.

When I signed up at Stars in Feb,2003 (my first site) I thought it was really cool that they had up to 1500 players on during weekend-evening hours. Although I don't know if they were profitable during this start-up time or not.

[Billman]

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My prediction is that if the US ever allows online poker, everybody but Party is gone within 6 - 12 months.

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I can't even begin to understand why would you would think this.

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I thought I touched on it in my post but I'll speak to it directly. Look to your right and note the crappy ads (InterPoker is a perfect example). Some of these guys can't even invest the $5000 it might take to design some really slick ads. Those PokerStars commercials look like they had a production budget of around $75 plus another $50 to buy the crew lunch.

Now, let's imagine the US lightens up on online gaming restrictions and Hilton, MGM, etc. all decide to get into online poker. These guys spend $75 million on a water fountain! Rake revenues are expected to reach approx. $4 billion within the next few years. That's a nice sized market that would justify throwing a few hundred million at. Now, on top of that you have the fact that most of these casinos actually know a thing or two about how to treat customers and I think the stage is set for a major shake-up with the victors being those with the deepest pockets.

Somebody mentioned that only someone capable of running SuperBowl ads would be able to upset Party, well . . . these guys have that kind of money.

Plus, as soon as the US allows online poker those very same casinos will be writing their congressmen checks to get laws passed that regulate the industry so as to keep others out. These guys operating offshore will probably not be able to operate, legally, in the US and the US casinos will promote that fact heavily. For every 10 people I talk to who like poker but haven't tried it online, 7 mention that it's because they don't know if they can trust the casino.

[LSUfan1]

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What money? Mike who?

Thank you,

Jim Kuhn
Catfish4u
[img]/images/graemlins/spade.gif[/img] [img]/images/graemlins/diamond.gif[/img] [img]/images/graemlins/club.gif[/img] [img]/images/graemlins/heart.gif[/img]

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Really, I'd trust Kaz to hold the money. [img]/images/graemlins/smirk.gif[/img]

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Who wouldn't, have you seen his post count.

Sorry Granny, I still think he is the biggest prick around!

[Billman]

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Just like smaller poker-rooms in the US (in California or anywhere else) you don't need THAT many players tobe profitable.

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Bob, I hear you but there's a difference between being profitable and being relevent. Maybe you could be profitable with 1000 players. You're probably not going to get rich though. If the total market size is 1 million players and you have a 1000 players . . . you're the small fish.

The other thing which was touched on in another post was the taxes. Yes, taxes suck but if it were legal the market size would double or triple (at a minimum) which would probably make up for the tax burden. Also, once it's legal it's easier for the US to demand tax payments from the offshore companies. I'm sure the US government's position will be that if you transact with a US citizen you pay US taxes on that revenue. Regardless, while being completely tax free would be nirvana, I would still much rather pay taxes on $4 billion than no taxes on nothing.

Bottom line, here are the advantages US b&m's have:

1. It's legal. They can advertise on prime-time television. They already have name brand recognition far exceeding that of any online poker room (including Party) and they'll use that as a way to build trust with consumers worried about getting ripped off or sending money to some company operating out of a small shack in Costa Rica.

2. They have very, very deep pockets. In addition to being able to saturate the media with advertising they also have the advantage of being able to drop the rake (or offer cash-back awards) in order to cut the revenues of their offshore competitors. Think about it in terms of the WalMart effect; they undercut your prices and outspend you in advertising. You either respond with your own advertising which lowers your profits, lower your rake to match theirs which lowers your profits, or do both which for most competitors ends up just speeding up the inevitable. Hilton Hotels can afford to bleed companies like Paradise into submission. Maybe not Party but Party certainly won't be the industry 800lb gorilla any more and may actually have to do things like . . . innovate (gasp!).

[_And1_]

innovate .. that s a good one.. [img]/images/graemlins/grin.gif[/img]

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When I signed up at Stars in Feb,2003 (my first site) I thought it was really cool that they had up to 1500 players on during weekend-evening hours. Although I don't know if they were profitable during this start-up time or not.

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I m pretty sure this is the case. Why? couse a room that is part of a network, having x players and x players on every night making money in the bundles.. even thou they pay network fee, have exetensive marketing and so on..

The market here in sweden is fascinating. All major tv shows on commercial tvs are sponsored by pokerrooms (multipoker (party), expekt (prima), unibet (b2b), betsson (pokerroom) and so on.. (its pretty rediculus really).

The major commercial tv stations all have several poker/casino shows each week. It's gettin out of hand really...