|
The Rise
of Online Poker
While poker
has been played
for nearly 200
years, the online
version of the
game is a recent
phenomenon. Online
poker has boomed
in the past couple
of years, and it
has forever
changed the face
of poker.
Other types of
online gambling
sites were
launched
significantly
before the first
online poker room.
Online sports
books sprouted in
the mid 90's. The
mid 90's also
witnessed the
launch of online
casinos. For
example,
Microgaming, a
major online
casino software
supplier,
developed its
first operational
online casino in
1994.
It
was not until 1998
that the first
online poker room
was established.
Planet Poker,
which has since
become a
relatively small
poker room,
enjoyed the status
as the sole online
poker firm for a
short period of
time. While Planet
Poker has since
been overtaken by
many other online
poker rooms, the
initial rake
structure it set,
5% up to a $3 max
rake, has been
mirrored by other
poker rooms. So
while the industry
has drastically
changed since
1998, the rake
structure has
remained fairly
constant.
Other online poker
rooms soon entered
the fray. Paradise
Poker was
established in
1999 and would
soon become the
industry leader.
During this
initial period of
entry, the
infamous case of
Poker Spot
occurred. Poker
Spot was an online
poker firm founded
by Dutch Boyd, a
successful poker
player.
Poker Spot was
launched in May
2000. In September
of that year, it
would become the
first online poker
room to offer
tournaments.
However, troubles
soon plagued Poker
Spot. According to
Dutch Boyd, it was
unable to collect
player deposits
from its credit
card processing
firm. Essentially,
all of the money
players deposited
and played with
was not in the
system, so Poker
Spot was unable to
pay its players
their winnings.
The firm soon went
under.2
An
incident like the
Poker Spot case
has so far not
been repeated by
any major online
poker room. This
is largely the
result of the
emergence of
e-cash. In
particular,
Neteller has
become the
dominant funds
transfer service
for the online
poker industry.
Neteller has
appeal for both
users and online
poker firms. For
users, it allows
them to deposit at
a poker room
without a credit
card or wire
transfer, and it
also allows the
user to generally
receive quicker
withdrawals. The
online poker rooms
like Neteller
because it
decreases fraud
and has relatively
modest fees for
them.
It
was not until 2001
that the two most
dominant online
poker firms
entered the
industry. Poker
Stars became a
popular
destination
because of its
tournaments, and
Party Poker made a
splash in the
industry.
Poker steadily
gained popularity
and the industry
continued to grow.
Paradise remained
the dominant firm
in the industry
until 2003, when
Party Poker
launched its
television
advertising
campaign. Party's
advertising
campaign during
the World Poker
Tour, and its
launch of the
Party Poker
Million were very
successful
marketing moves
that quickly
catapulted the
poker network to
the top.
Currently, the
network represents
roughly half of
the entire online
poker market.3
While Party
Poker was spending
millions on
marketing, one
man's $40 buy-in
truly put the
entire industry on
the map. Chris
Moneymaker's
Cinderella story
of winning the
World Series of
Poker was the type
of advertising the
online poker
industry could
once only dream
about.
Moneymaker
qualified for the
World Series of
Poker main event
through a small
buy-in satellite
event at Poker
Stars. At the
WSOP, he outlasted
a field of 839
entrants, the
largest in World
Series of Poker
history at the
time. He pitted
heads against some
of the most
well-known poker
professionals in
the world.
Moneymaker's first
place finish
earned him $2.5
million, which is
not bad
considering it was
his first live
tournament.
Online poker
exploded in 2004.
The increasing
popularity of the
poker and the "Moneymaker
effect" resulted
in even more play
at the virtual
tables. Because of
this, the
industry's
revenues more than
tripled.4 The
industry also saw
even more entry,
with new firms
such as Full Tilt
Poker and Noble
Poker.
Now
it seems that the
major online poker
firms may soon
become public
companies.
Paradise Poker was
purchased by
Sportingbet, a
publicly traded
online sportsbook,
in October of 2004
for $297.5
million.
Currently, other
online poker firms
are considering
becoming publicly
traded firms.
Party Poker,
Empire Poker, and
Pacific Poker are
all potential
candidates for a
public offering.
There have
also been recent
developments in
the legal arena.
The United Kingdom
recently passed a
bill that allows
for the licensing
and regulation of
online gambling
firms. Whether
these online poker
rooms soon make
the UK their
official home,
instead of
Gibralter or the
Kahnawake Mohawk
tribe, remains to
be seen.
|
