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Online Poker Vs.
Offline Poker
No one knows for sure where poker originated from. Some
say it was possibly derived from Chinese dominoes. Others
claim that it came from "As Nas", a seventeenth
century Persian game played using special decks of twenty-five
cards with five suits. Others swear it was based on the
French game of "Poque" a card game played by the
French who settled in New Orleans in 1480. However, all
of these theories remain debatable today.
The origins of online poker however, began as a computer
game and software. Online poker then began to evolve and
adapt to the ever-changing technology that supported it.
In 1998, online poker history witnessed the very first online
poker room. And for a very short period of time, Planet
Poker became the first to capitalize on this new idea and
became the first company to offer online poker to players.
Since then, online poker has spread like wildfire and we
soon saw online poker providers such as VC Poker, Doyle’s
Room, Poker Spot, Party Poker and Blue Square Poker emerge
to claim their place in online poker history.
Compared to traditional or "brick and mortar"
poker venues or casinos, one obvious difference is that
online poker players do not sit right across from each other,
removing any ability to observe other player’s reactions
and body language. Instead, online poker players learn to
focus more keenly on betting patterns, reaction time and
other behavioral tells that are not physical in nature.
Since both traditional poker and online poker is a game
that requires adaptability, successful online players learn
to master and adapt to their new surroundings by playing
more online poker games. Online poker is also a great way
for novices to hone their skills.
On the business side, putting up an online poker room may
be a wiser business venture for most gaming companies than
a traditional poker room. Brick and mortar casinos often
find that the rake or time charge is often very high and
the overhead costs of running a poker room even higher.
In fact, casinos make more money by removing poker rooms
and adding more slot machines. Brick and mortar casinos
are also reticent to promote poker because it is very difficult
for them to profit from the activity. But that isn’t
the case with online poker. Online poker venues, by contrast,
are dramatically cheaper because they have much smaller
overhead costs than their offline counterparts. For example,
adding another table to an online poker room does not take
up valuable space like it would for a brick and mortar casino.
The major online poker sites offer varying features, but
one common feature is to offer tournaments called satellites
by which the online poker winners gain entry to real-life
poker tournaments. Another key factor that continues to
entice new online poker players is that online poker rooms
allow the players to play for very low stakes (as low as
1¢) and often offer freeroll tournaments where online
poker players can enter tournaments for free. Another less
obvious difference is the rate of play in online poker rooms
vs their brick and mortar counterparts. In brick and mortar
poker rooms the dealer has to collect the cards, then shuffle
and deal them after every hand. Due to this and other delays
common in offline poker rooms, the average rate of play
is around thirty hands per hour. Online poker rooms, however,
do not have these delays and the rate of play is made faster
due to "auto-action" buttons. So it is not uncommon
for an online poker table to average sixty to eighty hands
per hour with online poker players playing multiple tables
at one time. This large difference in rate of play allows
an online poker player to increase and even double his earnings.
Another important difference results from the fact that
online poker rooms, in some cases, offer online poker schools
or tutorials that teach the basics and significantly speed
up the learning curve for novices. Many online poker rooms
also provide free money play so that online poker players
may practice their skills in various online poker games
without the risk of losing real money. People who previously
had no way to learn and improve their game now have the
ability to learn the game much more quickly and gain invaluable
experience from play money games offered on online poker
rooms.
But for years, Internet gambling and online poker has seen
strong opposition from those most threatened by gambling
sites: legal American casinos. The American Gaming Association,
a trade group of gaming firms, maintains this view regarding
online poker and online wagering: "The industry has
been state-regulated and we think it should remain that
way. The Internet is presently unregulated and we support
a federal law regulating Internet gambling." But their
fears may be unsubstantiated. According to Bill Eadington,
professor of gaming issues at the University of Nevada,
“Online gambling and online poker has not affected
Nevada's casinos. Their revenue has remained consistent
and online gambling and online poker has not had a significant
impact on the gaming industry in Nevada." So the casinos
can rest easy. The trend clearly seems in favor of more
online poker rooms, more players, and continuing legal uncertainties
in a market that is undergoing rapid growth.
Online Poker Comes Of Age
In the late nineties, the world saw the crash of the mighty
dot-com. One by one internet-based companies folded as a
result of huge losses, and downsized their operations. But
despite the losses, online gaming sites and more specifically
online poker rooms, continued to flourish and grow with
the advent of new technologies, faster internet connections
and a steady influx of new online poker players everyday.
And in 2003, online poker suddenly sky-rocketed beyond expectations
and gained worldwide attention, all because of a $40 buy-in
made by Chris Moneymaker for a satellite event at an online
poker room. From there, he practically soared all the way
through the World Series of Poker, landing first place and
a cool $2.5 mil. Chris Moneymaker is known in online poker
history as the man who placed the whole online poker industry
on the map.
In 2004, a total of 2,600 players competed for the 5 million
grand prize in the World Series of Poker. It broke the record
of the 800-player turn-out in 2003. Online poker records
show that almost half of the participants in the World Series
of Poker gained their entries through online poker satellite
tournaments. The 2005 WSOP came and with it, a whopping
6,000 registrants! As a feather in the industry’s
cap, the champion was once again an online poker player,
Greg Raymer.
Huge turn-outs to major poker tournaments enhanced the
online poker industry’s credibility. The general public
soon saw former unknowns like 2003 Poker Champion Chris
Moneymaker elevated to celebrity status after his meteoric
rise to fame. Soon after that online poker satellite tournaments
became commonplace and are now more popular than ever. The
trend suggests growing interest and involvement in online
poker fed by a general surge in the popularity of poker
in general.
Online Poker And The Media
Another important reason for the rapid growth of online
poker is the increasing number of successful TV shows featuring
poker. There are many examples of successful poker TV programming,
among them the World Series of Poker on ESPN, Celebrity
Poker on Bravo, and the European Poker Tour on Eurosport.
Programmers discovered that their viewers love the excitement
of watching live poker on TV, and that in turn stimulates
even more interest in online poker.
And it’s not just the average Joe that’s tuning
in. Even Hollywood has embraced the online poker phenomenon
with great fervor. Media hungry socialite Paris Hilton and
her sidekicks can be seen playing the game. Even heartthrobs
like Leonardo Dicaprio and Tobey Maguire seem eager to join
the online poker bandwagon. Most of these stars however,
started out by playing online poker or play online poker
to improve their game. Last year actor, producer, director,
writer and Oscar winner Ben Affleck added another title
to his long list - that of Poker Champion when he
won $356,400 at a poker tournament. His win earned him a
seat in next year's World Poker Tour Championship next April.
But the most astounding celebrity win came from an Oscar
nominated actress known more for playing risqué and
stereotypical ditsy, busty girl roles. Actress Jennifer
Tilly won the Ladies no-limit Texas Hold ’Em event
at the World Series of Poker — the first time a celebrity
has won an event at the famous tournament.
Tilly’s skillful play earned her a cool $158,625
and a championship bracelet. She beat 600 top female professional
poker players to capture first place. Tilly, 46, said she’s
learned plenty of pointers from her boyfriend, online poker
and professional poker player Phil “Unabomber”
Laak.
The demand for online poker on TV is so great that ESPN’s
22-part series last year was viewed by an average of more
than 1.5 million households — a 42% increase from
the network’s 2003 seven-part series. According to
Gary Thompson, director of tournament operations, “Last
year the World Series of Poker had higher ratings than everything
on ESPN except the NFL and NASCAR”. He also added
that he “will expect to see even higher ratings this
year because of the greater size of the purse ($7.5 million
to be exact and a championship bracelet), the greater number
of players and the momentum the game has built.”
The trend points to an increase in online poker and poker
related programs on US TV stations which, is partially influenced
by the media and the entertainment business’ budding
interest and extensive promotion of the sport. Soon, as
many predicted, it won’t be long till ESPN and others
Sports TV stations start broadcasting poker tournaments
20-hours a day. But till then the rest of the online poker-mad
universe will have to wait.
Online Poker Growth
The growth of the online poker industry is staggering.
According to the World Poker Exchange, 39% of those playing
are logging in for an online poker game more than 5 times
a month. It has also been reported that over one third of
online poker players are female with women being the fastest
growing segment of the online poker playing public. Now
imagine those percentages by the millions. For the online
poker industry overall, "Total revenue for online poker
among all companies was already a healthy $92 million in
2002, but then online poker revenues exploded, surpassing
$1 billion just two years later, according to Christiansen
Capital Advisors L.L.C., a consulting firm in New Gloucester,
Me., that specializes in advising gambling companies. In
the case of PartyGaming (PRTY), the parent company of the
largest online poker room went public on the London Stock
Exchange, achieving a market value in excess of $10 billion
dollars within a week of its initial public offering. At
the time of the IPO, 92% of income came from online poker
operations.
Not long after PartyGaming went public, Betonsports.com
(BSSBSS), which began as an Internet sports bookmaker, launched
a poker product, and is also listed on the London Stock
Exchange. Cryptologic (CRYP), a Canadian company that provides
much of the online poker software currently being used,
already trades on the Nasdaq.
Nowadays, these online poker operations have become global
in scope, reaching gamblers and online poker players even
in countries where all forms of betting are banned. While
the majority of the revenue sources for most online poker
sites come mainly from the United States with a growing
audience in the UK, other areas specifically in Asia and
in Central and Southern Europe have online poker markets
that remain untapped. This has not only sparked the interest
of major online poker rooms but also has them seeing profits
in Euros.
While the online poker community continues to enjoy a steady
and very healthy growth, some aspects of the game seem uncertain,
with many questioning both online poker’s security
and legality. But the trend strongly suggests that for online
poker companies to continue to thrive in a saturated market,
online poker providers must be ready to expand geographically
and tap new markets especially in Europe. And it seems online
poker companies like PartyPoker and the likes are quick
to respond.
Online Poker Legal Issues
Technically, it is still illegal in the United States to
gamble on the Internet. This has led many online gaming
and online poker providers to host their businesses outside
the US. Online poker however, is legal and regulated in
many countries including the United Kingdom and several
nations in and around the Caribbean Sea. In Asia, Hong Kong
seems to be the only country making a move to criminalize
Internet gambling and online poker games.
But as legislators worldwide are learning, trying to put
a stop to these new, unregulated online poker businesses
isn't easy when anyone who can get access to a modem and
a computer can take a seat at the online poker table. And
although online poker and internet gambling still accounts
for only a small percentage of the global gaming market
- online gamblers and online poker players spend $1.25 out
of every $100 wagered worldwide, according to Britain's
Global Betting & Gaming Consultants - it has already
dramatically changed the rules of the game and how online
poker companies do business. Estimates vary widely, but
today from $1.5 billion to $2.3 billion is spent on internet
gambling and online poker, in a $290 billion global gaming
market. "It's completely revolutionized the marketplace,"
says Warwick Bartlett, founder of Global Betting & Gaming
Consultants. "It's changing the ways bookmakers operate.
It's caused governments to look at their taxation policy,
recognizing the challenge from offshore."
In Britain, lawmakers backtracked on imposing a betting
duty on wagers in an effort to lure back online gambling
and online poker companies after some of the country's biggest
moneymakers moved their operations to tax havens such as
Gibraltar and Costa Rica.
But the US isn’t looking back on reversing its decision
to ban online gaming and online poker despite the fact that
Nevada legislators went ahead and legalized online casinos
and online poker games in their state earlier this year.
According to William Lerner of the Prudential Equity Group,
he doubts the US will change their position any time soon
and that pressure from the World Trade Organization would
not convince them otherwise. “With current technology,
it would appear to be very difficult to regulate that business
online. We've seen the US government pressure financial
institutions to stop facilitating transactions and that
hasn't really helped.” But he adds that there will
likely be continued proliferation of online gambling and
online poker providers from offshore-based companies.
The ban, based on a 1961 federal law originally designed
to cover telephone bets, has been the target of the World
Trade Organization (WTO). The WTO case was brought by the
Caribbean state of Antigua and Barbuda, host to many of
the online poker and online gaming casinos. The WTO ruled
in favor of Antigua but the US has promised that it will
appeal the decision. It has been a growing trend for “conservative”
nations like the US and Hong Kong to spearhead the creation
of legislation against online gambling on the basis of morality
issues, but with various organizations like the WTO vowing
to challenge them the legal status of online poker remains
a question mark.
Online Poker Security
Another growing concern is security. Online poker venues
may be more vulnerable to certain types of fraud, especially
collusion between players. However, online poker rooms also
have collusion detection abilities that do not exist in
brick and mortar casinos. For example, online poker room
security employees can look at the “hand history”
of the cards previously played by any player on the site.
Online poker rooms also check the player’s IP addresses
in order to screen out any foul play. But no system, no
matter how advanced, is perfect, and there are always people
who will try to cheat at online poker. But as far as online
poker security trends go, the task of strictly implementing
current monitoring systems and finding better security systems
is left to the online poker providers themselves, and this
trend will probably continue.
Online Poker Payment Systems
The emergence of Poker Spot in mid 2000 was significant
in more ways than one. Poker Spot became the first online
poker room to offer online poker tournaments. Unfortunately,
the firm was unable to give the online poker players their
winnings. Owner Dutch Boyd, a popular poker player, claimed
that his company was unable to collect player deposits from
its credit card processing firm. The players’ money
was not in the system. Because of that incident, companies
offering e-cash surfaced, Neteller in particular.
Today, online poker players’ options are usually
limited to credit cards, bank drafts or online payment services
such as NetTeller and Paypal. But even companies like Paypal
have had to limit their areas of coverage. In 2002, the
company was under attack by email scams proliferated by
online criminals aiming to harvest PayPal account numbers,
passwords and credit card data from unsuspecting users of
their online service. Paypal has since taken certain measures
to protect its clients.
But Paypal wasn’t alone, major credit card companies
Visa and Mastercard made the headlines when they reported
that a hacker was able to successfully gain access to more
than 5 million Visa and Mastercard credit card accounts
in the US. Both companies immediately took action to limit
damages and alerted the affected banks. Although more and
more credit card companies are refusing to process payments
to online gambling sites as they don't want to be seen breaking
US law.
Normally most online poker sites have some form of in-house
security or monitoring system in place. With growing cases
of fraud every month, current online poker trends pointt
towards the implementation of added security measures for
most online poker room transactions using encryption algorithms
from 3rd party online security firms like Verisign or Thawte.
Online Poker Robots
Another incident worth mentioning is that players may use
‘bots’ to cheat on online poker games. Last
July, six programmers converged on Binion's, a downtown
casino and birthplace of the World Series of Poker, lured
by a winner-take-all prize of $100,000 offered by GoldenPalace.com.
The challenge was to create the best software to “aid”
the online poker players. After three days, PokerProbot,
written by Hilton Givens of Indiana, emerged victorious,
outlasting Catfish, a program written by Brian Edwards of
Florida.
But the question that seems to be in everyone’s minds
is: Why would a company that runs online poker games sponsor
a tournament using methods that many online poker players
consider shady? Steve Baker, a spokesman for GoldenPalace.com,
said it would be naive to think that people wouldn't use
poker bots anyway -- with or without such promotion. "I
don't think this will change what happens," he said.
Baker said the event might actually help online poker sites
find ways to protect their customers.
While the trends lean toward online poker websites banning
the use of software that assists in playing or making decisions
for a player, such rules are difficult to enforce. However,
the online poker industry is exploring ways to step up enforcement.
The Future of Online Poker
Even when faced with all these factors, new and advanced
online poker players alike are not deterred from playing
and enjoying the game with literally millions logging on
everyday. Most market analysts seem to agree, online poker
is the product that seems to be the current guarantor of
future growth. What began as a triumphant advance in the
US is now leading to a global online poker wave with tremendous
potential.
When it comes to geographical expansion, analysts agree
that Europe seems to be the place to go; 52% of the experts
believe that Europe offers the greatest future potential
for online poker. Market leader PartyPoker, for example,
is planning to launch its presence on television throughout
Europe very soon and already operates its site in German.
As evidence of this ever-growing trend, the amount gambled
on online poker websites around the world is estimated to
be more than $60 billion for 2005. The online poker playing
public is hungry for more and online poker providers are
more than willing to respond. These numbers alone have lead
to the birth of numerous new online poker companies. It
won’t be long, industry experts predict, till we see
major players like Microsoft getting a piece of the action.
One of Microsoft’s (MSFT) less-publicized adventures
is Ninemsn, an Australia-based Internet service to which
Bill Gates has pledged tens of millions of dollars with
partner Australian tycoon Kerry Packer of the Crown Casino
in Victoria. That partnership leads many observers to believe
that an online poker room or online casino - using Microsoft
platforms, of course - is reportedly in the works.
But questions threaten to darken the future of online poker:
How long will it stay on top? Are we looking at a similar
dot-com crash scenario - a case of too much too fast?
According to researchandmarkets.com, 60% of the industry
experts surveyed believe that online poker will be the dominant
offer in online gambling in 2-3 years. It is likely to reach
its peak of maturity by that time.
But this study also points out that the online poker market
will become a tougher market in the future. With decreasing
revenues per active player and growing competition, online
poker operators will have to find successful strategies
for the future. Industry insiders recommend that the most
important strategies for the future is the creation of online
poker networks, the entry into the market by more betting
brands such as Ladbrokes, and the consolidation of online
poker sites. We might also see other online forms of gambling
like slots, baccarat and roulette gain more popularity and
eventually share the same spotlight with online poker.
In conclusion, the online poker business trend is straight
up. This is an industry that is definitely booming and growing
bigger with each day. Thanks to a seemingly endless flood
of new online poker converts, emerging new technologies
and a surge of new online poker rooms competing to offer
more engaging online poker experiences, the future of online
poker seems bright… for now.
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