Industry News
Major Online Gaming Sites Continue to Grow During October, Nielsen Reports
At exactly the same time that U.S. President W. Bush signed the restrictive Unlawful Internet Gambling Enforcement Act (UIGEA) into law.
These Web sites have "yet to feel the pinch" of this new legislation, and many industry analysts speculate that there are ways to "circumvent these restrictions" and continue to "do good business," Nielsen said in its report. The growing firms include Bodog.com, FullTiltPoker.com, and AbsolutePoker.com, Nielsen said. Bodog's sales increased by four percent last month; FullTiltPoker's revenues surged by 42 percent during the same period; and AbsolutePoker's sales were up by two percent. A two percent monthly growth rate would translate to a 24 percent annual sales surge, experts noted.
More Gambling Online than Casinos
According to Nielsen, a total of 8.1 percent of American adults online gamble on the Web, compared with 6.9 percent of Americans who gamble on site at a casino. Online gambling is most popular among households with lower incomes. Those with an annual income between $25,000 and $35,000 are over 25 percent more likely to engage in online gambling than the average Web user, the study said. By contrast, those with an annual household income of over $150,000 are 22 percent less likely than the average Web user to gamble online. Speculation is growing that use of Canadian or U.K.-based credit cards will grow among Americans -- so they can continue to frequent their favorite online sites and circumvent the restrictions.
Research by Professor William Eadington of the Institute for the Study of Gambling and Commercial Gaming indicates that publicly traded companies from the U.K., and Gibraltar, have emerged as "very significant players" in the online gaming business and this has increased integrity and trust levels in the industry amongst consumers.
"Sites have benefited from becoming a legal, regulated industry," said Eadington. "There have been a number of publicly traded companies in the UK, Gibraltar or Malta who have a level of confidence with players especially around Internet poker and sports wagering."
Thousands of Sites
Though no one really knows for sure just how many individuals are gambling online, Eadington uses Party Gaming as an example of the potential of online gaming public companies. When the company went public over a year ago its value was estimated around $10 billion, the same capitalization as MGM or Harrah. Party Gaming earned $1.5 billion primarily from Internet poker. And that's just one company. There are thousands of online gaming sites around the world, he said.
With major sites running as businesses listed on stock exchanges around the world, many gamblers see them as very trustworthy.
Eadington says the U.S. law against processing gaming transaction is "unenforceable" since almost all of the online gambling industry is located overseas, outside of the limited U.S. jurisdiction.
"It's very reminiscent of prohibition in the 1920s," said Eadington. "Ultimately we will see legal Internet gambling. And part of it is just consumer demand, and what technology brings us."
Table 1: Web Traffic Trend to Popular Online Gambling Destinations
Site Oct-05 Sep-06 Oct-06 10/05-10/06 09/06-10/06
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Bodog.com 500* 649 678* 36% 4%
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FullTiltPoker.com 302* 439 623 106% 42%
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Absolute Poker N/A 510 520 N/A 2%
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Source: Nielsen/NetTraffic for OnlineCasinoCrawler.com
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