Copyright 2004 Sunday Business Group
November 7, 2004
HEADLINE: POKER WEBSITES RING CHANGES TO RAKE
BYLINE: Ben Wright
The new super-casinos are not the only force
changing the face of UK gambling.
The popularity of online
poker around the world has increased hugely since
the first websites were set up in the late 1990s and there are
now roughly 200 poker sites in operation.
Although estimates as to the size of the online
poker market vary, Sportingbet, the world's largest
online betting group, which has just bought ParadisePoker.com,
believes that an average of 37,675 people play
online poker for real money every day.
The popularity of poker, already the most
played card game in the world, has increased significantly over
the past three years with the advent of television shows such
as the World Poker Tour, Celebrity Poker Club and Late Night Poker.
These programmes, which use cameras under the table to show the
players' cards allowing viewers to follow the action, have drawn
thousands of new players to the game.
poker sites have provided a ready and convenient
forum for these new players to chance their hand at the game without
having to go through the rigmarole of joining and travelling to
The exotic cyber-locations of the games may
be fake - often appearing complete with digital palm trees, cigarette
smoke and cocktails - but the actual location of the site operators
are no less bizarre. ParadisePoker.com operates from Costa Rica
and is licensed in the Kahnawake Mohawk reserve near Montreal
This elaborate set up allows the sites to
attract American gamblers, who comprise about 75% of all online
poker players, despite the fact that gambling in
most US states, even over the internet, is illegal. The US authorities
have tried to make it more difficult for Americans to bet online
on overseas sites, but some of the restrictions it imposes were
recently overturned by the Caribbean island of Antigua at the
World Trade Organisation. A liberalisation of the US gambling
restrictions would prove a huge boon to online operators.
sites typically offer continuous availability of
active tables for general play, known as "ring games",
and also tournament play on both a single-table and multi-table
The sites earn their money by taking a small
percentage of the winner's pot, which is known as the rake. In
tournament play, each player pays an entry fee and a single jackpot
is awarded to the winner instead of the rake.
poker operator therefore has no principal risk as
it acts only as the host of the poker
games and takes its rake and tournament entry fees
regardless of which players win or lose.
The market is believed to be worth approximately
$ 1.2bn (£648m, E948m) to $ 1.5bn based on the daily rake
earned by all the different sites. This has mushroomed from last
year when the daily rake was about $ 400m in August 2003.
But poker only represents a fraction of all
the betting that takes place online. Turnover for Sportingbet
in the 16 months to the end of July this year was £1.4bn
and it now accepts more than eight bets every second of every
The company offers bets on 56 different football leagues from
the UK Premiership to the Czech Division One.
This steady revolution in the way that punters
place their bets is the real threat to the bricks-and-mortar bookies
rather than the new super-casinos that will be created by the
UK's gaming bill. Investors in the shares of online gambling sites
are clearly no mugs.
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