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Copyright 2005 Research and Markets

December 27, 2005

HEADLINE:
Online Poker – Driving Gambling To New Heights

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Body:
Detailed industry report includes results of a survey conducted among industry experts featuring gambling’s hottest topic.

Gambling reinvents itself constantly, and online poker is the product that seems to be the current guarantor of future growth. Online poker is the perfect symbiosis of two mega trends in gambling: online gambling and poker. What began as triumphant advance in the US is now leading to a global poker wave on the Internet with tremendous potential.

- The amount gambled on poker websites around the world is estimated to be more than USD 60 billion for 2005.
- More than 60% of the industry experts surveyed believe that online poker will be the dominant offer in online gambling in 2-3 years.
- 75% of the industry experts surveyed believe that the global annual rake/commission in the 2-3 years will be more than USD 4 billion.

An 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 coverage, among them the World Series of Poker on ESPN, Celebrity Poker on Bravo, and the European Poker Tour on Eurosport.

Online poker has also gone up in the estimation of the global business and financial community. Betting heavyweight Sportingbet just recently bought poker site Paradise Poker for about USD 300 million -not a bad price for a site launched in 1999, but more than 53% of the experts surveyed believe this price to be appropriate.

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, the poker operators have to find successful strategies for the future. The industry insiders surveyed recommend as the most important strategies for the future the creation of poker networks, the entry into the market by more betting brands such as Ladbrokes, and the consolidation of poker sites.

When it comes to geographical expansion, 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 one other language besides English –German.

Contents

1 Executive summary

2 Online poker –Symbiosis of the two current mega trends: online gambling and poker
2.1 One of the most talked about phenomena in the gambling industry
2.2 Poker as part of the growing online gambling market
2.3 The poker boom
2.4 What makes online poker so successful –Major success factors

3 The growing online poker market
3.1 Market size and revenues
- Amounts wagered and revenues made
- Forecast for 2005
- Top geographical regions

3.2 Who are the poker players?
- Demographics and motivation

3.3 Business model of poker sites
- Revenue streams
- Cost elements

3.4 Elements of good poker sites
3.5 Managing business risks specific to online poker

4 Overview of relevant online poker sites
4.1 Most important criteria for evaluating poker sites
4.2 Evaluation and analysis of leading online poker sites
4.3 Case Study –Paradise Poker
4.4 Kahnawake/Canada –Home of online poker sites

5 Entertainment and poker –The perfect match
5.1 Poker –The new star in movies and on TV
- Examples of successful Poker TV coverage

5.2 Good Entertainment needs stars and heroes –Poker can provide plenty of both

6 Software providers
6.1 Market situation and business model
6.2 The most important factors in evaluating online poker software
6.3 Overview of major software suppliers

7 Future development
7.1 Growth estimates
7.2 Successful strategies for the future
7.3 Networks
7.4 Big brands moving into the online poker market
7.5 Acquisition, mergers, and consolidation –Where to grow?
- Multiples of the Sportingbet/Paradise Poker deal

7.6 Europe –Liberalization and increasing media coverage
7.7 Asia –Billions of potential users, gambling mania, and an increasing Internet penetration
7.8 Alternative investment opportunities –Participating in the poker boom

8 Recommendations
8.1 Recommendations for existing online poker operators
8.2 Recommendations for potential new market entrants such as state lotteries and media companies
8.3 Recommendations for financial investors

9 Methodology

10 Appendix

List of Exhibits

Exhibit 1: Online poker’s continuous growth potential and expected dominance of online gambling offers –Results of survey
Exhibit 2: Gross win development by sales channels –Example
Exhibit 3: Broadband penetration in major countries world wide in 2004
Exhibit 4: Major success factors of online poker -Results of survey
Exhibit 5: Forecast of rake and number of active online players for 2005
Exhibit 6: Regions with top potential for online poker -Results of survey
Exhibit 7: Poker players according to gender in the US and the UK
Exhibit 8: Reasons to play online poker
Exhibit 9: Rake/commission structure and tournament fee –Example
Exhibit 10: Revenue and average revenue per active player (2001-2004) –Example
Exhibit 11: Most important elements/characteristics of a good poker site -Results of survey
Exhibit 12: Number of poker sites used by the average player -Results of survey among online poker players
Exhibit 13: Minimum number of registered users for a good poker site -Results of survey
Exhibit 14: The most successful marketing tools for online poker sites -Results of survey and survey of online poker players
Exhibit 15: Examples of print advertising and sponsoring of online poker sites
Exhibit 16: The biggest online poker sites
Exhibit 17: Evaluation of the largest online poker sites
Exhibit 18: Example of online poker user experience
Exhibit 19: Active players of Paradise Poker (2001-2004)
Exhibit 20: Revenue and operating profit of Paradise Poker (2001-2004)
Exhibit 21: Selection of TV coverage of Poker in January 2005
Exhibit 22: The most popular TV poker shows -Survey of poker players
Exhibit 23: Poker-playing Hollywood celebrities
Exhibit 24: The most relevant factors in evaluating online poker software -Results of survey
Exhibit 25: Global annual commission revenue (rake) in 2-3 years -Results of survey
Exhibit 26: Successful strategies/market players in the future -Results of survey
Exhibit 27: Was the price Sportingbetpaid for Paradise Poker justified? Results of survey
Exhibit 28: Key multiples of the Sportingbet/Paradise Poker deal
Exhibit 29: A fully liberalized European gambling market by 2009? Results of survey
Exhibit 30: Internet access in China -2000-2004
Exhibit 31: Example of customer support experience
Exhibit 32: Example of customer support and trust issues
Exhibit 33: Overview of participants of survey

Companies Mentioned

- American Gaming Association
- Anheuser-Busch
- Apex Poker Network
- Bellagio Casino
- BetandWin
- Betfair
- Boss Media
- Bravo Network
- Cassava Enterprises
- Challenge TV
- eBay
- Empire Poker
- ESPN
- European Poker Tour
- Eurosport
- FHM
- GAT
- Golden Palace
- Harrah´s
- IGGBA
- IGlobalMedia/Partygaming
- International Poker Federation
- InterPoker.tv
- IntertopsPoker
- KahnawakeGaming Commission
- Ladbrokes Poker
- Merrill Lynch
- Microgaming
- Pacific Poker
- Paradise Poker
- PartyPoker
- Pizza Hut
- Playtech
- Poker Rook
- PokerStars
- PricewaterhouseCoopers
- Random Logic
- Sportingbet
- Sunset & Vine
- Travel Channel
- TribecaTables
- Ultimate Bet
- Victor Chandler
- WagerLogic
- WagerWorks
- World Poker Tour
- World Series of Poker
- Yahoo

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