Are Online Gambling Games Good For The Poker Industry?

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Thursday, October 16th, 2014 | Written by Stephen Smith

Although online poker has always been regarded as a useful means of attracting new players to gambling sites and encouraging them to wager their funds on a variety of ‘house games,’ poker purists have often espoused the virtues of keeping the game of skill separate from casino-style games. Up to recently, however, while the majority of poker sites have continued to offer other gambling options, the industry leader PokerStars proudly kept its offering to poker only.

Following Canadian company Amaya Gaming’s purchase of the Rational Group (owners of PokerStars and Full Tilt Poker) for $4.9 billion, that has all changed and PokerStars has already rolled out its initial installment of gambling games in the guise of its Spin & Go tournaments. Naturally, this move has not sat at all well with many players and enthusiasts in the poker community, who have questioned the benefits of introducing lottery style poker games to online poker sites and, indeed, casino gambling games in general.

Good for online gambling operators

Without a doubt, online gambling games are set to have a profound effect on PokerStars‘ balance sheet, and whereas presently the site is limited to a worldwide online poker market worth $4 billion a year, by introducing casino games into its gambling mix Amaya Gaming’ will gain further access to a $25 billion market, and a future roll out of PokerStars’ sportsbook in 2015 will open the business up to yet another potential market worth $17 billion.

Good for players

Aside from benefiting the business, Amaya Gaming also insist the move stands to benefit the poker playing population by boosting traffic, providing a safe environment for players to gamble on casino games, whilst also allowing gamblers to earn loyalty points across a single online platform. Commenting on the subject, David Baazov from OnlinePokerReport, said:

“We believe there are important benefits from regulating online gaming operations [including] protecting consumer funds, ensuring game integrity, combating collusion fraud and money laundering, and ensuring responsible gaming processes are in place.”

The PPA would seem to agree

The Poker Players Alliance (PPA) would seem to agree that online gambling games are good for the poker industry, and recently the organization’s executive director John Pappas signaled he was only prepared to support a ‘Restoration of America´s Wire Act’ (RAWA) banning all forms of online gambling games if it included a poker carve-out legalizing online poker on a federal level. Otherwise, Pappas has acknowledged that online poker would have a hard time surviving in its present form with individual US states deciding whether or not to permit regulation. As Pappas explains:

“If there was a bill that banned online casino games but legalized online poker at the federal level, we would support that all day long.. [otherwise] We as a poker community need to recognize that the success of poker often is built on other forms of gaming. If you cut off all other games in the US market, investment and interest would shrink considerably.”

Online poker just 20% of US iGaming revenues

Lending further credence to his claim is the fact that since regulation was introduced to the US, online poker has accounted for a mere 20% of total iGaming revenues, with even those revenues generated falling far below initial pre-regulation forecasts. Online poker in New Jersey, for instance, generates roughly $120 million in annual revenues, whereas in Nevada that figure drops to $12 million, and in Delaware to a paltry $3 million, for combined iPoker revenues of $135 million per year.

Many regular players not happy

Despite the persuasive arguments for introducing gambling games, many regular players in the poker community seem far from pleased over the development, not least a legion of PokerStars regulars who have complained about the site’s new Spin & Go tournaments which they say narrows the skill gap separating poker regulars from recreational players, with the variance Spin & Go’s create subsequently making it almost impossible to beat the game over the “long run.”

While regulars have been airing their opposition to such games, however, the format have proved incredibly successful since they were first introduced across a number of sites and networks, including Winamax France (Expresso), iPoker (Twister), Full Tilt (Jackpot Sit & Gos), and now PokerStars (Spin & Gos).

In fact, their popularity has proven such a boost to revenues that in Italy the online gambling market reported higher revenues from poker tournaments than from cash games for the first time since regulation started. Therefore, similar formats are only likely to gain further traction in the future, and commenting on what that means for the industry, PokerStars’ top sponsored pro Daniel Negreanu, explained:

“I love, love, love, and love this concept and if it helps to level the playing field a little bit, while allowing rec players to stretch their dollars a bit further than before, I think in the end that is a win for everyone- even the winning players who are upset about it now.”