Online Poker Lagging Behind Casino Games in UK

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Thursday, December 14th, 2017 | Written by Charles Washington

The UK online gambling industry has flourished following its liberalization and the many promotions and marketing innovations that have been introduced by iGaming operators in order to better penetrate the lucrative market. While the online gambling industry is booming as a whole, online poker revenues, on the other hand, continue to shrink with the segment now worth just 5% of the country’s $3.5 billion industry.

Online Poker Decline

A recent report by the UK Gambling Commission (UKGC) covering April 2016 to March 2017 reveals that the online poker industry generated around $136 million over the 12 month period, compared to $2.2 billion from online slots, and $2.5 billion from sports betting.

In total, the total gross gambling yield (GGY) covering the period of $3.5 billion meant that online poker was responsible for just over 5% of overall GGY. Furthermore, while the UK online gambling industry posted a 10.1% year-on-year GGY increase, the stats show that online poker is continuing to decline in the country, with online gamblers opting for more entertaining gambling choices, like sports betting and online slots.

PokerStars Expected a Global Online Poker Decline

PokerStars, the world’s largest online poker website, controls around 60% of the international online poker market. However, the company decided several years ago to diversify their product offerings away from just poker rather than depend entirely on the game to be the driving force behinds the company’s revenue.

PokerStars then began offering online casino games and sports betting services, which has proven to be an excellent decision by the company. They did this by cross-selling their online services, and promoting their online casino and sports betting offers to their extensive database of poker players, thus allowing players to switch between games if they got bored or needed a change.

Interestingly, The Stars Group (TSG), which owns PokerStars, reported that its third quarter performance was similar to that mentioned in the UKGC study. According to The Stars Group for the third quarter ending in September, revenues from online poker increased by 12.5% to $221.4 million, and while this certainly looks good, online casino and sports betting revenue were up by a combined 48% across the same quarter.

Need For Innovation

Online poker operators such as PartyPoker and 888Poker, may have had success pushing their online poker products, but smaller operators are having are lot harder time competing and staying relevant. In fact, key to any of their future success will be the need to innovate their online poker tournament formats and events in order to draw in more poker players.

The UKGC report also indicates that UK online poker players prefer to play games with a high emphasis on fun rather than games that involve a great deal of skill. This suggests that online poker operators within the UK would do well to introduce events based more around chance and featuring large jackpots.

UK Market Microcosm

The UKGC report and the third quarter results from PokerStars show online poker is continuing to decline, while sports betting and online casino gambling is on the rise. There are bound to be optimists that dismiss the data as being information from just one country and one online poker operator. However, the UK is home to one of the world’s largest and most successful regulated online gambling markets, while PokerStars is the main online poker operator in the world. This means that the data from these sources offers a very useful insight into what may happen to the global online poker industry in the near future.

According to this trend, online poker revenues will likely stagnate across global markets, with gaming regulators having to find ever more creative ways in which to boost the sector. European regulators across Italy, Spain, Portugal, and France are already moving ahead with plans to share online poker liquidity to address the issue of their individual struggling markets. It’s going to be interesting to see what other changes may be implemented going forward in order to make online poker keep up with online casino games and sports betting.

Finally, the UK government takes social responsibility committments made by the operators working within the country’s gambling sector very seriously, and as UKGC Executive Director Tim Miller, stated after the recent report was released:

“These latest figures show that the gambling market is continuing to grow, particularly in the online sector. However, with such growth comes a great responsibility for operators to prevent gambling-related harm to all consumers and the public. We would urge all gambling businesses to be acutely aware that as their market grows so too will our focus on ensuring that consumers are protected.”