Online Pokers Complementary Effect On Offline Gambling Market, US Market was worth $1.2 billion - Poker News

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Online Pokers Complementary Effect On Offline Gambling Market, US Market was worth $1.2 billion

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03-22-2012 , 05:31 AM

Daveshoelace

journeyman

Join Date: Mar 2008 Posts: 354

A report from PokerStrategy.com, which among other things reveals the US market was worth $1.2 billion, and North Americans paid $981 million in online rake in 2010.

We all know that online poker rooms, and bricks and mortar casinos, work alongside each other all the time, you only have to look at the success of something like the European Poker Tour to see the mutually beneficial relationship between the two entities. But does online poker actually take revenue away from offline casinos, and vice versa?

Kahlil Simeon Philander of the University of Nevada and Ingo Fiedler of the University of Hamburg have worked together on a research paper which gives evidence that it does not. Their paper, "Online Poker in North America: Empirical Evidence on its Complementary Effect on the Offline Gambling Market" is the first of its kind to provide evidence that online poker does not harm offline gambling revenues, but in fact increased them.

Online poker and offline gambling complement each other
Previous literature has suggested that online poker is a gross substitute for offline gambling, meaning they compete with each other for the same revenue. This paper provides evidence that online poker and offline gambling are actually gross compliments (Please note the paper compared online poker to all offline gambling, not just offline poker, because of certain limitations of the study):

"The results are surprising: overall, online poker and offline gaming do not compete for an identical market and cannibalize each other’s revenue. Rather, we found a small but significant positive relationship between those variables. This indicates that the markets reinforce each other and the goods are gross complements and not gross substitutes."

"Depending on the model, we found that in a market with an additional $1 million in casino revenue, we would predict an additional $2.7 thousand in online poker revenue. That means that the larger the online poker market, the larger the offline gambling market and vice versa. On the other hands that means that a reduced online poker market has a negative effect on the size of the offline gaming industry."

Online poker is a $3.6 billion industry
The study also provides the most accurate estimates to date of the size of the online poker market in 2010, particularly in the US & Canada. The overall online poker market in 2010 was estimated to be worth $3.6 billion, with the US market estimated at being worth $1.2 billion.

This was at a relatively stable time in the US poker market, just prior to Black Friday. The findings from the Online Poker Database of the University of Hamburg in 2009 suggested that 1,429,943 Americans (0.46% population) played online poker, and paid an estimated $981 million in rake.

The same study found that 307,000 Canadians played online poker and paid around $220 million in rake. Although this figure is noticeably smaller than in the US for obvious reasons, it is interesting to note that this equates to 0.9% of the population of Canada. This is double the percentage of the population playing online poker in the US, which is no doubt a result of the fact online poker is not legally restricted in Canada.

This evidence clearly has huge implications for a potentially regulated online poker market in the US, as legalised poker would surely result in these 2010 figures increasing significantly. Legal US online poker would, of course, lead to significantly more tax revenue, but the paper is also keen to point out the potential drawbacks:

"While the complementary effect appears to be positive for these offline and online operators, it leads to the common double-edged sword for regulators. In support of legalization is the incentive to accrue the benefits of tax revenue on this product as well as increased taxes on offline gaming. Conversely, legalization leads to higher availability of this product and a larger market size, which may lead to more gambling problems."

Here at PokerStrategy.com we think these findings are very important for not just the US online poker market, but the poker industry as a whole, as it is clear that online poker and offline gambling have a mutually benefical effect on each other. We would love to get your thoughts on this topic in our discussion forum.

Read the whole study

Source:

http://www.pokerstrategy.com/news/wo...-Market_57798/

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03-22-2012 , 05:41 AM

Jack&MarkGetBusy!

grinder

Join Date: Apr 2011 Posts: 566

inb4 copyright infringement

not a bad read though, nothing mind blowing either.

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03-22-2012 , 05:44 AM

Daveshoelace

journeyman

Join Date: Mar 2008 Posts: 354

Quote:

Originally Posted by Jack&MarkGetBusy!

inb4 copyright infringement

not a bad read though, nothing mind blowing either.

Its ok, there is permission from the source.

I thought the $981 million in rake was the most pertinent thing, even though that's probably what we thought anyway, its good to have it clarified.

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03-22-2012 , 05:50 AM

Morph3us

adept

Join Date: Aug 2011 Posts: 799

News like this can never hurt but to me it's just common sense.

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03-22-2012 , 10:39 AM

iosys

old hand

Join Date: Sep 2011 Posts: 1,753

I don't know if it really is common sense, I find it surprising that online poker actually helps offline-gambling, kudos to the people that probably pushed the doj to act before researching if it's true that they are losing business.

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03-22-2012 , 11:25 AM

gimmepilotwings

centurion

Join Date: Feb 2012 Posts: 105

Quote:

Originally Posted by iosys

I don't find it very surprising at all. Online poker supplies probably 4/5 of the satellite entries (my figure) into B&M tourneys. There are only so many that B&M S&G's that can be run. People also want to take the money and talents that they learned online (cash) and translate that to the casinos.

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03-22-2012 , 12:45 PM

DonkeyQuixote

veteran

Join Date: Jan 2009 Posts: 3,283

Quote:

Originally Posted by iosys

A young bull and an old bull were standing on a hill overlooking a pasture below. There were 20 or so cows grazing around the pasture. The young bull turned to the old bull and said, "You know what we should do ? We should run down there as fast as we can, each grab the nearest cow and f**k the living hell out of her."

The old bull shook his head, and replied, "No, you know what we should do ? Let's get DOJ to first prosecute the current US-facing poker operators, then we can walk down there, and f**k them all"

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03-22-2012 , 01:36 PM

LastLife

Pooh-Bah

Join Date: Feb 2007 Posts: 4,593

Quote:

Originally Posted by Morph3us

News like this can never hurt but to me it's just common sense.

It's not common sense to lotteries, tribes, or racetracks, who have all said at one time or another that ipoker would hurt their business.

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03-22-2012 , 01:39 PM

LOLRussians

old hand

Join Date: Oct 2011 Posts: 1,381

Quote:

Originally Posted by LastLife

It's not common sense to lotteries, tribes, or racetracks, who have all said at one time or another that ipoker would hurt their business.

Definately!

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03-22-2012 , 02:32 PM

#10

mag8500

journeyman

Join Date: Oct 2008 Posts: 291

I think the most interesting part of the study is that Canada has double the percentage of their population playing online poker than the U.S. One could assume the U.S. market would double once regulation is put into place.

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03-22-2012 , 03:36 PM

#11

Daveshoelace

journeyman

Join Date: Mar 2008 Posts: 354

Quote:

Originally Posted by mag8500

Or more, when you consider the rich history and sense of identity America has with poker.

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03-22-2012 , 04:15 PM

#12

3BetBroke

banned

Join Date: Oct 2011 Posts: 1,494

we really like to gambo

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03-22-2012 , 07:57 PM

#13

b finkelstein

banned

Join Date: Oct 2011 Posts: 667

Quote:

Originally Posted by DonkeyQuixote

lolololol

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03-23-2012 , 05:49 AM

#14

acesholdup

old hand

Join Date: Oct 2009 Posts: 1,390

Quote:

Originally Posted by iosys

Ivey doesn't shoot craps like he used to (neither do I for that matter).

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03-23-2012 , 05:39 PM

#15

3BetBroke

banned

Join Date: Oct 2011 Posts: 1,494

Quote:

Originally Posted by DonkeyQuixote

loool

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03-23-2012 , 08:04 PM

#16

IamPro

one time Plz???

Join Date: Jan 2009 Posts: 17,652

Quote:

Originally Posted by DonkeyQuixote

amazing

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