The Biggest Thing There Ever Was

15 July 2005

A trip to Las Vegas is never without fodder for an article or two. Last week I bounced for two days between the World Series of Poker at the Rio and the Bodog Poker and Sports Marketing Conference at Mandalay Bay, and it was overwhelmingly clear that not even the Southern Nevada sun in the July is hotter in Las Vegas than poker.

"[Internet poker] is attracting and expanding the overall player base around the world. It has been nothing but a gift."

- Kelley O'Hara
- Bicycle Casino

Listening to industry reps assess, dissect, predict and analyze the poker biz on day one of the Bodog conference provided quite a glimpse of just how big it has become. Of course, one could have drawn the same conclusion in a matter of seconds by stepping into the poker Mecca that's been erected in the Rio convention center.

More on the Rio scene in a moment, but let's start with the impetus : the proliferation of Internet poker. It is abundantly clear that everybody wants a piece of what Bodog CEO Calvin Ayre estimates to be a $3 billion industry, and it's likewise apparent that major U.S. entertainment companies would climb over each other for a chance to run an online poker room if it wasn't for the legal risks.

Sans the DOJ's stance on Internet gambling, the online poker space would be swarmed in the U.S. business world like Tom Cruise at a psychiatry convention. But as long as the risks are there, the potential beneficiaries will have to remain on the periphery benefiting in any way they can.

That's precisely what Bicycle Casino, the famous California card room, is doing, and its director of marketing, Kelley O'Hara, put it all out on the table at the Bodog powwow, where she spoke of the tremendous upside to developing a synergy among the three major poker channels: television, the Internet and land-based poker rooms.

While some in the terrestrial gambling world are still leery of the threat Internet poker poses on their businesses, O'Hara has nothing but praise for the online game and what it has done for the industry as a whole.

"[Internet poker] is attracting and expanding the overall player base around the world," O'Hara said. "It has been nothing but a gift."

Each of the three channels can play an important role in the synergistic relationship, and the Internet, she said, is the "perfect private tutor"--an ideal setting for learning the game and honing one's skills.

No one expects the Bicycle operation to launch a real-money Internet poker room in the near future, but the company has nonetheless ventured into the Internet space. Its relatively new free-play online poker room has helped draw people to the land-based casino by giving potential customers a means of familiarizing themselves with the Bicycle environment and, more importantly, creating new players by offering educational tools.

Further, they have launched "Live at the Bike," an Internet-based streamed program showing live poker action at the Bike every Wednesday and Saturday from 6 p.m. to 10 p.m.

According to O'Hara, the Web site gets over 1 million hits a month, and Bicycle has partnered with the likes of Bodog, PokerStars and other online poker rooms to merge the online and offline poker worlds--a relationship that should pay of for all parties.

The World Series of Poker has seen the light too. (How could they not?) Backers of the tournament have had the delicate task of opening the flood gates to a swelling sea of Internet players while appeasing the brass at Harrah's and ESPN, who need to stay at arm's length from online gambling.

If [attendance] gets to 10,000, we'll accommodate them."

- Matt Savage
- WSOP Tournament Director

No official statistics for how players qualify for the event are available, but the tournament's director, Matt Savage (also on hand to address the Bodog delegates) estimates that between 3,000 and 4,000 online qualifiers took seats at the main event, which has grown from having 631 players in 2002 to 839 in '03, 2,476 in '04 and 6,600 as of the close of entries this year.

The Internet and television have no doubt been catalysts, and Savage said he'll be prepared next year for another growth spurt.

"If it gets to 10,000," he said, "we'll accommodate them."

The Big Picture for I-Gaming

Sebastian Sinclair, an analyst with Christiansen Capital Advisors in New York, points out that while the effect Internet gambling has had on poker has been phenomenal, the same can be said for the effect poker has had on Internet gambling. Sinclair, who has followed the industry for the better part of a decade, scaled back his estimates for the first time in 2002 when the dot com bubble burst and U.S. banks collectively stopped handling I-gaming transactions. But the poker boom has revitalized the industry.

Sinclair projects that online gambling will draw $11.9 billion in revenues this year, a 31 percent increase over $8.2 billion in 2004 (the largest increase percentage-wise since the turn of the decade), and the number will approach the $25 billion mark by 2010. He even suggested that last month's PartyPoker Float on the London Stock Exchange marks the beginning of this decade's version of the Internet boom in the '90s.

Dot Not?

That brings us to the major increases of late in ad spending, which serves as a measuring stick for how much the industry is growing. While no one was watching, online gambling sprouted into a top 30 advertising category in the United States. I haven't beheld any official statistics on I-gaming ad spend recently, but I spoke to several publishers while in Las Vegas and all of them are enjoying a resurgence in ad sales. (Have you noticed lately that a new consumer gambling pub is being born every other day?) For the moment, at least, the lean years appear to be behind them.

Even the mainstream pubs that previously treated I-gaming like the plague are catching the wave, and the about-face (following the DOJ advertising crackdown of 2003) can be summed up in two words: "Dot Net." Amazingly, the crucial bridge joining Internet gambling with the mainstream entertainment world in the United States rests on the replacement of three letters typed into a Web browser (from ".com" to ".net"). Virtually all of the major online poker sites (and all I-gaming sites, for that matter) have free-play ".net" sister sites that are free to advertise throughout the mainstream media. In doing this, the industry has found a way to reach the masses unimpeded by the U.S. Department of Justice.

That's the good news, but here's where my skepticism gets the best of me. I don't believe for a second that the DOJ will sit back and watch it happen. At some point, a U.S. attorney somewhere will draw the conclusion that advertising the dot nets "might" be illegal, and the subsequent threats will be made to mainstream media outlets, who will be very thankful for the window of dot-net opportunity, but equally as eager to drop the suddenly piping hot potato.

So, although we would all like to see a major TV network or mainstream magazine stand up to the government, it continues to be abundantly clear that the burden rests on the shoulders of industry publications.

As the government employs its well developed dodging techniques in the stalling Casino City case, the industry waits for the next media outlet to step up, and if the opportunity presents itself, the challenge could be assumed by Card Player Magazine. Allyn Jaffrey Shulman, the counsel for the publication and the wife of publisher Barry Shulman, declared while speaking on a legal panel at the Bodog conference that Card Player will engage in a lawsuit if the government goes after them. Jaffrey also believes there will be 10 more years of inaction on Capitol Hill in regards to I-gaming legislation.

The Main Event

"They won't let me wear a shirt with logos."

- Anonymous WSOP Entrant

The presence of Internet poker at the World Series of Poker was astounding, and it started with the new WSOP expo adjacent to the gaming floor. Attendees were well acclimated with the I-gaming world before even setting foot in the exhibit hall, from the entrance hallway of Bodog (lined with easel after easel) to the giant Full Tilt mural at the entranceway. Inside, after getting past the mammoth Bodog and PartyPoker booths in front, they had the run of dot-net paradise (not to be confused with paradise dot-net): gaming pubs (mostly online) affiliates, poker networks, and agencies as far as the eye could see. It was a perfectly brilliant way for the WSOP to tap into the bottomless Internet poker well that has fueled the tournament's emergence.

The online poker parade continued inside the tournament room, at every table and up and down every aisle. In terms of getting a thorough overview, I was fortunate enough to be there on day 2 of the main event, which meant I was in the presence of quite a large portion of the 6,000-plus field and an equally impressive gathering of spectators.

In a very unscientific survey (using the "general observation" methodology) I surmised that PokerStars had the most t-shirt and hat coverage again, with the likes of Pacific, Paradise, Party and Full Tilt not far behind. The most eye-catching attire, was the red-and-black Full Tilt gear. I also saw tons of logos for virtual poker rooms that I had previously never heard of.

The rule for what flies promotion-wise at the tables appears to be that you can wear what you want until you make it to ESPN's main table. (Whether this is official I don't know.) I arrived at the main stage (after an exhausting trek through hoards of star-struck poker groupies) just in time to overhear a conversation between a player getting ready to join the main table and an "entrepreneur" working his angles on the perimeter, and it went something like this:

Player: They say I can't enter unless I wear a different shirt, but this is the only one I've got.

Entrepreneur: Why can't you wear the one you've got?

Player: Because of the logos.

Entrepreneur: I've got plenty of shirts. Wear one of these.

Player: Thanks, but your shirts have logos too.

Entrepreneur: I'll give you $300 if you wear one of these.

Player: They won't let me wear a shirt with logos.

Entrepreneur: $500.

Player: They won't let me wear a shirt with logos.

Etc. etc. . . .

The logo checkpoint is a disappointing reality for online poker rooms whose qualifiers make it to the main table, but not all is lost, for the event has grown so big that just having your logo out there (anywhere on the floor, regardless of whether it gets on TV) has significant value. Case in point: A woman who qualified through a very prominent online poker room (which I'll refrain from naming) told me that they offered to add $1,000 to her account just for wearing a t-shirt with their logo while playing. It didn't matter how long she kept it on. Nor did it matter whether it got on TV.

A final note on the attire: I'd say at least 10 percent of the spectators in attendance were outfitted by Bluff Magazine, whose publishers and promoters came to the Rio with $6,000 t-shirts to give away and were down to 2,000 after one day. They clearly set out to make a splash, and it looks like they succeeded.

Thoughts in Closing

Overcome by claustrophobia, I didn't spend a whole lot of time at the tables, but I got a really good taste of what this event has become, and it was truly impressive. More than anything, the idea that WSOP is the product of the synergy Bicycle's O'Hara referred to at the Bodog conference was reaffirmed.

And as those in the online gambling industry await the next barrage of threats from the Department of Justice and the next push for prohibition in Washington, they can be assured that the U.S. government is now tasked with stopping a freight train. We all know that policymakers and justice officials have more important things to tackle than coming down on I-gaming, and the momentum the industry has gained in the last two years has me wondering just how long they can continue to do so.

Related Links Poker and Sports Marketing Conference 2005