Bwin.party digital entertainment Plc and other U.K.-based companies offering online poker have yet to see significant gains from last month’s U.S. Justice Department crackdown on rival Internet gambling companies, according to company executives and industry analysts.
Founders of Pokerstars, Full Tilt Poker and Absolute Poker were among 11 people charged by the U.S. on April 15 with offenses including bank fraud, money laundering and illegal gambling. Bwin’s shares soared 30 percent on the first trading day after the announcement as investors speculated it would gain players who would have previously tried for higher-stakes games with U.S. competitors.
“There was huge excitement in the market; a lot of the problems in poker have been due to PokerStars,” said James Hollins, an online betting-industry analyst with Evolution Group. “But they’ve spent the past few years recycling a huge amount of the U.S. money in Europe, and the returns have been enormous. They’ve still got lots and lots of money, and a fair bit of brand power.”
PokerStars lost 29 percent of its players after it had to stop offering online poker to Americans, and Full Tilt Poker decreased 36 percent, comparing May 8-14 with April 1-14, according to PokerScout, a Las Vegas-based website that monitors poker traffic.
Still, Bwin.party’s PartyPoker site only gained 1 percent, and its Ongame system lost 10 percent. Microgaming, a system used by Ladbrokes Plc (LAD), lost 5 percent, and 888 Holdings Plc’s poker site increased 3 percent, PokerScout said.
PokerStars and Full Tilt Poker remain overwhelmingly the world’s biggest Internet poker sites, though world poker traffic is down 16 percent over the same period a year earlier, according to PokerScout.
Bwin.party executives said it had an “encouraging” 33 percent gain in average daily new player signups in April’s second half over the first.
“We think it represents a meaningful, albeit small, first step towards returning our poker business to growth,” Co-Chief Executive Jim Ryan told analysts May 6. He said it was too early to assess the full impact, as PokerStars and Full Tilt still have a “formidable presence” in Europe.
PokerStars and Full Tilt are still so big, players know they can get the game of their choice at the stakes they want at any time, according to Dan Stewart, owner of PokerScout.
“PokerStars has a $1 million guaranteed tournament,” he said. “PartyPoker can’t match that kind of turnout.”
PokerScout data on May 20 showed PokerStars had more than six times as many online cash players as PartyPoker, the third- biggest poker site. Full Tilt had almost three times as many.
The Internet poker market was $5.1 billion last year, 7.1 percent higher than 2009, according to U.K.-based H2 Gambling Capital, which supplies data on the industry. The global online gambling market now is about $30 billion.
The indictment and a related civil complaint filed by U.S. Attorney Preet Bharara’s office seek at least $3 billion in money laundering penalties and forfeiture from the poker companies and the defendants.
“Those figures would put a significant dent into their ability to fund such aggressive marketing,” said Gavin Kelleher, an online gambling analyst for Dublin-based Goodbody Stockbrokers.
The mixed results came even though the companies stepped up promotions after what U.S. poker players now call Black Friday on April 15. Ladbrokes added new daily free rolls, new tournaments, and briefly had a $675 “welcome” bonus, according to spokesman Ciaran O’Brien.
Chief executives of William Hill and gambling software company Playtech say they didn’t expect a quick payoff.
“Certain monies made in the U.S. by certain companies will now invest their money in Europe,” Playtech’s Mor Weizer said in an April 28 telephone interview. “We don’t expect them to go away soon.”
William Hill’s Ralph Topping told analysts April 21, “no major change, and we wouldn’t expect that it would be in the short term.”
Still, gains for the European online gambling companies may be in the future. A conviction could cost PokerStars and Full Tilt their Italian and French licenses, and might hamper their attempts to gain approval in other European countries, said David Jennings, an analyst with Dublin-based Davy.
“I think this story is going to take a while to play out,” he said.