vnunet.com feature: Smart money backs online poker

An estimated £36m was staked on online poker sites every day in 2005

The potential profits offered by online gambling are phenomenal and, over the past few years, the smart money has turned to poker.

This trend has resulted in a boom that has transformed the game's traditional Cincinnati Kid image and turned it into an industry that rivals the early days of the dotcom gold rush.

According to Ladbrokes, an estimated £36m was staked on online poker sites every day in 2005, up 89 per cent year on year. Those who got in early are getting their share of that money, but for the 'Johnny come lately' it may already be too late.

"Launching early was a key critical advantage," said Albert Tapper, general manager at Ladbrokes Poker.

"We launched in May 2002 and we were the first big name betting brand to launch online poker. We established 'liquidity' early on, which is the word used in the industry for having lots of players.

"Lots of players is critical because it means you can offer a range of tournaments and a good choice of cash games."

However, Tapper maintained that it is unfair to talk of online poker in terms of a boom which implies a bust just around the corner. Ladbroke's research suggests that the future for the market is bright, as its main audience is young players.

The company's report from January 2006 shows that 60 per cent of players are under 30 years old and the average age is just 32. There are more 19 year olds than any other age year.

"I don't think it's right to say that poker is a bubble about to burst. There are a huge number of people playing; at peak times we'll be dealing 15,000 hands an hour and that's a lot of games," said Tapper.

"The internet bubble was more speculative. There is more substance to the online poker business in that it's happening for real."

Lee Ferris, poker marketing manager at sports betting firm Victor Chandler, backs up the argument that demand is leading the success and not the other way around.

"Some of the greatest dotcom successes - eBay, Amazon, online poker - have been as a result of the clever reinvention of a product or service repositioned properly for the online consumer," he said.

"Based on my experience, a large factor in the dotcom bust was companies foisting products and services on consumers for which no demand existed.

"This was under the assumption that the internet as the platform would drive the demand. Unless it's a killer application, technology alone does not drive the demand."