I’ve seen two news reports this morning that seem contradictory. On one hand, online gaming is booming in Britain. On the other, Harrah’s has just pulled the plug on its online gaming site.
First, the good news (for online gaming operators), from Reuters:
Online betting firm ukbetting has launched a new poker site, boosting its shares, as a report predicted the global online poker market could double in 2005.
Technological advances have made online gambling one of the few financial success stories for Internet businesses.
“In the last year the arrival of broadband Internet connections has really made online gambling potentially a very, very big business,” ukbetting Chairman Peter Dubens told Reuters on Friday.
Swedish, German and Italian versions of ukbetting’s sites are in the pipeline to broaden its reach, he added.
Shares in the smallcap company were up 3.5 percent to 51-1/4 pence in afternoon trade after it said it had launched poker and an online casino on its European gaming Web site www.goldbet.com.
Gamblers lost $237 billion (124 billion pounds) to gaming companies worldwide in 2004 and will be losing about $277 billion a year by 2008, said a report on Thursday by investment bank Dresdner Kleinwort Wasserstein.
BOOMING IN BRITAIN
Online gambling has grown to $9.2 billion globally since its birth in 1995 and is forecast to produce a 22 percent compound annual growth rate between 2003 and 2008, driven in particular by poker, said the report.
Sports betting represents 45 percent of total online gambling spending with other gaming representing 32 percent, but both could be overtaken by poker by 2008, if not earlier, it added.
Online gambling is becoming a booming industry in Britain, one of the few jurisdictions where it is welcomed.
“We’re the market that’s embracing online gambling,” said DKW analyst Andrew Lee.
In January the world’s biggest online poker company, PartyGaming, said it was considering what would be one of London’s largest share listings in over three years — estimated at over 3 billion pounds.
Online casino 888.com., which is also seen as another potential float, recently estimated the amount Britons are gambling over the Internet has increased more than six times in the last year.
DKW’s Lee predicted PartyGaming, Sportingbet and 888.com would in the future be the driving force behind a wave of consolidation.
“What I see going forward is massive consolidation in the market, and you’ll end up with some massive portals that offer poker, sports betting and gaming,” he said.
Now the bad, from the LV Sun:
Harrah’s Entertainment Inc. has suspended the operations of an online gambling site based in the United Kingdom after posting losses of $9.3 million last year.
The move marks the second time a Las Vegas casino giant has tried and failed to tap into the lucrative Internet gambling market.
The site, called Lucky Me, was introduced in November 2003 for British bettors and was suspended in October, the company disclosed Tuesday in its annual report to shareholders.
The site was discontinued because it was losing money, Harrah’s spokesman David Strow said.
Rather than the typical method of gambling for money, the Web site allowed players to access as many games as possible — with new games offered every seven-and-a-half minutes — with a monthly subscription. Gamblers paid from about $17 to $84 per month for access to bingo and other games with cash prizes ranging from $8.50 to $1.7 million.
Lucky Me featured an identification process that prohibited bets from U.S. residents as well as from other countries where Internet gambling is prohibited.
The site was developed in partnership with Revahertz Networks, a Boston-based, privately-held software game developer that founded Gamesville, a games-for-prizes site that was sold to the Internet search engine Lycos in 1999.
I guess people just want to log on and gamble.
Harrah’s is laboring under more intensive regulatory obligations than the online-only companies, so it might be unfair to juxtapose these two stories. Still, it seems that British online bettors feel less than “totally” rewarded.