The recent incident in the online poker industry, what is also known as the ‘Black Friday’ of Poker, has completely shaken up investors. Following the FBI arrest of three online poker tycoons, Ladbrokes and 888 Holdings have put a hold to their buyout talks. It is already evident that short term investors are pulling out from Bwin.Party, William Hill, Ladbrokes, Betfair and Sportingbet. However, while this is happening on one front, values of these shares are rising on the other.
Subsequent to the FBI seizing three of the top American online gambling sites, the values of shares tied to several UK online gambling companies have increased. Many non -US poker players left PokerStars and resorted to more secure gambling websites; Bwin.party shares rose to 30%, Playtech increased by 8% and 888 increased by 19%.
There has never been such a showdown in the online gambling industry since 2006, when the UIGEA was regulated. The American government has accused the founders of Full Tilt Poker, PokerStars and Absolute Poker for money laundering, bank fraud and illegitimate poker -pulled them up and closed them down. The European gambling entities are now reveling in the loss of the US based companies
According to Geetanjali Sharma, the Execution Noble analyst, “The US-facing operators have been a drain on the profitability of the European operators as their US liquidity drew the non-US poker players. At the same time these operators diverted cash gained from the US operations to gain market share in the regulating territories in Europe. The closure of the main competitors’ operations and the US legal proceedings initiated against them should benefit European listed operators.”
Even though players from other countries can still indulge in playing online poker on PokerStars and Full Tilt, the FBI’s confiscation of the funds will lead to difficulty in operating the sites. It is expected that more players may shift to other US online poker sites owing to the insecurity factor. When it comes to US online poker, poker sites need traffic to run tournaments and the like – so players will move to other sites where US deposits are accepted.
What’s more, the case in terms of liquidity has fallen in favour of these online websites which have been functioning illegally in America. According to H2 Gambling Capital, a gambling data provider, PokerStars and Full Tilt accounted together for about 30% of the market share on 2007 January, and this had nearly doubled last week when both the sites were seized.
According to PokerScout.com, the number of visitors at PokerStars and Full Tilt has plummeted by 25% and 48% respectively and at the same time the traffic at Party Poker and 888 has risen by 8% and 5% respectively.