November 2, 2022, marked the fourth consecutive interest rate hike implemented by the US Federal Reserve. The 0.75-point hike brought interest rates up to the highest since before the 2008 recession. Consumers and governments alike are experiencing these rate hikes together, with any country that isn’t the US facing even greater issues as the strong USD hurts everyone else. But what effect, if any, could rising interest rates and general inflation have on the poker sector? Let’s dive in.
Highest Interest Rates Since 2008
The current Federal Reserve interest rate is the highest since the 2008 recession. The string of interest rate hikes has led many to believe that we are headed back in that direction, a worry that hasn’t been alleviated with this latest hike. While Jerome Powell, the Federal Reserve’s chairman, still thinks there is the possibility of avoiding a massive recession, the macroeconomic picture seems to be saying otherwise.
With another interest rate increase, every global economy is affected, especially those with USD debt. An already high inflation rate is being exacerbated by a vicious cycle in which nations and non-US companies are forced to sell their local currency for USD to repay debt. This devalues local currency while strengthening the USD, meaning that next month when they go to do the same process, they get even less USD for their local fiat. This can spiral endlessly and create hyperinflation if not checked sooner than later.
Gambling and Poker Industry Effects
Luckily for the gambling and poker industries, almost everything is done in USD, if not some form of cryptocurrencies like Bitcoin or Ethereum. This will help mitigate the effect of inflation and interest rate hikes on the sector, as users generally already transact in USD. If not, then they’re likely using digital assets, which are deflationary. However, poker players in foreign countries converting their local currencies to USD will likely be affected. This is for reasons mentioned in the section above.
The reality of the poker industry is that most players within it are doing well financially and, therefore, less likely to be affected by interest and inflation rate increases. Of course, those who aren’t in that sort of position shouldn’t be gambling anyways, but there will always be those working outside their means to their own detriment. Overall, the rate hike could lead to a minor reduction in the number of players in online gambling and possibly pot sizes. Still, it’s unlikely to be felt in any meaningful way by players.
Unfortunately, this latest interest rate hike isn’t likely to be the last, meaning that the sentiments expressed in this piece could change with the subsequent rise. Though the gambling and poker sector isn’t likely to be the first to feel the effects, it will at some point if we continue this current trajectory.