Smaller Online Poker Player Pools Show Global Market Slowdown

Fragmented online poker networks, especially a largely closed-off American player pool, are a big reason why online poker traffic continues to decline globally.

Data from PokerScout shows that, if you take the last seven-day running average (April 21-28) for ring game players as your point of reference, cash game traffic on the world’s poker sites has declined 12.6 percent year-over-year, 20.4 percent compared to the same period in 2013, and 21.3 percent compared to three years ago.

April 21-28, 2015: 41,139 players
April 21-28, 2014: 47,075 players
April 21-28, 2013: 51,677 players
April 21-28, 2012: 52,242 players

Note: All totals are averages from that seven-day period.

There are 66 active online poker sites/networks globally, according to PokerScout.

“Total cash game liquidity is down eight percent from this time last year,” PokerScout added in an April 25 traffic report. “That statistic continues to signal that the market may be nearing a bottom.”

Online poker revenues are effected significantly by the season in at least some markets, so it’s important to take this into account. Still, PokerScout data says that cash game traffic has been falling month-over-month for awhile, indicating that even boosts typically experienced during certain seasons might not be able to offset other factors leading to a market in trouble. Traffic is shrinking at an accelerated rate in the year-over-year chart above.

While peer-to-peer online poker is struggling, online gaming as a whole is still healthy in terms of revenue for operators, especially in Europe. Online gambling is the fastest growing service activity in this sector in the EU, with “annual growth rates” of almost 15 percent.

Other non-EU European nations, such as Norway, offer popular casino games online and have seen traffic grow, albeit at a slower rate.

In American, the three states—Nevada, New Jersey and Delaware—that have approved real-money online gambling have all witnessed less than stellar starts to the respective industries. Financial services analysts at Morgan Stanley have cut their valuation of the potential of the US online gaming market by almost half. The revised forecast values the market at $2.7 billion by 2020, down from the $5 billion it predicted in late September 2014. The firm cited several reasons for the reevaluation, from payment processing and geolocation problems, to a lack of effective marketing and the continued strength of the offshore market catering to Americans.

In New Jersey, revenue from house-banked online casino games has continued to distance itself from the rake collected from peer-to-peer poker play.

Through the end of March, year-to-date online poker revenue in New Jersey was $6,572,710, down from $9,762,137 during the same three-month period in 2014.

Combined Internet gaming win for January, February and March was $35,137,326, an increase of 11 percent compared to January to March of last year ($31,646,517).

Nevada and Delaware recently began sharing liquidity, albeit with minimal benefits, and there have been talks of New Jersey striking deals with other jurisdictions as well, possibly some in the EU. Other US states, like California and Pennsylvania, are considering legalizing and regulating online poker. The American market is on the rebound, and that bodes well for the industry as a whole since the American market is the most lucrative. Once Americans and Europeans can play on the same regulated sites, the online poker market should begin to bounce back.

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