The current attitude that many people hold on the online gambling ban being pushed by Sheldon Adelson is that the Las Vegas Sands owner wants to ban online gambling to limit new competition from online providers.
That being said, there is a problem with that line of thinking, considering regulated online gambling licenses have been restricted to land-based operators and online activity hasn’t been shown to siphon off enough live players to warrant this type of concern, as the executives from WSOP.com and Boyd Gaming have pointed out.
In fact, land-based casino revenues seemed to be positively correlated to online gambling and the popularity of poker.
So what is Adelson’s game?
One possibility is that Adelson is more fearful that some of his existing competition will reap the rewards not of their online gambling operations (although they will certainly profit from them as well) but from the boost to their land-based casinos’ revenues.
And when I say competition I am speaking mainly of Caesars.
Online gambling in and of itself may not save the struggling Caesars nor any other company – and it’s unlikely to pull players away from Adelson’s land-based properties – but what it could do is usher in another period of gaming prosperity from which everyone would prosper.
Adelson’s gripe with online gambling could very well be that it will help the entire industry, an industry he currently has a stranglehold on.
The online poker boom officially began in late 2003 and peaked in late 2006; the decline began when Congress passed UIGEA legislation.
The poker boom may have come to an official end on April 15, 2011, but the writing had been on the wall for years, and the poker community was sending out sympathy cards as early as 2009/2010.
During the three year run from late 2003 through 2006, online poker sites and online casinos were busier than ever, and so were brick and mortar casinos, which seems to indicate that the success of one industry does not come at the expense of the other.
In fact, it would seem to indicate that land-based casinos feed off online casinos and poker rooms.
As I see it, what was happening during this period was that new players were dipping their toes in the online gambling pool and then jumping in head first at land-based casinos. Online gambling offered people a convenient, cheap, and unintimidating vehicle to learn the games.
Below is a look at the gaming revenue in Nevada, Atlantic City, and the attendance numbers at the WSOP Main Event and the WPT Championship over a 13 year span:
There seems to be a clear correlation between land-based gaming revenue and tournament attendance numbers, as you can see a near identical trend, especially from about 2001 through 2006.
There were certainly other factors at work, but far too often the decline of the online poker industry in the US is brushed aside as a potential reason for declining land-based revenue, or merely downplayed, with the focus placed on the economic collapse of 2008 and new states expanding their gambling options.
Nevada’s revenue gains and losses line up perfectly with World Poker Tour Championship attendance from 2003 through 2012. If WPT attendance increased, Nevada’s gaming revenue increased in kind for a 10 year span.
The most telling example of this is the blip that occurred in 2011.
In 2011 Nevada’s revenue ticked up for the first time after three consecutive years of decline, and the World Poker Tour Championship saw the same bump after its own three year slide.
Looking at the chart above you can see how UIGEA had no effect whatsoever on land-based revenue or on WPT attendance, but the WSOP saw attendance plummet, as the tournament relied on online qualifiers to boost its ranks.
From there the WSOP leveled off, which indicates to me that 2007 was the low water mark for the tournament.
On the other hand, it appears that Black Friday had little to no impact on land-based revenues, but you can see it hurt both the WSOP (bringing it closer to the 2007 low water mark) and WPT Championship, which is no longer the prestigious event it once was.
The big question now is how the new licensed markets will not only affect tournament attendance, but what impact it will have on land-based revenue in the coming years.
If history is any indicator the effect should be seen immediately.