Internet Poker v. Brick & Mortar Casinos

Great Debates
1

I used to play poker online. Not for high stakes, and not stupendously well, but I made more than I lost. I don’t any more, because it is effectively gone from the US for the present. There are a number of pieces of legislation out there working their ways through the states and the federal government trying to make it legal to play poker online in the US, but there is no sign that any of them will be successful anytime soon.

In an attempt to defeat any such legislation, Las Vegas Sands and Sheldon Adelson have launched stopinternetgambling.com. Some poker players are starting to loosely organize a boycott of his casinos in response.

I can’t really speak to other forms of gambling besides poker, but I’ve always wondered about the relationship between meat-space casinos and cyberspace gambling venues. For a while it seemed like the prevailing wisdom was that the big real-world casinos saw the web as direct competition, and would actively lobby to shut down internet gambling. Is this: a. true, and, b. in their best interest?

Here’s why I ask. As an occasional live poker player, I don’t know that I would have ever thought about entering a real, live poker game if I had not first had the chance to play in the anonymity and comfort of an online poker room. It just seemed too intimidating. In my case, the owners of the MGM Grand, the Venetian, and our local poker room in Florida got money from me they never would have seen otherwise. Granted, it wasn’t a lot, but I wonder how many other people there are like me who might have stayed away from a real live casino (and away from their drinks and food, and maybe throwing a bit into a slot machine on the way out) were it not for the opportunity to try out the game at home first.

Secondly, couldn’t one of the big casinos make a decent amount of money off of branded online poker? If online poker were legal again, doesn’t it seem like a big casino could either partner with a well-established online poker room or buy up a smaller one, and suddenly you could play online “at” Caesar’s Palace? I can’t believe there’s not some money to be made there.

So, at least as far as poker’s concerned, are the brick & mortar casinos being short-sighted in their opposition to internet poker? Or, is their opposition not as strong as I always thought? Opinions?

2

Good questions - a few points:

  1. Poker doesn’t make as much for a live casino as other games. Many casinos didn’t even offer it until the Internet poker craze. This is of course different for online casinos which don’t have the floor space and dealer costs.

  2. Internet gambling decouples the relationship (to a large extent) between the atmosphere and gambling. If you don’t have to have a billion dollar casino - that of course increases competition. In some ways drug companies and tobacco companies like regulation, because the hight costs they impose creates a barrier to entry.

  3. I suspect that things are changing. I haven’t been following the industry as closely as I used to, but if memory serves there are Las Vegas casinos interested (and perhaps already in the process of) getting a license for Internet poker. Poker is much cheaper for them online, and for the reasons you pointed out - somewhat makes sense more from an online perspective. The critical mass of players you need for a game is much easier to get online.

3

I just like how online it’s “gambling” but in the casino it’s “gaming”.

4

My guess would be that DataX is right about barriers to entry, which would be much lower online. If online poker were legalized, they could jump in, but they’d be competing with any schmo with a website, some software, and a chunk of money. By restricting the industry to brick-and-mortar casinos, they ensure that they’re the only game in town.

5

That said, you have to admit they’d carry some hefty branding weight and the deep pockets needed to put up really snazzy sites.

I can see the OP’s point. I started in online poker. Now I won’t play it anymore; it’s too tight and uninteresting. I play exclusively in casinos, and that would never have happened were it not for online poker.

I believe online rooms represent competition to B&M casinos in the near run, but I can’t help but think that they’re terribly shortsighted; it’s like when sports teams didn’t want games on the radio or TV in the belief that it would kill ticket sales. The idea that more exposure would enhance the popularity of the product took decades to take hold.

6

I’m not sure this analogy works. Professional sports teams get direct revenue (gobs of it) from radio and TV - whereas casinos have no claim on revenue from internet poker sites.

Yes, they could create their own online sites. But there’s no particular reason (other than money) why a casino would do a better job of this than others. Am I right in thinking that past and current online gambling does not prominently feature sites sponsored by casinos?

7

I work in a Vegas Casino. I am in I. T. Our casino is looking at online gaming. AFAIK, the biggest barrier to entry is the gaming board. I don’t know the applicable laws, however I do deal with the gaming control board folks from time to time. (I am a server/storage/network guy. I usually deal with the GCB on network issues, making sure there is vlan separation, access lists and the like)

The GCB does not fuck around. They are very thorough and will pull games if they find something they don’t like. Pennsylvania GCB is worse. The application for a gaming license in PA 20 years of back ground including addresses. When I first filled it out I had to try and remember where I lived when I was 19. I moved a lot back then and had to guess.

The point of all this is that, in the U. S. at least, it is going to be hard to clear the GCBs. The GCB out here looks at source code, requires all kinds of documentation for changes and the audits are insane.

I don’t think online gambling will have a huge impact on Vegas. The thing about Vegas is the atmosphere. And the food. And shows.

It may really hurt poker rooms. However slots are where all the money is at. Table games are barelypprofitable at most casinos.

8

Good point.

9

This is very much what I was thinking. I wonder how many casual players would be leery of signing up with PartyPoker, or FullTilt, or PokerStars, simply because they are (to them) unknown entities. But sign up with Caesar’s (online) Palace? There’s some instant credibility there. I’m assuming that if and when online poker becomes legal again in the US, there will be some sort of regulatory oversight. Seems like the existing casinos would be in a good position to leverage their existing regulatory compliance systems to meet whatever the new requirements might be.

Seems to me it could actually be a good inducement to get people into the casinos. I wonder if there would be a way to tie an online poker room into existing player’s card programs, or somehow reward players in the online casinos with room discounts, or something redeemable in meat-space.

Plus, I just really wonder how much the two arenas really do compete with each other. In a sense, they are two different experiences. Online, you can play multiple games at once (well, I can’t, but may can), and many more games per day than you can live. I’d be interested in knowing how many poker players really do stay home instead of going to a poker room.

10

That’s kind of what I was thinking.

I’d also think some more dough in website design might help. In my experience most of the interfaces on poker websites are pretty shitty, save PokerStars, which is the only one that looks good (by a wide, wide margin.) And frankly, most poker websites lack the traffic to mount a lot of good games. There are more people playing $5/$10 limit in the Brantford Charity Casino right now than on PartyPoker.

A concerted effort by a major casino player like Caesar’s to create a strong online presence, maybe even buying out a few of the existing players, would present the public with a credible, noteworthy place to play online poker.

11

I think that Sheldon Adelson is the only major casino owner who is against online poker. Wynn and Caesar’s are actively involved in developing it (I think.)

The problem with playing internet poker is protection for the player. Who provides it and how and with what guarantees? I really don’t think any Joe Blow with a website is going to be successful.

12

Live poker is in the process of collapsing in on itself, more slowly than I had anticipated, but it’s sort of a vicious spiral. As fewer people bring new money into the game, the people at the bottom tend to get bled dry, who then leave, which means the next tier up become the bottom, who get bled dry. This is complicated by the increased number of online players who are, across the board, flat out better than live players that have been displaced also raising the toughness of the games.

Online poker was one of the major ways that new blood was attracted into the poker economy. Online poker accompanied the poker popularity boom (poker on TV, as a pop culture thing, etc) and it’s hard to separate how much of this was because of online poker (a lot of poker TV shows only really existed because of the online advertising dollars), and how much was just a fleeting jump in popularity otherwise.

Once online got banned, fewer people were brought into the poker economy, and while there was a surge of people moving/visiting Vegas to try to make up for their gap in online poker, it overall had a toxic effect on the games because of the cycle I spoke of earlier.

How much of the decline in new people coming in would’ve happened just as a natural result of people getting bored of poker’s popularity boom, separate from the banning of online poker? It’s hard to say. But it’s pretty clear that online poker overall had a massively beneficial effect on live poker. The entire poker economy grows, everyone benefits from it.

If I had to speculate, the people trying to stop it are further behind in trying to launch their own legal online poker ventures and want to squash/hold up the competition.

13

[/QUOTE]

It is interesting to note that in Canada - where online poker is still totally legal - the quality of play in bricks and mortar casinos remains jaw-droppingly appalling. The lower limit games have more donkeys than a farm. A $1/$2 live game in Canada is much, much worse played than five/ten cent online poker.

When I cross the border into the USA the quality of play at lower limits increases dramatically. I’m not saying I find myself playing Phil Ivey, but I see very, very few outright maniacs and fools; most players play reasonably good fundamental poker. In a Canadian casino I can win more often than I lose; in U.S. casinos my winning percentage is not great.

The impact this has on drawing in new players to B&M casinos should be very obvious. If a newbie has a fighting chance in Fallsview they will come back. If they get crushed in 45 minutes in Foxwoods why would they try again?