November 24, 2006
Whatever you think of the Unlawful Internet Gambling Enforcement Act’s (UIGEA) medium-to-long run impacts, the short run effects are clear. WaPo’s blog reports, “According to Nielsen/NetRatings, which tracks Web use, traffic to the top 10 Internet gambling sites dropped a staggering 56 percent in October” (via Iggy). PartyPoker, which promptly banned US players, apparently dropped from 7.5 million unique users in September to 2.5 million in October.
In time, many players will likely turn to various work-arounds or switch to sites like FullTilt and PokerStars so long as they accept US players. But the switching costs aren’t solely responsible for the decrease in online poker playing. With online poker and casino gambling booming before, sites like Party Poker were able to liberally hand out bonuses to customers — free money just for signing up or making a new deposit. These bonuses helped lure in new players or bring back existing ones, and a larger playerbase meant they could spread more games and increase the value of the site overall.
Given the current uncertainty, I doubt these businesses can hand out large bonuses — at least, I don’t see any sites providing bonuses comparable to PartyPoker’s past offers. In the short run, that’s also going to hurt businesses’ ability to bring in players.
See also: this interesting post at 2+2, also via Iggy.