Online poker players shrug off bad economy
(February 11, 2009)
News of the worsening economy seems to be everywhere these days, with stories of bailouts, foreclosures, bankruptcies and layoffs. Even Vegas has felt the pinch, as many straight months of declining revenue have forced hotel-casinos to slash rates in an effort to fill vacancies.
The impact on the online poker market is less certain, however. Cash game traffic as tallied by industry tracking site PokerScout.com is growing at a slower rate than in recent years, but is still up 15% year over year. Are online poker players spending less due to the economic meltdown? Will they be cutting back in the months to come? A new survey has the answers.
The survey, conducted by investment banking firm ThinkEquity in association with PokerScout.com, asked over 100 online poker players to detail their spending habits.
The results are encouraging for online gaming operators. Only 17% of players have reduced their online betting due to the recession, while 83% have either maintained or increased their spending from normal levels.
When asked to project their online betting into the future, players were overwhelmingly optimistic. About 85% plan to either maintain or increase their spending on online betting in 2009 despite the tough economy.
In a research note, ThinkEquity analyst Atul Bagga wrote that the survey "suggests that the economy may not have as big an effect on online gambling as some believe.... We are incrementally more confident that no disaster is lurking." Bagga further noted that "we expect to see some shift in spending patterns from offline betting to online betting, which should limit the impact of an economic slowdown on online gambling."
The note went on to recommend the stock of GigaMedia Ltd., software provider for Everest Poker. Everest is ranked as the sixth largest online poker provider in the world according to PokerScout, but shares of GigaMedia have been hit hard in recent months. The stock recently traded at $6.57 despite a ThinkEquity price target of $18.
