Why Internet Gambling Thrives
November 8, 2009
Now that the cool new thing in state politics is for voters to rewrite state constitutions and promote casino construction in their backyards, one question to think about is the impact the all of these new brick-and-mortar casinos will have on internet gambling. The answer, I think, is: virtually none; and the reasons are both political and economic.
(from flickr user .mw)
It's easy to understand why people think there will be a trade-off. We use the ambiguous term "gambling" and assume that casino games are interchangeable; but internet gambling is focused heavily on two games: poker and sports-betting. Brick-and-mortar casinos, on the other hand, dedicate more floor space to slot machines than anything else. This equation is unlikely to change anytime soon.
As far as sports-betting goes, federal law makes it effectively illegal in every state outside of Nevada. That's great for the bookmakers in Vegas and Reno, but it's annoying as hell for anyone who wants to make a bet on a game and who doesn't live in the desert. It's extremely difficult to imagine Congress ever changing this law. Professional sports leagues will lobby hard to keep sports-betting out of the mainstream; and internet gambling will fill in the void.
The key to understanding why poker doesn't get much attention at brick-and-mortar casinos is to consider the marginal costs of running a poker room. Online, the marginal cost is effectively zero. As long as the host company has surplus computing power, they can run as many poker games as people are willing to play. In a casino, the marginal cost is considerably higher - there is the opportunity cost of floor space where the tables go and the salary of the dealers and the supervisors who run the poker rooms. From the players' perspective, casinos typically take a higher rake (commission) per hand than do online poker sites, so the cost of playing is higher. Plus, the pace of play is slower and players can only play a single table at once. These all line up to give online poker a big advantage over casino poker.
And the numbers back up the theory. The poker room at the MGM Grand in Detroit, for example, has a capacity of around 100 players. At the moment I'm writing this post, Full Tilt Poker alone has tens of thousands playing online. Online, there are tournaments running non-stop around the clock online; brick-and-mortar casinos, if they offer tournaments at all, typically relegate them to the slowest times of the week, like weekday mornings, or Sundays at 3pm.
This dichotomy is actually one of the things that annoys me about all the hype surrounding new casinos. When it comes to gambling, I enjoy three games: tournament-style poker, craps (at low limits, since I don't have much disposable income), and sports-betting. There isn't a single casino outside of Nevada where I can find all three of those under one roof; and going to a casino where 90% of the floor space is covered with slot machines is definitely not my idea of fun.
(from flickr user .mw)It's easy to understand why people think there will be a trade-off. We use the ambiguous term "gambling" and assume that casino games are interchangeable; but internet gambling is focused heavily on two games: poker and sports-betting. Brick-and-mortar casinos, on the other hand, dedicate more floor space to slot machines than anything else. This equation is unlikely to change anytime soon.
As far as sports-betting goes, federal law makes it effectively illegal in every state outside of Nevada. That's great for the bookmakers in Vegas and Reno, but it's annoying as hell for anyone who wants to make a bet on a game and who doesn't live in the desert. It's extremely difficult to imagine Congress ever changing this law. Professional sports leagues will lobby hard to keep sports-betting out of the mainstream; and internet gambling will fill in the void.
The key to understanding why poker doesn't get much attention at brick-and-mortar casinos is to consider the marginal costs of running a poker room. Online, the marginal cost is effectively zero. As long as the host company has surplus computing power, they can run as many poker games as people are willing to play. In a casino, the marginal cost is considerably higher - there is the opportunity cost of floor space where the tables go and the salary of the dealers and the supervisors who run the poker rooms. From the players' perspective, casinos typically take a higher rake (commission) per hand than do online poker sites, so the cost of playing is higher. Plus, the pace of play is slower and players can only play a single table at once. These all line up to give online poker a big advantage over casino poker.
And the numbers back up the theory. The poker room at the MGM Grand in Detroit, for example, has a capacity of around 100 players. At the moment I'm writing this post, Full Tilt Poker alone has tens of thousands playing online. Online, there are tournaments running non-stop around the clock online; brick-and-mortar casinos, if they offer tournaments at all, typically relegate them to the slowest times of the week, like weekday mornings, or Sundays at 3pm.
This dichotomy is actually one of the things that annoys me about all the hype surrounding new casinos. When it comes to gambling, I enjoy three games: tournament-style poker, craps (at low limits, since I don't have much disposable income), and sports-betting. There isn't a single casino outside of Nevada where I can find all three of those under one roof; and going to a casino where 90% of the floor space is covered with slot machines is definitely not my idea of fun.
