The future of Online gambling where will it all end up?
The popularity of online gambling has sky rocketed over the past 5 years. The meteoric rise in online casinos and poker rooms has made many people very wealthy. The owners of cassava enterprises (888) Avi and Aaron Shaked recently floated their company on the London Stock exchange, their company is now valued in excess of £700 million. Ruth Parasol the co-founder of party gaming also recently floated her enterprise on the stock market making her an overnight billionaire. But where is all this heading? Surely the industry cannot continue to generate wealth at the staggering rate that we have witnessed over the past two years.
It must be remembered that the online gambling industry is still very much in its infancy. The first online casino opened around 1995 although the exact date is somewhat of a mystery. The industry itself did not fully capitalise on the online marketplace until around 1999 when faster internet connections became more widespread, allowing more colourful games with smoother graphics and game play. Today the industry is evolving more quickly than ever before with an ever increasing number of entrepreneurs realising the vast fortunes that can be made from hosting an online gambling site.
Today it is estimated that there are over 2000 online gambling sites just waiting to take punters money. There is a mixture of honest and dishonest sites out there and choosing a website that is fair and honest is no easy task. The reason for the vast number of online gambling sites out there lies in the simplicity involved with setting one up. One can set up an online poker network for several thousand pounds and the owner doesn’t even need to worry about a starting number of players on his network. Players from the owner’s site simply play in the software provider’s pool of existing players, providing an incredibly easy route to market.
Online gambling has taken affiliate marketing by the horns and adopted it as its own. For those that don’t know what affiliate marketing is, here is a brief rundown. Companies with products or services to sell do deals with website owners, whereby for every sale that is generated from a visitor of the webmasters website, they will receive a commission. The commissions offered by online gambling operators are one of the highest and most lucrative in the marketplace ranging from between 10 and 50% of net gaming revenue (player losses) or up to $500 CPA (cost per acquisition). As a result the online gambling industry is the most competitive industry on the web, with top spots in google form keywords netting webmasters over $1 million dollars per year.
So what does the future hold for online gambling? As mentioned previously the online gambling industry is still very much in its infancy. There will be many twists and turns as the market evolves that is for sure. If one was to look at the supermarkets in the UK there are many comparables that could be drawn. It may seem strange to select such a dissimilar industry but bear with me. In the 1950’s there were many corner shops and everything was done on a very small scale, as is the case with the online gambling industry today. As a few retailers made more money so they grew and started to buy other retailers. We are starting to see this today in the online casino industry.
Next came brand building. Tesco’s, Sainsbury’s and the rest began to advertise, promote and generally make people aware of their operations, this builds trust and assurance, something that is of fundamental importance in the online gambling industry. We can see this happening today with the larger brands of casinos and poker rooms. 888 sponsor Middlesburgh football club and the world snooker tournament. Party Poker and Betfair sponsored this year’s ashes series of cricket between England and Australia, so the ground work has been laid.
This will be followed by consolidation lots of it. There have been numerous mergers and buyouts of poker rooms and casinos already and this trait is set to continue into the future. What will be left? A Walmart Casino, a Tesco’s poker room and a Sainsbury’s bingo hall. The irony of it all is they will probably be even more profitable than their grocery equivalents.