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Poker's hot streak fading
Published: 2005-12-25
 There are signs that interest is waning in the $150 million industry.
December 25, 2005: 10:06 AM EST
NEW YORK (Reuters) - The worldwide poker industry appears to have hit every possible inside straight, flush and full house that it could, accumulating a large pot of cash in the process.
But as this holiday season nears an end, the industry's luck seems to be running out as boxed sets of cards and chips are discounted, ratings fade for some poker-themed television shows and shares of a poker-linked stock slump.
From televised celebrity poker tournaments to Internet gambling sites, to thronging tables at Las Vegas casinos and even a weekly column in The New York Times, poker remains an obsession.
Industry group American Gaming Association found the level of interest in poker rose significantly in 2004, with consumer spending on the game in Nevada and New Jersey increasing to $151.7 million, or 45 percent over the previous year.
Yet there are signs interest is waning among some of the demographic groups who fueled the craze.
"It is a pop fad," said Bill Thompson, author and professor of public administration at the University of Nevada, Las Vegas. "Fads pass."
Poker sets, once displayed prominently at his local Walgreen (Research), have been moved further back into the store, he said.
"It may be reducing down to the niche market, which would be people in their 20s, macho-man type of people," he said. "Parents aren't looking to buy little sets."
In the last few Christmas seasons, stores like Toys R Us did a booming business in poker chips, said Sean McGowan, an analyst at Harris Nesbit.
But now chains like Target Corp. (Research) and Wal-Mart Stores Inc. (Research) are deeply discounting the sets to move them off the shelves.
"The people who are obviously most interested in it obviously went out and did it already," McGowan said, noting that his own school-age son, who once obsessively played, has cooled on the game. "He doesn't even talk about it."
Risky bet
Ratings for poker shows and tournaments, which mainstream sports networks like ESPN rushed to televise in recent years, are no longer growing as fast.
"As far as we can tell, the big poker rooms have continued to grow, but global ratings for poker telecasts around the world have been seeing retrenchment," said Eugene Christiansen, chief executive of Christiansen Capital Advisors. "The future is not going to be like the past year at all."
He said that was a sign that global viewership was maturing.
Steven Lipscomb, chief executive of gaming entertainment group WPT Enterprises Inc., which owns the still-popular World Poker Tour television show, said the poker market was "still bubbling."
"We are in what I believe to be the early stages of a very long growth curve," he said. "If we were to be on the same growth scale that we were in ... we would be doing NFL-type numbers. And I don't think our expectations are that we will have 20 million people tuning in."
Some investors who rushed to capitalize on the poker craze have gotten burned.
Shares in WPT have tumbled more than 50 percent this year after briefly surging in July when U.S. poker champion Doyle Brunson made an unsolicited $700 million offer to buy the company.
The bid, which later expired, is under investigation by the Securities and Exchange Commission.
"These cult fad stocks always end up in disaster," said Ivan Feinseth of New York-based advisory firm Matrix USA, noting the company loses money and calling the stock overvalued despite rapid revenue growth.
Unlike England, where several online gaming stocks are listed, poker has not blossomed as an area for investors in the United States, where Internet gambling remains illegal.
Christiansen said telecommunication companies based in the United States had not bought into poker rooms either because of the legal issues.
He said interest in televised poker -- an important factor in the growth of the game -- continued to increase globally, although at a slower pace and at different rates in different countries.
"Nothing can grow to the sky," he said.
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Poker- Just Another Fleeting Fad? Say It Ain't So
Published: 2005-12-25
 Since the beginning of the poker boom, skeptics have been quick to say that this was one game that just wouldn't last. But weeks became months, and months turned into years (well, at least a few of them), and poker is still the talk of the nation, if not the world. According to an article published recently by Reuters ('Poker's lucky streak seen fading in US shops', December 22), however, the poker craze is indeed nearing its end. The evidence: waning interest in poker merchandise, poker programming and, lastly, poker stocks. It stands to reason, however, that interest is not waning; rather, that the market is changing.
Last year, stores simply could not keep their shelves stocked with enough poker merchandise to feed the growing craving for everything poker. This year, however, it seems that retailers have overshot their expectations, and now poker products are making their way from ornate storefront displays to desperate everything-must-go discount racks. Nevertheless, this may be a mere indication that poker consumers are becoming an altogether more discerning bunch. Perhaps flimsy poker chips are no longer enough to satisfy today's poker aficionado. Indeed, if manufacturers of poker goods fail to adapt to their evolving consumer base, interest will fizzle.
As far as television is concerned, production companies were astounded when demand for poker programming positively mushroomed, causing every poor boob with a camcorder to claim he/she had the next big concept for poker TV. Indeed, it seems a new poker show is launching every week, if not on a more mainstream channel, then at least on some digital cable outlet. Nonetheless, ratings for poker TV are also reportedly on the decline. This is natural, considering that just a year or two ago, one could count the number of poker shows on a single hand. Today, the number of programs is pretty much endless, and, thus, the original viewer base has been spread over an infinitely larger number of options. It is perhaps true that the options in poker television have grown at a faster rate than that of the viewer community, but this is not necessarily an indication that interest is waning.
Finally, the Reuters article implied that investing in online poker companies will never become a solid and trusted bet, due to legality issues in the U.S. This claim is difficult to swallow, however, considering the example of PartyGaming. The company, which is the largest online poker company in the world, surpassed its float price late last month, after months of dipping share prices. Also, earlier this month PartyGaming announced that that its full-year profits were likely to exceed expectations, leading to an initial 17 percent rise in share price. PartyGaming did, however, suffer a blow soon after, when leading broker Lehman Brothers undercut the company's value, citing that not too much clout should be given to PartyGaming's expectations. The skepticism displayed by Lehman Brothers is indicative of the general feeling among many of the powers that be in the stock market.
That being said, growth of online gaming sites, poker included, continues to increase. With more people playing at what many believe to be illegal sites, legitimacy for online poker will also continue to grow. Similarly, the more people openly break these boundaries, the less relevant these boundaries become. In short, the online poker site of today is becoming the speakeasy of the prohibition, and we all know what happened to that movement. Yes, it will take time for investors to warm up to online poker in any sort of a stable manner, but I, for one, am betting on it.
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