Party Poker Future Musings

The Future of Party Poker

Nearly two years from back I heard the one of the big wigs at a conference for online gambling spilling information on how they saw the poker market going. In that time a lot has happened and for the most part the mighty claims of the Party Poker representative have not come true. In October 2006 things went really bad for this industry leader.

But other fall outs include Empire Poker and the rest of their skins. I'm personally not sure what their affiliate base was feeling before the US Legislation but I know from 2 years back that they were not happy campers because of the fact that Party Poker had such a big dominance in the market that the pool of players that they could send was actually quite small.

The bottom line now is that Party Poker which cashed out in the London stock exchange (LSE) has had to pull out of the USA and with it over 80% of it's revenues have already gone.

For the company this means some huge adjustments. Obviously there will be a large number of retrenchments but the competition will be unrelenting from their competitors. With these kinds of internal changes it will be difficult for any company to adjust their business quickly enough.

Another major factor is that their software is old and their business model held up by the fact that they had such a huge weight of players in their system. Liquidity is going to be stripped from their market which will in turn move to their opponents who will eagerly feed on the carcass of the once all powerful poker company.

Other costly issues like their stock market presence will also hamper their progress. Being on a stock market forces businesses to maximize profit and long term business objectives are often foregone for short term profits. This will be a pressure cooker that will cause further internal problems and management will change. This is the same management that got them to this illustrious position. The purge in management experience will be profound and it is difficult to see how Party Poker can stay on the stock market with this kind of pressure.

The game is going to be even tougher for Party Poker as the competition uses it's US profits to beat down Party Poker in it's own offline marketing game of high priced advertising.

Can you blame them for this. No obviously not and the founders probably did the right thing by listing the company. It should also be noted that the founders sold a large portion of their shares too so they were prudent with their own wealth. The US legislation was some what inevitable. The only question was when it was going to come and if they would legislate the market so that legal operators would be able to operate online with licenses.

The bottom line is that Party Poker was a great company that will be noted for it's fall from grace and like other super star online companies will go down in the records as another close thing like Napster and so many others before it. The only difference is that this time the online company was actually profitable when it came to the market.

Good luck to all those Party Poker employees.