Internet gambling is good for business, recent study finds

A new expert study of online gambling by academics at the universities of Nevada and Hamburg has presented an interesting new perspective on the impact of internet gambling on traditional gambling businesses, suggesting that, contrary to perceptions that it is competitive and deleterious to the latter, online action in fact enhances and expands traditional offline gambling business.

Dr Ingo Fielder of the University of Hamburg, one of the academics that managed the study, says: “Our results show that off-line gambling operators should not be concerned about online poker but instead welcome it. I am certain that this will be new information to the US Government.”

Fielder, and his colleague Kahlil Simeon Philander at the University of Nevada used the comprehensive ‘Online Poker Database’ at the University of Hamburg to in part inform their project, a source of data that is reportedly the largest of its type in the world.

The activity of online players was tracked, revealing that although additional revenues generated by online gambling are relatively small when compared with off-line equivalents, they do constitute an enhancement of off-line revenues rather than detract from them.

The report notes that online and off-line markets reinforce each other, and that the products are “gross complements” and not “gross substitutes”.

“Depending on the model, we found that in a market with an additional $1 million in casino revenue, we would predict an additional $2.7 thousand in online poker revenue,” the experts claim in zeroing in on the internet poker phenomenon.

Interesting online poker nuggets in the report include the fact that in 2009 just over 1.4 million Americans (0.46 percent of the US population) played online poker, and paid an estimated $981 million in rake. Turning to Canada, the study found that 307,000 Canadians played online poker and paid around $220 million in rake (0.9 percent of the population of Canada).

The full study can be read here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2021993