ESPN launches ‘free’ poker room
US sports TV channel ESPN has launched its own poker website, signing up more than 30,000 users in its first week.
The company is the latest to launch into the burgeoning online poker sector, and is a natural brand extension for the channel which already screens TV programmes such as the World Poker Tour and the World Series of Poker.
However, ESPN’s poker room differs from its competitors in the market – such as Party Poker and Paradise Poker – as users do not gamble with real money.
Subsequently the business model differs from the more normal online poker offering, where operators charge either a ‘rake’ (a fee to play at a table) or a percentage of winnings.
Instead ESPN says the site will broaden the scope for licensing fees associated with the brand, intimating that it will generate revenues from sponsorship and advertising opportunities. The channel also intends to launch a wireless poker game, a book, DVDs of the 2004 World Series and other products such as branded chips and tables.
The reason behind the decision to keep the site ‘free’ highlights a problem for US companies wanting to get involved in the online poker boom. Online gambling is considered illegal by the US Justice Department, and although the federal authorities have to date turned a blind eye to those US citizens playing poker online it is likely they would take action against companies based in the US offering gambling over the internet.
The result is that US companies are, ironically, missing out on a market dominated by their own consumers. Gamblers lost $237bn online last year, with the US representing the lion’s share of the market, American citizens being responsible for $73bn of that figure. The market is forecast to grow at an annual rate of 22 per …