Full Tilt Poker Saga Hurts Whole E-Gaming Sector

The tribulations being faced by Full Tilt Poker at present are no doubt being watched with barely understood schadenfreude by some of its competitors in the Internet gambling sector. But the events of the last few months concerned PokerStars and Full Tilt reflect badly on the entire e-gaming market.

All e-commerce is based on consumer trust but within online gambling the dependence on trust is even more crucial. Online gambling companies do not make anything or sell anything physical. They simply hold players' money and move that money around based on the event of events being they sports events or RNG-based events. Trust is a fragile commodity and anything that threatens it affects the entire e-gaming sector.

Look at recent events involving PokerStars and FullTilt from the ordinary European players' point of view.

One Friday evening (European time) in April 2011 that they logged into their account only to find that the US Department of Justice had located the domain name.

Then for FullTilt players, many were faced with a "system update" message at the end of June 2011 saying the system is down and giving an email address as a point of contact.

Most players in Europe simply do not follow regulatory events as closely as those working in the industry do, so these events would have been both confusing and worrying.

Both FullTilt and PokerStars are very high profile e-gaming firms in the UK, broadly advertising on television and in print, as well as sponsoring televised poker tournaments. Regardless of the reality of the situation, many consumers will take the attitude that if it can happen to these two high-profile e-gaming websites, why should not it happen to any other gambling site? This in turn may influence consumer behavior on e-gaming sites and their trust in them – possibly keeping lower amounts of funds in their accounts, for example, or allocating to deposit funds at all.

For consumers there is always a sense of anxiety when a business' website experiences trouble – not just in e-gaming but any sector. This sense of anxiety is heightened when it is an "Internet only" business without a high-street presence.

It is Gambling Consultancy assessment that a "clicks and mortar" strategy will be the most beneficial in years to come. This strategy could mean betting shops on the high-street, casinos, bingo halls, or, of course, lottery outlets. A state lottery is often a brand highly reliable by consumers and with an intensive presence on the high-street. They will be well-placed to take advantage of the "clicks and mortar strategy".

Many former "offshore" online gambling companies have undergone a Damascene conversion in the last few years. They now clamour to be regulated and taxed by every government in Europe rather than enjoy the benefits of low-tax offshore jurisdictions. As such, they have lost all the advantages that they had over their land-based counterparts. If you are going to be taxed as highly as a land-based gambling operation why not get some of the benefits of a land-based business too and get a presence on the high-street to give consumers greater trust in your brand?