Published on October 12th, 2008 8:15 am EST

There has been a great deal of debate over the past couple of weeks regarding the impact that the global economic crisis will have on online poker. Some people are of the opinion that online poker will suffer greatly over the next few years, while others think that the game won't take much of a hit compared to other industries.

I'm of the opinion that the global economic slowdown will have a minimal impact on online poker. This is obviously just my opinion, and I could easily end up being dead wrong. I'm just throwing my opinion out there along with everyone else.

The global economic crisis has become a major news story over the past month or so. People are huddled around their TV screens at night, waiting for the latest "doom and gloom" update. The media has an interest in whipping hysteria and panic - it increases television ratings and sells more papers. Everyone is talking about bailouts, credit default swaps and the second Great Depression. Investors are all hitting the exit doors at the same time, spooked by what they are hearing on a nightly basis. The stock markets are crashing and people are, in general, pretty terrified.

Things are certainly bad right now, but let's think about this for a minute. People are panicking, selling all of their shares, and no one wants to buy anything. People are depressed and miserable.

One thing that I've learned from years of trading in the stock market is that the herd is usually wrong. If everyone is super bullish, then you have to be worried. If everyone is super bearish, then it's time to start buying. Maybe this is the second Great Depression. Maybe the Dow will be sitting at 2,000 in a year and everyone will be laughing at me. I don't think so though. My point? Things won't be as bad as many people think they will be.

Let's remember something before we get carried away with our predictions of online poker rooms becoming ghost towns. The biggest economy in the world (the United States) has basically been in a recession since January of 2008. The country with the most online poker players (by far) is the United States.

Many Americans have been crushed over the past few years by falling home prices. Real estate markets such as Las Vegas, Southern California and Miami have been absolutely destroyed over the past year or so.

Let's hop into a time machine and travel back to the height of the housing bubble a few years ago. Let's say that I told you that the US housing market (and many other housing markets around the world) was going to take a beating over the next few years. You'd be able to make a pretty strong argument that the online poker industry would suffer because of it. However, the online poker industry has continued to flourish over that time.

Here's a stat for you. In 2005, Americans extracted $700 billion dollars from the value of their homes with home equity withdrawals. Last year, that number had dropped to $24 billion dollars. This is generally "mad" money that people used to finance lavish lifestyles. Trips. New cars. Thousand dollar deposits to Pokerstars, only to tilt it off in one night. All of that money is now basically gone, and the online poker industry has continued to thrive. And this is just the United States - add in numbers from every other country in the world and you'll be in the trillions.

Many Americans had most or all of their net worth in their homes, and many Americans have seen their home values obliterated. Same with the United Kingdom. Same with many other countries in the world, and yet the online poker industry has continued to march on.

Let's not forget about all of the other monsters that have been attacking the wallets of consumers over the past year or so. Sky-high gasoline costs. Higher food costs. The list goes on and on. The markets have been taking a beating all year - I didn't hear anyone worrying about the state of the online poker industry in July, when the Dow had already dropped 3,000 points from its highs. Still though, the online poker industry continued to grow and do just fine.

Let's also not forget how resilient the online poker (and online gambling industry in general) has been. I was around when most American credit card companies and Paypal were first prohibited for use with online gambling sites. Many people predicted that the industry would die then and there - it didn't. Then you had UIGEA, and the industry has continued to grow and prosper, even when many thought that it was down for the count. You've had "superuser" scandals and multi-accounting scandals, but still, the industry has continued to grow. Are we really going to count it out now? I'm not.

Unless things get REALLY bad (like unemployment of 15%+, continued destruction of the stock markets), I don't see things changing too much for the online poker industry. Your hardcore gamblers will still want to play; your young college players will still want to play; your casual players will still want to play on the weekend. I just don't see this changing that much. People have had much less disposable income over the past year and I haven't noticed too much of a change in the industry. People are still going to play poker, even if they don't have the money in their budgets to do so.

The major rooms are still flush with cash and making money hand over fist. They'll still be spending millions upon millions on marketing. They'll still be penetrating new markets and continuing to extend their brands to the masses.

I'm not saying that the online poker industry will be totally unaffected by what is going on in the world - however, I don't think that there is going to be sagebrush rolling through the lobby of Pokerstars either.


Filed Under: Other Poker News

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