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Editorial: A Tale of Three Poker Companies: Part I – Planet Poker
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When it comes to investing in gambling companies, there can be no doubt that the hottest stocks are those that are attached to the most popular online poker rooms or the largest live tournament series. That said, these same stocks are also some of the most unpredictable. Both online and live poker represent a competitive (if not outright overcrowded) market. One misstep in marketing, financing, or design can cause the value of a once strong stock to plummet seemingly overnight. When it comes to poker-related stocks, the laws of supply and demand mean instant gains...and losses. In this article, we'll explore the good, the bad and the ugly business plans of three of the world's largest poker companies.
Our first subject is Planet Poker. Launched in 1997, Planet Poker has the unique distinction of being the first real-money online poker room. Planet Poker was the sole online card room for more than a year, giving them an obvious advantage over the hundreds of online poker rooms that would launch in the next decade. And yet...today Planet Poker is a somewhat poorly attended, fun-only site. What went wrong?
In their haste to get online first, Planet Poker neglected to invest in the best technology. Why bother when there's no competition, right? Wrong. Despite their one-year lead in the field of online poker, when Paradise Poker was launched a year later, it's superior software and site design quickly stole the interest (and money) of Planet Poker's burgeoning customer base. Ultimately, it took Planet Poker seven years to launch a better real money gaming interface, and by then they had lost their early lead to bigger, better, and newer rooms like Party Poker.
The final blow for Planet Poker came in 2006 with the passage of the UIGEA. Since a large percentage of the site's 750,000 paying members were American, and since the company was already floundering in a sea of superior gambling sites, Planet Poker made the decision to pull the real-money segment of their site. From 2007 onward, Planet Poker operates solely as a fun-only poker room. The value of the company's stocks declined steeply with the popularity of the site, and today—with no room for growth—Planet Poker stands as a prime example of both a poor poker stock investment and a poor poker business plan.
26-Oct-2009, 22:13
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