The latest set of online gaming data released by Italian gaming authority AAMS reveals that Italy’s cash poker market generated gross gaming revenue of €18.1m in April, down 9.4 percent month-on-month from €20.0m in March.
The sequential dip follows equivalent declines of 13.4 percent and 6.5 percent in February and March respectively and confirms a notable softening of the market since January, when Italian concessionaires collected €24.6m in cash poker revenue.
As shown in the chart below, the recent dip in gross gaming revenue from the segment has marked a departure from a steadier six-month period from August 2011 to January 2012 during which monthly revenue stayed broadly within the range of €23-25m.
Cash poker, along with non-slot-based casino games, entered Italy’s regulated online market in July last year and, in the process, served to both cannibalise the revenues generated by tournament poker, in operation since September 2008, and help grow the legal market as a whole.
To explain the recent softening in cash poker takings, it is useful to take a look at the historical impact of seasonality on Italian poker revenue, as well as the influence that fluctuations in the market-wide hold rate have had on the market’s headline figure.
Thinking about the slowdown in revenue in seasonal terms, from the back-end of winter to the start of spring, it is worth noting that January was the most lucrative month of the year for Italy’s tournament poker operators in both 2010 and 2011.
Cash poker’s average monthly revenue total from February to April equalled €19.8m, 19.5 percent below the €24.6m generated by the market in January. Similarly, average monthly tournament poker revenue in the February to April period undershot January’s total by 8.2 percent and 16.1 percent in 2009 and 2010 respectively.
This would suggest that seasonality has a significant role to play in determining levels of activity, with Italian online poker players spending more time away from their computers as the weather improves from January to April.
While it is intuitive that the changing of the seasons has had a major role to play in cash poker’s recent contraction, the latest AAMS figures show that gross gaming revenue within the segment has fallen back more sharply in recent months than turnover; perhaps a purer measurement of player activity.
While gross gaming revenue showed month-on-month declines of 13.4 percent, 6.5 percent and 9.4 percent in February, March and April respectively, turnover in terms of amounts wagered saw slightly milder falls of 11 percent, 4 percent and 9.2 percent over the same three months.
To explain this slight disparity, the below chart displays monthly values of the market-wide cash poker hold rate, calculated by dividing gross gaming revenue by turnover, alongside the number of cash poker concessionaires listed each month by AAMS.
The market-wide hold rate has declined from a level of around 2.8 percent during a relatively stable period between September 2011 and January 2012 to 2.64 percent in both March and April – enough to knock more than €1m, or 5 percent, off gross gaming revenue for each of the two months.
With poker rake held constant, the shrinking market-wide hold rate most likely reflects an increase in the extent of promotional bonusing deployed by operators in the face of increasing competitive pressures.
Indeed, the latest market share data included in the AAMS report lists a total of 56 cash poker concessionaires for April, up from 48 in January. The recent influx of new concessionaires, many of whom operate multiple white label sites or 'skins', is likely to have contributed to a phenomenon of increased promotional bonusing within the market.
With the anniversary of cash poker’s introduction to the Italian market approaching, it remains to be seen whether this recent trend of contracting market-wide hold rate is one that will be maintained over the rest of the year.
AAMS online gaming data can be found here.
A full analysis of the Italian online gaming market will be included in GamblingData’s upcoming Regulated European Markets Data Report.