Internet bookmakers are optimistic heading into this year's Super Bowl, but one industry analyst is predicting this year's game could be the ultimate test for the sector.
For the first time since he started studying the industry in the mid '90s, Sebastian Sinclair of Christian Capital Advisors is predicting a decline in business for online sports books on this year's game.
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"The Super Bowl is likely to be the litmus test for what looks to be a pretty bad year for e-gambling businesses."
- Sebastian Sinclair
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Last year Sinclair's figures showed Internet sports books generated a whopping $400 million from the game. That was $100 million more than the 2000 Super Bowl, which was the double amount wagered in the 1999 game.
Sinclair predicts that $339.5 million will be wagered on this year's game. This, the first decline since he began tracking the event, is due, he said, in large part to credit card networks' increase pressure on merchant banks to decline all Internet gambling-related transactions.
Mid way through last year Visa and MasterCard started auditing online casinos and sports books. The associations instituted penalties for U.S. processors who weren't using the proper coding on transactions to designate them as gambling-related. The move has crippled many operators that rely heavily on American consumers.
Sinclair said the revised projection is just the start of the bad news for the industry. In the past a large factor to the industry's growth was tied to the casual bettor, who turned to the Internet during big sporting events like the Super Bowl and then was converted to a more regular online bettor.
With the added measures in place from the credit card companies, Sinclair feels the casual bettor will be less likely to convert to the Internet upon learning it won't be easy to use a credit card.
"The real impact will be felt later," he said. "A huge amount will drop out of the system at that point not wanting to bother with PayPal, unless they already have an account. . . and some 10 million plus Americans do. . . or Firepay."
Operators, though, aren't as pessimistic about the big game--and the overall picture--as Sinclair.
Steve Schillinger, one of the founders of World Sports Exchange, said his company is gearing up for what has always been its biggest day of the year, and he is expecting this year to be no different. The company is counting on its lines being busy on Sunday and is shooting for $3-4 million in bets..
"We expect a little more than last year," he said. "Our whole business has increased since last year."
He said the credit card issue hasn't plagued their operation that much this year.
"It really hasn't effected us that much," he said. "I think a lot of books are doing about the same as last year, but our business has been kicked up about 15 percent. That is why I think we will have a pretty good Super Bowl."
Peter Childs, a spokesperson for Sportsbook.com, agreed with Schillinger and said many of his customers were able to adapt to alternative payment solutions rather easily.
"The third-party payment systems like PayPal and Net Teller have saved us," he said. "They can use their credit card with those accounts."
One site effected indirectly by the credit card companies' policies was Betinternet.com. After years of accepting bets from U.S. players, the site decided a couple of months ago to distance itself from American customers.
Mark McGuinness, marketing manager with Betinternet.com, said the decision was a commercial one, but the site still looks at Super Bowl Sunday as a key event because of its international appeal.
"Whenever you have an international sporting event of high caliber watched by billions around the world, not just North Americans, you have to be ready for that," he said. "There will be significant interest from the Far East where the game is exceptionally popular."
He said the site doesn't have any projections for Super Bowl turnover or handle, but he expects the majority of the site's customers to take a wager on the game.
"Because of the media behind the game, that will attract new customers as well, but our main focus will be our existing player base," he said.
Schillinger said a key for WSEX in combating the credit card issue has been the advent of new features to the site.
"We do interactive games a lot more than we used to," he said. "We do about 10 a week and we do every golf tournament you can bet interactive."
With the interactive option, bettors can buy Tiger Woods, for example, after every shot. Betting can take place all the way up to the last hole. The concept will be incorporated into the Super Bowl as well, with the value of each team being adjusted after each play. Bettors can then buy and sell each team all the way through the entire game.
WSEX does see a spike in new account sign-ups in the week leading up to the Super Bowl. Schillinger said no special efforts are made to convert those casual bettors into regular subscribers, but the site tends to bring them back.
"We don't have that many people leave after the Super Bowl," he said. "They will come on, see what things we offer and see how easy everything is to use and how many betting opportunities there are and are interested in what we have to offer."
Childs said the Super Bowl is Sportsbook.com's biggest betting day of the year.
"We will have more users placing bets than any other time," he said "The thing for us is that you have all week to bet on it and see all the props and halftime stuff."
"While our volume will still be high and there will be a lot of people on our site, most of the people that bet the game bet it during the week because by Sunday they will be somewhere watching the game," he said
Regardless of whether insiders and analysts think Sunday will be down compared to years past, Sinclair thinks 2002 will be a bell-weather year for online gaming. An industry which has seen shattering growth in the past, he said, is facing a make-or-break period.
"The Super Bowl is likely to be the litmus test for what looks to be a pretty bad year for e-gambling businesses," he said.