[sam h]

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Honestly, I think that if last week, Harrah's was able to open their own online poker room legitimately in the midst of Party's dominance, Party would be done for. Assuming Harrah's room was on the up and up, they could launch a huge ad campaign saying as much, discrediting Party's trustworthiness.

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The cost of such a marketing effort is very large. Plus, opening up at the same time the US is shutting down foreign companies who are already active in the market is next to impossible. There would be injunctions, lawsuits, appeals to the WTO, and lots of messy business were the US gov simply to say "all foreign companies get out, all US companies get on"

Even if they could do this, there is no guarantee that Harrah's traffic would even come close to Full Tilt in the first year, let alone Party or Stars.

Full Tilit is probably the best late comer start up to use as a model. They have cache (as would Harrah's) and credibility with the current consumers (poker players). They have spent millions on marketing, and in the 3 (?) years they have been a going concern, they still do not have 15% of the market.

Just because Harrah's is Harrahs is no reason to assume massive, cheap and immediate market penetration. They would have to earn their online customer just as much as everyone else. They would have a head start over a "cold" start up with no reputation in the industry, but that doesn't amount ot "killing" Party or Stars anywhere in the near future if they had to compete head to head.

Most poker players have a slight (or more) distain for Harrah due to the crappy way we all get treated at the WSOP. To say they can step into a market and dominate it with a simple ad campaign just simply isn't true.

Would Harrah's do well with a cold start? Most probably, but it would take a long time (and time=$$$) and a lot of marketing $$$ to come even close to the industry leaders.

Lucky for them that they now probably do not have to face those obstacles.

Regards,
Woodguy

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I think you are actually underestimating how difficult it would have been for Harrah's to gain penetration. Online poker is a classic case of "network effects." The value of the product to the consumer is mostly a function of how many other consumers are using the same product, and once you have a giant like Party it is almost impossible to gain substantially on them unless they really screw up (a la friendster). This is basically the same situation with eBay. There is a reason Google or Microsoft can't just spend a bunch of money and dominate that market.

I am on the fence regarding the conspiracy theories, but I think that its absolutely clear that the only way for a Harrah's to get into the online poker market as a major player was to use other (read: political) means to disrupt or destroy the currently entrenched consumer networks.