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How Much is The Prohibition of Online Gambling Costing The Search Engines?

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June 10, 2009, was the day when opposing forces clashed over the future of online gambling. First, U.S. authorities froze the online bank accounts belonging to some 27,000 online gamers as part of a general crackdown against illegal gaming and money laundering. Almost at the exact same moment, the European Union accused the U.S. of violating international trade rules by banning online gaming, going so far as demanding compensation for what EU-based gaming outfits claim is a $100 billion loss.  At the same time, HR 6870, the Payments System Protection Act, which partially decriminalizes online gaming, was approved by a House committee and appears headed for a vote within days.

What impact would the decriminalization of online gaming have on the search engines, which have banned any paid search ads for several years? Armed with Google’s keyword suggestion tool, which lists approximate monthly keyword volume, average CPCs, I created a list of 200 keywords consisting of those which were obvious choices for online gaming outfits vying for the attention of searchers. My findings follow (you can examine the complete spreadsheet here (link to spreadsheet).

How Much Is This Costing Google?
My list of 200 keywords were hardly exhaustive (many search marketers have keyword lists in the thousands or even hundreds of thousands in order to mine the long tail), but they are instructive in terms of setting a minimum benchmark for what the search engines are leaving on the table. My CPC figures were taken directly from the keyword tool’s listing of average CPC for each keyword/keyword phrase. The sampling period for all of these figures was April of 2009. My assumption was that paid clicks would constitute a 15 percent CTR rate for each gambling oriented SERP, a rate that I believe to be conservative.

Bottom line? In Google’s case, the amount of lost revenue is $9,632,382.62 million per month, or about $115 million per year. Again, I would regard this to be a very conservative estimate, both because my keyword list was very limited and my CTR per SERP rate was at the low end of industry estimates.

How About The Other Engines?
It’s easy enough to extrapolate these results out to Yahoo and Microsoft (Bing), using comScore’s search query rankings for the same period (April 2009). According to comScore, Google’s share was 64.2 percent, Yahoo’s at 20.4, and Microsoft at 8.2, which would put Yahoo’s monthly loss at $3,060,756.77 and Microsoft’s at $1,230,304.32. Ask, with a 3.8 share, is out $570,377.72 and AOL, with a 3.4 share, is out $510,377.97. Collectively, then, the money that all the search engines are leaving on the table each month is $15,004,198.40, or about $180 million per year.

These numbers are very rough approximations and I believe they’re quite conservative. But they’re not exactly chump change, either for the engines or for the offline casino industry which will likely fight hard to keep the old prohibitions in place.  Nor is the $180 million annual loss figure really indicative of what the overall online advertising business has lost over the past several years, because display media is typically a preferred medium for online casino owners.

It is not possible to know what the fate of the current efforts to remove restrictions on online gambling will be. But investors placing bets on the fortunes of search engines and the future of the online advertising industry will doubtless be watching these developments with great interest.

How Much is The Prohibition of Online Gambling Costing The Search Engines?
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  • Guest

    For a much better idea of how it might affect search engines, why not look at the UK (for example). There there aren’t any rules banning gambling advertising online, but Google’s own terms and conditions prevented any search advertising on the subject until earlier this year. Advertisers had worked around this by using typos and misspelled keywords, for example. But you could look at traffic since Google relaxed its rules and extrapolate out from there.

  • http://www.slotbonuses.info/ slot bonus guy

    It is costing the search engines at least $50 million. it is also costing the US governments at least $100 million in lost tax revenue. Tax and monitor the industry already! Step being two-faced about state lotteroes and allow online gaming again.

  • Guest

    The no deposit casino bonus is ideal for those who are not looking out to gamble for money but to enjoy playing it.

  • Guest

    Banning gambling sites is not the ultimate solution for this. This will lead to huge loss of revenue generated, it’s not that bad either. Government take actions with regardless of concern that lots of people’s money has been invested in there. Total banning will cause more problems. Games like Online Scratch Cards should be a big problem or won’t be accused of illegal money laundering. Banning of online gambling will bring a huge loss to search engines as well as US governments.

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