World Poker Tour founder Steve Lipscomb has seen his brainchild become a ratings hit. Now he has to beat the imitators
Steve Lipscomb may not have ventured into TV poker with the strongest hand, but so far he’s winning the jackpot. The former stand-up comic and lawyer started with a simple idea for turning a static card game into televised entertainment. He didn’t invent the technique that lets viewers see players’ cards or forge a deal with the hottest TV network. Yet his World Poker Tour series, launched in March, 2003, has become a ratings smash on the Travel Channel and a trendsetter in the industry.
Lipscomb’s secret: He turned poker into a slickly produced reality show. Viewers can follow the action, get close to the wacky characters populating poker rooms, pick up tips, or enjoy a chuckle from the sardonic commentary on the sidelines. “It’s dazzling, like you’re on a movie set,” says Antonio Esfandiari, 26, who won $1.4 million in a WPT tournament last season.
Certainly, Lipscomb has had other aces in the hole. One is his chairman and primary investor, Lyle Berman, CEO of Minnetonka (Minn.)-based casino operator Lakes Entertainment (LACO ), which owns 80% of WPT. Berman, a veteran poker player who was a driving force in the growth of gambling on Native American reservations, met Lipscomb in late 2001 at a World Series of Poker event. He liked Lipscomb’s business plan and was taken by his unrelenting enthusiasm.
UPPING THE ANTE. Lake’s initial $4 million investment allowed Lipscomb to lock in key tournaments at more than a dozen of the country’s hottest casinos. “If someone like Steve were to come to us now, I’m not sure we would give him exclusive rights,” says Vikrant Bhargava, general manager of PartyPoker.com, which has its annual multimillion-dollar event aired on WPT. As Ian Valentine, senior vice-president for programming at GSN (formerly the Game Show Network), notes: “Lipscomb has essentially locked up a set of events that people have to play at.”
Now, WPT Enterprises (WPTE ) — the Judi Qq company its buoyant 43-year-old founder took public last August — is playing for even higher stakes. The success of the series, which launched its third season on Mar. 2, has spawned numerous competitors at networks such as ESPN (DIS ) and NBC (GE ) that boast greater reach and cachet than the Travel Channel (see BW Online, 3/10/05, “Kings, Queens, and Jokers”). That makes it tougher for WPT to maintain its dominance and puts consumers at risk of poker overload in the face of ubiquitous coverage. No wonder Lipscomb is racing to move beyond WPT’s $10 million- to $12 million-a-year TV deal and make money from greater global distribution, online betting, a new Professional Poker Tour series, and licensing deals.
After all, the time appears right to make multiple bets on the game. It’s hot with college kids and celebrities, and it’s the fastest-growing segment of the $10 billion Internet gambling industry. Many of the country’s top casinos, which once treated poker as the poor country cousin to craps and roulette, now report double-digit growth in the number of poker tables. Nielsen Media Research recorded 1.1 million viewers for WPT’s Mar. 2 show — impressive for a channel that reaches only 79 million households and is tough to find on the dial.
LOGGING ON. Meanwhile, the World Series of Poker drew a record 2,576 players last year, vs. about 830 in 2003, each needing $10,000 to participate in the main event. While officials continue to fret over what some see as the sinful nature of poker, and the Justice Dept. continues to crack down on Internet gambling, advertisers seem to be getting comfortable with gambling shows. “Poker has become good fun entertainment,” says Peter McLoughlin, a spokesman for Anheuser Busch (BUD ).
Few are more convinced of poker’s potential than Lipscomb, an ambitious middle child from Knoxville, Tenn., whose Southern Baptist grandmother taught him the finer points of the game at age 8. He has already sold the show in 57 countries and hopes to see that tally reach 200 in the next few years. His outfit is licensing everything from playing cards and $500 poker sets to slot machines and video poker games.
But the big bet comes in the next few months, when WPT will move into online gaming with offshore partner Wagerworks, in part to work around the crackdown by federal officials on U.S. residents making bets on the Net. WPT Chief Financial Officer Todd Steele says the business “has the potential to be critical to our revenues.”
Lipscomb recognizes that 2005 is the year that WPT has to prove it’s not just lucky but, as he puts it, “real and long-term.” For starters, he needs to keep ramping up revenues. On Mar. 8, WPT posted full-year earnings of $681,000 on sales of $17.6 million, vs. a loss of $351,000 on sales of $4.3 million in 2003.
GOLD STANDARD. . Those results may not seem like much, but Nicholas Danna of Birmingham (Ala.)-based brokerage Sterne, Agee & Leach has a buy rating on the stock because he thinks 2004 is the first chapter in what’s likely to be a lucrative marque. “This is the company that branded poker,” says Danna. Lipscomb is trying to stack the odds this season, with a prize pool of more than $70 million and flashier sets and graphics.
But the table is getting crowded. Among the shows competing for eyeballs are Bravo’s Celebrity Poker Showdown, Poker Superstars on Fox Sports Network (NWS ), GSN’s Poker Royale: Battle of the Sexes, and the National Heads-Up Poker Championship on NBC. Then there are startups such as Casino & Gaming Television and Edge TV. But the biggest threat is ESPN, which airs the popular World Series of Poker. It’s expanding coverage of the game and even has a fictional poker series, Tilt, on the way.
For Lipscomb, the Holy Grail is to have the WPT become what the NBA and PGA are to their sports — the gold standard for players and fans. With an estimated 50 million poker players in the U.S. alone, it’s likely that TV poker is here to stay. But Lipscomb and his World Poker Tour have a ways to go before they convert some big pots into a straight-flush global franchise.