Tuesday, August 30, 2016

Leveraging Artificial Intelligence(AI)/Machine Learning(MI) In Gambling Games

Artificial Intelligence(AI)/ and Machine Learning(ML) have been in existence for decades with AI applications being used in a number of different domains. Video games, in particular, have leveraged AI to assist and direct gaming characters/avatars to act in a human way and to assist the characters in their interaction with the game or other  players. Gambling style games have not leveraged AI and Machine learning techniques(to my knowledge). However, this may be changing as "traditional" gambling games have to sort out a way to reinvigorate the space and grow the market and attract a younger audience.  Online gambling potentially provides the ideal  environment for AI/ML because game play   generates a significant  amount of data that can be used to profile players, spot trends, increase revenue per player and increase engagement.

The real question is what form of AI is more appropriate for the  gambling space versus the video game space where some AI is already in use? It is common knowledge that video  games use a "form" of AI. However, the AI  approach used in video games  may or may not be appropriate  for traditional gambling games that are simpler, less "role" playing oriented and lack the  massively multi-player characteristics of some video games. Online poker may be the exception to this characterization.

What are the options in terms of AI approaches?

Machine Learning(ML) - Until recently computer programs have been  hard coded anticipating what a problem will be and  reacting  to  a fixed set of scenarios  providing recommendations or executing code that drives a process to conclusion. Traditionally, computer programs have  not been able to react to events, learn from these events and automatically change a program's behavior  based on that interaction. Machine learning changes all of this as it includes  ways to  react to  unexpected events by analyzing data patterns and making recommendations based on that analysis. This approach could be used in gambling games to   solve the problem of a player continually winning or losing a game, skewed payouts, consistent losses with not enough wins, etc.  In an ML driven environment the games math model, bonus structure and payout structure could be modified during play to improve the overall experience and to increase revenue per player.

Case Based Reasoning(CBR) -  CBR is an AI approach that matches the goal of the outcome with specific "cases" that are appropriate for a scenario. This concept could be extended into the gambling environment  for specific game types,  game "states" and player profiles.  Case based reasoning has been used for diagnostic purposes to determine a specific method to address a symptom or issue. In gaming the case could be the "characteristics" of  game play and or the history of game play of a particular player. It could also be applied to the amount of the "wager" and loses to date or in a game. In a multiplayer or head to head game the game play of the players and opponents could be adjusted over time as the game progresses. Players may also chose a "case/category" to be placed in before the start of a game.

Decision Tree   - Decision trees were some of the first AI systems constructed. A decision tree starts at a point where a problem or goal is stated and then guides an individual or program  through a process of questions and answers to help that person or machine to achieve a goal. These systems are relatively static. Consequently if a scenario has not been experienced or anticipated there is no other option. In a gaming environment  it may be difficult to anticipate all possible scenarios . However, once the decision tree becomes robust it can be an effect coaching tool to help a player execute a reasonable gaming strategy or drive a slot experience based on player profiles.

Neural Networks - Neural networks are essentially 'learning" systems that evaluate behavior  and  or activity and develop "advisory" approaches to solve problems. To be effective neural networks need a constant flow of data. Neural networks would appear to be a good approach for massively multiplayer gambling games  such as poker or perhaps blackjack where a a number of players  continually engage and react in a gaming environment create large and ever changing data sets. Slot games are fertile ground for Neural Networks because they accumulate large data sets that can be associated with a single player and groups of players.

Post Play Analysis Learning  -   Although  reacting to game play activity during a game using AI/ML is the ideal scenario, post analysis of game play data is also important. Mining data from a game data depository that contains game play data that has been accumulated over time is an excellent way to determine trends,  player habits, causes of drop off and engagement. MI in particular is a great way to to do this as MI is geared to evaluating large data sets. The analysis of this data could be used to determine better ways to monetize games, improve the "stickiness" of games.    

It may seem odd to think of   gambling games  as a domain that can take advantage of advanced computing approaches.  However, given the amount of data that is generated from gambling games it actually is a perfect forum for AI/ML.  Slot machines are actually  a form of computing device that accumulate large amounts of data making for an excellent source of data for MI/AI.  From an economic perspective  gambling, relative to other gaming domains, has a high revenue per game coefficient.  This coefficient could be improved through the use of ML/AI. The real challenge is to determine what AI approach or approach is or  appropriate for a given "game".



Kevin Flood is the CEO of Gameinlane and FitCentrix, Inc. Kevin spent time at the Machine/Learning Lab at MIT as a technology transfer fellow engaged in model based reasoning, case based reasoning and rule based systems to enhance diagnostics systems.  He created a company called AI Squared as a result of that research.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.


Wednesday, August 3, 2016

Gaming Blog "Kevin's Corner" Achieves Milestone of 130, 000 Visitors!!

Kevin's Corner traffic exceeded 130,000 visits last week marking a significant milestone in the Gaming blog!  Kevin's Corner   started 5 years ago as a "professional" blog targeting individuals and businesses engaged in the "gaming" industry. With over 200 individual  blogs  it provides a wealth of knowledge on a variety of different gaming subjects. It has covered, "real" money iGaming, social casino, freemium gaming, virtual currency transaction and the relationship between land based casino and online gaming operators. The blog continues to attract a global  audience  as  different gaming business models merge and converge creating  acquisition and business partnership  opportunities.

Kevin Flood started the blog  to encourage  an open dialogue on a subject that was becoming increasingly complicated as new forms of online gaming began to emerge and merge into a complex interwoven environment of land based gaming, online gambling, social casino, virtual currency transactions and real money transactions. The international nature of gaming and the various laws  and preferences impacting gaming made for an interesting and, perhaps, confusing mix of laws, player populations and revenue models. Kevin's own experience as a game developer, game publisher  and executive for  US  based land based casinos exposed him to many of the influences that guided gaming behavior and business models. His experience launching  online gaming operations in different countries and in different environments made him realize that there are also similarities across borders that could be shared and discussed in a public forum.

The following  blogs are the top 5 blogs in terms of volume. Although volume is a good indicator of popularity it is not necessarily  an indicator of  "value". Kevin's Corner has attempted to address many aspects of gaming for  a variety of different business  sectors. In some cases a blog that has not hit the top five in terms of volume has been very useful for its  targeted audience and the information it provided.

Number 1 -Game Analytics - Big  Data and Business Intelligence  -  With over 2500 views this blog has received the  most attention and still continues to get   high traffic views based on how important making sense out of all of the data that games and game businesses produce.  Games are unique based on the amount of data that games can produce. It is a lot harder to understand the significance of, and patterns within data, then to collect it. Planning ahead for what you really need to know and being flexible in how to add new data and new data types into the mix is the key to good gaming business intelligence. Understanding player behavior and player (state) is challenging.  Where a player is(state) in terms of the lifetime value of the player is critical for the success of a gaming business. Having comprehensive analytical systems that  individuals or even a staff of analysts pealing through the data is not uncommon as a slight difference in game content and marketing strategy can make a meaningful difference in revenue, player retention  and player acquisition.

Number 2 -What Is the Better Gaming Business Model? - With the advent of social networks, social casino, freemium play, virtual currency and various new notions of what constitutes a game of chance , skill or for fun it is easy to become confused as to what is the right gaming model for a business. The source of revenue for the models, consumers of the content , marketing approach and revenue per player differ widely across gaming business models.   This makes the choice of a gaming model difficult. In the end, the gaming business model of chose has to fit the knowledge, skills, investment capital and legal framework that fits the organization.

Number 3 - Will Social Casino Games Be Subject To Regulated Gambling Laws?  - In the early days of social casino there was much speculation that social casino would be categorized as "real" gambling. Facebook credits(virtual currency) where at the heart of the controversy. Gambling is traditionally characterized as an activity that includes chance, consideration and "prize".   Government entities and traditional online gambling regulators where skeptical about the use of virtual currency in social casino games as a prize.  After a lengthy debate on the subject of virtual currency, regulators concluded that virtual currency that could not be converted or "cashed out" into a traditional currency obviated the "prize" definition of gambling. Therefore, avoiding the need to "regulate" social casino.

The regulator's decision not to regulate social casino may also have been influenced by the  realization that the social casino and "real" money gambling populations had different characteristics. Traditional gambling attracted a smaller audience relative to social casino.  Also, social casino was heavily influenced by the social network that hosted the games with the network itself being as important, if not more important then the game play itself.  The  poor "conversion" of social casino players to "real" money gambling players also had an influence on the regulators decision.  Some players prefer social casino  over real money gambling and others prefer freemium or virtual currency games. The social casino businesses have also been careful to make a clear differentiation between their models and online gambling business models. 

Number 4 - The Merger Of Social Casino, Online Gambling And Land Based Casino Models. - Similar to number 3 in terms of content and interest blog number 4 also received a lot of attention as a number of businesses began to develop, acquire and launch a number of  gaming models. However, merging of these models has been difficult as the audience, risk and governance of these models is  very different.  Operating the  gaming models as separate and distinct businesses has proven to be the most rational and successful way to operate  these discrete models.

Number 5 - Zynga Under Investigation  By The US Justice Department -   The popularity of Zynga poker in the Facebook  social network did catch the attention of the US Justice Department as it was one of the first really large social casino businesses using Facebook virtual currency credits as a way to monetize players. The sheer size of the Zynga poker community averaging thousands of players interacting at  peak time did draw the attention of US authorities.  However, with no cash out possible the JD had little to stand on without changing the "definition" of what "prize" meant in a gambling  context. Prize is something of "tangible value" that can be exchanged and used to purchase other items of tangible value outside the origin of the currency generated. Facebook made sure that this could not happen, therefore, obviating the need to either shutdown Zynga or forces the company to change its revenue model.

Kevin's Corner continues to cover global gambling topics of all, types and  varieties. Reflecting on what has been the most sought after gaming content subject  over the past 5 years certainly reinforces what is "popular". However, the popularity of a blog does not necessarily indicate its "value" to all audiences. Thus, making it an important goal of Kevin's Corner to continue to cover many different topics.  Kevin's Corner subjects are often recommended by members of the gaming community as the community seeks to decipher what is really going on in the space and to engage others in a open dialogue about the future of gaming. If you would like a subject covered lets us know. Please send your suggestions to kflood@gameinlane.com.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.



 









Thursday, July 21, 2016

More US States Considering Legalized Online Gambling

We continue to see more states in the US  floating legislation to legalize online gambling. Poker continues to be in the spot light as opposed to casino style slots or blackjackMichigan and Rhode Island are the latest states to join the fray. Essentially, the states are looking for more revenue sources and online gambling appears to be an option. The new states  considering legalized online gambling intend to impose licensing fees on the online gambling operators. Both Michigan and Rhode Island have land based casinos thus following the trend of other US states (Nevada, Delaware and New Jersey) with land based casinos to be the only states where online gambling is either legal or being considered.

Michigan -  Michigan has a population of 9 million people similar to New Jersey's population. Michigan also has land based casinos. However, Michigan's casino are  native american tribal owned and operated.  The  legislation is poker focused only  and does not include any  table  or slot games.   The  proposed Michigan  online gambling proposed licensing fee is 5 million USD with an additional  annual gross revenues tax of 10%.  Certainly, Michigan's population should be able to support a robust poker community.  However, a full casino offering would make for a much better business model and ultimately a better revenue source for the state. 

Rhode Island -   With a population of 1 million residents Rhode Island is following the lead of Delaware as a state with relatively few residents offering legal online gambling. It appears that the Rhode Island online gambling legislation  will be poker "only".   However, this could change with Rhode Island adding casino games mirroring Delaware online gambling options.   Delaware is quite pleased with the revenue it has garnered from online gambling leading Rhode Island to believe it can also benefit from legalized online gambling.  However,  poker may be a challenge given to relatively small population of the state. It is most likely that Rhode Island will poker poker players across state lines and with UK players.  

Population Density -  If Michigan and Rhode Island join the other states that currently offer legal online gambling  the  combined  total population of  the states that will be offering legal online gambling  is 23 million. Of course, one has to be 21 years of age to gamble so the total gambling population is lower. However, if we presume that the adult population of these states is 75% the  eligible gambling population is 17 million.  This is not a trivial number of potential online gamblers.  If poker is the only gambling option in Rhode Island  the population may not be able to support a robust poker community.   With this said it appears that poker is "working" in Delaware which has a similar population.  

Poker Player Liquidity And Players - Providing online gambling legislation is passed in Michigan and Rhode Island the result will be a meaningful population of US based gamblers. Poker appears to be the current focus for US based online gamblers. However, liquidity is always an issue  with poker as it requires a significant amount of traffic to make for a viable poker community. We have witnessed this as New Jersey has teamed with UK online poker sites to improve its own liquidity.

Poker License Barrier -  We will also have to see how many operators will be able to pay for the up front licensing  fees. The Michigan license fee is non-trivial at a 5 million USD starting point. This fee will certainly prune the candidate pool of potential online poker businesses operating in Michigan  and how many operators can coexist in the state. It will also be interesting to see how many non-US based poker rooms will participate launch in these newly added states. The Israeli based poker businesses(Pokerstars, 888, etc.)  have and are active in the other US states and will most likely extend their presence into the new states.

The recent announcement by Michigan and Rhode Island that their state governments are interested in legalizing online poker  demonstrates a growing trend on the part of US states with land based casinos to add online gambling as a regulated activity. Ironically, poker as opposed to  the real land based money makers like slots and other table games being launched online. Certainly there will be a gestation period to determine how online poker is working in individual states and how pooling players across state lines is perceived. We might see the US Justice department step in as cross state line online gambling becomes more prevalent. However, for now it appears all systems are a go and the US online gambling is a growing business sector.



Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.



Friday, July 15, 2016

The Paradoxical Case Of Legalized Online Gambling In The United States

Given all of the experience that can be garnered from legal online gambling in European countries where online gambling, especially in the United Kingdom, has been very successful it is shocking that the US states have not taken advantage of  that experience and knowledge when launching or considering  launching online gaming businesses in the US.  Having personally spent time in the UK launching online gambling sites in the UK for US based casinos taught our teams a lot about what it takes to make an online gambling business work. Of course, the US and European markets are different in terms of size, history and gaming content  preferences. However,  certain lessons are transferable from the UK market and recent events may accelerate that process.  

Population Size,  Liquidity, Lead Generation And Poker - The UK has a population of 65 million people and capable of supporting liquidity dependent games such as poker and blackjack. In Europe. sports wagering  has been the primary source of  liquidity dependent online gambling as opposed to poker. However, poker  has become very popular in the UK.   This works because  of the size of the participating audience.  In the US  online sports wagering ,for the most part, is illegal. Thus eliminating that as a source  of leads for online gaming companies and especially those launching liquidity dependent game content. The lack of a liquidity pool requires US poker operators to become more creative in their approach to creating "liquidity".

Consolidation To Create Liquidity -  Pokerstars recently announced  it will combine it's UK poker players  with it's New Jersey players indicating how important "liquidity" is to making poker a viable commercial proposition. This "inter" country move is both creative and bold challenging regulators on both sides of the atlantic on how to regulate game play  and impose taxes across jurisdictions.     This will likely lead to a consolidation  with Rhode Island  (population 1 million), Nevada (population 2.8 million ) and Delaware  (population 1 million) creating a viable US and  enhancing the UK online poker market. Will blackjack be the next liquidity based game proposition that will witness intra country player sharing. 

Online  Casino Games - In contrast to poker and perhaps blackjack most casino style games  are "solitary" experiences and in many ways the money makers for online  and offline casino operators. The average slot machine  produces $240 dollars a day.   In June of 2016 New Jersey online casinos generated 14 million in gross revenue from slots.  In contrast poker produced 2 million in revenue. Paradoxically, the popularity of poker does not translate to significant revenue for either land based or online operators. However, "casino" style slots are not popular amongst European players. This dichotomy  is most likely another  reason why the we are seeing a consolidation of poker players across countries. 

Online Gaming Impact On Land Based Casinos - Clearly, consumer trends to experience gaming as an online activity as opposed to a land based activity is exerting  pressure on  regulators and land based operators on how gaming and gambling is managed in the US.   There is no denying that the land based gaming experience is becoming subservient to the online experience.  The Atlantic City situation is a primary example of this trend. It is difficult to say how Vegas is reacting to this shift in consumer preferences as they have withdrawn from poker as an online offering and have refused to consider consolidating online poker plays across state lines or launch online games other then poker.

The need for liquidity in an online poker environment and the contradictory signals that US land based casinos have conveyed  in relation to online gambling has truly created a paradoxical situation that can only be understood if one studies the history of gambling in the US and the role that land based casinos play in terms of  online gaming regulation.  Unfortunately, the current situation leads to US player confusion as to what is and is not legal. This unfortunate paradox has lead to a flourishing  illegal online gaming business sector taking advantage of the mixed messages conveyed by regulators and land based casino operators. It has also lead to a Euro based intrusion to acquire US based poker players sapping the US from a potentially robust, large and successful interstate poker offering.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.





Tuesday, June 28, 2016

BREXIT(British Exit From European Union) Impact On European Online Gambling Business

The news that  Britain voted  to leave  the EU (BREXIT) certainly has many people, businesses  and organizations scrambling to determine the impact of the vote  on themselves, organizations and their businesses. One of the business sectors  that is especially interested in the impact is the online "gambling" industry. Great Britain is somewhat unique on a worldwide scale because they have embraced online gambling as a legal activity under the  UK Gambling Act of 2005.  In 2015 The online gambling industry generated 3 billion pounds for the UK(including Scotland and Ireland)! Clearly this amount is non-trivial?

 Great Britain's online gambling business sector  is  somewhat complicated as many online gambling business have moved their business to British ("protectorate") jurisdiction such as Alderney, GibraltarMalta and Island Of Man to avoid the standard UK business taxation regime.  These "protectorates"  are subject to British law and protection. However, their tax structures differ and their unique political status provides business in these jurisdictions to access markets they may not be able to access if they where domiciled in the UK itself.

There is currently much chatter about what happens to these "offshore" gambling business under BREXIT  and are they better off then their English counterparts(especially the sportsbook operators)?  One of the overriding points of interest is the unique status of these "Protectorates" in relationship to European EU law as opposed to UK law.   The protectorates are considered part of the EU and therefore can access Euro markets proving they adhere to EU gaming  laws of a specific country. 

Another interesting situation has been created as Northern Ireland and Scotland are actually independent countries under and part of "Great Britain". It appears they want to stay in the EU. This could also create a situation where these countries in-fact chose to host online gambling for themselves for the purpose of raising tax revenue. If they side with the EU there may be an opportunity for them to behave is a way similar to Alderney, Malta, Gibraltar and Isle Of Man. 

It is clear that the British protectorates(Alderney, Gibraltar, Malta and Isle of Man ) may come out of BREXIT as the ultimate winners in the battle for the hearts minds and wallets of European citizens if the EU clearly acknowledges these principalities as "member" states.



Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.










Monday, June 13, 2016

If Elected President Will Donald Trump Endorse Nationwide Legal Online Gambling In The United States?

There has been plenty of press over the last several years indicating that Trump is a proponent of legalizing online gambling in the United States. Back in  2011 a Forbes article identified Trump as a proponent of "Online" gambling. His associating with the online poker business Ultimate Gaming  also indicates that he is interested in the online gambling space. Trump has also been involved in the land based casino business  having launched land based casino's in New Jersey. This indicates that Trump is not adverse to "Playing" the gambling card if he wants to fund certain US projects but is constrained by outstanding debt. 

To date he has not mentioned this association in his current bid to obtain the Republican bid for the white house. However, with current US debt is 13.8 billion dollars and   no signs of  decreasing his "trump" card could be to promote online gambling for the purpose of raising tax revenue to fund specific projects and initiatives. His endorsement of online gambling may also be leveraged to raise campaign funds from businesses interested in launching gambling venues in the US. 

Another factor impacting his decision on online gambling is Sheldon Adelson's stated opposition to online gambling in the US . Sheldon is also a land based casino operator with political connections that has flip-flopped on the online gambling subject.  It is still not entirely clear why Sheldon, a one time proponent to online gambling, has recently turned so negative on its proliferation in the US. However, Sheldon is a heavy hitter in terms of his wealth and political clout. With this said, his proposed legislation banning online gambling in the US has gone nowhere in congress. Clearly, someone with bigger pockets has decided that federal online gambling may indeed  be a very good source of tax revenue.  Also, Trump is competitive and  has a mind of his own which may factor into his support of online gambling in the US despite Sheldon's current position on online gambling. 

European online gambling regimes also need to be taken into account  when evaluating Trumps potential endorsement of online gambling legislation.  Europe has a hodgepodge of successful offshore hosted online gambling in Malta, Alderney and Gibraltar and country based online gaming. For instance The UK has a long tradition of offering legal online gambling which is generating hundreds of million pounds per year.  To date we have not seen any rollback of these venues. In fact many online properties are thriving and meaningful tax revenue is being generated by these properties.  

Trump has no fear when it comes to controversial issues. Online gambling certainly has been controversial in the US. However, it can also be a great source or revenue and jobs in the US. Restricting gambling to land based venues is a bit silly and arcane and there is no proof that online gambling has any negative impact on land based gaming revenues. The world has moved on and Trump may very well play this card if he is elected.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.



Monday, June 6, 2016

Is It Gambling, Skill Or Play For Fun? "The Confusing Intersection Of Fantasy Sports, Social Casino, Skill Gaming And Traditional Gambling"

I have to believe that at this juncture a person, business or regulator entering the US online gaming space must be totally confused as to what is "real" gambling and what is not and what is regulated and what is not. Even for a veteran of the online gaming space the world has become confusing, if not downright contradictory and perhaps even a bit strange.  The traditional definition of "gambling" has been "an activity that involves three elements; "chance", "consideration" and "prize". In a a game of "chance" a players' knowledge and acumen are not factors in the outcome of a game. However, this definition has been stretched by the advent of virtual currency, skill gaming and fantasy sports creating a bit of confusion over what is or is not gambling.

Even before the advent of the "skill" game category people have argued that poker and blackjack are skill games and not games a chance. The dictionary definition of skill actually identifies poker as a skill game. "poker is a game of luck and skill"!!  Despite this definition  poker and blackjack retain their "gambling" status. Fantasy Sports has further complicated the  gaming universe making for an even more confusing world of conflicting and perhaps misleading notion of what is or is not fun, gambling, skill or "other". Fantasy sports is "categorized" as a skill gaming yet "unregulated".

  Facebook And Social Casino - Confusion over what is or is not gambling intensified with the launch of gambling game content in social networks. The first real challenge to the notion and definition of online gambling started in 2009  when "social" casino entered the scene in the form of Facebook games  leveraging Facebook "credits"  as a wagering currency. These games allowed  game/gambling publishers to launch gambling style games in the Facebook environment without being subject to a "regulatory" process or regime.  Facebook "virtual" currency credits could be purchased but not redeemed allowing game developers. operators  and Facebook to  circumvent the traditional  "prize" element of online gambling law.    The term "social" became attached to any gambling style games that used virtual currency as a transaction currency. The term "social casino" has now extended beyond Facebook  gambling style games and includes all "gambling" style games played on mobile and web that are either freemium(no virtual currency) or virtual currency based. Essentially, no "cash" payout and no social network required.

Fantasy Sports - Coincidentally, and perhaps serendipitously "fantasy sports" entered the scene in 2009 as well with the launch of FanDual and eventually the launch of DraftKings fantasy sport businesses. One of the factors leading to the creation of fantasy sports is the fact that "traditional" online sports wagering is considered illegal in the US.    In  Europe online sportsbook is legal and a very successful business model.    Interesting to note is that wagering in fantasy sports is with "real" money and not with virtual currency. Thus, North American fantasy sports operators are not much different then their European "real" sportsbook cousins.

Legal US Online Gambling - Further complicating the online gaming/gambling world is that  states such as New Jersey, Delaware, Nevada, etc. are offering  regulated  gambling content online. This market is estimated to grow to 5.2 million in 2020!!

Land Based Casino's  - US land based should also get a mention here as it is apparent that the online online gambling has not impinged on their revenue and growth. In 2014 the land based casinos  raked in 34 billion dollars in revenue!!   Players are engaged in both venues.  There are US land based casino operators that still fear the impact of legal online gambling even if there is no proof that online gambling has any negative impact on land based casino businesses. It could be argued that operating a land based and online gaming/gambling business may actually improve revenue and traffic for both forms of gaming/gambling. 

The complex and evolutionary nature of US online gaming  and online gambling regulation has created a confusing, and  complicated collection of laws, regulations, definitions and business models. The most recent ascent  of "fantasy" sports has made the environment even more confusing.

 Despite, the confusing and contradictory nature  of regulations and the lack of regulation gaming and gambling sectors of all kinds continue to grow and thrive.  Consumers continue to seek out   gambling style content no mater what the wager is the payout is. However,  The desire to "gamble accompanied by confusion over what is legal and what is not  has  given rise to very robust and successful "illegal" online gambling business sector  targeting US players. To date these offshore sites have peddled their businesses in a clandestine fashion. Despite this marketing approach they have grown successful offshore businesses targeting US players.

 The complexity of  the  online gambling/gaming  space combined with the continued demand by consumers for gaming/gambling begs the question; Should "gambling/gaming" of any format that involves "wagering" be folded into a singular regulated regime or should all regimes be deregulated with the exception of "problem gambling" legislation?  This is certainly a question that is worth answering yet very challenging from a practical perspective. Certainly the ultimate goal for regulation is the protection of citizens. However, if the laws are contradictory and confusing then the laws themselves lose their value and the respect of the citizens they protect.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane  has developed, launched and operated Internet gambling sites in Europe,  social casino,   freemium and subscription gaming in the US.   The company engages with land based casino  operators, online gambling operators, social casino operator and game developers to assist them in determining their strategy and implementation  of game content in an online context.   Kevin has worked for and with US land based casino operators helping them evaluate social casino and iGaming platforms for the purpose of joint ventures and acquisitions in addition to launching online gambling operations in Europe. Gameinlane is also startup "friendly" understanding the unique value new gaming companies bring to the marketplace.  Kevin frequently speaks at gaming conferences around the world providing him with a unique perspective on this very interesting business sector. Kevin can be reached at kflood@gameinlane.com  and or twitter  at @kflow1776.