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.

 

Summary Of California iGaming Symposium 2015

Recently, I attended the  2015 California symposium on iGambling with the intent to understand the legislative progress made since the 2014 conference which I had attended. In 2014 there appeared to be a sense of optimism about the potential for legal iGambling within California in the  "very near future", which to me meant 2014 or early 2015.    Various assembly members were promoting new legislation and the native American tribes were working together  with their constituents to educate them on the opportunity inherent  in  a California legal iGambling environment. Passage of legislation seemed imminent in 2014.

Certainly, the fact that 2015 had rolled around without passage of  a "bill" was a warning sign that the ship was not as ready to sail as was implied in 2014.  Also, the dates of the 2015 conference had shifted at the last moment and I almost missed the conference. In at least one e-mail from the conference organizers I swear Gavin Newsom, the lieutenant governor of California was slated to speak. He was a no show at the conference. Granted this put me in a skeptical mood as the conference began.  In 2014 Richard Schuetz the newly appointed California gambling commissioner chaired the proceedings. Not so in 2015. Instead the conference organizers chaired the proceedings. Hmm?  Why were these various high profile individuals not in the spotlight??

The conference opened with a year in review of iGambling roll outs in Nevada, New Jersey and Delaware.  The delta between "expectations" and the commercial reality was debated. This was actually addressed in a very mature way pointing out that the "overly" optimistic predictions(New Jersey) and strange game content choices(poker in Nevada?)  made by politicians where done to gain legislative approval knowing full well that the numbers would not be there and that land based casino operators would be placated to move forward with legislation. The emergence of "compacts" between states to bolster player liquidity(especially poker) was discussed and endorsed by the speakers. The Sheldon Adelson iGambling challenge at the federal level was brought up and proved to be  a topic of discussion throughout the conference.

This was followed by speakers addressing the future of iGambling in California which was dominated by native American Indian tribal  representatives explaining how the California native American community was all in with the program. Very impressive actually given the number of stakeholders in this debate and the amount of education required to gain consensus in this very diverse community. Clearly a lot of time and effort has gone into this eduction process.

Next up was  a discussion on "Critical Issues" for iGambling going forward. This discussion was  a rehash of iGambling 101 with an explanation of geo-location, hosting, payment processing, affiliate network marketing, etc.   The one rather odd addition to this discussion was coverage of the "social" casino market. This actually seemed a bit out of place considering the fact that this sector has nothing to do with iGambling and is in fact an extremely successful, unregulated business model that is dwarfing iGambling as a preferred way for consumers to gain access to traditional gaming content. It has also been proven that their is little or no conversion or up-sell from social casino into iGambling venues. In most cases social casino operators do not want to be associated with and iGambling activity for fear of drawing attention to the possible cross over and regulation of their industry.

Is iGambling more addictive then land based gambling? This is a worthy topic indeed. With 7/24 access to online content the opportunity to engage in this activity in an addictive fashion is ever present. The panel indicated that the organizations that have worked with land based operators in the past to minimize problem gambling are hard at work doing the same on line. It remains to be seen how effective this will be.  However, The Europeans having been effectively dealing with iGambling problem play for a decade and have done a great job.

 One anecdotal mention on this subject is the issue of problem social casino gambling. Although I though a discussion of "social casino" at at iGambling conference was odd this subject did come to my attention as an online gambling consultant when a distraught mom contacted me about her sons Facebook social casino play that was resulting in significant credit card debate. The numbers were ominous. I tried to get in touch with Facebook directly to find out how they could help to curtail this individuals game ply. However, this was impossible without using the problem gamblers ID??? Sad really and something to watch out for in the future.

Assembly Member Mike Gatto Bombshell - The pivotal  point in the conference was the lunch time presentation given by Assembly member Mike Gatto. It appeared he was the replacement for Gavin  Newsom at the conference. Mike started out with an enthusiastic statement of his support for iGambling in California. He self proclaimed that we was the most active representative in the California legislature on behalf of iGambling and he continued on with an endorsement of legislation. He raised the hopes of everyone that 2015 would be the year for passage. He then abruptly  stated that his hopes for passage of legislation in 2015 were not good and  refused to answer any questions form the crowd indicating he "had a plane to catch". The audience was in complete shock with many people leveling the conference entirely after the lunch.  "Very bizarre." 

In conclusion, it is difficult to determine what is really happening in the California state legislature relating to legalized iGambling and why the state has decided to shelve legislation in 2015. One can only speculate based on some of the buzz at the conference.  It appears that Sheldon Adelson's sabre rattling at the federal level is having an impact on California's appetite to enact iGambling legislation until the federal issue is resolved. This is all very disturbing given the amount of time an effort the native American tribes have invested in getting legislation passed. 

The other perplexing issue that will have to be resolved before  California l iGambling legislation is passed  is the lack of engagement with American and especially California businesses in the process providing game content, hosting, security etc.   This is especially true for  Bay Area businesses and entrepreneurs  that have more then enough expertise in the area of secure cloud based secure hosting, game development, security, online marketing, software and hardware development, etc. In fact, Bay Area entrepreneurs, technicians and businesses have been been building and launching iGambling businesses for European deployment for a decade. Despite this we continually see Israeli and European operators being given preferential treatment in terms of iGambling platforms, hosting and security advice, etc. We certainly have nothing against these non-California business as they are good businesses. However, in a state that leads the world in technology, game development, virtualized hosting, investment capital, etc. it seems silly not to take advantage of expertise in your backyard. 

    Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social and real money" casino games for third parties. 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. Kevin can be reached at kflood@gameinlane.com. 

Putting United States Online Gambling Back On The Tracks

There has been much soul searching, questioning and angst over the recent launch of online gambling(iGaming) in New Jersey, Delaware and Nevada.  California is on the fence contemplating  legalization and Pennsylvania is also in the mix of states wanting to step in. However, the launch of legal online gambling/iGaming/iGambling in the currently active states has been less then a textbook implementation with many interest group questioning the viability of online gambling in other US states. This is giving pause to new states that want to engage with legalizing US online gambling.  In all due respect to the states that have launched iGaming, it is not uncommon for first adopters in any business sector to experience a delta between expectations and reality. Mistakes will be made for a number reasons. Expertise, knowledge, staffing, funding, etc. all play a role influencing the outcome of new businesses and business models.

 The delta between pre-existing expectations and  the reality of the actual  online gambling business experience in America is now propelling us to sort out all of the factors contributing to a well run iGaming experience and get on with the business of US iGaming.

There are many moving parts  involved in the implementation of any new business. iGaming is an especially challenging e-commerce venture due to the regulatory climate, business acumen,  consumer "expectations" for the product,  marketing, geo-location  and payment processing constrains are a sample of a few unique factors influencing this sector. This "rather special" domain narrows the field of organizations that should and can  be involved in American Internet gambling.

 The following are specific areas to be addressed or reevaluated in the era of the launch and or relaunch of iGaming/Internet Gambling in the USA.  The one advantage we have is that the initial  attempt at launching iGaming in the US has given us insight into what works and what does not work. It also shows us  how US Internet gambling differs from European iGambling requiring America to take its own unique approach to the business sector. 

Who Is In Charge? -  There are many moving parts, functions and organization that need to be coordinated in the implementation of an iGaming roll out with a number of  activities requiring attention  and timing to assure that the overriding  business model is successfully launched. This requires a single individual and or  associated organization  to take responsibility for the successful introduction of an iGaming regime within a state, interstate or on the federal level.  Without this single point of contact there is no place to go to fully understand the status of, schedule for, cost of, organization involved, licenses granted, content approval, legislative interaction, payment processing, marketing, technical platform approval, etc.  

The State Of California has made a bold and thoughtful move and has assigned Richard Shultz to this position. The other states have or are   either currently engaged in iGaming  are contemplating if they should do the same. Of course, no single individual is going to have knowledge in all  iGaming areas and will have to engage with "experts" in each silo to fully master the knowledge base required to successfully engage and launch an iGaming regime. This individual is the go to person for a sign-off on a launch, creation of the business plan, coordination  of the moving parts, and of course, the place to go when things go wrong. This single point of contact appeared to be noticeably  absent in  the New Jersey iGaming launch  resulting in a 'who is on first" reaction to inevitable diversions  from the assumed plan.    

Business Plan - iGaming is a business like any other and should have an overriding business plan  like any new business. iGaming is complicated because of the involvement of government and  associated regulation. However, this is not dissimilar to a banking operation and therefore not alien to the investment community.  The overriding business plan should take into consideration the basics, such as market size, cost of marketing, staffing, regulation, technology, licensing etc. ,and, of course the overall expectations for when revenue will be generated and when the  "stated" plan will go "profitable".

 This business plan will reveal how very complicated and challenging an Internet gambling  business is to launch and manage. In many cases some investors, governments and vendors will simply pass on the investment plan and opt out.  Despite this overriding complexity of developing a full on business plan it is very important for each state to go through this form of rigor with all of the moving parts engaged in the development and scrutiny of the "plan" to assure that the service providers, operators and the governing body fully understand the plan, its  benchmarks and how to compare them against  the actual numbers . Of course, plans very seldom match reality.  The plan also has to acknowledge these what if scenarios. How should the business, investors, regulators and politicians react to delta's in the plan?  

 This process could result in overall optimistic predictions which is the case with most start up operations. However reviewers of the plan and plans should be knowledgeable enough to know when the predictions have gone to far and  the likelihood of plan execution.

Payment Processing - One of the important reasons why Internet Gambling has fallen so far behind its stated financial goals is the fact that major US credit cards can not be used to wager online. This is such a fundamental requirement for  any e-commerce operations it almost seems surreal that a launch would even be attempted without it. This does reinforce the need for someone being "in charge" of the launch and the details of the iGaming business plan before a launch.

Over Zealous Location Constraints - State by state Internet gambling requires only people that are residing and located in  a legal gambling state to gamble on the state sanctioned gambling sites. This requires a knowledge of where the person is playing from and if they are a resident of the state. Unfortunately,  IP filtering is not an exact science and can place people outside the gambling zone when they are actually in it and the government databases used to verify residences inevitably can be inaccurate about the current address and even the correct spelling of a persons full first , middle  and last name. This can  lead to frustrating denials of service for many players. This has impacted New Jersey players. This is one case where European experience can come in handy. The Europeans have faced this same dilemma and have solved it by engaging "reasoning" and filtering verification that does a good job in accepting the valid residents of a jurisdiction.  Also, the requirement for people playing on a laptop to also have a phone to precisely geo-locate them is absurd and only further adds to the frustration associated with IGaming access in America.

The European iGaming Model Is It The Right Model For America? - America has relied heavily on the Internet gambling expertise cultivated in Europe to guide its Internet gambling programs in the US.  Much of the  American iGaming legislation, vendor selection and expertise is directly associated with business, organizations and individuals  involved in European iGaming. In many cases these decisions where made without properly assessing the iGaming business in Europe.  No critical analysis was done to determine if the European approach is the right choice for the USA. For example, Europe recently went from a .com model to a country by country iGaming regime that has largely decimated the iGaming business in Europe forcing consolidation, higher cost of operation and lack of innovation, etc. The stuttering start of US iGaming might be a good point to reassess the European direction and critically scrutinize what is right and what is wrong with that  model as it relates to the US.   We clearly need an "American" model and not a European model if we want a robust and healthy iGaming business in the USA.

Land Based Casino Involvement - US iGaming regulators and license issuers have looked to the US land  based casino to   guide the iGaming effort in the US. In some cases they have received the first licenses with government entities directing true iGaming operators to seek their licenses through the casino operators. The irony of this prejudice is not lost on the casino's themselves and anyone that has been involved with the casino industry.

 In point of fact there is virtually no similarity between land based casino operations and online iGaming.  The US land based casino operators are exceptionally good at terrestrial operations. They are the envy of the world and have exported this excellent model to Macau and Singapore. However,  they have consistently struggled when attempting to launch online gaming(European) ventures. In response to their experience they have decided to wisely withdraw from Europe and have not attempted to build up internal iGaming expertise within their organizations.  We have also witnessed the Steve Wynn and Sheldon Adleston grand standing on a ban on US Internet gambling. They may fully realize that this is not a business they know and understand or perhaps they want every out of the business so they have time to sort it out for themselves?

Social Casino - It is hard to ignore social casino(freemium or virtual currency) in the context of launching and operating an online gaming  business in the US.  In point of fact many of the people playing social casino games in North America are the exact same demographic that normally play slots in US land based casinos.  No, there has been no hard evidence that there is or could be conversion directly from a social casino game to an online gambling slot game! However,  This is not a reason to ignore the social casino audience. Leveraging a clever advertising campaign through social or terrestrial  media directly targeting  the social casino audience might be a very shrewd way to kick start a US Internet gambling businesses.

Affiliate Marketing - Europe has traditionally leveraged affiliate marketing organizations to drive traffic to IGaming properties. This same approach is being taking in the US. However, this is another area where Europe is very different then America. Most affiliate leads come from people that have wagered on sports events through online sports book operators in Europe.  European sports wagering is legal and a very good business. It have been in existent since the .com era and remains viable and profitable. Consequently,  the online sportsbooks  have a robust pool of sports wagers that they can funnel through affiliate networks to online casino operators. The US is completely different, so where are the affiliate marketers getting their leads? Essentially, affiliate marketing my not be the preferred Internet gambling marketing tool that it is in Europe requiring a very different  marketing approach to attract and retain US online gambling customers.

We have passed the irrationally exuberant stage of US Internet Gaming and are now facing  tackling  the practical necessities of operating "real" profitable Internet gambling businesses in the US. Some people and organizations are disappointed with  and shocked by the initial launch. However, they should not be given the way the launch was orchestrated. This is not cause for abandoning Internet gambling in America. Instead it is great opportunity to reinvigorate the effort, reorganize and bring new organizations and people into the effort to launch new properties and reorganize existing ones.

 Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social and real money" casino games for third parties. 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. Kevin can be reached at kflood@gameinlane.com.

2014 EIG Berlin iGaming Conference: 'Putting Up Or Taking Down European Internet Gambling Access Boundaries?"

 The European Internet Gaming(EiG) conference was held in  Berlin this year. The selection of Berlin as a host city for the conference was befitting given the proposed roll-out of legal iGambling in Germany and the continuing pressure to restrict access to iGaming content. Also, the tech focus of the conference was well suited for a burgeoning  high tech and start up culture within Berlin. The historical significance of Berlin in world and European history is also very relevant given the trend in Europe for each country  to create  virtual walls between each European country only allowing their residence to gamble online within their borders.

Venue - The venue for the conference was very "edgy" held in a former bus depot in the  East Berlin section of the city. The floor plan was completely open with no real or artificial walls. Essentially, a real tribute to the destruction of the Berlin wall and how it is against human nature to balkanize into artificial quadrants.    Essentially, no "walls" and a good reminder to everyone how tech, business, commerce and everyday life functions so much better in an open format with inevitable dialogue and interaction.  Open spaces are actually good for business! Yes, it was noisy and distracting at times. However, it was very easy to move between events and programs, mingle and network and engage is open discussions.

iGaming Balkanization Becomes The Norm - Western Europe continues on its march towards a balkanized world of "you can only" gamble on the state run or sanctioned sites that provide tax revenue for the hosting country if you are  within the boundaries of that country, and, I presume a citizen of that country. Clearly, there is no turning back at this point with all countries  jumping on the band wagon to get their piece of the revenue pie. With the exception of Germany, most of the countries such as Spain, Italy and France  have not sought clarification from Brussels concerning the obvious violation of the EU mandate that prohibits the interference of free trade and commerce between European countries.  Apparently, the EU governing body does not consider iGaming  as commerce  that should be unrestricted despite the EU overriding mandate. The EU stance was beguiling to one German official  acknowledging that the current country by country trend in iGambling is clearly against the EU pan European mandate. This is putting the lawyers and lobbyist to work trying to sort out when and if Brussels will continue on this track.

German Interstate iGambling Legislation - We have become accustomed to each country in the Euro zone creating a country by country online gambling program. In Germany the situation is a bit more complicated with each German state seeking to launch their own Internet gambling legal framework. The big question in the debate is how does this all work with the German federated government also considering a launch of Internet gambling property. 

 UK Conforms To The European Trend(kind of). The UK has a long standing history of legalized iGaming with sports wagering being legalized first then casino. In many ways they set the processes and standards for how legal iGaming could and should be conducted. Their law mandated the creation of legal gambling hosting  zones in British protectorate locations such as Alderney, Isle of Man, Malta, Gibraltar, etc. Under pressure from the other EU countries the UK is now requiring all gaming operators to be licensed within the UK with the associated fees and tax implications. However, the UK has not abandoned the protectorates allowing gaming servers to be located within these territories.  The UK has also taken a less draconian approach to auditing of game transactions. They see no need for"speciality" servers or "vaults" that capture and retain all transaction details. 

Startups And VC Funding - I sat in on a session with European venture capitalist discussing their approach to investing. It was amazing to see how their mantra was almost identical to what one would hear in the Silicon Valley. Clearly Europe is trending towards the approach to funding early stage companies as is practiced in the Bay Area.  However, as is the case in the US, investors are leery of gambling investments so the number of funds that can invest in this space are limited. The startups themselves that were pitching or roaming the floor are also no different then they are in San Francisco or Palo Alto in terms of their profile. However, high risk/reward investments, which iGaming startups fall into are a breed in and of themselves where private funding from business partnerships should be considered as a viable option. In point in fact, the iGaming industry is in dire need of an overhaul in game content, gaming  business models and more ubiquitous access to gaming content. Perhaps, these startups will lead us to a new improved and perhaps more exciting iGaming landscape. Lets grow and build the community of iGamers with novel and exciting content that attracts  wider range of players. 

New Gambling Content - The gambling industry has historically lacked innovation in the creation of gambling content. Content developers have used historical land based gaming proxies as a guide to the creation of content relying on what is familiar and culturally acceptable. However, recently we are seeing a break from tradition with the introduction of games that allow one to wager on just about anything that has chance involved. The new trend is to wager against the stock market, currency market, etc. This is a refreshing giving us all something new to think about in the context of a broader definition of legal gambling. Hopefully, we will see more of this kind of innovation.

Social Casino Regulation  - Social casino has become, perhaps, the most successful implementation of online gambling content in the history of gambling. Although it is officially not considered gambling because there is no cash out. It far exceeds the  concurrent player numbers of "real" gambling and continues to innovate at a rate far out pacing traditional Internet gambling. However, this popularity and the lack of age, identity and location tracking is raising concerns about "problem" social casino play. The primary issue is age related. A panel discussion was conducted that addressed this very issue and the consensus of the experts appears to be that some form of regulation is required and inevitable. The suggested approach is some form of "warning" about addictive play, under age participation, spending limits or transaction caps. Not sure how successful these efforts will be. However, some form of self regulation is coming.   

Europe has embraced the country by country or state within country approach to regulating iGaming allowing Internet gambling within the EU. It is a full on rush for each country to lock down their virtual borders and operate their own gambling operations. The  overriding goal of course is revenue for each country. However, this trend also results in less overall liquidity and perhaps a violation of EU cross border commerce law.  It will be interesting to see what this all looks like two or three years from now. The US is obviously following the Euro model verbatim assuming that the Europeans cross border content access restriction will work economically and politically. I could not help draw a corollary between Chinese restricted internet access and European iGaming. The Chinese population has cleverly established  a host of moving and changing VPN's that allow everyday citizens of China to break through the government's virtual walls and get to the content they want. Not sure if gambling content is worth this effort. However, one might make a bet on the resurgence of illegal gambling if restrictions are too draconian resulting in a lack of competitive content, constrained access, collusion in odds setting, low liquidity numbers and too many barriers of entry to sanctioned gambling sites.  

Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social and real money" casino games for third parties. 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. Kevin can be reached at kflood@gameinlane.com.

Sobering Up On The Future Of US Internet Gambling(iGaming)

The launch of Internet gambling(iGaming) in three US states; Nevada, New Jersey and Delaware have many individuals and  groups discussing the early results of these implementations. Investors, land based casino operators, iGaming platform providers, legislatures, politicians, gaming content consumers and investors have been pondering the roll-out  comparing preexisting expectations against the reality of iGaming in the USA.

The subject matter is rich with comparisons and debates referencing  the European iGaming experience and US iGaming business  plans that where drafted prior to the actual launch of any live iGaming businesses in the US.  The salubrious and intoxicating expectations associated with US  iGaming are now being tempered against what is really happening.  As with any expectation jammed venture such as a new business or even a marriage, reality is always a wake-up call highlighting  the delta between expectations  and or the reality of a "relationship(s)".

iGaming evaluations can be  somewhat confusing because certain interest groups publicly predicted expectations they knew where overly optimistic. The goal, apparently, was to prognosticate potentially overly optimistic outcomes for the purpose of gaining public support for iGaming legislation or to obtain working capital  that would allow the prognosticator to enter the US market. One can argue the efficacy of this approach. However, this is a common strategy used by non-gaming related businesses promoting themselves for the purpose  of raising funds or going public on an exchange.

At two ends of the spectrum we have a binary evaluation of the roll-out assessing if the roll-outs have been successful or not. The middle ground is also being explored taking into consideration the preexisting goals of various participants and interest groups and what is actually happening. 

So what is the general consensus and how are each of the vested interests reacting to the reality of iGaming in the USA?

Investors - With revenues far from being close to iGaming business plan predictions and the overall roll-out across the nation being slow, it is highly likely that some investors are not pleased with what is happening. However, as previously stated, savvy investors know that the majority of initial business plans they review and approve include overly optimistic expectations.  The entry into new markets is always highly speculative even if a similar business model has been introduced into a another geographic area and culture.  The well healed investor has probably done some predictions of their own based on other historical introductions of regulated business ventures such as banking or investing.  In addition, their motivation to invest may be more closely allied with the limited supply resulting from  a regulated as opposed to "open" market.  Ironically, the gaming licenses themselves may be the real value proposition for investors.

Consumers/General Public - It is not completely clear as to what the reaction of the public is to "legalized" US gambling in certain States. Yes, the numbers and revenue are lower then expected. However, is this a result of overly optimistic business models, frustration/dissatisfaction with the iGaming proposition or overly restrictive  age/location scrutiny that excludes valid players. Is the heavy influence of European iGaming operators and their content causing dissatisfaction with the actual gaming content?  After experiencing the initial legalized iGaming content will seasoned iGaming players return to their tried and tested "illegal" sites that many of them actually "trust" and enjoy? 

State Governments/Legislatures - Certainly governments that forecasted optimistic iGaming revenues for their states are subject to criticism  if those revenue models are not being achieved. However, if the objective of overly optimistic revenue predictions was a planned strategy to assure that iGaming legislature would be passed, perhaps,  in a convoluted way,  the first step goal was achieved and it will be a wait and see situation to determine if the actual revenue generated over time will be appreciated and used in a way that will placate the voting public.  States like California planning to legalize iGaming are in a different situation. They have to take into consideration the new "normal" of iGaming proposing plans that contain more realistic  predictions. How will this influence state legislatures contemplating iGaming in their States?

Federal Enactment Of iGaming - We have seen from the likes of Sheldon Adleson and Steve Wynn that certain high profile US land based casino  operators are not in favor of federal or state legalization of iGaming. One can argue that their logic and reasoning for not wanting iGaming  is flawed.  Of course, their are equally politically powerful land based operators such as Caesars and MGM that are very active in iGaming in the US and will no doubt make their own public proclamations about their will to influence federal iGaming legislation.  We will see how the congress reacts to these competing interests. 

American Indian Nation - Although no native American Indian tribe(to my knowledge) has legalized iGaming within their territorial boundaries they are closely watching the events occurring in active iGaming jurisdictions.    They are sovereign nations within the US and have the legal rights, similar to state governments, to launch iGaming businesses. They are also land based casino operators in many US states providing them with  knowledge of  "gambling" regulation and operations.  Their relatively small land based consumer foot print makes their decision to operate iGaming operations more challenging as they look at the numbers in New Jersey, Nevada and Delaware.   Do they move forward at this point or do they wait at the sidelines and see how the federal debate evolves or perhaps collaborate with other tribes to create higher liquidity and lower risk for any one tribe?

In conclusion,  we are seeing  US states launch iGaming businesses  and we are gaining important insights into the economic impact of iGaming in the US.  Operators, governments and consumers are becoming more familiar with the right iGaming "product" for the US and are learning more about the operational reality of US iGaming. In point of fact, the current American iGaming model is an import from the European model where Europe   moved from a .com to a .co implementation. The impact, in Europe, of this change was quite sever causing a significant increase in the cost of operation and a decrease in overall revenue for operators. Some countries such as France have proven to be what one might characterize as a "failure" while other European country implementations have proven to be successful in term of "break even" financial models.   Canada has also moved along with their iGaming initiative conceding  control of those businesses to lottery operators in each province.

These experiences either directly or indirectly give America  plenty of data  to draw on to eventually come-up with an  iGaming business model that works for consumers, voters and legislatures.  We can all agree that there is still much to learn about the economic viability of US iGaming and how best to achieve a balance between the need to control, drive revenue, achieve profitability  and please the general gaming public. The public consumers of iGaming content will be the most important group to understand because they will make the ultimate decision if iGaming succeeds in the good old USA. 

Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social" casino games for third parties. 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. Kevin can be reached at kflood@gameinlane.com

  

More Indication Of Challenges With The American Approach To Legalized Online Gambling

The poker and gaming blog AgentMarco was first to break the story that the Santa Ysabel Native American Indian tribe in Southern California has decided they are frustrated with  the California legislature and their own tribal compatriots approach to legalizing online gambling in California.   This frustration has lead them to go rogue with the announcement that they are going to launch their own online "real" gambling poker room for California state residents without any confirmed  California legal authority to do so.

They are claiming that the American Indian nation is a sovereign nation within the United States and ,therefore, has the right to offer Internet gambling to California residents.  This is further confirmation that California and other  states in the  United States are struggling in their attempt to offer Americans safe and commercially viable Internet gambling content. Governor Brown's recent decision to  engage outside gaming attorneys is another indication that Sacramento  is pondering  how best to enact legal Internet gambling in California.  This confusion, combined with  historical American Indian rivalries is causing some tribes to become frustrated and impatient with the "process".

    The Sheldon Adelson Federal initiative is creating even more confusion  despite its irrational allegation that Internet gambling will hurt land based casino operations. Clearly there is no evidence that this is the case putting into question what  is Mr. Adelson's point and goal?

So what is going on here? The Europeans have had legal online gambling for decades and there is no indication that it fosters under age gambling or  crime syndicate involvement. Granted, Europe does not have a robust land based casino industry. Therefore, there is no way to determine from their experience if online gambling will steal customers away from land based operations. However,  illegal online gambling has been around for 20 years and has specifically targeted US citizens with great success. The biggest fear for illegal online gambling operators  has been the potential of a "legal" US gambling regime forcing the illegal sites  into oblivion.  Why do respected business owners and politicians want to encourage illegal gambling?  

It is also clear that the expectations for legal online gambling were greatly inflated to encourage the passage of Internet gambling law in the US. The reality of the commercial viability of legal Internet gambling is now being tested in Nevada, New Jersey, Pennsylvania and Delaware.  What will be the outcome of this experiment?  It is already clear that in some of these states reality is far different then the expectations set prior to legalization. 

Another juggernaut for the land based casino advocates is the amazing popularity of "Social Casino" It far dwarfs the player numbers compared to Internet gamblers. Ironically, the typical social casino player fits the exact same land based slot machine player profile. Ironically, it has no regulation and does not appear to need any. The irony of all of this is that social casino has no "cash out" resulting in players contributing but not financially benefiting.  

In the end  de-regulation of  Internet gambling, slowing the state by state proliferation of iGambling  or not legalizing iGambling in the United States is not going to stop Internet gambling in the US.  Also deigning the importance, by land based casinos, of the online channel is a bit nihilistic and potentially  self destructive for their  businesses.   Many land based US casinos and casino suppliers are "all in" with both iGambling and Social Casino. These early adopters are the winners in all of this. This may be the real reason Sheldon Adelson and Steve Wynn are trying to stop or slow down legal iGambling in the US. Their competitors are way ahead of them already and they realize they may not be able to catch them.

Kevin Flood is the CEO of Gameinlane, Inc. Kevin, has developed, launched and operated Internet gambling sites in Europe.   Kevin and Gameinlane   develop "social" casino games for third parties. 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. Kevin can be reached at kflood@gameinlane.com