On-Premise Gaming/Gambling: What Is It And Why Is It A Game Changer For Land Based Casino Operators?

Recently, I was talking to the CEO of the online mobile gambling business  CASHBET   about their business and where he thought the gaming industry was going. During the conversation the CEO frequently brought up the subject of "on-premise" gaming/gambling.

What Is On-Premise Gambling? - Essentially, on-premise gambling is online gambling restricted to the confines of a specific geographic area. In the case of the casino industry it is the restriction of gambling game content within the confines of the casino(premises). The primary delivery vehicle for on-premise gambling is a mobile device such as a phone or tablet either owned by the player of provided by the casino for use within casino premises.

 Apparently, many of the US based regional as well as Vegas and Atlantic City casinos have been given the regulatory green light to offer  this form of gambling within  their physical properties. On-premise game "delivery" is  a convenient way for land based operators  to engage players within their casinos without the requirement of having a physical  machine, table, etc. On-premise gambling allows players to use their own mobile devices to access branded gambling content within the casino property which also includes the hotel, recreation areas/pool, bar, etc.

There are a number of reasons why delivery of gaming content in this form is important for the longevity, survival, growth and player retention of land based casinos.

Generational Shift In Player Preferences - It is no secret that a generational shift in casino game play habits has occurred and is continuing to evolve.    The primary catalyst for this shift is Internet access to content of all kinds with gaming being only one of many domains that have been impacted. Potential land based casino visitors not only want to experience a game in an online context they also want to see shows, book rooms, communicate  with casino staff, friends and family, etc. online.

Social Context - The social context of online engagement is also an important byproduct of gamers playing casino games online in a casino setting. If properly executed all forms of social engagement including Twitter, Facebook, SnapChat, etc. can be included in the mix of communication during play allowing a much larger audience to participate vicariously in the game experience.

The End Of The Land Based Casino As We Know It And The Rise Of the New Co Casino - In many ways the on premise concept is a continuation  of the theme of the evolving casino experience and casino patron behavior and interests.

The recent  Vegas eSports event that was heavily covered by media is also a big part of the casino make over that is resulting in a younger demographic experiencing Vegas and casinos in general  in a way they understand and prefer.

The adoption, by land based casinos, of the  CASHBET online  mobile gaming  model is one of many new online and game content models that land based casinos will be  embracing in the future. The evolving  intersection of land based and remote gaming will be an interesting process that will likely result in new games all together that muddle the lines between terrestrial, remote, mobile  forms of game content delivery.

Kevin Flood is the CEO of Gameinlane, 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.    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.

The End Of The Land Based Casino As We Know It And The Rise Of the New Co Casino

It is no secret that traditional  US land based casinos have been in decline for some time with fewer players at the tables or the slots. The Caesars Bankruptcy, blamed on high debt loads , and the exit of  CEO Gary Loveman  to greener pastures in the insurance industry point to a troubled land based casino business environment that cannot magically be rectified by a change in management.

The issues impacting land based casino  participation and revenue in  Atlantic City and Vegas  are numerous; including the rise of regional native American casinos, other non native American  regional casinos, online social casino, legal and illegal online gambling.  

 The existence of alternative gaming venues can be partially blamed for a percentage  of  the decline in visits and gambling revenue in Vegas and Atlantic City. However, the nature of "gaming" engagement  itself has changed with less interest on the part of existing gamers to engage in  "Vegas" style games and land based gaming in general. The online world, and to some extent, the console gaming world in the form of eSports and other popular connected console games have taken precedence over the physical gaming experience.

 The passing of the baby boomers and the rise of the millennials has resulted in a change in gaming behavior, preference, and venues. Ironically, visits to Vegas are increasing. However, the visitors are not gambling when they arrive in Vegas.   The problem with this trend is that gamblers spend more money then tourists and party goers. This trend has created a challenge for Vegas, and to a certain extent, Atlantic City  when it comes to offering a casino style experience without the casino revenue.

The recent eSports competition  held at a Vegas casino  points to a ray of hope for casinos. This event was well covered by the media and strongly endorsed in the G2E gaming conference in Vegas.  G2E is a conference that has a long history and is predominately sponsored by land based casinos and suppliers to the land based casino industry.  The enthusiasm and curiosity of the attendees about the eSports phenomena was obvious. 

The real question going forward, is what do the land based casinos do to further encourage gaming that involve millennials?  eSports is just one flavor of "connected gaming that is popular amongst this demographic. What other connected games can the casinos leverage?

The Connected Casino Floor -  When you watch a traditional slot player sitting at a slot playing for hours you wonder how that experience could  be extended by having head to head play or at least some form of competition amongst other players on the floor.  There is no reason why you can not connect theses players in tournament style gaming. Each of this players could create a made-up/fictional name and select an avatar.  Play could start with all players participating and ending after an elimination of all players except two. This final showdown could  and would attract spectators if the floor was properly configured to broadcast the players  final competing. This could also lead to a "big money" final tournament which is televised. There would be   time limits on each competition and a jackpot achievement that would complete the competition. The start of each competition would be announced, players could decide if they want to participate and add their names to the list of participants. The connected floor players could also play against online players that have access to the same game in a virtual context.

Console Games On The Casino Floor - The connected casino floor concept  could be extended by adding console gaming in the casino itself. Instead of a slot machine a console with joy sticks, etc. would replace the slot. The console would give the player a number of game options to play individually or against other players.  Play would require coin in by the player and perhaps additional wagers as the game progresses. Players ready to play against each other would be listed and a time for a game to commence would be displayed on the machine/device and  on notifications screens through-out the casino. Big winners  engaged in console game play would be given special attention throughout the casino and on social media to keep everyone updated and engaged in the competition.

Connecting Land Based Casino  And Social Media - When a players engages in an activity on the casino floor there activity should be  broadcast  on social media. Player wins in particular or large payouts should be the focus of the communication. This will engage the social media audience within and outside   casino  in a games progression and how certain players are doing. The goal of social media communication is to increase "engagement" and "awareness" inside and outside of the casino. 

Connected Blackjack And Poker In And Out Of The Casino -  Blackjack and poker are traditional multi player gambling games that are  popular gambling games that millennials play in and out of the casino. To extend the popularity of these games amongst millennials online poker and blackjack matches should be sponsored by land based casinos leading to finals in the casino. The qualifying games should also be played with a mix of players outside the casino and within the casino. Within the casino itself the "connected" casino could have  computer terminals  placed in sections of the casino where people could also play online. These terminals would allow players in the casino to join poker and blackjack games being played worldwide on the net. The results of their play and the play of the online players would be displayed in strategic places in the casino. The final tournaments would be played in the casino either at a traditional table or in the connected casino environment.

There are certainly many options that the land based casinos have to grow and attract the "connected" generation of players.  Poker and Blackjack are  popular gambling games that conveniently  bridge the gap between offline and online game play. 

Social media can also play a big role in creating an online  audience for gambling game tournaments  keeping the  online audience aware of what is happening, when it is happening  and where gaming events are occurring. 

It is clear that  the land based casino business must change and change quickly if they want to remain "relevant" in a connected world. The recent eSports event in Vegas demonstrates that Vegas can pull this off. The question is: Do the traditional gambling business owners  have the energy, expertise, will and courage to reinvent the casino as we know it by combining the offline and online gaming audience?

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.    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.

2016 G2E Vegas Gaming Conference Dominated By eSports

 The 2016 G2E Gaming conference   addressed a number of   interesting gaming and casino  topics and  hosted an extensive exhibit venue. However, it was clear from the attendance at various   events  that eSports was the hot topic with eSports events well attended.

For the traditional gambling crowd eSports is an enigma  because it does not involve traditional gaming content such as slots, table games, lottery, etc.  It also crisscrosses  the line between sportsbook wagering, skill gaming, online gaming, console gaming  and on-premise gaming making  it difficult to categorize from a  traditional regulatory perspective.   eSports also attracts a  "younger" demographic relative to what land based casinos currently attract.  The 20 something crowd being the dominant group engaging in the activity. This is a distinctly different demographic from traditional sportsbook punters.   One noted concern is that many eSports players are under the age  of  18. It is not clear how this will all play out from a land based casino perspective. This may also be  reason why some eSports events in Las Vegas are not being held in the casinos.

Games such as Counterstrike, League Of Legends and Dota, to name a few,  are games that are popular eSports games. These games have moved  beyond the  standalone console to a connected  online venue that allows thousands of players to engage in heated competitions.  Game competition culminates in an ultimate showdown between top players.  These showdowns  are well suited for on premise engagement. These are the events that  Vegas wants to tap into. Gaming enthusiasts,  casual spectators and sports wagers/punters want to wager on the outcome of these games and the top players. Vegas is and  wants to take wagers on these competitions. 

It was interesting to see how receptive Vegas regulators are to the idea of hosted eSports tournaments in Vegas. It is also interesting to note that there is not more concern over who is playing these games. Can a 15 year old play a game that has bets being placed on the outcome? The traditional sportsbook operators are also all in on this form of wagering with the likes of William Hill and others already taking bets on out comes.

Clearly, eSports is very attractive to land based gaming operators as it  attracts a younger audience relative to its current customer base.  eSports reverses a trend of aging gamblers in casinos .  It also exposes the  gen x, y and z audience to a land based gaming experience.  Land based gaming operators are demonstrating that they are keen to engage with this audience to  stay relevant and to grow their businesses.

eSports wagering is in the billions already. This is obviously a phenomena that has a life of its own. It has been embarrassed worldwide with Asia, North America and Europe already fully  engaged with 50 million USD paid out in 2015 in association with eSports.

The ultimate questions is this a true "sport" and if so can someone wager on a juvenile's game play.  Certainly eSports is a long time coming and represents a convergence, of machine computing, gaming, sport, on premise events and worldwide web competitions. Overall, it is an exciting phenomena that will be hard for regulators to  fully harness. However, for now they do not seem  to be concerned. The amount of wagering, the demographics, technology and an obvious desire to engage a younger  audience in a traditional wagering context is just too tempting to not  look the other way. Finally, land based gambling operators, and especially the Vegas and Atlantic City operators have a growth strategy and they are "all in".

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.

Is The Current North American And European Method Of Implementing "Legal/Regulated" Internet Gambling Fostering Illegal Online Gambling?

EU countries have had a legal structure for  Internet gambling for some time. It started cautiously with the UK setting up a regulatory framework  for sports wagering which was extended to casino and other forms of gambling formats hosted from British protectorates in locations such as Gibraltar, Isle Of Man, Malta, Alderney,  etc. This regulatory regime provided European citizens with a safe and audited Internet gambling experience. Apparently, EU countries who's citizens were gambling on these sites where less then happy about the prospect of their citizens gambling online without the countries themselves obtaining tax revenue from the activity. Thus, the move by countries such as France, Italy, Germany, etc. deciding to create their own legal Internet gambling infrastructure for  their citizens. The term "balkanization" has frequently been used to describe this trend inferring the  associated political and economic impact of this strategy. Unfortunately, a number of the regulated European Internet gambling properties have failed because of their lack of liquidity associated with the downsizing of their  gaming audience. 

During this phase of European repatriation of gambling regulation into individual EU countries the US and Canada were pondering the legalization of Internet gambling.  The Americans were heavily influenced by the direction that the Europeans had taken.  A debate ensued which pitted federalist against state's rights advocates arguing either for a federal or state by state regulatory regime. A similar yet muted debate had  occurred in Europe with some advocates wanting the EU governing body in Brussels to establish a pan European EU Internet gambling legislation. The EU governing body could not come to a consensus decision allowing for cross European Internet gambling law, therefore, each country proceeded on their own. Oddly enough the same situation has occurred in the US. No federal law is likely to be passed so each state interested in hosting  legal Internet gambling is charging off on their own. Nevada, New Jersey, Pennsylvania, Delaware, etc. have either legalized Internet gambling for their citizens or are about too.

One of  consequences  of this approach  to iGambling legalization by Europe, Canada and the United States is the unintended legitimization of illegal Internet gambling sites.  This legitimization is largely unintentional and caused primarily by a  combination of a "land" based casino  regulation bias and the assumption that the Internet can be "regulated".  Clearly the Internet is borderless despite the attempts to block IP addresses. In addition, clever ways to identify people that are or are not in a region that is gambling friendly are hard to implement and in many cases my deny people access that should have access to a legal online gambling property.  China has tried IP blocking  with limited success.

The other interesting challenge for governments attempting to restrict access to their Internet gambling properties is the lack of competitive rigor that is a normal part of competitive and open economies. Certainly there can be competition within the sanctioned online gambling properties. However, it is not to the level that an open economy offers. 

For example, I have spoken to a number of amateur and professional poker players that have decidedly migrated back to the "illegal" sites because of  the inferior quality of the poker experience on legal Internet gambling sites and the lack of "liquidity" on these sites. Poker and in some cases Blackjack and  Bingo require liquidity and "churn" to remain interesting.  Many online poker players have played on "illegal" sites for years and are quite happy with them. An incident where a potential player  attempts to access a"legal" Internet site and is rejected due to a close proximity to a border state that does not support Internet gambling also creates an incentive for that player to go back to their favorite illegal site or perhaps to search for one. 

 Hopefully,  governments that have either decided to "regulate" Internet gambling or are considering it properly assess their motivations for doing so in a commercial context. In the end, if the regulated jurisdiction wants to generate meaningful revenue, cultivate successful Internet gambling businesses and  actually protect their citizens from the dangers associated with illegal Internet gambling they need to offer their citizens a competitive, accessible,  safe and secure environment that rationally approaches the Internet gambling arena. Modeling Internet gambling regulation solely based on land based regulation models is admirable. However, the contrast between these environments is stark requiring specific regulatory consideration for each sector to ensure a safe commercially viable gambling experience. Illegal Internet gambling sites that initially were fearful of a regulated legal Internet gambling world have now realized it is actually good business for them as long as they are assessable and offer a superior online gambling experience relative to the regulated properties.

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

    

         

Understanding The Relation Between Land Based Casinos And Online Gaming

The upcoming online gambling debate between Caesars and the Sands CEO's is a bell weather for the historical, cultural and operational divide that has existed between operators of online casino game content such as social casino and online gambling operators and the operators of land based casinos. The upcoming debate addressing the legalization of online gambling in the US and its impact on land based casinos has been going on for years with casinos changing their minds on supporting online gaming or ignoring it maintaining a singular focus on land based operations.

Many people are unaware of how long land based casinos have actually been confronted with this questions and how they have vacillated between supporting, not supporting and supporting again, etc. operating, running or engaging in joint ventures related to online game content.

Between 2001 and 2004 many of the UK casinos and land based brands such as Hard Rock successfully launched online gambling operations and still do today. US casinos also entered the UK online gambling and pseudo social/gambling market around the same time and eventually closed their operations for a number of reasons.

Of particular interest was the social casino  site launched by MGM for the America audience in 2001. The service was a resounding and surprising success but was closed because the service was not tied into the MGM loyalty  systems and MGM was more interested in "real" online gambling in the UK.

The emergence of Zynga poker between 2007 and 2009 attracted the interest of land based operators again and they turned their attention to "social/freemium" gaming.  Fast forward to 2013/14 with MGM/MyVegas  jumping back into the social/freemium arena  with the added benefit of integrating the property into their loyalty systems. IGT buys DoubleDown and the other Slot providers such as Bally's and Williams all start to convert their traditional offline slot content to online versions. Caesar's buys Playtika, etc.

Despite all of this activity there still remains a divide and a degree of skepticism on the part of traditional casino operators, small regional casinos and even operations managers within the larger land based casinos that have launched online businesses. If online is real and if they should get involved?  The Sands is upfront about this, however, others have the same feeling. Social and real money online gaming operators still sense an aloof  and sometimes disconnected relationship with land based casino staff.

So what is at the basis of this confused and for many, a rather frustrating state of affairs between offline and online gaming operations?

The fact of the matter is that both of these businesses models could not be more different. There are more reasons for  each group not to engage then their are to engage. Everything from day to day operations, marketing, staffing, content selections, priorities, regulations, history, skill sets, etc.  are different.

The one binding factor between the two business sectors is that in the US and Canada the gambling regulation and license are being  controlled by land based operators. This does force the two sectors to collaborate in some way and ironically forces land based operators to become online gambling experts.

The Sheldon Adelson Gary Loveman debate is going to  engage the question "will online gaming positively or negatively impact land based operations" and does online gambling make any sense from a purely financial sense based on a land based casino's operating model, cash flow and profitability. we will see how the debate goes.

Social and freemium gaming is a wild card in the overall debate because it is not subject to the same regulatory rigor and has a very different operating model for "real" money online gambling. Pace of Innovation,  extreme competition, size of the market, etc . are examples of why this sector has a different spin to it.

In the end, despite the outcome of the debate social and online gambling are here to stay. Even if legislation to legalize online gambling roles out at a glacial pace in the US there are plenty of "illegal" sites that are and will fill the demand for this content.

There is certainly a place in the business world for land based casinos that take no interest in online social/freemium or real gaming and a place for pure online models. Offline and online are fundamentally different experiences and people will have their preferences. The questions is where will the growth in total players and revenue per player  come from?Currently, Vegas is beginning to generate more revenue from non-gaming activities. The regionals still are predominately gaming revenue. However that is because they have less non-gaming revenue opportunities. Competition is fierce in the online space, especially, in the balkenized world of European online gambling. This may force both online and offline gaming content providers to form joint venture  across borders and within different gaming models to stay competitive. Essentially, the two operating groups may have to collaborate to remain competitive.

  Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes  about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.

Managing The Land Based Casino iGaming And Social Game Company Relationship

At GDC this year I met a number of social casino operators that were attending the conference.  One of the major topics that these operators wanted to discuss with me is how would they go about establishing a relationship with a US land based casino operator. I was being asked because they were confused over the behaviour of the land based casino's approach to social gaming, which by the way, the GDC audience refers to as  "Free To Play" and not social games, with free to play being the more appropriate characterization of the space.

After some cursory discussion on the topic of the land based casino approach to iGaming and free to play games I realized that the social casino  and iGaming people really do not fully understand US land based casino operators. The most important thing they do not understand is the role the land based casino operations model has on their  Internet gaming strategy.

For the purpose of clarity on this subject I would like to set the historical context for why US land based casinos act the way they do when it comes to  iGaming and  free to play casino businesses.

Land Based Casino's Are Defined By Their Core Business - This may seem obvious, however, it is remarkable how little online casino operators understand the land based casino business model and its impact on them. For the most part very few people in a land based casino operation have practical hands-on experience with online Internet or gaming businesses. This has certainly changed over the years.  However, it is far from where it could or should be and this knowledge gap has an impact on land based casino iGaming and social gaming strategy and execution. 

This is important because  for the few people in a land based operation that do understand the iGaming space it is  hard for them to get the land based organization behind it and to interact with it in an effective manner.

Land Based Casino Operations - Running a casino is a bricks and mortar activity that involves physical items, such as buildings, restaurants, actual living breathing people,  taxi cabs, physical slot machines,  snail mail marketing campaigns, etc. Land based casino's operate their businesses with amazing efficiency. These businesses are so efficient because they do not want employees to think out of the box. They want them to execute according to a formula and directly with the public not through the filtered lenses of the Internet. The casinos have a lot of people on their staff that they have to keep  focused on the mechanics of operating hotels, restaurants and the casino floor. Quick change in an environment like this is difficult,  risky and potentially expensive.

Conversely,  iGaming and social gaming businesses require adaptation,  frequent changes to product and agile processes to compete in the online marketplace. Essentially, iGaming and social gaming can be  threatening and confusing to many land based casino employees because it operates differently from their core land based  business model.

Lack Of Internal Project Or Internet Gaming Expertise - For the most part the US land based casinos have not made significant investments in staffing  their own Internet or Internet gaming  organizations. You can see this reflected in their web sites, in the deals they have with Internet gaming related companies and  in the way  Internet gaming content is integrated into their web sites.  In the absence of Internet/E-commerce  expertise it is hard for land based casinos to make   substantive  or informed decision when it relates to iGaming or social casino deals and partnerships. This lack of experience usually results in deals and relationships that do not significantly result in the integration of the two business models or deals that focus on the benefits of online gaming for the land based operation.

Primary Short Term Social Gaming  Goal Of Land Based Casinos - Because  of the absence of Internet gaming expertise within the casinos the casinos will have the tendency to focus on how Internet gaming will help their land based operations.   There are two  primary goals that land based operators currently have for social gaming. One is to drive more traffic to their web sites and hopefully to their land based operations. This is primarily done through an association between the game and the land based loyalty program granting points for online play that can be used in the casino. The second is a marketing objective to associate the casino's brand with online game play. This is a form of   "gamification" where games are added to the web site to provide stickiness and potential up-sell of online players into land based casino activities.

Primary Internet Gambling Goal -  The casino's Internet gambling strategies have been primarily influenced  by the legal status of Internet gambling in the US. The back and forth nature of US legal Internet gambling has certainly confused and frustrated everyone and especially, the land based operators who realize they need an online gambling strategy but which one? iGaming  is currently not legal in most states and it is difficult to tell when there will be a critical mass of legal online gamblers in the US. However, some day there may be enough liquidity in the US online gambling space to make a real business out of it. However, because Internet gambling is a closer match to the core land based casino model, primarily due to the regulated nature of online gambling in the US and the potential ability to leverage land based licenses into the online space, the casinos are very interested in Internet gambling.  Also, the Internet games themselves are more likely to be clones of the land based games. In addition, the casinos may have a strategic advantage in online gambling that they do not have in social or free to play games. The moral of the story hear is that the social or free play business model has not been top on the list of gaming models to consider. However, the vacillation of legislators on the likely outcome of widespread legal Internet gambling has caused casino's to take a look and get invovled with social gaming. However, the integration or lack of well thought out integration into the casinos themselves demonstrates their rather lackluster approach. Yes, Caeser's has purchased social gaming properties and MGM has MyVegas. However, look at the integration of these models into their core business. To be polite they could have  done a much better job. 

The Impact Of Regulation - The US casino's are heavily regulated resulting in an homogenised set of gambling offerings that are identical across the casino landscape. Essentially, meaningful changes in the games or the delivery mechanisms are rare and highly subject to being copied quickly by competing casino's and vendors.   

 This is obviously very different  from the world of  iGaming, social gaming and free to play where everything is constantly changing. Technologies change on a regular basis, different game formats appear and disappear. Most marketing is done online, the social graph is important, competition is fierce with numerous companies of all sizes competing in the space.

 In contrast, regulation has caused the land  based casino business to consolidate into a small number of operators owning and controlling  a number of casinos all with the same essential game content.  Innovation in the gaming space is infrequent with extraneous businesses such as entertainment, hotel and restaurants playing more of a role in the evolving customers experience. Thus, the reason for non-gaming revenue now exceeding gaming revenue on the Las Vegas strip.

This means that the iGaming, social gaming and free to play business  and operational models are unfamiliar to most land based casino staff making it difficult for these two worlds to be able to speak the same language, have similar business objectives and to execute on an  overriding Internet gaming strategy. The moral of the story is to learn to speak the language of the land based casino and address the needs of the land based operator before you start a dialogue with them. The social casino culture is particularly alien to the land based operators.

The Land Based Casino Family - Casino operators like to work with people that have been on the inside working with land based casinos and not as much with companies and people on the outside with no land based casino history. A good example of this is the team that has created MyVegas for MGM. That team is populated by people that have a long history working in and with the land based casino operators. Some of them have actually operated land based casino's and built slot machines!! This prejudice makes it difficult for a company with only iGaming or social gaming background to do deals with the land based operators.

Buy Versus Build - The land based casinos have a strong propensity to buy versus partner/build. This is for obvious reasons given their lack of expertise in the online space. There are two notable exceptions, MGM's association with MyVegas and Wagerworks and the   Harrahs(Caesar's Place) launch of the Luckyme property in the UK.  Harrahs eventually changed its course and purchased Playtika. The major slot machine manufacturers  have a similar history with the purchase of Wagerworks and DoubleDown By IGT and Aristocrat's recent purchase of a social gaming company  Product Madness.  Wynn also put a bid on  PokerStars but had to back off the deal because of the US justice departments claim against PokerStars. Essentially, going at the casino companies with some kind of business deal that requires the casino management team to integrate content into their web sites or implement changes to their staff and processes is probably not going to be well received. Whatever it is it has to be almost turn key for the land based operator.

Backend Casino Management Systems - The casino companies all use  a "backend" systems to manage the transactions on the casino floor. These systems are supplied by three main  slot providers, Aristocrat, Bally's and IGT.  The propensity to  purchase slot  content and outsource backend functions to these companies also makes the casino's dependent on them and familiar with them. Therefore the casino's have a propensity to look  to them first for any gaming content and information processing.  Consequently, companies looking to do iGaming, social gaming or free to play gaming deals with casinos may want to first contact the slot game manufacturers first before approaching the casino's themselves. However, be careful about revealing any proprietary content or processes during the initial discussions.

It is obvious that the land based casino and online game companies have a bit of a disconnect when it comes to operating models, staffing and  business processes. This also means that approaching a land based casino operator with an iGaming, social gaming or free to play model has to made with this in mind if progress is to made.  Knowing someone inside the land based casino world is helpful and an endorsement from that individual should be obtained.  Any social, free to play or  Internet gambling operation should be able to stand on its own without any involvement with land based casino operators. Ironically, this may setup a purchase of an Internet gaming company instead of an affiliation.  

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane works with companies in the social, Internet gambling and land based casino sectors developing game content and online gaming strategies. Kevin is a frequent speaker at social game, Internet gambling and casino events and conferences in Asia, Europe and the US. Kevin is currently working with organizations to determine their acquisition and merger strategy as it relates to the growing interdependence of the various game content and delivery platforms.

The Merger Of Social Casino, Online Gambling And Land Based Casino Business Models

Over the past two years we have seen the rise of the "social" casino in Facebook and on mobile devices with traditional online gambling businesses jumping in offering their own social games.  Last year we saw the US land based casinos embrace  the "social" casino as an adjunct business and a traffic driver for  land based operations.  In the  last half of  2012 Facebook opened up its platform to "traditional" online gambling operators allowing a few anointed gambling businesses  entry to  Facebook's closed community.  This activity is an indication that  there is inertia hurling social gaming, online gaming and land based gambling forward into 2013.

The attractiveness of combining gaming businesses is driven by the inherent  "stickiness"of  game  play relative to other forms of recreational activity. This is especially true in the online space.  An average hold time of a visitor to a web site is counted in seconds. Player time in a game is much higher given the propensity of some people to spend hours playing a game. Add to this the possibility to have the social games themselves generate revenue and you start to understand the inherent value proposition of investing in game content. The attractiveness of game content extends beyond the casino industry. The concept of "gamifying"  web site, mobile or Facebook apps even if the business is none gaming related is becoming popular with many standard  land based brands such a Coca-Cola and Disney actively engaged and launching game like destinations.

So where will bricks and mortar, social games and online gambling businesses take online game content  in 2013?

Social Gaming, Online Gambling And Land Based Casino Mashup - Certainly we will see each of the independent sectors, social games, Internet gambling and land based  sectors continue to move forward with their traditional business models and lessons learned from 2012. However, a mash-up of all of these models is going to become more important in 2013 taking advantage of the differences, co-existence and potential merger of all of these business models into a consolidated operation. There is a real benefit to combining the the different game models. Player/customer acquisition  and a combined wallet are two important reasons.

Social Games -  Standalone social game companies and social game divisions of land based casinos and online gambling businesses will add more game content, retire game content and modify  existing content at breakneck speed to try to stay ahead of the competition and to satisfy the increasingly impatient social game community's appetite for more content, more creativity and more frequent change to game content.  Social game companies that where exclusively social in 2012 will explore online gambling as a new business model. This may prove challenging for them as my recent blog "Social Gaming Companies Enter The Online Gambling Space: Think Before You Leap" calls out. The transition from social gaming to online gambling is a quantum leap for most social game companies.  It also appears that Facebook is prejudicial about what companies they are going to allow to offer gambling in Facebook with an obvious bias towards existing online gambling companies. 

Online Gambling - Online gambling operators primarily focused on the European market will have to deal with their ever decreasing audience and higher cost of acquisition caused by the country to country regulation model. The number of online gambling operators will decrease as the British government repatriates licensing form the British protectorates (Alderney, Gibraltar,  Malta, etc.). This compression in the online gambling sector will force traditional online gambling businesses that have shunned social games as an uninteresting business model to reconsider it as an alternative and or supplement to their gambling operations. This trend will be fueled by the decreasing likelihood of any meaningful online gambling legislation  in the US in 2013. 

US Online Casinos - In 2012 we saw a flurry of activity by the US casinos to partner with online gambling and social game operators. We  also saw the US casino's directly invest in social game businesses as an adjunct to their land based operations for the purpose of developing an "online" brand for their land based business,  to drive traffic to their land based properties and to develop expertise in operating online gaming businesses.  With  uncertainty about when  online gambling will become legal in the US land based casino operators will continue to develop and launch social gaming businesses to acquire online online players in anticipation of one day being able to convert these players into online gamblers.

Gaming Model Mash-up - Given the afore mentioned activity of the three main stakeholders in online and land based gaming it is clear that a tight merger of social, online gambling and land based gaming into a single roll-up business is going to emerge as a daunting and powerful business model.  The  advantage of  a physical casino presence,  capturing and holding customers for long durations and monetizing them with physical game content and non-gaming revenue activities, combined with social gaming player acquisition and player monetization with virtual currency, plus the acquisition and monetization of online gambling players with their relatively(to social gaming) high online revenue per play creates a daunting revenue and brand recognition engine.  

  

The one major hick-up to this is who is going to know how to operate and run such a business. Clearly the skills to run a land based business, social gaming and online gambling business  are different. This has proven to be a problem in the past with US land based operators trying to run online gambling businesses using land based executives not skilled in this area. Conversely, it is hard to imagine a social gaming executive or an online gambling executive running a land based operation.

Unfortunately, the proposed business model does not work as a collection of independent divisions because each of these models is co-dependent on the others if the full benefit of this merger is to be realized. Someone has to know all of these models really well and be able to pull together an organization that can collaborate and move very quickly to react to market, regulatory, competitive and technology changes within these gaming domains.

2013 will prove to be a winning year for companies in the acquisition sights of organizations looking to consolidate the various gaming models. Collaborative business deals between social and online casinos will also be popular with both social and online gaming businesses realizing that it will be hard to do both models well and in time to address rapidly developing social and online gambling co-dependency.    Land based casino and lottery operators will increasingly feel  pressured and threatened by mega deals that involve land based, social gaming and online gambling mergers. Cost of acquiring social casino gamers will go up because of the competition for these players. In addition, social casino games will have to add features and functions to them that differentiate them from the standard slot or table games currently seen in Facebook and  on Apple, Android devices.

Kevin Flood is the CEO of Gameinlane, Inc. Gameinlane works with companies in the social, Internet gambling and land based casino sectors developing game content and online gaming strategies. Kevin is a frequent speaker at social game, Internet gambling and casino events and conferences in Asia, Europe and the US. Kevin is currently working with organizations to determine their acquisition and merger strategy as it relates to the growing interdependence of the various game content and delivery platforms.

Step 1 - US Land Based Casino's Prepare For US Legalized Internet Gambling

The march to the  legalization of  US Internet gambling has begun with states and the federal government grappling with how it will be legalized. It is no longer a matter of, if Internet gambling will be legalized in the US, it is a question of when and how will the legislation unfold. During this interim period of uncertainly many casino businesses interested in taking advantage of the new gambling law are pondering what they should do now to prepare for the eventual passage of Internet gambling legislation. The US land based casino industry is one sector that could benefit the most from the change in gambling law or potentially miss the greatest business opportunity of the industry's lifetime. Given the historical constraints imposed on land based casinos by legislatures and consumer groups the casino operators have done very little in the Internet space relying heavily on snail mail marketing, TV ads and the promotion of their entertainment venues to entice consumers to come to their properties.  This leaves them at a strategic disadvantage relative to other business sectors that have sophisticated Internet marketing teams that understand the online space , conversation rates, cost of acquisition, consumer behaviour, etc.  So what are the first steps they should take to explore the Internet space, preparing themselves and consumers for the big day?

Will Land Based Casino Patrons Gamble Online? - Clearly the answer to this question will significantly impact a casino's online gambling strategy. Speculating about the answer to this question  is a big gamble in and of itself and should be  answered prior to any investment in Internet gambling platforms, strategic gambling partnerships, etc. 

E-mail Capture - Before a casino can assess their land based customers propensity to gamble online they need to able to communicate with them online. E-mail is the good old fashion way to do this. Most people have an account and will provide that to a business. Capturing that e-mail address at hotel registration time or perhaps at the cashier counter would be a good way to build a database of marketable consumers. 

Survey - With the e-mail database underway an online survey would be a great way  to connect online with the existing land based gambling consumer to ask them what their propensity to gamble would be and what a casino operator would have to offer to get them to gamble online with them.

Build An Online Marketing Team And Expertise - Much of the success of online gambling operations is dependent on how well the properties will be  marketed online. In many cases the game content that will be offered by Internet gambling operators will be  identical with marketing  being the only differentiation between casinos. 

Social Media - It is no secret that Facebook and Twitter rule the online world with just about everyone on the planet in Facebook or on twitter. Facebook will also be a strategic battle ground for US Internet gambling.  Gambling will be hosted in Facebook. In preparation for Facebook gambling, to understand how to build community in Facebook ant to effectively market within Facebook requires an expertise different from standard Internet marketing. How do you build an effective Facebook page? How do you build a robust Facebook community, how do you advertise in Facebook and on other Facebook properties? How do you communicate with your installed base through Twitter?

Consumer Profiling - Profiling Internet gamblers is a sophisticated process that relies heavily on a number of data points such as Facebook activity, Twitter posts and communication, search characteristics, game play;  social, casual and  real gambling online and offline, E-commerce transactions, etc. Casino gambling operators should begin to determine how they will combine the profiling gathered from their land based operations with their online properties. This will provide them with an information data source that will help to optimize Online gambling operations.

These are some of the obvious and necessary first steps in the march to launch and manage a successful online gambling operation. In the next installment of this series we will address the question of buy, build, partner, etc. to obtain and manage online gambling games and content. That will be followed by the question should I launch a freemium, Facebook game and or mobile gambling games.  

Kevin Flood is the CEO of Gameinlane, Inc. Kevin writes extensively about online games and their impact and integration into iGaming and E-commerce environments. Kevin is a frequent speaker at online game events and conferences in Asia, Europe and the US. Kevin and his Gameinlane team are currently working with online gambling, social gaming and e-commerce companies integrating social gaming with online gaming operations and integrate game mechanics into e-commerce applications.