Gaming Industry Going Online
Online Casinos
Apr 10, 2001, 17:14
By Will Raymond-Valentine http://www.gamblingonlinemagazine.com
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How big is the online casino market? It is so big that traditional casino operators are looking online to boost their share prices and to produce substantial ongoing profits into the future. We have come to a point where traditional casino managers cannot ignore the fact that online casinos are wildly popular and are growing in a big way. With over $2 billion wagered on the Internet last year, online casino gambling has developed into the fastest-growing segment in the gambling sector. With more than two million people gambling on the Internet each year, online casino gambling is one of the most popular pastimes on the web. Now, companies like Lasseters, London Clubs, and even American gambling giants MGM/Mirage and Harrah's Entertainment are looking to get into the act.
The first terrestrial casino licensed and regulated online was Lasseters casino in Australia. Lasseters Hotel and Casino is a major casino resort located in Alice Springs, Australia. Lasseters has a long history of catering to some of the biggest players on the planet, but that didn't stop the company from seizing the opportunity to go online when the Australian government began issuing online casino licenses. Almost immediately, Lasseters developed a suite of online casino games, got their license, and began virtual operations.
This was an eye-opening event for both online casino operators and for terrestrial casino managers. From that moment on, Lasseters had set the stage for the convergence between reality and virtual reality in the casino business. Almost immediately after the Lasseters launch, questions arose as to the implications this had on the American casino market. Casinos in America began to ask themselves if they could compete successfully with the foreign and offshore casinos that were operating online.
Online casinos have always maintained a more cost efficient structure than land-based casinos, and thus produce higher profitability per player than their terrestrial brothers. The profit margins of terrestrial casinos would increase dramatically if they were to run as cost effectively as the casinos online. In the absence of a billion dollar hotel structure, hundreds of hotel support staff, hundreds of casino staff, and free drinks pouring like water from a fountain, online casinos can cater to an unlimited number of players as inexpensively as they can cater to just one.
Around the time of the Lasseters launch, a European operator called London Clubs International decided that it too would test the waters of the Internet. Located in a jurisdiction that had no laws specifically regarding online gambling, other than for licensed sportsbooks, London Clubs International developed a "play for free" portal site. Despite this being a "play for free" site, London Clubs International received a lot of attention for being yet another early pioneer in online gambling.
Another significant European firm that helped explore the realities of land-based operators going virtual was the English betting firm William Hill. They executed plans to augment their telephone and betting shop business with an online casino bearing their logo. Through an agreement with software provider Cryptologic, William Hill established their own licensed online casino and sportsbook. William Hill is one of the UK's largest licensed bookmakers, and moving online and operating an "offshore" casino was one of the boldest online migrations of a major terrestrial betting firm to date.
Most recently, a lot of media attention has been focused on major American casino firms beginning to take steps towards online operations. The first large casino group to announce a major move towards an online casino operation was MGM/Mirage. MGM/Mirage is one of the largest casino operators in the world, and has recently contracted the development of online casino software from a company called Silicon Gaming, a prominent developer of online gaming systems.
This, amidst rumors that Nevada was considering the licensing of online casino gambling for state residents, opened speculation that the lights of the Vegas Strip would soon be twinkling in cyberspace. Then, to add fuel to the fire, Harrah's Entertainment announced that it too was advancing online by taking a minority stake in iwin.com At present, these US casino sites are being used only for promotional purposes, but they are building an important database of gamblers and would-be gamblers for the Las Vegas casinos that operate them.
But will taking a terrestrial casino online be as easy as putting a well known casino name on a standard online casino package? Most terrestrial casino operators think that it won't. These casino operators have too much at stake both with their brand's recognition to promote an online casino site that doesn't totally reflect the needs of the casino's target clientele. Terrestrial casino operators have for years been building their unique positions and niches in the casino marketplace by building a larger and more outrageous and extravagant, theme park atmosphere for their guests. As they think about going online, they need to think about how to convey their own unique images onto a computer screen so that the players at home associate the online casino with the resort casino. Without being able to offer free meals, free rooms and complimentary shows to their online players, casino managers have to rethink their strategy for attracting and retaining their clients.
Since online gambling began, terrestrial casino operators have been finding that they compete much more closely with Disneyland than they do with any of the online casinos. Las Vegas casinos need to convince vacationers that Las Vegas has more to offer than any other holiday destination the player is considering. In this, the casino is competing with The Redwood Forest, New York City, and Orlando, Florida for the player's precious vacation days.
On the other side of the fence, online casino are competing with other web sites for the few hours a week players spend surfing the net. Online casinos compete to take players away from sites like Amazon.com and Gamesville.com and convince them that their lunch break would be better spent at their casinos. The real question is how Las Vegas will make the jump online once they are legally able to? Current online gambling technologies cannot reproduce what Las Vegas casinos have to offer. So, the Las Vegas casinos must leverage their brand names while distancing their brands just enough so that there is a clear separation between the online casino and the resort casino. The Las Vegas casinos must also make it clear to the online player that if there is a problem with payment online, then they can come knocking on the casino manager's door at the Las/Vegas hotel/casino.
Another question to ask is whether or not terrestrial casino managers, by virtue of their being casino operators, are equipped to run cyber casinos? Although at first glance the answer is an immediate yes; many terrestrial casino managers would say that the knowledge of one has no bearing on the other besides the fact that the games themselves are the same. Top terrestrial casino executives are realizing that they must rethink their entire strategies if they want to be as successful online as they are offline. Many terrestrial casinos that have acquired staff for their online gaming departments have looked outside of the casino industry to find their project leaders and project developers. Frequently, online casino project teams for land-based casinos are made up of technology and Internet specialists rather than individuals with practical gaming experience.
To create a web casino that marries the technical requirements of an Internet game with the branding and reputation of the casino resort, a mixture of both technical and casino experience is necessary in the terrestrial casino's online development department. Even the most amazing graphics are wasted if they convey an image contrary to that of the casino resort. At the same time the online casino shouldn't be encumbered with the limitations of the terrestrial casino that they are representing. The balance is actually quite difficult to procure, and this is proving the bane of online casino departments across the Nevada desert.
Before long every major terrestrial casino will have a presence on the World Wide Web. Some will use standard gaming software developed by the major casino game designers, while others will develop software from scratch in an attempt to diversify their product and create a unique experience for their players. But however terrestrial casinos do it, the underlying fact remains that gambling is going digital and even multi-billion dollar terrestrial casinos can't ignore the popularity of gambling online.
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