It has become one of the most talked-about topics in the industry and has the potential to change gaming altogether. Internet gaming opens a whole new area for exploration, creativity and convenience. But it also brings up regulation issues, legal stipulations and the potential, yet unlikely, replacement of brick-and-mortar casinos.
One of our contributors, John English, put it this way: “Internet and mobile gaming will change the gaming industry by adding convenience and a whole new spectrum to the industry.” And Tony Caporicci states in his essay, “Mobile gaming is here today and is going to proliferate inside of casinos.”
People might be able to play games and place bets from their computer or mobile phone wherever they may be, but will brick-and-mortar casinos ever be replaced? English says that casinos offer something unique—something that mobile and Internet gaming do not, and people will never let that go—no matter how attached we get to our iPads and iPhones.
GLI says that, despite the ban on i-gaming in the U.S., it is still widely accepted that the U.S. is the largest i-gaming nation in the world. Harry Reid originally pushed the legalization of i-gaming, and in doing so, established a framework for licensing, regulating and taxing legal Internet gaming. With proper regulation, these markets can be safe and acceptable to the public. And now with the potential authorization of i-gaming taking place in New Jersey, the thought of “gaming of the future” is within reach.
Read on to see exactly what our contributors to this feature are saying, and on the last page, read what several online gaming hosts have to say about the possible legalization in the U.S.
This Changes Everything
My experience with mobile gaming began in October 2010, when we installed Class III server-centric gambling systems at Blue Lake and Colusa casinos using Apple’s iPad™. Players borrow devices from the casino and take them into the restaurant, bingo parlor or gambling lounge to play. Once a few more details are ironed out, players will be able to take iPads anywhere in the casino they desire, possibly even to their hotel rooms.
IPads not only offer the benefit of portability but provide a fun, even joyful, interface that brings new dimensions to gambling. IPad gaming provides unprecedented player comfort. No longer are players forced to sit on a high stool in front of a bulky cabinet. Instead they sit in comfortable chairs, at tables or even stand, in groups or alone, and change locations whenever they want. I suspect the casino of 2015 will have more in common with Starbucks than today’s casino floor configurations.
Plentiful game selection is another benefit. Five games are offered today, and that will grow to dozens of titles by this time next year. All titles are available to all players, and switching between games takes only a couple of seconds.
I used the term server-centric earlier, and it’s the backbone of mobile technology. Game processes, including the all-important Random Number Generator, exist solely within the game server, which is constructed of a simple box measuring just 12x9x6 inches. Using half the electricity of a standard light bulb, this server supports up to 500 simultaneous players and easily scales to higher capacity. By placing this box in a safe, back-of-house location, security is easily and cost-effectively maintained. IPad devices simply display game outcomes that are communicated over highly secure wireless transmissions. Even if someone breaks through the wireless security, they can only alter the information displayed and not game outcomes.
Server-centric borrows heavily from Internet gaming systems. In fact, server-centric supports gambling within the casino and over the Internet (when it becomes legal) simultaneously. Instead of competing with Internet gambling, your offering includes it as your brand extends into the player’s home.
Dramatic cost savings are another benefit. Suppose you start with an installation that supports 50 players. You’ll need only to install a server and wireless infrastructure at a cost of perhaps $20,000. Add in the cost of 50 iPads, and you’re ready to go. Now suppose you add capacity for 20 additional players. Just buy that many more iPads—which retail for just $499 each—and you’re good to go. For the price of just three traditional $20,000 games, you’ve got an 80 game installation!
To be clear, these prices don’t include game titles, but the server-centric business model lets you have as many games as you want for zero up-front cost, though you do pay a percentage of net-win, which is historically a hot button for casino operators. Remember though, non-performing games cost almost nothing and all players have access to all game titles with absolutely no additional capital cost or up-front risk.
Auditing and reporting are simpler, too. Suppose you have 10 gamblers playing the same style of video poker. With traditional games, you have 10 separate games to audit, analyze and report. With server-centric, it’s just a single game with 10 times the volume. Short-term deviations from theoretical hold are diminished by these higher play volumes and there’s only a fraction of the number of game instances to audit.
Server-centric is perfect for third-party game developers and without doubt you’ll see the equivalent of Apple’s app store for casino games within the next year or so.
Traditional gaming machines are stand-alone entities and you face the expense and complexity of connecting them all together with a data collection system. Because all server-centric play activity occurs within the server, that information is born, collected and ready for analysis; there’s absolutely no additional hardware required for player tracking or accounting. For those same reasons, game option configuration is straightforward. Just use a computer terminal to quickly configure parameters for each game type—right from the comfort of your office chair.
Nothing limits server-centric technology to mobile games. By mounting a low-cost, personal computer into an appropriate cabinet, traditional gaming machine appearance is replicated for only a fraction of the cost. In reality, mobile gaming—or Internet gaming for that matter—is nothing more than a new cabinet style that provides a comfortable, convenient, new choice for players.
Importantly, while we happily used Apple’s iPad in our first installations, there’s absolutely no reason other devices, including those running Google’s Android or Microsoft’s Windows 7, could not be equally effective.
Our gambling industry is often criticized for its slow adoption of new technology. That’s partly due to regulation but mostly caused by trying to develop high-technology across relatively low quantities of production. Fewer than 100,000 gaming machines were produced in 2010. Compare that to 15 million iPads. Next year, about the same number of gaming machines will be produced, but iPad production will grow to more than 50 million.
High-volume consumer electronics providers can spend far more on R&D and charge significantly less for each product copy sold. Because of this, it is virtually certain that the next generation iPad will cost less, and do more, than its predecessor. There’s not much chance of next year’s slot machine design achieving that same feat. And because these display devices don’t decide game outcomes, regulatory approvals are easier to obtain, meaning your casino floor technology can finally keep pace with the rest of the world.
These first installations only hint at what can be accomplished and I’m certain this technology will revolutionize both the configuration and cost structure of your gaming floor. I’ve had the fun of demonstrating server-centric to a score of industry veterans. I cannot recall one that didn’t utter the phrase “This changes everything!” within the first 10 minutes of discussion.
There’s hard work ahead to bring this technology to mainstream casinos, and we equipment suppliers desperately need the ideas and expertise of casino operators. Without the help of talented people at Blue Lake and Colusa, our own product development would’ve taken much longer and been far less gratifying. Through the close cooperation of suppliers and operators, the next 10 years of casino gambling can be more enjoyable and more profitable than ever before.
This is going to be fun!
Senior Vice President
American Wagering Inc.
The Key is Convenience
With both the Internet and mobile gaming, casino executives and other gaming industry leaders should be aware of the marvels of technology and a wide variety of content offerings. Our company, in particular, is going to focus on the sports market, which is our expertise and background. It’s a new marketplace for a lot of different developers, with the opportunity to open up new channels of creativity.
We should expect to see more of an open-source platform, much like that of Google or Android, with flexibility of design function and flow. I think it could work seamlessly with the regulatory environment to the benefit of the operators. In my opinion, our business is all about convenience, and any time you can add a convenience to the customer, you’re improving your business for both yourself and the customer.
Looking ahead, I anticipate the emergence of a wide variety of mobile offerings, with some movement in Internet areas. Many have been saying, “It’s going to be two years,” but it’s getting closer and regulators are starting to look in that direction, so we’ll see where it winds up.
Internet and mobile gaming will change the gaming industry by adding convenience and a whole new spectrum to the industry. I do everything on my mobile phone now: pay bills, check e-mail, read documents. But mobile gaming is regulated and controlled. For instance, our device is the first mobile application to be approved here in the U.S. That was a big step forward for our business. Our customers have the ability to be anywhere within the state of Nevada and place their bets. So if they’re at home, if they’re driving, wherever they happen to be, they can place their bets. It’s a true convenience.
But it’s not meant to replace casino environments. Casinos are always going to be there because it’s fun, it’s exciting, there are restaurants, there are shows, there’s a plethora of entertainment that happens inside the casino. All we’re doing is adding a lot of convenience to the marketplace. And once you have convenience it’s going to increase your handle, and the number of people that want to use it. It’s a big step forward for the entire industry—a game changer. Studies are showing that mobile gaming is going to be a $48 billion enterprise. We’re the first ones to enter that arena, and we’re really excited about the possibilities.
With gambling, and sports betting in particular—which is the only thing we can really do right now—a new dimension has been added to the gaming world. It’s a sportsbook in your pocket, no matter where you go.
Companies are creating specific games for specific markets, with a large variety of games already built. In some other countries and jurisdictions, you can get blackjack, poker, just about anything you’re looking for, on a mobile phone.
I see that eventually—and it’s going to be a while—things like that are going to happen here in the United States. Our company is currently doing things like that on more of an entertainment basis.
The U.K. doesn’t have the same regulatory restraints that we do in Nevada. They still are regulated, but not in the same way.
For instance, our product has to have heavy duty geo-location software and technology—like cell phone towers and GPS—and wires of encryption to make sure that all bets are within the state of Nevada. All transactions have to be under the guidance of the Nevada Gaming Control Board. In our particular case it’s account wagering. When somebody comes, they show two forms of ID and fill out an application so we know who they are. Then we give them a pass code and a PIN and they have to be within the state to do it. In the U.K. they don’t have to go through those steps.
Currently there aren’t any ways operators in the United States can take advantage of Internet and mobile gaming applications while complying with UIGEA. Our company is the only one in the United States now that has a true mobile application taking actual sports wagers and the ability to do so outside a casino.
We think mobile wagering is a big step forward, and where the regulatory bodies are heading. But somebody had to do it first. I think we opened a door for the standards of the future, which makes it easier for the regulators to start looking at other types of products. With the current state of affairs, it’s going to take a big government movement to get Internet gaming to happen. Complete Internet gaming in the U.S. is still a ways down the road.
One thing that’s kind of disappointing for our company is that only about $2.7 billion in legal regulated sports betting takes place in Nevada. Compare that to approximately $400 billion that takes place in Italy, outside our country and in unregulated areas. With our economy as bad as it right now, it’s a shame to see that money go offshore.
I think the regulators have to look at it as taxable revenue we can bring to our states and keep here in our country, as opposed to going elsewhere.
Change is Constant—And a Good Challenge
This industry deals with a constantly changing legal climate around the world, and we enjoy the challenge. Nevada has the best regulatory aspects of the gaming world, with a great gaming board and lab that’s very thorough, setting the bar for the rest of the world.
For instance, when we first went to the regulators with the mobile phone product, they said, “Well, you know you’ve got a lot of challenges ahead of you. We don’t know how you’re going to be able to get a mobile product outside of the casino and be able to convince us that it’s safe to use anywhere in the state.” We rose to the challenge and we succeeded. We enjoy the challenge and our ability to develop something like this. The challenges are good and exciting, and make things competitive. They’re there for good reason and good purpose. If people can’t adapt to those changes and challenges, they won’t live long in this industry.
Preparation and the Future
Our company is definitely preparing for the possible move to regulating i-gaming in the U.S. The first step was getting our mobile phone betting application approved, which was a very big step in the right direction.
With regard to Internet wagering, I think we first have to start with intranet, which stays controlled within state borders. That way, the state can tax the revenues and impose guidelines.
And we already have things in play for that. We already have “play for fun” in some jurisdictions. If those jurisdictions eventually allow for true gambling, we already have our stake in the game there.
We have content prepared, we have multiple content offerings, and we’ve already aligned ourselves with potential partnerships for when the day of legalization comes. We’re about as prepared as any company can be, and looking forward to the future.
We truly want to add convenience to the marketplace, at the same time assisting in setting the regulatory bar to give others the means to follow. We see people starting to come down the path and submit their own mobile applications—but we pride ourselves in being the leaders in that area. Somebody had to do it first, and we were that somebody.
The future is exciting. And we have a lot of good things to look forward to as things progress.
Vice President of Mobile Strategies
SkyWire Media Inc.
Mobile Gaming Strategies
With the advent of the iPad™, the Galaxy tablet, and many more coming, and as users become more familiar and comfortable using smart phones such as iPhones, Androids and Blackberrys, mobile devices are set to be a natural in gaming.
The first thought that comes to mind is users playing video poker, slots and even blackjack on an iPad while sitting next to the pool, inside a bar or at a restaurant—almost like keno but without the keno server. Then I see people using iPhones, Blackberrys and Androids to chase points or scan barcodes for discounts and using those devices to make transactions. I see mobile devices used to interact with the concierge and the valet, enabling line passes and direct ordering. What is more difficult to see is how mobile gaming will be utilized or differentiated as a segment of online gaming.
It is clear, however, that mobile is a natural transition into the future. People are addicted to their mobile devices, and it is natural to see people using their mobiles for information and communication for hospitality needs, entertainment and gaming. The devices of today are intriguing, and the advancements underway at the major carriers and manufacturers are wild. For example, Visa and Mastercard are jumping on board with mobile payment tools, utilizing nearfield communications, which enables them to understand each transaction and control aspects of customer behavior.
I believe that mobile technologies, as applied to hospitality and gaming, are all about interfaces. Many years ago, when the Internet became more accepted, website owners focused on developing user interfaces and search engines that accommodated user requests. Integrating legacy back-end systems to web services was an intensive task that required a lot of understanding of networking as well as new coding concepts. Today, with the availability of advanced programming interfaces (APIs), integrating web services to mobile applications can be done in a matter of days—if not hours—and requires just a little configuring of the code. If you, for example, want to integrate Twitter into your strategy, it shouldn’t take more than an afternoon.
I will talk more about social networking in an upcoming issue of CEM, but right now I want to cover some of the technologies available on devices today that I think will become more adopted in 2011.
Quick Response and Tag Readers
Quick Response (QR) 2-D barcodes and Microsoft Tags provide mobile devices equipped with QR readers or Microsoft Tag readers instant mobile content acquisition. This content could range from a simple link to a website that the mobile could view to a function that instantly adds contact information to the device’s address book for the user to access later. This “scan” makes mobile content instant by “portalizing” content using mobile interfaces as a security and account management platform. The protocol of mobile gaming is already available, so beginning a mobile device-driven campaign is as simple as placing a 2-D barcode on consumer-related programs. During the scan, analytics are also performed, and intelligence such as when, where, what and who can be provided in reports that help you understanding the behaviors of the mobile users for use in future campaigning.
Augmented reality (A/R), which utilizes the camera in a mobile device to help the user find things, will likely become a natural function for many in the near future. A layer can be superimposed over the live view from the camera to display information, such as points of interest, that the user can interact with. When enabled, the points of interest become “hot points” or “balloons” that pop up inside the view, and the user can access embedded videos, photos, ads, coupons, etc., by simply tapping on the hot point or balloon on the camera view.
Nearfield communication (NFC) technology can make a major impact in gaming, as it uses presence detection to let the provider know when an app is provisioned as well as the whereabouts and howabouts of each user. Visa is already using it to provide transaction alerts that notify account holders in near real time of their account activity. Following close suit with financial compliance, gaming compliance is crucial to mobile strategies that are used for regulated purposes. Integrating NFC technology into gaming enables providers to interact in real time with guests but also to, in real time, detect device activity and presence.
Messaging and Notifications
Extensible messaging presence protocol (XMPP) provides real-time chat and messaging, and on mobile devices, it can enable features such as real-time presence and real-time notifications. Likewise, push notifications from Apple provide mobile users instant messages similarly to XMPP. They use an open port that is dedicated to the push services, which act as notifications that enable server-side messaging. These real-time services provide an abundance of technology to casinos for mitigating operational costs, developing smart marketing programs and creating new entertainment resources, all of which set the tone for online gaming.
Simply put, by “portalizing” content using mobile interfaces as a security and account management platform, the protocol of mobile gaming is ready—and Apple has proved it works. Apple has created a marketplace, obtained millions of credit card accounts and developed supreme loyalty. It has made transactions through mobile devices easy and trustworthy. (Now watch how tempting it will be for Apple not to become a credit [card] switch.)
Technology is the major force that will change gaming, and technology is already an addictive presence in our lives and in our leisure. When you see an iPad today, it is not hard to envision relaxation alongside that device in use. Mobile gaming is here today and is going to proliferate inside of casinos. Eventually it will be used to connect accounts to games that could emulate in many ways, online gaming. This will revolutionize gaming—just like it is starting to revolutionize hospitality—and how mobile devices play a role in the way players and guests interact with services.
Leveraging the technology available today creates some levels of security that prove these applications are real-world and not fantasy—although many of the ideas that are introduced are beyond the scope of real-world use. One new product that is a major thrust in the right (and realistic) direction is Bet-Em, by American Wagering Inc., which was recently passed by the Nevada Gaming Control Board. (Full disclosure: I have worked with this company in the past.) According to John English, senior vice president of American Wagering, the company spent more than a year planning and developing the application. “The Nevada Gaming Control Board scrutinized the project with a very thorough lave investigation, which helped us in setting the bar for our security features,” he noted.
Mobile interfaces are now becoming the new self-service platform, and transitioning content as casino compliant technology is a natural next step. Being able to play remotely and access virtual wallets or purchase credits via real-world compliant casino apps is not far away. Push notifications, text alerts, mobile coupons, reservations, check-ins, rewards and points are some features that will become standard. Boyd Gaming Corp. got in on the front wave of this when it recently launched its mobile application called B Connected Mobile, which utilizes Agilysys Inc.’s new Mobile ResNet application. The application enables guests to book rooms directly through the Lodging Management System™ via any web-enabled smartphone, iPad or iPod® touch. According to Agilysys, Boyd is one of the first companies to use the application. B Connected Mobile, meanwhile, is the first multi-property, loyalty program-based smartphone application of its kind in the gaming industry. Rolled out in July, B Connected Mobile delivers personalized offers and information, including best rates available on hotel rooms, directly to customers on their mobile devices.
“We wanted a solution that would allow us to expand the benefits of our B Connected loyalty program,” said Boyd Gaming’s Corporate Director of E-Commerce, Brian Best. “The B Connected Mobile smartphone app complements B Connected Online, our online community of nearly half a million loyal customers who use LMS ResNet by Agilysys for online room reservations. The Mobile ResNet application allows our customers to make room reservations at any Boyd Gaming property in a mobile-friendly experience. This is one more way Boyd Gaming is using technology to help create an exceptional guest stay.”
“Increasingly, hotels are looking for technology that speeds delivery of services and gives guests more options,” said Tina Stehle, senior vice president and general manager of Agilysys Hospitality Solutions Group. “Our new Mobile ResNet application offers maximum flexibility to guests, many of whom are on the move and looking for ways to save time. It is exciting to see how Boyd Gaming has incorporated this application into its broader nationwide loyalty program to enhance service and offer a more personalized guest experience.”
Catania Gaming Consultants,
Law Offices Catania & Ehrlich, P.C.
N.J. Moves Toward Being First State to Regulate Online Gaming, Takes Steps to Support A.C. Casino Industry
The New Jersey Assembly and Senate approved an online gaming bill on Jan. 10, 2011. The legislation to authorize and regulate online gaming now goes to Gov. Christie for his approval. If the governor signs the legislation, New Jersey would become the first state in the nation to allow licensed casino entities to offer residents the ability to play poker and other casino-style games on their computers.
In early December 2010, the N.J. Assembly Regulatory Oversight and Gaming Committee released Senate bill S-490 (combining it with the Assembly bill, A-2570), legislation allowing for intrastate online gaming within N.J. The legislation had been amended in the Senate, allowing wagers from within N.J. and from international locations outside of the U.S. The international language was amended out of the bill, which, if left in, would have killed the bill.
The assembly committee added amendments that limited wagers to within N.J. and changed tax structures to help bridge a gap for the N.J. horseracing industry to work toward being self-sufficient. A vote on the bill to authorize Internet wagering by New Jersey residents on poker and other casino-type games was referred to the Assembly Budget Committee because it contained a tax provision.
Specifically, the bill provides:
• All games, including poker, that may be played at a casino, as well as variations or composites thereof, may be offered through Internet wagering;
• All equipment used by a licensee to conduct Internet wagering, including but not limited to computers, servers, monitoring rooms and hubs, must be located either in a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City. All Internet wagers will be deemed to be placed when received in Atlantic City by the licensee regardless of the player’s physical location within this state or outside of the United States; any intermediate routing of electronic data in connection with a wager will not affect the fact that the wager is placed in Atlantic City;
• Internet wagering in this state will be subject to the provisions of, and pre-empted and superseded by, any applicable federal law;
• The Casino Control Commission may establish a Division of Internet Wagering to which it may delegate authority for the administration of Internet wagering conducted by casino licensees; the division would be responsible for recommending regulations concerning Internet wagering for consideration and possible adoption by the commission; this would not affect the authority of the Division of Gaming Enforcement with respect to all casino gaming activities, including Internet wagering;
• The application process for a licensed casino to obtain a permit to establish Internet wagering, with the permit valid for one year and subject to renewal. As part of the application process, a casino licensee must submit to the commission for its approval a description of its system of internal procedures (including security procedures) and administrative and accounting controls for Internet wagering, including provisions that provide for real-time monitoring of all games. A casino licensee must also submit its gaming software and other Internet wagering equipment to the Division of Gaming Enforcement for testing to ensure compliance with technical standards for such equipment set by the commission;
• It will be lawful for a casino licensee to provide marketing information by means of the Internet to players engaged in Internet wagering and to offer those players incentives to visit the licensee’s casino in Atlantic City;
• Required features to assist problem gamblers and potential problem gamblers;
• Penalties for violations of the provisions of the bill;
• An annual fee for Internet wagering permit holders for the initial permit and permit renewal to cover the costs of regulation by the commission and the division, with the initial fee to be at least $200,000 and the renewal fee to be at least $100,000; and
• An annual fee for Internet wagering permit holders of $100,000 to be allocated to programs to prevent compulsive gambling and to assist compulsive gamblers.
The New Jersey Legislature also approved legislation that creates an Atlantic City Casino District, which allows for state oversight and phases out a casino financed subsidy for the New Jersey horse racing industry. The Casino District is an initiative by Gov. Christie to help revitalize New Jersey’s traditional casino industry. The legislation was advanced after the governor’s transition team issued a report that recommended creation of the Atlantic City Tourism District as well as having the state get out of the horse racing.
Three gaming-specific bills also passed the assembly in the same voting session:
• Creation of a “Casino Gaming Study Commission” to study the economic impact of a possible Meadowlands casino.
• A bill to reduce the amount of regulations in the Atlantic City casino industry.
• A bill that provides incentives for continued breeding of racehorses in the state.
Over 40 years ago, New Jersey was the second state to authorize a state lottery after New Hampshire; this time New Jersey will be the first authorizing intrastate Internet gaming. Will other states follow suit and authorize intrastate Internet gaming? If a number of states authorize intrastate Internet gaming, will there come a time when, like the multi-state lotteries, there are multi-state intrastate Internet? We will have to wait for the answers, however, it now seems possible and we have to credit the lawmakers in New Jersey for leading the way.
Not a gaming convention or conference goes by where you don’t hear people talking in hushed tones about the future of i-gaming in the U.S. The conversation usually centers around what Congress will do or who stands to lose if i-gaming is enacted. In the U.S., there are more misconceptions and innuendos about what i-gaming may be than there are truths as to what i-gaming is in well-regulated jurisdictions.
Internet and mobile gaming can be made safe and will be healthy for the gaming industry if it is regulated properly. If you consider that in many European and Asian i-gaming jurisdictions, recent legislation has been very effective at defining and protecting stakeholders’ interests, similar legislation could easily be adopted and enacted in the U.S. to provide an equivalent level of stakeholder protection at the state level. If this is done properly, i-gaming legislation will create a new generation of players who are comfortable enjoying gaming in fair and controlled environment.
Many people believe that if legalized, i-gaming would appear on the computer screens, iPads™, iPhones® and Blackberrys of adults and minors in every state in the union without regard to age or identity. There are concerns that underage gamers will have unfettered access to poker rooms across the Internet, as long as they have a bank account or credit card and an Internet connection. However, these arguments fail to consider that in fact there are several mature technologies that are designed to remove unlawful gamers at every stage of the registration and gaming process.
Some of these techniques include, but are not limited to, i-gaming account registration, payment processing setup and player identity verification. It is very common in Europe for i-gaming operators to ask for several forms of government-issued identity cards (driver’s license numbers, passport numbers and social security cards), which are cross-referenced against national databases to ensure that the player’s account information and their identity cards match. In many instances, if there is not a match, the regulations require that the operator reject the account.
There is a second stage of verification when it comes to payment processing. The bank account record and bank identity must be verifiable by the operator and must have operations within the jurisdiction for which the player is playing. For example, an Italian operator could not accept payments from a Swiss bank.
Finally, there are companies that can do a tertiary check on the identity of the player using public and private databases to compare e-mail addresses with social networking sites, credit score sites and other readily available databases. These databases are used to establish the history and web presence of a potential gamer. The more info there is available, the more likely the applicant is, in fact, who they say they are. These three methodologies have been very effective at removing a large portion of the ineligible or unlawful gamers.
These mature technologies could easily be adopted by U.S. states to protect an intrastate i-gaming market. While there is a ban on interstate i-gaming, which justifiably comes under the federal government’s purview, it is not yet clear from a legal perspective if intrastate would be illegal if there were reasonable assurances that i-gaming would remain in state.
As is currently happening in Europe, countries like France, Spain and Italy have all recently enacted legislation that provides a very high border around the country’s i-gaming market. These countries also use technologies implemented by Internet Service Providers (ISPs) to block foreign gaming sites. As these countries have regulated and protected their markets, players and operators, i-gaming in these jurisdictions has grown tremendously, as has the tax revenue collected by governments. These governments have taken technology that exists and used it in a new and innovative way to create a safe and well-regulated market comprised entirely of gaming from their country.
The i-gaming market is very different from that of the casino market in two distinct ways and, therefore, attracts a different type of player—a player who will learn the entertainment value of gaming in a safe environment and later become a casino player. The first difference is that the i-gaming player is much more focused on games of skill, such as poker and blackjack, than the casino players. In Italy, more than 50 percent of i-gaming gross gaming revenue comes from poker, where as in the U.S., the majority of casino gaming revenue tends to come from slots and machines. So there is a difference in preference of games types of the players.
A second key difference is the perceived age of the players. In the i-gaming market, it seems as if the majority of the players are under the age of 40, with a good percentage being under the age of 30. Because there are many newer and novice players, it is very common to see many low stakes tables where players can learn the skills and strategies of the games without having to put too much money on the table. The age distribution in the casino market is much greater, as there is a much more diverse age of players. These facts suggest that the i-gaming markets are introducing players to a safe and comfortable gaming market, where they can learn the games and strategies at their own pace. Because the computer environment is much different than the casino environment, it stands to reason that as these players mature and increase their ability to spend their disposable income, they would be more inclined to spend their vacation time at a place where gaming is offered along with the many other entertainment outlets that accompany a casino than a person who was not seeking the entertainment value offered by gaming.
While it is understandable that there are misconceptions as to what i-gaming is and how it can be made safe, it is our responsibility as industry participants to consider that i-gaming is a reality, and access to the Internet cannot be regulated in any meaningful way. Despite the ban on i-gaming in the U.S., it is still widely accepted that the U.S. is the largest i-gaming nation in the world. Also in the top three is Germany, another country where i-gaming is not legally recognized. With good regulation, using existing technology, we can make these markets safe and acceptable to the public.
Executive Vice President Interactive
IGT’s Take on Internet and Mobile
Over recent years, we have seen an increase in the convergence of mobile and online gaming, with the differences between products on each platform being far less pronounced. Casino executives should be aware that as these differences continue to decrease, players will move freely between online and mobile gaming environments.
In addition, the development of smartphones and tablet devices has begun a new era in mobile gaming. People have become accustomed to doing many things at once, in almost any location. They don’t want to be tied to a desktop PC, and mobile gaming allows for massively increased flexibility.
Player expectations and desires have shaped developments and the market today. The new generation of young adults has grown up immersed in technology, and are so savvy that their demands and habits are becoming ever-more complex. This presents the industry with a huge opportunity and facilitates the convergence of traditional, online and mobile gaming.
As new markets continue to legalize, growth will be even more explosive in the mobile and online gaming market. Only a handful of IGT’s customer base has entered the market to this point, but as markets legalize, most will. IGT’s land-based casino customers have some powerful advantages in the interactive space—not least their long-standing and deep player relationships.
For example, the U.S. potentially will exist as a nearly new online market where the industry will basically be starting from zero when it comes to the market and a player product channel. These changes offer a unique opportunity for traditional, land-based casinos and may give them a distinct advantage in the online and mobile gaming marketplace. Their brands are firmly established, allowing them to wield a power that cannot be underestimated due to the familiarity and trust they have created. Their databases of past and present customers are unparalleled and allow them to reach a vast audience of players. When that potential player audience is combined with marketing expertise, it offers land-based casinos a valuable commodity—a way to interest and appeal to new players, as well as re-engage older players in new online and mobile gaming opportunities.
IGT has more than 10 years experience in online and mobile gaming. IGT can show customers how to leverage their advantages and win in this gaming space. We’re positioned for the next decade and beyond to serve our customers, to participate with force in legalized markets and to utilize the power of our core business to create significant value and develop an incredible new revenue stream.
Having such experience in online and mobile gaming, we believe that players who go to a casino’s website will expect to see some of the same game titles they know and love from the casino floor. And, while there is no shortage of content and suppliers in the interactive industry, IGT has been able to consistently produce the highest performing online casino content in the industry by relying on our unique IGT heritage and talent pool.
Game development is obviously hugely relevant to IGT. As a leader, we have found that our game portfolio needs balance to appeal to players worldwide. The same holds true for the online and mobile gaming space as well. Experience and market research will show us the correct combination of content needed for these new, emerging markets.
We also have seen that the strength of our in-house offerings has increased to the extent that they have become “brands” in their own right. Cleopatra® is a great example.
There are ways operators in the U.S. can take advantage of Internet and mobile gaming applications while complying with UIGEA. We have been meeting with several operators to discuss how our free-play games can benefit their websites and drive traffic to the land-based casinos. I think there is a great opportunity here. I am pleased to say our Cleopatra mobile game has recently launched on MGM’s new M-Life mobile app, and I hope there will be many more in the future.
As is common in gaming, new markets will continue to open up over the next several years. More immediately, there are opportunities in the likes of Canada, Italy and France and other countries will most certainly follow, particularly in Europe. In addition, many believe that U.S. legalization will occur at some point, but the timing is difficult to predict due to various political considerations. As you would expect, we are close to the legislative processes, and, like most industry participants, are making plans to ensure we are prepared in order to act quickly and decisively in the U.S. market as well as other emerging online and mobile gaming markets around the world.
IGT’s view, and that of most of our customers, is that U.S. legalization will eventually happen, although we can only speculate on the exact timing or process.
With more than a decade in the business, IGT leads the way in online and mobile gaming with top-performing game content and end-to-end gaming platforms. In the last five years in the U.K. alone, we have handled more than $10 billion in online wagers and are currently processing more than 1.5 billion online transactions each year.
We already work with the largest online operators in many European countries and look forward to doing the same in new territories.
Internationally, the quality of games will be key in what is becoming a crowded market. Branded titles have been a core component of IGT’s land-based portfolio and we will look to replicate this online. Convergence across big brands across land and online will be key.
Managing Director of Online
A Gaming Utopia
Only a year or so ago, the casino of the future sounded like a fantasy. A casino that offers a truly unique experience to each player that walks through its door. No queues or crowded tables and machines, just the unlimited availability of exactly what the player wants to play. Imagine that same casino being in the player’s reach 24/7, no matter where they are, and then you have an industry-changing proposition.
This fantasy is now becoming a reality. It is the new benchmark being set by the leading online operators and they, in turn, are setting this challenge to their existing supply chain. Inspired Gaming Group is very much at the heart of this process, taking its expertise in server-based gaming technology—which is harnessing the power of broadband technology to modernize land-based gaming and provide players with more choice by “uploading” new content and features to terminals over the wire—and applying that to this vision of the e-casino of the future.
Its technology is perfectly placed to understand the challenges of analyzing player’s habits, giving them content, rewarding their loyalty and engaging them with the brand across as many access points as possible.
Players want to see continuity of game content. After all, if players are now accessing their preferred casino online, offline and via their mobile devices, it is crucial that they can access their preferred gaming content when they get there.
We have seen a growing demand for localized content. That is not just simply changing the language of a game; it is about creating content that fits the unique playing habits and preference of a particular player type, culture or country. Of course some content, such as globally recognizable brands and sporting events, is universally portable and will find an audience in most gaming environments. However, players now have more choice than ever before, so it is important that all gaming content feels like it is specifically designed for them.
One area that may help land-based casinos focus on player acquisition and retention is the rapid development of new technologies. Innovative technology and new devices can and will play their part in any gaming environment.
A futuristic example of new casino gaming technology is touchscreen gaming tables that can seat up to six players and offer multiple gaming content. These tables offer players a more social environment to sit and play together, or in groups. The tables are powered by a Microsoft application, which intelligently recognizes when an object is placed on the screen and serves the content in the remaining screen area.
Making this just as sociable but also mobile, we have been supplying hand-held gaming tablets across one U.K. land-based estate for some time. These devices, linked centrally to the game servers, enable players to access a wide range of games as well as the main bingo games from anywhere in the venue. They are also cost-effective, durable and cashless.
When it comes to regular mobile devices, the recent developments in mobile handset technology, particularly on the Apple and Android platforms, have given rise to a new breed of casino player. Consumers expect the experience of using their favorite social networking site to be consistent across all formats—desktop PC, tablet PC and mobile. Players, quite rightly, demand the same quality experience from their gaming. But perhaps more importantly, this new breed of portable wireless devices has given the savvy operators a new link in the relationship chain. Now the player has the opportunity to carry his favorite casino experience around with him 24/7 and play almost anywhere he wants.
If land-based operators are looking for lessons on how to reach the player when he is not in the casino, then the mobile device offers a whole new range of possibilities. Traditional gaming venues need to develop a cross-channel strategy quickly or they will lose valuable revenues to those online operators who are waiting to service the players.
Can land-based casinos successfully take their customers online? The answer is yes, as long as there is brand and product continuity. If the player arrives at a website that does not reflect the brick-and-mortar brand value, then he will not stay. If the quality of the online gaming content is not as strong and the rewards and loyalty points are not seamlessly transferable, then players will not feel as valued by the casino.
Many traditional land-based venues have now started an online casino to help them take a share of their traditional customer’s online wallet, as well as targeting new players. There is clear evidence that convergence is taking place, as players no longer neatly fit into the categories of exclusively either playing online or in a land-based venue. Players are now exercising choice and taking opportunity of the multiple access points to casino gaming. Online, offline and mobile players are now all potentially interchangeable, making the challenge instilling brand loyalty across all of the mediums.
Industry figures demonstrate that online operators are leading the pack. Online gaming showed an average growth across all sectors of 12.5 percent (source: H2 Gambling Capital) during 2010 and a similar growth in revenues is predicted for the next two to three years online. Land-based gaming seems to be growing at a much slower rate, with analysts at Moody’s Investor Services outlining that the land-based sector only grew 1 to 2 percent in 2010 and similar modest projected growth is anticipated in 2011 offline. In tough economic times, the online sector has found ways to meet consumer demand and utilize technology to drive revenue growth a lesson that the traditional land-based sector would do well to take note of.
We sit very firmly in the middle of this supply chain, working alongside online gaming and land-based operators to upscale their platforms and content to meet new consumer expectations. In the offline space, many operators use our server-based gaming platform to manage their machine estates across multiple locations, and in the online sector we provide best of breed online slots content and virtual sports.
The mantra from all operators, to their suppliers, has now become “give us best of breed content” and this has meant a fundamental shift away from the one-stop shop mentality of some platform providers. Now the platforms must give the operators a more “content agnostic” service, allowing the operator to offer the very best gaming experience to its players. That has often conflicted with the platform supplier’s desire to only provide their own content. This fits well with our strategy of allowing external games developers to write content for our platform, allowing operators to select the best content available in the marketplace—not just from Inspired’s in-house library. As we move further into the online sector, this agnostic approach is already winning over new clients.
Changing Regulatory Landscape
The changing international gaming regulation is a challenge for the gaming sector. In the European Union, there is a large demand for a central European policy and control mechanism to protect the rights for free trade in the gaming industry. France and Italy have set new standards for self-regulation and licensing, which have potentially become the template for other countries. Our Open SBG system has been deployed numerous countries, so we work alongside customers to meet the challenge of a changing regulatory landscape both offline and online—and at the same time deliver the latest technological advancements for land-based venues.
In 2010, we passed the requirements set by the Italian framework, which requires land-based operators to meet very stringent server-based system requirements set out by the Italian legislature. Few suppliers were able to deliver the required solution and only a handful, including us, were able to meet the stringent specifications and legal requirements in a short timeframe.
The issue surrounding U.S. legislation is still a debated issue, especially with millions of U.S. citizens now playing online with offshore casinos, who would no doubt migrate back to legitimate regulated sites when it becomes legal. This raises the issue of when the U.S. market moves toward regulation, what will its traditional land-based operators do to take market share in the lucrative online space?
The answer may lie in looking across the proverbial “pond” at what has happened in Europe and modeling a strategy along similar lines. Those U.S. land-based operators that don’t yet have a clear strategy in place for post UIGEA must act now to:
• Have an online platform ready for when a regulated market exists
• Establish relationships now with customers that will follow the brand online
• Create online destination sites with play for fun, or “leisure” content that is engaging and creates loyalty—until a fully legal online casino offering can be made
• Create engaging mobile content that establishes a relationship link to customers allowing them to engage with the brand
There is one certain thing in all this seeming uncertainty. Non-U.S. operators and technology partners are queuing up outside the gates of the U.S., waiting for regulation and a chance to use the expertise they have accrued in other markets. Whether it is through JVs, alliances or simple competitive advantage, they need to be looking now at what technology will help them ensure their success, as only the strongest will survive!
Michael D. Lipton, Q.C. and Kevin J. Weber
Legalized Internet Gaming in the U.S.: The Shape of Things to Come
Legislation advanced by Sen. Harry Reid (D-Nev.) in the dying days of the 111th United States Congress was widely discussed by the leading minds of the gaming industry throughout December 2010. It was just as quickly forgotten when it became apparent that it would not be enacted before the House of Representatives came under Republican control on Jan. 4, 2011. However, there is much to be learned from examining the provisions of the now-defunct Prohibition of Internet Gambling, Internet Poker Regulation, and Strengthening UIGEA Act of 2010. The Reid bill can be taken as a proxy for the viewpoints of that portion of U.S. policy-makers who are amenable to the idea the federal government regulating Internet gaming. Whenever the U.S. moves to regulate i-gaming, it will do so in roughly the manner set out in the Reid bill. To many outside the U.S., the conditions under which the U.S. is prepared to enter the global market of i-gaming will be viewed as draconian and unfair. However, they are also “the only game in town.” Opposition to measures such as the Reid bill comes from those for whom continued prohibition of i-gaming is the preferred policy option.
The Reid bill proposed the establishment of a framework for licensing, regulating and taxing legal i-gaming in the U.S., pursuant to which most state or tribal gaming authorities would have been required to apply to the federal Commerce Department to become “qualified bodies” entitled to issue i-gaming licenses (restricted to online poker) carrying a term of five years. At the same time, the Reid bill would have granted a few state or tribal entities automatic status as a “qualified bodies,” namely any state or tribal gaming regulatory body that had been a gaming regulator for at least five years prior to enactment of the Reid bill, and that had been responsible for regulating at least 5 percent of total U.S. casino gaming revenue for at least three out of those five years. In effect, the Reid bill granted preferred status to the gaming regulators of established state gaming powers, such as Nevada and New Jersey.
The first such i-gaming license could not have been issued until at least 15 months after the Reid bill was passed into law. Existing i-gaming operators who had provided online poker to persons in the U.S. prior to passage of the Reid bill, and who desired to be licensed, would first have been required to cease unlicensed activities within 30 days of the passage of the Reid bill and return all customer deposits received within two years of such passage. Accordingly, for the first 15 months after the passage of the Reid bill, the only online poker available to U.S. residents would have been that provided by offshore operators that had no intention of ever applying for a U.S. license.
During the initial two-year period after the first license was issued, licenses could only have be issued to pre-existing land-based gaming entities with U.S. operations. The Reid bill provided that to be eligible for a license during those two years, applicants must have, for at least five years prior to the passage of the Reid bill, either (1) owned or operated a casino or racetrack; or (2) manufactured and supplied slot machines to casinos. The Reid bill defined a “casino” for this purpose as a facility that hosted “500 or more gaming devices in one physical location pursuant to a duly authorized license issued by a state or tribal gaming regulatory authority.” This provision would have granted a “head start” for existing U.S. casino interests and gaming equipment manufacturers and suppliers, during which period they could solidify their market position in the U.S. without having to contend with competition from offshore i-gaming operators.
Offshore i-gaming operators who sought a license to offer poker in the U.S. would first have needed to cease taking all U.S. i-gaming customers for a total of 39 months before they could apply for U.S. licenses—an initial waiting period of 15 months, plus 24 months in which only entities already active in the U.S. land-based gaming industry could apply. As well, i-gaming operators that had accepted U.S. customers prior to the enactment of the Reid bill could only apply for a licensure through the auspices of those qualified bodies that had received “automatic” status. The meaning is clear. Presuming any offshore i-gaming operator could survive while waiting out the 39-month “freeze” in which they would be starved of U.S. gaming revenue, the fate of their licensure hopes would then lie in the hands of a small group of gaming regulators from those states with large, vested gaming interests, such as Nevada or New Jersey.
We see that while the Reid bill ostensibly provided a route under which the existing non-U.S. i-gaming industry leaders could participate in the U.S. i-gaming market, albeit limited to i-poker, legislators had purposely strewn that route thick with obstacles. It was so heavily weighted against existing offshore i-gaming poker operators that it would, in effect, have struck the death knell for operators who rely heavily upon U.S. revenues. Operators who had never accepted U.S. players would first have had to wait 24 months while the large U.S. casino interests established a firm commercial beachhead before they could apply for licensure, after which they could be frustrated by a handful of state gaming regulators.
Had the Reid bill passed, the best outcome for many in the offshore i-gaming industry would have been to sell their businesses to the major U.S. casino interests. Offshore i-gaming operators who refrained from entering the U.S. market for the initial 15-month “waiting period” could, under the Reid bill, have sold the assets of their businesses to an entity eligible for a U.S. license within the 24-month initial licensure period. The Reid bill would have allowed the owner of a brick-and-mortar casino that had been in operation for at least five years to purchase the assets of an offshore i-gaming operator that had once taken U.S. gaming revenues, as long as such that i-gaming operator ceased all activities in the U.S. within 30 days and returned all customer deposits within two years of the passage of the Reid bill. This would allow that U.S. casino owner to enter the licensed U.S. i-gaming poker market with strength once the initial 15-month waiting period ended.
To further encourage offshore i-gaming operators to sell out to U.S. interests, the Reid bill would have taken a number of steps to enhance and supplement the existing federal prohibitions against accepting U.S. i-gaming customers without a license.
The legislative proposals found in the Reid bill signal that, when regulated i-gaming comes to the U.S., it will do so in a manner explicitly designed to favor existing U.S. interests. The regulatory scheme will be structured to enable U.S. companies to swallow up established international i-gaming companies, with the intention of using the assets of those companies to become dominant in the world’s most lucrative national i-gaming market. Once that base is firmly established, these U.S. companies will expand to the international i-gaming market.
I. Nelson Rose
Whittier Law School
Clearing Up Internet and Mobile Gaming
The most important thing to understand about interactive gaming in the United States is that the laws are based almost entirely on politics, not logic. The legal systems are confusing, especially to Europeans. In the U.S., federal, state, tribal and even city and county governments can potentially become involved. Laws are not only made by legislatures like Congress on the federal level and state legislatures in every state, but there are also administrative bodies and courts, whose rulings have the force of law. Even law enforcement officials often act as regulators, telling operators what they can and cannot do. Informal decisions by the cop on the beat, although not in writing, can have a greater practical impact on an operator than an act of Congress signed by the president.
More fundamentally, legal decisions on all levels are often not the result of reasoned studies. The Unlawful Internet Gambling Enforcement Act (UIGEA) is the best example. This is a bill that literally no one wanted, except the author, Bill Frist. Frist was, at the time, the Majority Leader of the U.S. Senate. The Republicans controlled both houses of Congress and the presidency, and Frist could get anything he wanted made into law. He wanted to run for president, so he added his pet anti-Internet gambling bill, which he thought would get him votes from religious conservatives, onto an anti-terrorist bill and then would not even allow Democrats the time to read it.
The irony is that Frist got his UIGEA, but his failed leadership and the disastrous administration of George W. Bush resulted in the Republicans first losing both houses of Congress and, two years later, the presidency. Frist himself retired to obscurity.
But his UIGEA lives on. It panicked the industry and wiped out billions of dollars in the shares of publicly traded online gaming companies on the London exchange. But it had been rushed through without even being proofread. Legal experts now realize that the UIGEA actually opened as many doors as it closed.
Specifically, the UIGEA called for regulations to be issued by the U.S. Treasury and Federal Reserve Board. Those regulations, although designed to identify and block illegal transactions, also contain numerous express exemptions. One of the most interesting is the “reasoned legal opinion.” I have written a number of these, including for Internet poker sites that limit their activity to states where online poker is legal. Once an operator has a reasoned legal opinion, it can work with banks and other payment processors and affiliates in the U.S.
The UIGEA also has express exemptions for fantasy sports, very broadly defined, free games, inter-tribal and intrastate gaming. There has been, and will continue to be, an explosion of interest in these games. The general view of just about everyone, although not exactly legally correct, is that UIGEA made all of these legal.
The same is true for skill contests and other gaming that does not fall under the definitions of “gambling.” And I have given reasoned legal opinions for international horseracing wagers, even though the federal Department of Justice has publicly said that it thinks even interstate bets are illegal.
The necessity of having to find alternatives to traditional gambling games, and the wondrous possibilities of modern technology, have led to an explosion of other forms of gaming and near-gaming. Auctions and even insurance have been rediscovered as offering opportunities for entrepreneurs. The land-based gaming industry has been astonished that Zynga now has a private market valuation greater than $5.5 billion, $5 billion for the developer of Farmville, Mafia Wars and other games where players can’t win anything.
The short-term future is with gaming industry executives who can use their expertise to get their games online. It will be companies who can build player loyalty with free alternative entry subscription sites and skill contests, both played for real money. Tribes will be linking games both on the Internet and through closed-loop systems. Nevada will be increasing its intrastate mobile gambling with sports betting and on-site, hand-held slot machines. These devices have also been introduced in California for Class III games, and Class II versions will soon expand throughout Indian country. True intrastate online poker will probably start with New Jersey and California in 2011 and 2012 and then spread through a dozen other states.
The long-term future is with social networks and other parts of the Internet that might not even exist today. Blockbuster could have bought Netflix for $50 million. In 2010 Blockbuster declared bankruptcy; Netflix is today worth about $12 billion.
I expect we are going to see companies like the newly combined giant PartyGaming-bwin go after Harrah’s, or the other way around; or maybe Apple or Google will swallow them both. Disney has wanted to get into the legal gambling field for decades. Or maybe the biggest winners will be entrepreneurs whose names nobody knows today.
The Chinese have a curse: “May you live in interesting times.” But for those with courage and foresight, it can also be a blessing.
Thoughts from Current Online Gaming Hosts
We asked several online gaming hosts to respond to this online and mobile gaming topic as well. Below are what four companies are saying, regarding the potential opening of the legal i-gaming market in the U.S.
“We have been investing in our award-winning b2b division, Dragonfish, to ensure that, as and when i-gaming is legalized, we can work with partners in the United States to provide leading gaming services to American players. Through our existing relationship with Caesars Interactive Entertainment, we have already provided free play poker software for the WSOP brand in the U.S. market.”
bwin Interactive Entertainment AG
bwin has been closely following the regulatory developments in the U.S., both at federal and at state level. “Just recently, New Jersey took a decisive step toward regulating online poker and casino. We are confident that other federal states will follow suit and take this as an incentive to regulate online gaming in the USA at the federal level. The prohibitive regulation of online gaming currently applicable in the U.S. has by no means brought about the desired result; online gaming continues to take place on a grand scale. But this comes at the expense of consumer and player protection and the providers who withdrew from the U.S. when the prohibitive law was enacted in 2006. The slated merger of bwin and PartyGaming will create bwin.party, an excellently positioned company that stands to benefit from any future regulation in the U.S. since it marshals the necessary technological resources and brands, which continue to enjoy strong recognition value in the U.S. PartyPoker used to enjoy leading poker brand status in the U.S. and Poker Room ranked among the top five. Given that the prospects for a new regulation in the U.S. are good, bwin has been holding exploratory talks with potential U.S. partners for quite some time.”
Executive Chief International Operations
If the USA legalizes online gaming and opens up licensing to international online gaming operators, GR88.com would endeavor to obtain a license in America. Once licensed, GR88.com would initiate marketing campaigns through national and regional media outlets. This would include developing branded content for television, live events and social media, utilizing American talent and services. Our strategy would be to drive the GR88.com brand into the psyche of the American people. Who would benefit from this? American media outlets, through advertising dollars, and their employees would directly gain. As we grow the GR88.com brand in America we would staff the operations top to bottom in America, creating jobs and training people for positions that are easily learned and well paying with a long-term future. Of course, once licensed, the USA gains via tax dollars being paid on GR88’s earnings. Win! Win! Win!
Paddy Power welcomes any positive changes in the U.S. online gambling laws. With the growing need for tax revenues and an increased acceptance that prohibition doesn’t work, we believe online gambling will become legal in the USA. As a market leading European operator, that has not broken the law in the USA, we hope to invest in the USA as soon as legislation allows. This may be an online poker opportunity (as per draft California bills) or a sports wagering opportunity as countenanced by New Jersey legislators. In addition to the tax revenues such a business would generate, there is also an opportunity to create a hub of digital gambling expertise for the first state(s) to license. With 10 years experience of delivering digital product to the demanding (legal) British, Irish and Australian markets, we feel Paddy Power has the credentials to offer quality product and value to the U.S. market.