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29 April 2013
By Vin Narayanan
The land-based and online gaming worlds converged at the Global iGaming Summit & Expo (GiGse) last week to discuss the future of the online gaming industry in the U.S. And with New Jersey, Delaware and Nevada already authorizing intrastate online gaming, this year's GiGse had a cheery sense of optimism.
In the midst of the buzz, conference sessions and meeting rooms, 10 key storylines emerged. Here are my top observations from GiGse.
10. Wheeling and dealing
As usual, much of the action at GiGse was happening in the hallways, networking sessions and hotel lobbies, where suppliers and vendors tried to close deals with operators. To a certain degree, the situation resembles a school dance, with companies trying to secure deals with the pretty girls before the supply runs out.
At GiGse, business executives were spending more time in meetings than in conference sessions, where they tried to close deals ranging from payment processing to know your customer (KYC) to supplying software.
9. Payment processors
The backbone of the online gaming industry, and all e-commerce for that matter, is the ability to move money in and out of the system. This is particularly challenging in the online gaming industry, where credit cards will most likely not be allowed to fund online gaming accounts. ACH transactions are not necessarily instant, yet the online gaming industry needs instant, or nearly instant, transactions. And consumers don't necessarily want online gaming transactions traced directly to their bank accounts. As a result, a new crop of cash alternatives is trying to break into the market. Companies like PayNearMe and paysafecard are hoping to become a go-to payment method for the online gaming industry in the U.S.
8. Retail stores hate online lottery ticket sales
Consumers can buy almost anything they want online. But, for the most part, they can't buy lottery tickets online. And the owners of convenience stores want to keep it that way. Convenience stores make a ton of money off lottery tickets. It's their most profitable item in many instances. And they don't want them sold online. As a result, they're lobbying hard at both state and federal levels to prevent the sale of lottery tickets online. They claim they're protecting jobs. I wonder how many of them shop at Amazon, which helped kill bookstores?
7. Poker-only not the only way
New Jersey didn't pass poker-only online gaming legislation. Instead, they authorized the offering online of any game offered on the floor of a New Jersey brick-and-mortar casino. Delaware authorized offering the full suite of casino games online. And at GiGse, many were openly wondering why Nevada hasn't followed suit, instead of sticking with the poker-only regulations they have now. This is the first time the concept of moving forward with an online poker-only agenda in the U.S. has been under assault at a gaming conference, and it looks like conventional wisdom on the matter is starting to shift.
6. Knives are out for PokerStars
The most lively exchange at GiGse came courtesy of Jan Jones, the executive vice president of communications and government relations for Caesars Entertainment, and Jon Pappas, the executive director of the Poker Players Alliance. Jones made it very clear that she believed PokerStars should not be licensed to purchase the Atlantic Club in Atlantic City. Pappas responded by citing polls showing players wanted PokerStars, PokerStars had admitted no guilt and the DOJ had changed their stance regarding online poker.
Jones didn't like Pappas's response and proceeded to lecture him about how hard it is to get a license and that the standards should absolutely not be relaxed for PokerStars.
In another session, California Tribal Business Alliance Vice-Chairwoman Leslie Lohse said an indictment was enough for Indian regulators not to give PokerStars – or anyone else, for that matter – a license. "Where there's smoke, there's fire," Lohse said.
While Jones and Lohse have competitive reasons for not seeing PokerStars get a license, many gaming executives were taking the issue personally.
These executives, who had to undergo personally invasive and extensive background checks, could not imagine being licensed if they had the background PokerStars did. And they found the notion that PokerStars could be licensed – especially by New Jersey's notoriously tough regulators – galling.
5. Optimism in California
Pechanga.net Editor Victor Rocha is more plugged in than anyone on the Indian gaming scene in California, and he's brimming with optimism that online poker legislation is going to pass this year in California. I'm not as optimistic as Rocha, but I do think he's on to something. For the first time, the Native American tribes appear to be on the same page regarding how online poker should come to fruition in California. Sure there are some differences in terms of approach. But those differences are minor in comparison to what we've seen over the past few years. In fact, tribal representatives went out of their way to point out that their differences were relatively minor. And if the tribes are on the same page and ready for online poker, it could be coming soon. The major question now appears to be whether it will be this year or next. My money is on next year. But it's usually a bad idea to bet against Rocha, so do so at your own peril.
4. Focus on New Jersey
At last year's GiGse, everyone was talking about Nevada, and its upcoming online poker market. This year, nobody was talking about Nevada. The focus was on the much, much more lucrative New Jersey market. Every segment of the online gaming industry is trying to figure out how to get into New Jersey.
Payment processors want in. Software suppliers want in. Geolocation companies want in. And in an exclusive interview with Foxwoods and Game Account, executives from both parties told Casino City that New Jersey was a top priority for the B2B part of their venture.
With a population of 8.82 million and the full suite of casino games authorized for regulation, New Jersey is easily the most lucrative online gaming market in the U.S. right now, and everyone is trying to get in on the action.
Social gaming was one of the most discussed topics at GiGse. In fact, an entire track/"sub-conference" was dedicated to it. There tended to be two divergent views on social gaming at this conference. One view was a healthy percentage of social gamers are sitting there waiting "to be monetized" by real-money gaming. The other point of view was social gamers were a completely different segment in the market, and companies shouldn't waste time and money trying to turn them into real-money players. They should instead try to make money off of them as social gamers.
The one point where both groups agreed was more social game mechanics would appear in real-money games. Real-money players, including social game mechanics, are familiar with them, and will respond to them in a real-money environment, the thinking went.
Every casino executive – online and land-based – who spoke at GiGse said companies that did not have a robust mobile strategy would be doomed to failure. Many pointed at Facebook's struggle with developing a mobile strategy as one they needed to avoid.
PKR CEO Malcolm Graham told GiGse attendees that 50 percent of new PKR signups come through mobile devices now.
Probability CEO Charles Cohen noted that 50 percent of all sports bets are made on smartphones – despite truly awful user interfaces. Cohen also discussed how games needed to be redesigned for the mobile experience – which differs based on the device being used.
"A game interface on a smartphone, which people use with one hand, has to be different than one on an iPad, which people use with two hands," Cohen explained.
And most executives said that their audiences were already there, so they had to get there too or risk being left behind.
1. Renewed optimism
Finally, there was a sense of optimism surrounding the American online gaming industry that hasn't been felt since 2006. Operators, suppliers, regulators and other attendees were looking forward to making money off of online gaming, instead of trying to figure out when it was going to arrive. And that was a refreshing change.
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