Panelists addressing an Internet gambling conference in Las Vegas on Tuesday said online casinos would enhance business at brick-and-mortar properties instead of cannibalizing them.
The panelists — three of them Las Vegas industry executives — said just as casino expansion in New Jersey, in riverboat markets and on Indian reservations led to established Las Vegas casinos growing their market share, the legalization of Internet gambling would give them the ability to reach out to new customers.
The panelists made their remarks on the first day of the two-day iGaming North America, a conference addressing aspects of Internet gambling, attended by more than 300 people at the Monte Carlo.
Internet gambling is illegal in the United States, but the debate is growing over whether to legalize, regulate and tax it as a new revenue source for governments starving for cash to pay for underfunded programs.
Some industry leaders think online gambling would take customers from traditional casinos, but the panelists, including Jan Jones of Caesars Entertainment, Art Manteris of Station Casinos and Doug Dalton of Bellagio, said they believe Internet gambling would grow the market and present opportunities for land-based casinos.
“The average gaming customer is around 50 years old,” said Jones, senior vice president of communications and government relations for Caesars. “The upcoming generation of gambler — the X and Y generation — makes all of their decisions on the Internet. They meet, they congregate, they make entertainment choices and I believe if we don’t have a significant presence, there is the likelihood that they will make other entertainment choices that are not gambling choices.”
Jones cited the newspaper industry, record stores and bookstores as businesses that did not have good online strategies in place and paid the price for failing to react to the advantages of the technology.
The popularity of poker, the game that is driving the effort to legalize online wagering, has grown exponentially in the last decade.
Mark Tenner, president of gaming consultant Concept Development Group, said about 250,000 people played poker online or in casinos 11 years ago. Today, there are an estimated 65 million players.
Dalton, who manages the poker room at the Bellagio, said the World Series of Poker and the World Poker Tour have grown in part as a result of players migrating to casinos from online poker.
Panelist Steve Rittvo, chairman of The Innovation Group, a gaming consultant, called the online environment a “farm team” that has fed the growth of poker play in casinos. He believes the poker market would double within five years of legalization.
Manteris, vice president of race and sports book operations at Station, said the failure of the horse racing industry to embrace new technology has led to its current financial struggles.
Asked how the casino industry would react if online gambling were legalized and it resulted in a flood of new competition, panelists said individual companies would have to step up their efforts to compete for customers.
“If a Lowes, a Home Depot and a Wal-Mart all opened within a mile of each other, what do they do?” Jones asked. “You become smarter, better marketers.”
A separate panel also addressed how Hollywood could impact Internet gambling.
The convergence of television and online media could lead either to losing market share or opportunities for new partnerships, panelists concluded.
Vahe Baloulian, CEO of Red Planet Marketing, Vienna, Austria, said television has successfully grown markets in Europe by educating viewers about how to play games in an entertaining way.
Panel moderator Terry Debono, a partner in The Debono Group, Toronto, said television has built a large game-show audience over the years, and collaborations between casinos and shows like “Wheel of Fortune” have proved successful in the casino environment.
In Great Britain, television is collaborating with casino companies by broadcasting live games and enabling home audiences to wager online.
While most of the panels and presentations delved into online gaming implementation, marketing and policy considerations, one panel assessed the damage that occurred on “Gray Friday,” April 15, when prosecutors with the Justice Department filed a money laundering complaint that seeks $3 billion being held by three online poker companies.
The U.S. website domains of PokerStars, Absolute Poker and Full Tilt Poker were seized and 11 executives were indicted on counts of bank fraud and money laundering. Absolute has quit allowing American customers to register for the site or deposit money, while PokerStars and Full Tilt have shut down their U.S. operations.
Legal experts Fred Heather of K&L Gates and Paul Hugel of Clayman & Rosenberg, who have practiced in New York, where the indictment was unsealed, said the case is mostly about accusations about what the poker companies allegedly told various banks about their transactions, with violations of the Unlawful Internet Gambling Act as the vehicle in the fraud and money laundering case.
“The heart of this case is this collateral activity, which constitutes bank fraud and money laundering,” Heather said. “One of the indications of that is the fact that the government isn’t resisting the return of money to the players through their deposits.”
The panelists said the odds are slim that the case would ever go to trial, because eight of the defendants are from out of the country and are expected to resist extradition. A settlement is the most likely resolution of the case, they said.
A parallel civil case also has been filed.
Panelists said it is an unorthodox fraud case because the victims in the case, the banks, were receiving money in the transactions. The companies are accused of hiding Internet gambling transactions by listing them as payments for sports equipment and flowers.