The main program of the 2012 iGaming North America conference kicked off Monday at Las Vegas’ Planet Hollywood. The conference is, according to its organizers, “designed to introduce the land-based gaming businesses of North America to the global iGaming industry.” Sessions Monday focused on the legal, political, and economic aspects of online gambling, primarily in the U.S., a market many in the gambling industry believe will create billions of dollars in revenue. (Estimates from Monday’s speakers ranged from $12 billion to $20 billion annually.)
Exhibitors were scarce at the conference; however, this is likely due to the fact that much of the discussion centered on the future of American iGaming business. With that market still held up by the lack of legal and political clarity at all levels of US government, the lack of exhibitors angling for near-term business made sense. One notable exception was Ongame Network, whose acquisition by Shuffle Master was ironically announced just an hour before a session on “M&A” (mergers and acquisitions) convened at the conference.
Still, speakers at Monday’s session ranged from US legal experts to European investment bankers to experts in the online gambling field, discussing nearly every aspect of the iGaming industry. Among the highlights:
- Michael Jabara of Valtus Capital opened the “M&A” session by predicting a “convergence” in the gambling industry as a whole. Jabara noted that the worldwide gambling business had “no global brand leader.” “There is no Coca-Cola, no Mercedes-Benz, no Jaguar,” he pointed out. Jabara predicted consolidation in the gambling business, arguing that continuing expansion by the industry’s major players into new territories and new platforms would likely mean that, by 2020, there would indeed be globally known, highly respected, gambling brands. Who would they be? Jabara didn’t say, though he did list Wynn Gaming, Las Vegas Sands, and Genting as the three current leaders in the industry.
- In a later session, Deutsche Bank’s Andrew Zarnett and iGaming Capital’s Melissa Blau followed up on Jabara’s commentary by noting the “confusion” in the gambling industry as its largest land-based players move into the online sector. Last year, Caesars acquired online game developer Playtika, noted Blau, while earlier this year slot maker International Game Technology purchased Facebook operator Double Down Interactive. Caesars – traditionally a casino operator – was now moving into game development, while IGT – one of the world’s largest game developers – was now moving into operations. Blau suggested this paradigm shift could represent the new way forward, although some attendees questioned the purchase price IGT laid out for DoubleDown. Overall, Blau – an experienced veteran of online gambling in Europe – was notably more subdued about the US market than some of her fellow presenters.
- Christian Tirabassi of Italy’s Ficom Leisure was more detailed in his criticism of social media, based on his experience in the long-running European market. The Facebook user “does not convert,” Tirabassi said flatly. The Facebook user knows the game is just for fun, he argued, and that user knows there are alternatives. “I don’t believe in the easy transition from social games to real [money] games,” he concluded. Tirabassi’s attitude is likely of interest to investors in Zynga, whose CEO said at another conference on the same day that Zynga and online gambling were “a good natural fit.”
- Among the concerns of all speakers was the potential nature of the US regulatory regime. On “The Federal Legislation Panel,” Penny Coleman, former general counsel of the National Indian Gaming Commission (NIGC), was far less ebullient about December’s Department of Justice opinion reframing the 1961 Wire Act than many industry observers. That opinion, written by the Office of Legal Counsel (OLC), “is an attorney’s opinion,” Coleman noted. “And we all know what attorneys’ opinions are worth,” she added humorously. Coleman commented on her time with the federal government that “we ignored more OLC opinions than we followed” and that the new interpretation of the Wire Act was “true, until it’s not.” (iGaming Capital’s Blau agreed, saying of the DOJ opinion that “she didn’t see it as the great windfall” many others had.) Later, asked when and if she believed federal regulation of online gambling would be forthcoming, Coleman said she believed it was highly unlikely any legislation would be passed before the November US presidential election. When asked the same question, fellow panelist Linda Shorey of K&L Gates noted with a laugh that she was pretty sure legalization would occur “by 2010.” Asked to update her timeline, Shorey added that “her crystal ball was murky.”
Given the still-unclear legal and regulatory issues facing US iGaming, there was a wide range of opinions on the viability and size of – and the future winners in – American online gambling. A few speakers were notably skeptical of the multi-billion dollar revenue estimates for the market, given the fact that, as of right now, a slow, state-by-state rollout seems far more likely than a sweeping legalization at the federal level. Still, the conference featured interesting and intelligent speakers commenting on all aspects of Internet gambling across the globe. Tuesday’s session looks set to provide more insights into a messy, interesting – and potentially lucrative – industry.