Complimenting Land-Based Casinos

TAGs: American Gaming Association, david trunkfieild, frank fahrenkoph, Hippodrome Casino, Ladbrokes, media corp, PricewaterhouseCoopers, William Hill

Complimenting Land Based Casinos by Mike O'DonnellThe end of 2010 saw a significant change in the chances of legal online gambling becoming a reality in the United States. The catalyst for this change was the confirmation of support from the American Gaming Association and therefore some of the biggest names and biggest lobbying influences in some of the US power states. Nevada provides the obvious connection between casino companies and the state’s lawmakers but California, Florida and New Jersey are all known to lend an ear to the bigger casino companies around.

Advisory service PricewaterhouseCoopers produced a report in December of last year which included new analysis of the land based and online gambling industries. Among the many conclusions was the statement that land-based casinos and iGaming firms working together is inevitable.

In charge of that report was partner and head of gaming at PwC David Trunkfield. Having spoken to various CEO’s including Frank Fahrenkopf of the AGA while compiling the report, Trunkfield felt that the perception that online gambling would be in direct competition with land-based casinos is largely misplaced.

He explains: “Online gives you access to a different, younger, perhaps more affluent customer that isn’t going into betting shops or going to the more traditional casinos in the US. That’s why we see it as complimentary.

Examples in the UK of companies that have cashed in on their offline presence are bookmakers such as Ladbrokes and William Hill. They’ve reported that the overlap of players from retail to online is actually very small and US casinos can expect much the same story.

We’ve also done analysis of offline companies like PMU in France. Their offline business has grown in the past ten years at the same time that their online business was growing really fast. So if the online business was cannibalising then the retail business would be going backwards and not growing,” Trunkfield says.

It is arguments such as this that has convinced the major land-based casino companies in the US that online gambling isn’t the enemy. However, when it comes to specific gambling activities they tend to remain sceptical about the claims that online casinos will not be a hindrance to them. Instead, they choose to put all of their support behind online poker while claiming that the deciding factor is the relatively higher level of skill required to win in poker.

Trunkfield explains: “Casino companies are nervous as lots of companies have been about losing their customers which is why they’re so protective of online casino games. However, if they see poker growing and they get a piece of the pie then they’ll be arguing forcibly for online casino games as they know that they can cross-sell that.”

While players are more likely to remain with a brand when it comes to a service that they’re familiar with, the small overlap described by UK bookmakers means that the brand is more important than matching online and offline services to each other.

A prime example of this is Ladbrokes who were of course known for their retail sportsbook. However, when the time came for the bookmaker to go online it was their poker product that stood out. This can be attributed to a combination of a recognisable brand name and the Microgaming software that the company used.

The fact that Ladbrokes Poker is in its current situation is even worse considering the start that the product had and how popular it once was. There have even been land-based casino companies that have been able to make their mark online. One of the most recognizable is Genting who not only run the pureplay Circus brand but also provide a Genting online casino and poker product. Gala will be hoping to emulate their success as they re-launch later this month with Playtech software and an entirely new look.

Even the Hippodrome Casino will offer online casino games if their joint venture with Media Corp is eventually completed while US casino companies have been pairing up with iGaming companies – if only to provide poker products.

One more example of where land-based casinos will be able to benefit from running parallel online and offline operations will be with the new opportunities that this will afford them. The Palace Casino in Great Yarmouth took advantage of such an opportunity by creating live online dealer games that allow you to play on the same tables as real customers that are actually in the land-based casino at the time.

While there are slight tweaks to be worked out in this kind of game, the point is that it was made possible by online gambling and a bricks and mortar casino combining forces. It will be the first few who manage to do this successfully that will strengthen their grip on an ever more saturated market place.

Trunkfield concludes: “There’s an opportunity there but you have to go and grasp it otherwise other people will. In most countries, although there are some land-based casinos and sports betting businesses that have a high share of the market, there’s always others who didn’t take advantage or went the wrong way about it.”

“The people who are partnered with the right people, understand the customer and understand the online marketing side of things can have great success.”


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