Before I start espousing, some background: I have never gambled on the Internet, nor participated in Fantasy sports. Because of my job, I spend an average of six hours a day looking at a computer screen, cruising the Internet. I do not want to spend any more time than necessary “online.” Most importantly, as a strictly recreational player, what a brick-and-mortar property offers – restaurant, entertainment, wonderful sounds, visuals, and other built-in excitements – are as important to my casino gaming experience as the actual play. Professionally, I have no financial interest in any iGaming site or related entity. And since most of my competition is considerably more invested (or at least interested) in iGaming, it might be better for CDC Gaming if currently proposed national legislation to ban online gaming were to became law.
Despite my lack of a professional or personal interest in iGaming, I strongly feel that my favorite industry should do everything possible to fight the proposed Internet gaming ban introduced in the Senate last week by Sen. Lindsey Graham, R-S.C.
iGaming is not a threat to casinos
More than a week ago, I first considered writing a column on iGaming – not about the proposed legislation but on why iGaming is nowhere near as popular (in the three states that permit it) as everyone thought it would be. I have my own thoughts about why the current gaming audience prefers the bricks-and-mortar experience, but I decided to ask two world-class experts on player preferences and behavior: “Queen of Comps” Jean Scott and Las Vegas Advisor publisher Anthony Curtis. Both are Las Vegas residents, both visit casinos, and both spend a great deal of their time talking to other players.
Jean Scott is a professional gambler. For her it is “all about the numbers”, but she still gave a (well-thought-out yet) irresolute answer to my question – All things being financially equal, would you play in a casino or stay at home on the internet? “A substantial amount of the benefits from my play comes through casino comps (restaurant, spa, entertainment), which are not available through an online casino. But even if the online play was profitable enough to cover that (and I don’t see how it could be – especially in the long run), I can’t say with certainty that I would restrict all of my play to the Internet. Casinos are too much fun!”
Jean Scott’s fans strongly prefer “real” casinos, hands down. “Players reading my books [she has sold well over 100,000] or my blog are looking to lose as little as possible and get as much out of their play as they can – but the casino and all that goes with it is a big part of the experience. Online play alone just doesn’t do it for them. And this is not because they dislike computers. Many of my Facebook ‘friends’ play Angry Birds and Candy Crush, but their casino visits and their computer recreation are two distinct experiences – and they want to enjoy both. There are a small amount of players who would devote a lot of time to online gaming if they could make money at it – but they are few and the online casinos do not really want them.”
The always analytical Anthony Curtis feels that the current online gaming situation is still too isolated to draw long-term conclusions regarding player preferences or other comparisons. “Nevada only offers poker which is not as hot as it was a couple years back. Many of the sites are confusing – if not intimidating. Plus funding problems (banks and credit card companies not allowing customer to use their cards on the sites) is still an issue.” However Curtis does feel that most online players are new to the gaming experience and that “iGaming sites do not cannibalize brick and mortar casinos.”
An iGaming Ban will limit options – especially in battles to come
Based upon my readers’ response (measured by clicks and other traffic indicators), Internet gaming is not a major interest among gaming industry executives. I can live with that – but only in the short term. Over the next five to twenty years our industry will be engaged in a very important effort – keeping the gaming product current and appealable to the next generation of players. The competition for millennials is already heating up with fantasy sports, social media games, off-shore iGaming sites, and illegal gambling sites in the U.S. (including Internet cafes), just to name a few.
To avoid going the path of our horse-racing brethren, the gaming industry will need every available resource it can muster, including innovative game design, skill based games, expanded sports betting, and Internet gaming options. Even if iGaming (as we know it today) is not going to a big part of our industry’s future, other aspects of the Internet will be – so any type of ban could inadvertently prevent an innovation which the industry needs and wants. (Just last week the Supreme Court handed down a major ruling on some poor wording in the Affordable Care Act, saying a literal reading was wrong. I doubt they would go to that length if a similar problem was created by an iGaming ban.)
Two years ago (then brand-new) AGA President Geoff Freeman kicked off a campaign to get national legalization and regulation of Internet gaming. I felt (and still do) that the effort was well-executed but not completely thought through. A decade of Washington insider experience combined with strong personal communication skills led to a solid December 2013 appearance by Freeman before the U.S. House of Representatives Subcommittee on Commerce, Manufacturing, and Trade. Not only did he and other pro-iGaming advocates come off well, the other side (including Andrew Abboud, Vice President of Government Relations and Community Development for Las Vegas Sands Corporation) appeared totally out-of-touch (even about the Internet play options currently available in Sands properties). Unfortunately – and this is total conjecture – Freeman had not been on the job long enough to accurately gauge the sentiments throughout the industry on the subject, beyond major members of his board. Based on the emails I got, many casino executives were quite frankly scared of the prospect of totally legalized national Internet gaming, which they thought would only benefit the multi-casino big boys.
Freeman’s initial successes, combined with successful legalization efforts in New Jersey, Delaware and Nevada, caused iGaming opponent Sheldon Adelson to take two drastic actions: make friends with long-time, but much more admired rival Steve Wynn; and then jointly threaten to leave the AGA (which Wynn had only recently joined) if the AGA’s pro-iGaming efforts did not stop. They did.
What’s next?
As we all know (and are constantly reminded in the press), Adelson is putting his considerable prestige, power and, of course, his checkbook behind getting an iGaming ban passed. Other than possibly reaffirming that he is the real 600-pound gorilla in the room, I have never understood his motivation. While he succeeded in stopping nationally regulated iGaming, pushing for a total ban looks like egocentric overkill – with unforeseeable future impacts.
Whether Adelson is likely to succeed depends on whom you talk to. We have a sharply divided Congress, with much more important issues to decide in the next 18 months. Adelson is not well-liked by President Obama, by most Democrats (retiring Harry Reid is suddenly the exception), or by those Republicans (especially the two-dozen who are running for President) who might have to defend their support of a bill that goes against their normal philosophy: leave it to the individual states to decide.
Just because Sheldon really cares while the rest of us are ambivalent doesn’t make a national Internet gaming ban a good thing for the gaming industry. Let’s learn more about legal iGaming before we kill it. Let’s give the status quo time to run its course, even with an expansion by California tribes and/or Pennsylvania. As we stand today (and knowing where we might be standing tomorrow), there is no good purpose in having a national ban on Internet gaming. There are a lot of good reasons the Industry should fight it.
