How Will Remote Gaming
Legislation Revolutionize Digital Media?
Market Analysis 2009-2012
effects will the British current gaming reformation have on the
traditional gaming industry?
- How will
the allure of the marketing power promoting the “HardRockCasino.com” shape
international gaming habits - and thereby individual countries’ current
- Will Britain’s
coming foray be as welcomed as the Beatles once were to foreign shores?
this legitimize an Epcot-like, Casinos-of the-World, economic-development
Senior Editor, DemoCast / GameWays
Los Angeles: +1 (310) 350-0310
London: +44- 0709-239-0935
British Pop Gaming – Optimizing for Export?
The U.S.A., long-considered marketer-par-excellence
of leisure gaming and the birthplace of the Internet, continues to
support a policy of “Prohibition”-style
domestic laws in an attempt to restrict tele-gaming (i.e., remote-access phone,
PC, digital-appliance, etc.) within its borders. Since the vast majority of Internet gaming
conducted by Americans already originates extra-jurisdictionally – from largely
unverifiable, unaccountable, and un-taxable (by the US state and federal
governments) operators, this strategy does little to advance US federal and
state interests to harness safe, online gambling supply or the potential
benefits it could receive there from in it’s quest for passive tax
Some other national governments are
more responsive to reverse this 7-year, extra-jurisdictional drain of business
by legalizing and regulating chance gaming online. Most countries’ current
e-gaming policies restrict e-gaming operation to incumbent monopolist agencies,
e.g., the French PMU, the Austrian Lottery.
Limiting playership to domestic residents only, heretofore few Western
state-run gaming agency’s strategies have aimed to poach customers’
across-borders for their recreational gaming expenditures, so profitably for
the off-shore tax-havens that have.
whose Sir Francis Drake interrupted pirate gold shipments from the Caribbean Sea 400 years ago, may once again be taking aim
at the pirates’ broadside. In the process,
they bring the global gaming industry to the crossroads of remaking gaming –
perhaps in Britain’s
own image. Notice a trademark similarity to two generations ago, when British
culture refined America’s
taboo invention of rhythm and blues and then sold it back to the world as its own,
improved brand of entertainment.
back – with a thorough plan to remake its own domestic gaming as one of the
foremost in the world.
As part of the process to create
order from the evolved quagmire of 40-years of gaming media provisions, the UK
Government’s proposed Gaming Reform incorporates a laissez-faire
endorsement of e-gaming. While most traditional gaming industry’s focus has
been on the promise of recreating Atlantic City in Blackpool, members of
Nevada’s licensed Establishment, long-forced to wait out unlicensed e-gaming,
are taking a second-look at the promise of opportunities afforded through
Britain’s promoting the licensing and regulation of online-casinos directed at
domestic and (discretionarily) international (including North American and
British popular culture is notably
more game-active than most others’.
“British TV is representative of it’s culture’s puzzle-solving
pre-disposition,” according to culture guru Peter York at the Edinburgh TV
Festival. “This is particularly evident in our proliferation of reality game
The game-show format-creation
industry traditionally attributed to Holland’s
Endemol (“Big Brother”) has become dominated by British companies, both for
domestic and international markets. This trend was also noticeable at the
Cannes International TV & Media Festival, where the Marina, formerly reserved for celebrities,
now features an abundance of British companies’ game-show formats. Remarked ReedMidem’s Raphaële Vallauri, ““While the
Internet may have been invented in America,
Europe may have been the more pensive, added higher-style, and now Britain seems
quite effective at harnessing it for game play.”
What effects will sanctioning e-gaming create?
While countries empower their
existing gaming monopolies to expand online, the repercussions of e-gaming
legalization may be most dramatic upon domestic society and the global industry
from the current steps taking place in Great Britain. The UK Government
has had a tradition of upholding competition to its’ owned-and-run gaming
(e.g., on-course pari-mutuel racing) through licensing and taxing commercial
gaming (e.g., bookmaking, sports pools).
The concessions to gaming companies for lost-business resulting from the
establishment of the UK National Lottery are part of the genesis of the
proposed reformation. The bold-step towards legitimization of privatized
online-gambling will serve to create unprecedented, competitive challenges and
opportunities within the marketplace, i.e., challenges to regulators in
creating fair-policy while fostering growth, and secondly, challenges and
opportunities to commercial gaming enterprises in an attempt to
“mass-consumer-ize” online gaming within a regulated environment.
“Well, it should bring some of that
betting revenue back onshore, including those in the Caribbean,” intimated
Clive Hawkswood of the Department of Media, Culture and Sport, who’s crafting
the new code, referring to the UK gaming brands who’ve gone offshore. “But it’s
also an anti-organized crime measure – truly accountable gaming. This solves Washington’s concerns about reported consumer fraud and
money laundering in the Caribbean in a way that Washington hasn’t. We’ll vet them before we
license them- and many won’t pass.“
How deep will this vetting reach?
Will it be as extensive as Nevada’s? And how stringent should their licensing
standards be? For example, while
American regulators might argue that any ‘bootlegger’ who, in the face of a
violation of law, or without a clear legality, operating during an absence of
prosecution ought to be precluded from state sanctioning as a form of penal
enforcement, in Britain, no law prohibited offshore operation and thus would
not be considered a violation. Will
British standards establish a de facto “morality whitewash” for some
unscrupulous, consumer-frauds who’ve flaunted their ill-gotten gains - while
thumbing their noses at the state, the legitimate industry, and most
reprehensibly, at the consumers potentially defrauded?
Who Will The Public Choose to Gamble With
Online established brands have captured mind-share
and market-share in face of the cautious traditional casino operators, the UK’s betting shop
titans are attempting to flex their muscle, with William Hill and Coral/Eurobet
flush with $1 billion of investment capital apiece. But will they purchase new customers, or the
companies that currently have them? What
value do which brands have in the new e-gaming space?
What value does a U.S.
resort casino name carry in
These issues were addressed in the
seminar “Marketing and Advertising Opportunities for the Casino, Gaming, and
Betting Industries,” coordinated by Samantha Byrne and Suki Scade of the ATE
Conferences Division in London. The UK government, in the process of
revamping gaming legislation and administration in a formidable effort by the
Department of Culture, Media and Sport, is attempting to create a mostly-level-playing-field
for commercial gaming.
DCMS Gambling Review Project
Manager, David Bawden is wrestling to create regulation that, in his words,
“strikes a balance between promotion of a leisure product and protection of the
vulnerable.” In their attempt to address global-online gaming revenue
opportunities for the government through taxing commercial casino interests
(while the National Lottery wrestles with the World Lottery Association’s
provisos against cross-jurisdictional online sales), lawmakers must also remain
sensitive to matters of European Law.
“The laws applicable to the
promotion of gambling services are in a mess,” according to speaker Giles
Crown, senior communications lawyer with the London office of Lewis Silkin. “ For example, it is permissible to sell lottery
tickets for European Union lotteries online in the UK, but such lotteries cannot be
promoted in this country.” While the
government pursues a complete revision of gaming administration and regulation,
commercial gaming and its support industries (including product development,
marketing, and distribution) wrestle to establish gaming products and marketing
to compete with the largely - unregulated, offshore interactive industry.
What effects will regulation have on the marketplace?
The market’s analyst /
prognosticators illuminate several perspectives. Market-research firm
Datamonitor estimates that “the US
is the largest online gambling market with a 2001 value of $262 million. In
2006 this market is forecast to reach a value of $411 million.[i] The UK online gambling market reached a
2001 value of £34 million. In 2006 the market is forecast to reach a value of
£93 million.” They believe much of that
will come as a by-product of the overall growth of games on the Internet. They forecast that the number of online
gamers in Europe and the US
will grow from over 13 million in 2001 to more than 111 million in 2005.
Online gambling revenues
by genre: 2000-2005
D A T A M O N I T O R
an increase of $100 million within 5-years, the UK’s
total domestic online market will only total the amount of the net increase of the US market of
around $149 million. Where will all that
money come from and go to be gambled?
The “Global Gaming
Report” published by Global Betting and Gaming Consultants infers that a lot of
it will come from the category of currently illegal gambling. “The evidence suggests that just over half of
illegal gambling takes place within Asia and Middle East and is the result of
the level of prohibition and the lack of betting and gaming opportunities
across the region. However, the rate is
also particularly high in North America where
the lack of legalised gambling opportunities, particularly sports betting and
gaming machines, continues to leave the door open for illegal operators in a
number of states.
According to GBGC analyst
and partner Simon Holliday,
1) “As existing
(retail gaming) customers discover the advantages of utilising the Internet and
other interactive channels as an additional means by which to gamble, and
2) a new
generation of gamblers grow up accustomed to using a broad range of interactive
channels for all aspects of their consumption, as well as
customers enter the market because of the easier level of accessibility that
interactive gambling provides”
Legal Vs Illegal Gambling in Terms of GGY by Region
anticipated that continued deregulation/ globalisation of the industry and the
further development of the Internet as a market channel will continue to erode
illegal gambling. In the process the
(general) legal market would receive a boost in GGY of approximately £10
billion (US$15 billion/€16 billion) just as a result of current illegal
activity moving into the legal market. We expect interactive revenues to
increase from amounting to 1.7 per cent of total industry gaming sales during
this year, then grow to 2.6 per cent during 2005, and reach 3.7 per cent by the
final year of the decade, by which time it will generate GGY of approximately
US$8.7 billion/£5.9 billion/€9.3 billion.
New World Marketing
There’s a Lot of Noise
advertising by Internet casinos grew by 170 percent from 911 million
impressions in December 2000 to 2.5 billion impressions in December 2001.
(Jupiter Media Metrix)
- •Online casino advertising is now the fifth
largest online advertising category, up from eleventh largest a year ago
- •Gambling related keywords are one of the
two most competitive Search Engine categories and one of the more
expensive pay per click keywords
- •Intrusive marketing tools: pop-ups,
pop-unders, exit pages and SPAM
- •Emphasis on acquisition rather than
What sort of an effort will it take to effectively persuade gamblers to abandon
existing, offshore registered casino accounts for accounts with High Street
gaming brands? Which sort of brand
marketing will motivate demand – existing and new?
Branding on the Web Takes
- •Increasing customer acquisition costs for
pure play operators
- •The average customer needs to see a name 22
times before they can recall it and type it into a blank field of a web
browser (Red Herring Magazine)
- •Decline of ‘surfing’
- •Nearly 52 percent of Internet users arrived
at sites by direct navigation and bookmarks, compared to about 46 percent
only a year ago, (StatMarket, February 2002)
- •More and more Internet users know where
they want to go without assistance or guidance.[ii]
How will traditional, legal gambling expenditures be affected by Britain’s
online regulatory plans?
One of the drafters of Britain’s new online gambling policy,
the DCMS’s Clive Hawkswood, speaking in Toronto at the Global Interactive Gaming
Summit felt, “I don’t feel online gambling detracts from what a gambler would
spend on a holiday (vacation).” He
likens the effect of online gambling to the effect miniature-golf courses have
on golfing - it attracts new customers and advances the activity overall.
“Gaming’s ready to look towards the future of it’s customer base - younger
people and greater numbers of women.”
newer customer segments are more receptive to online brand marketing, another
emerging dynamic from Britain’ s reformation of gaming- marketing and
advertising. According to Peter Gamble, Group Account Director for McAnn-Erickson, Manchester, “Consumers respond
to 7 universal marketing drivers:
brand awareness; emotional bond; product news; activation; loyalty; product
experience; and buzz. Establishing
the brand has changed; the call to action has changed – don’t just remember our
casino brand next time you plan your leisure trip – here’s our new proposition:
Activate! Come gamble now!”
Merrill Lynch London’s
Gaming Analyst Andrew Burnett adds insightfully, “Are we approaching a scenario
where the City (Britain’s
Wall Street) will provide legitimization for existing offshore casinos as
acquisition targets in a new round of mergers and acquisitions by cash-rich
dot-com traded companies?” Who knows
what effect this prospective consolidation will have on the advertising
experience - and the consumer experience – for the worse or for the better?
# # #
Author’s Info: GameWays brings 10-years’
experience in the evolving British gaming industry. GameWays’ new-media
expertise has been featured in “U.S. News and World Report,” and various
new-media industry trade-journals. A part of the evolution of new-media gaming,
GameWays has contributed to catalyzing renowned gaming developments, such as
initiating TV’s “TVG- America’s Horse Racing Network, and establishing America’s first legal, interactive online gaming
– in Nevada.
You may contact Scott Jacobs for questions and consulting online at firstname.lastname@example.org, from Britain on +44-709-239-0935, or from the U.S. at +1(310) 453-2200.