by John Acres
As you undoubtedly know, gambling is a highly regulated activity. Operating a casino without government approval is potentially hazardous and, at least, inconvenient. Just ask David Carruthers, the ex-CEO of BetOnSports.com, a British Internet gambling company. Gambling laws vary from one jurisdiction to another, and what is legal here may well be illegal there and vice versa. In Great Britain, for example, Internet gambling is legal. BetOnSports is, by most accounts, a responsible organization that adheres closely to British laws that regulate and, not coincidentally, tax Internet wagering.
A well-known fact since 1776 is that the good ol' U. S. of A. is not Great Britain. Nevertheless, BetOnSports, like a lot of Internet gambling sites, willingly took bets from U.S. residents and made piles of profit. Carruthers visited the United States regularly to make speeches about how the U.S. government could never control the Internet. Whether he was right on that point remains unknown - but the U.S. Attorney General certainly took control of Carruthers when he made a brief stopover at the Dallas Fort Worth airport last July. Armed with a 22-count indictment containing allegations of fraud, conspiracy and racketeering, a team of U.S. Marshals escorted Carruthers to a nearby federal prison, along with a stylish set of leg-irons and handcuffs.
Many legal observers doubt that Carruthers' arrest will result in a conviction, but it certainly grabbed the attention of every existing and would-be Internet gambling operator. His arrest was especially impressive to me, as I was just then joining the board of a start-up company called GameLogic, which specialized in - of all things - Internet gambling. GameLogic had a clever idea of how to provide the feel of gambling on the Internet without actually gambling on the Internet. Called PlayAway™, players buy coded coupons at a legal casino and take them home, where they log onto a website, enter the ticket codes and play games. The ticket codes aren't simply proof of payment; they also contain the games' outcomes.
In other words, when Mary buys 20 PlayAway tickets, the win or loss assigned to each ticket is determined in the casino at the time of purchase. When Mary plays website games using those ticket codes, the game outcomes are electronically chosen so as to reveal the already-determined result. Mary must then return to the casino to collect her winnings. Because the purchase is made at a legal casino, game outcome is determined at a legal casino and winnings are collected at a legal casino, it is actually casino gambling and not Internet wagering. Very clever and very legal, PlayAway has been approved in Nevada and a number of other jurisdictions.
After the Carruthers arrest, which was instigated by federal, not state, agencies, few casino managers even wanted to experiment with PlayAway. Although I thought the PlayAway concept interesting, I was more intrigued by the idea of playing games at home to win prizes that had to be redeemed at the casino.
Once Mary is in the casino, a big part of a casino marketer's job is to make sure she'll return again. Customer service, general surroundings and Mary's play experience are all part of that. No matter how good a job you do, once Mary leaves, her memories of that experience begin to fade. Other casinos, lottery tickets or even a new pair of dress shoes compete with you for Mary's attention and discretionary spending.
But, you already know that. You buy newspaper ads, put up billboards and spend huge amounts of money on direct mail just to retain a place in Mary's mind. Too often though, such tactics simply aren't powerful enough. Every casino manager has a long list of great players gone missing. Just as important is a list that those managers don't have - the list of people living in the surrounding area that have the income and inclination to become great players, but simply have not yet been invited to play.
The Internet is a great tool by which to meet new players and strengthen relationships with existing customers. Let's start with an important and indisputable fact: Your profitable players like to play games. GameLogic offers a technology called Fun Play™, which allows anyone with Internet access to play games online. There's no fee and no prize. Fun Play displays messages about your casino and its offerings during game play, keeping your name and your attractions in prime mind space.
Are these free games effective? Conrad Granito, GM of New Mexico's Santa Ana Star Casino, says: "Fun Play is a valuable tool for us. The average play session lasts 40 minutes, during which players have fun and are reminded of our brand."
An important extra benefit is new player recruitment. Because the games are accessible from home and available to all, lots of non-players try it out. Fun Play includes a registration process that includes incentives for new members to visit the casino right away. Thousands of new players have been recruited so far, and their average play level is many times higher than new signups gathered in traditional ways. In other words, people who like Internet game play also tend to like to gamble. All they need is an invitation and easy access. Fun Play provides both.
GameLogic's Bonus Play™ technology steps Fun Play up a notch and allows players to enjoy a limited daily amount of free game play to win prizes that are redeemable only at the casino.
A fact of human nature is that a dollar earned feels more valuable than a dollar given. We've all felt the pleasure of spending that first earned paycheck as opposed to Mom or Dad's money. An interesting corollary to this fact is that, for most people, a dollar won is even more valuable than a dollar earned. For proof, look no further than your casino floor. Were this fact not true, the gaming industry could not exist.
There are four elements to Bonus Play, and each is adjustable to accommodate specific goals: invitation, categorization, play and redemption.
Invitation determines who plays the games. Santa Ana Star Casino invites existing players through club communications and reaches new players through coupon handouts at public events, club registration sites and other such places. "We do handouts at concerts and also include a link for new player signups on our website," Granito said. "We've gotten a significant number of new signups, but we've also had good success in reaching dormant customers." That's done by sending special invitations to players who have not visited the casino within the past six months or so. The promotion is effective, because it is so easy for players to log on from home.
Each player is categorized according to play potential, whether based on historical performance or projected value. The type and quantity of games offered is variable by category, as is prize value. Typical prizes include buffet tickets, non-cashable gambling credits, event tickets and cash.
Redemption always occurs at the casino and can be limited by time and date criteria. For example, buffet coupon redemption could be restricted to Monday-Thursday from noon until 6 p.m. to drive more visits during non-peak times. Similarly, non-cashable gaming credits may be limited to specific time periods or reduced in value at peak times.
Because these are no-cost promotional games, you are not restricted to normal gaming rules. You can alter the odds of winning and the size or type of prizes for each player category. One group could have an average per-game value of just $1, while another group could win an average of $100, all while playing the same game type on the same website.
When we were developing bonusing at Acres Gaming, I was surprised by how even small awards caused big increases in repeat visits. Crown Casino in Melbourne, Australia, had great success with prizes of just $3. Back then, all players received the same fixed reward. GameLogic's technology magnifies the perceived value of those rewards because the customer has to win them and not all rewards are of the same value. In sum, GameLogic's idea enhances traditional player comp awards by allowing players to win them.
While its technology is powerful, GameLogic's founders and staff are Internet oriented and are just beginning to understand the needs and ways of our regulated industry. They also lack an integrated interface with player tracking and cashless systems for automated award delivery at the gaming machine. That said, GameLogic's organization is rapidly improving, and it's forming alliances with a number of key industry suppliers and operators to develop and deliver better integrated products.
A disappearing limitation of this technology is Internet access: Not all of your customers have it or are comfortable using computers, a fact confirmed by Granito. "Some of our customers lack high-speed Internet access, and some don't even have computers. In fact, we're working on a promotion in which we give away computers as prizes." Around the country, more than two thirds of all households have a high-speed Internet connection, and that percentage is growing rapidly. Certainly that number goes up in younger households and down in older ones - which are both probably core customer groups. In other words, you cannot discard all of your old communication techniques and rely solely on the Internet.
The power of technologies such as Fun Play and Bonus Play is undeniable and cannot be ignored. We'll no doubt see other companies offering alternative Internet technologies. For now, you can learn more about GameLogic at www.gamelogic.com.
I believe the Internet will play a crucial role in the future of legal gambling. Eventually, federal and state governments will figure out how to regulate and tax Internet wagers and Internet gambling will become legal and widespread. Far from harming traditional gambling, the Internet will spur new interest in recreational wagering. Consumers will have the convenience and privacy of the Internet and the excitement of live casino visits. We'll see games that include elements of play at home and the consummation of outcomes at the casino. The concept of tournaments will be redefined. None of this will come without pain, trial and error, but the time to start is now.
Your choice is simple: Start integrating the Internet into your gaming operations now, or be overwhelmed by those who do.