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Hypocrisy Unchained

Strategies for iGaming

Hypocrisy Unchained

There is a lot to be concerned about with iGaming if you are a land-based casino operator. The simple fact that players can enjoy gambling from the comfort and safety of their own home should be enough to make you nervous. Unless you have a strategy to contain the potential damage, and possibly turn it in your favor, you should be worried.

Sheldon Adelson’s strategy is something of a scorched-earth policy. Adelson wants iGaming gone from the legal agenda in the U.S., and he plans to use his vast wealth to make that happen. He wants Congress to put a ban in place that would prevent any more states from legalizing iGaming, and certainly stop any movement in that direction from the federal government.

But is that a reasonable policy? Remember, iGaming was exploding on illegal—or at least “grey” area—websites in the U.S. prior to 2006. With the passage of the Unlawful Internet Gaming Enforcement Act, most—but not all—of those online casinos and poker rooms stopped taking bets from U.S. customers. Over the intervening years, however, much of the business that went away has returned to now clearly illegal sites.

Also in the last year, we’ve seen three states legalize online gaming. Any federal prohibition would now have to “grandfather” those states into any overall ban.

So for Adelson to suggest that a law banning iGaming in the U.S. would put the issue to rest is simply disingenuous.

More disturbing, however, is the argument for a ban. Certainly there’s some justification when it’s viewed from a business perspective, as LVS President Rob Goldstein explained to me recently.

“What worries me about it is twofold,” he said. “First, the cost of entry is incredibly small, which means anyone can get into it. That shows me it is of limited value. Secondly, once you’re in it, it’s all about marketing dollars. The reinvestment becomes larger and larger. The customers have no loyalty. There’s no bricks and sticks that attract them.

“We thought that brands had real value online. But the more I look at it, the more I question that. Once a customer gets online, he looks for the best deal, so the deal becomes the driver. If that’s the case, the margins erode quickly. That’s the biggest fear for me, from a business perspective.”

But when you get to the “moral” outrage that Adelson exhibits, the justification gets thin, and begins to damage gaming of all types, because Adelson’s arguments can apply to all of us.

He says online gaming targets the vulnerable, encourages underage gambling, promotes money laundering, and is a breeding ground for criminal enterprises—all arguments that anti-gamers have used in the past against the land-based casino industry.

He claims iGaming sites are “reckless” and have no regard for the players. But he fails to mention an incident that was reported recently when a player owed several Las Vegas casinos almost $13 million ($8 million to Adelson’s Venetian).

Despite Adelson’s iGaming objections, this situation would not have occurred online. First, there are no legal online casinos that extend any credit, much less $8 million worth. Second, the player’s activity would be tracked and warnings sent out to both the operator and the player as he lost more and more.

Player tracking on iGaming sites is much more comprehensive than in real life. Everything that occurs is recorded electronically, so online operators are much more informed than their land-based cousins. This will actually prevent underage and problem gambling and protect players who may get in over their heads in the iGaming space.

So Adelson’s campaign is not only damaging to the growing iGaming industry but it clearly threatens our business both land-based and online. No, iGaming may not be the most profitable business in the world, but there’s no way to put it back in the bottle. Banning it will only encourage illegal casinos and expose players to fraud and other dangerous activities.

Further attempts to ban it will only damage consumer confidence and the gaming industry as a whole. Let’s hope Adelson realizes he can’t win and decides if you can’t beat ‘em, join ‘em.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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