One of the companies that withdrew from the U.S. after the passage of the Unlawful Internet Gambling Enforcement Act of 2006 was 888 Holdings. The operator of one of the more popular poker rooms on the internet, 888 sacrificed short-term gain for long-term integrity. When 888 Holdings signed a deal to become the internet gaming service provider to Caesars Entertainment in the U.K., it was the beginning of a great relationship. The deal was later extended to the U.S., and is now in place in the legal online gaming venues of Nevada and New Jersey. Itai Freiberger, 888’s chief operating officer, explains how the deal works and how the two companies expect to cooperate in both states. He also explains how 888 will use its own brands, including the All American Poker Network in the U.S., and broke the news about Wynn Resorts becoming involved with Caesars in New Jersey. He spoke with GGB Publisher Roger Gros at G2E in Las Vegas in September.
GGB: Give us a thumbnail background of 888 and how you got where you are today.
Freiberger: The company was founded in 1986, one of the first online gaming companies in the world. At that time, there was no online gaming industry, so we had to develop everything in-house, from platforms to content. Because of that, our entire platform is proprietary. We’ve spent a lot of money building our platform from the front to the back end, which is important in our business success. In 2005, we went public on the London Stock Exchange, and a year later had to pull out of America after UIGEA was passed.
What is your strategy?
We have a dual strategy of B2B and B2C. Today we offer casino games and poker, as well as bingo and sports betting. We have the largest B2B bingo offering in the U.K. We are No. 3 in the global liquidity pool for poker. We run the company more as a technology company than a gaming company. We build the tools and technology to ensure a quality customer experience and to ensure that business goals are met.
Why has 888 always stayed on the white list?
We see regulation as the future of online gaming. I don’t believe the markets that are unregulated today will stay open in the near future. So we decided to invest in regulated markets only. We are active today in most of the regulated markets in Europe. And we look at the U.S. as the single biggest opportunity for a company like ours, and we’ve invested a lot of effort and money in this country. We believe it will be one of the largest, if not the largest, online gaming market in the world.
Your arrangement with Caesars has worked well. Explain how that came about.
We started with a proposition in Europe. For Caesars, I believe they were testing the waters, and developing a relationship more than the business itself. And because we worked together with them and showed them they could trust us, that led to our relationship in America.
How much will your experience in Europe help your U.S. operations?
I believe it is critical. We’ve been doing this for 17 years now. There are 1,700 people working for 888 in Europe. These people really know how to operate, and I’m not just talking about the marketing side but also the operational side—detecting fraud on the gaming or financial side, running the all-important algorithms, predicting and increasing lifetime value and many other items. These are all crucial issues that you only learn after doing it for years.
It’s early, but the Caesars WSOP.com just rolled out in Nevada. How has it been performing so far?
We’re quite surprised at the level of business; we didn’t expect this much. Caesars, which is responsible for all the marketing, is doing a great job in pushing the brand. We’re the technology partner and provider, so I have to say that they are really doing well in the marketing.
We’re learning about how to make changes and make our sites in Nevada even better.
New Jersey will come on in late November with full online gaming instead of just poker. Do you expect to go live on that date?
The regulators have set a very aggressive timeline, which means that we have to be live by the end of October. This is a major market, with a lot of people with a lot of money. Because we can acquire people for a poker offering and cross them over to a casino, it makes the entire proposition more attractive. We will be ready.
What brands are you expecting to use under the Caesars license?
We actually have two deals in New Jersey with Caesars. The first is exactly like in Nevada, where we are the technology provider. The other is through 888 and All American Poker Network, that allows us to operate under the Caesars license. It’s a straightforward licensing brand. This will happen in Nevada, too, by the way. Caesars was there first, so it was only fair for them to launch first, but we will use our brand in Nevada as well.
Caesars is deciding which brands they will use in New Jersey. Wynn is also a partner as another brand under the Caesars license.
We come into this market very prepared. Our platform is very capable and very competitive. We have a full understanding of what it takes to run an online gaming business. And the brands we are delivering will have a significant impact on the market.