GPWA Times Magazine - Issue 19 - February 2012

By Frank Pracukowski, Foxwoods Development Company I have been in the gaming industry for nearly 20 years. During that time, I have developed what I feel is a fairly comprehensive understanding of casino operations – on the brick-and- mortar side of the world. Online gam- ing, however, is a whole different story. What I have learned about the online gaming industry over the last couple of years is, “You don’t know what you don’t know.” My education was thrust upon me when Foxwoods Development Company began discussions with major online gaming op- erators and providers in Europe as part of a newly formed joint venture. So I started where anyone who doesn’t speak the lan- guage starts: I learned the language and acronyms of the online world. Let’s start with a few basics: B to C (business to con- sumer), B to B (business to business), B to G (business to government), KYC (know your customer). And let’s not forget clicks, hits, tweets and links. You may think you know what you are doing . . . but you don’t. Before 1990, if you wanted to place a casino or sports-type bet in the U.S. you had two choices: travel to a legitimate brick-and- mortar gaming establishment or place an illegal wager through a bookie. Then along came the Internet and a new formof gaming appeared: Internet gaming through gaming casinos and sports wagering that can take place on any electronic device that offers Internet access anywhere on the globe. A number of large casino operators in the U.S. are expending significant time and money investigating online gaming pro- viders, with the goal of forming partner- ships to be positioned for when the mar- ket opens in the U.S. Casino operators realize their expertise lies in traditional casino operations. Drive the patron to their multi-million-dollar gaming (and hospitality) facilities and the play will fol- low. But this is the Internet – the world of the young, educated, technically savvy user. Bringing patrons to your gaming site is just the beginning. The real question is how do you retain them? Remember, a customer will access your site and can easily click off your site and move to another gaming website in a matter of seconds. Players don’t have the same “investment” in the online gaming experience; they don’t physically leave their home and travel to your property. Consequently, the player’s online experi- ence with your site will ultimately deter- mine how loyal that player will be. Online casino operators need to understand how to effectively market to the online player. Ultimately, to be successful in online gam- ing, player retention is critical. Just because you selected your partner doesn’t mean the work is done. Once you have selected your dancing partner for the U.S. market, you will quickly real- ize that the real work has just begun. In many states, casino operators have not yet experienced working with regulators to begin drafting regulations. KYC re- quirements will be key and the right tech- nology is the solution. Through the use of a “rules-based engine” combining tech- nology and regulations, you will need to ensure that your players are who they say they are and that they are located where they say they are located. One could write a book on the KYC requirements for the U.S. market. I believe many operators are either underestimating this effort or think that it can’t be done. Player loyalty and what it means to online gaming. I learned that online op- erators/providers in Europe don’t under- stand the significance or the value of patron loyalty programs used by most U.S. casino operators. Effectively integrating online gaming operations into their land-based loyalty programs has the potential to drive increased visitation not only to their online site but to their casino properties through targeted cross-marketing programs. The purpose of player loyalty programs is to re- ward the repeat player so that he plays lon- ger. Operators who understand who their online patron is and what “reward” moti- vates repeat play will hold one important key to success in the online world. Play for Fun . . . is it play and is it really just for fun? I realized early on that there are two schools of thought on Play for Fun sites: whether the sites are loss leaders and whether you should have a Play for Fun site at all. I would liken it to your retirement plan – it is taking stock in your future. In the case of Play for Fun sites your future is developing player loy- alty and obtaining e-mail addresses for the eventuality of the legalization of Internet gaming. If the conversation rate of Play for Fun to real-money play is 3 to 5 per- cent (using typical marketing conversion rates) wouldn’t you want 3 to 5 percent of a million versus 50,000 or 100,000? There are numerous reasons why a Play for Fun site is beneficial; however, don’t expect to see an immediate return on in- vestment. If you develop your Play for Fun site correctly, the return will come as you convert these players once real-money play is legal. Poker, poker, poker. There is a strong push to launch Internet gaming by offer- ing poker only. Why? Is it easier politi- cally, because it is a game of skill? Poker will only make up a small portion of your You don’t know what you don’t know A major American land-based gaming exec shares what he’s learned about online gaming in the last two years COVER STORY You don’t know what you don’t know