GPWA Times Magazine - Issue 25 - June 2013

COVER STORY THE ANATOMY OF A DEAL Foxwoods Development Company and GameAccount executives give us a behind-the-scenes look at their journey through the online gaming world and how they reached a partnership that could transform the American gaming market. G old rush. Landgrab. Bonanza. Talk to any gaming executive about the opening of the U.S. market for online gaming, and these are the words they’ll use. It’s easy to understand why those are the most frequently used words to describe the market. Morgan Stanley Research estimates that online gambling in the U.S. will generate $9.3 billion in revenue by 2020. Bonanza. With potential online gaming licenses locked up – at least initially – by existing brick-and-mortar operators or lottery providers, European opera- tors and software providers have spent the last three years jockeying to find partners to help them break into the market. Almost every ma- jor European provider and software supplier has been pursuing U.S. deals hard, with varying de- grees of success. Gold rush. An uncertain regulatory environment put American brick-and-mortar operators in the un- comfortable position of lining up deals before real-money play was available. But the biggest ca- sinos in the U.S. wanted to be in position to grab the market as quickly as possible when they were licensed and regulated to do so. Landgrab. Like most gold rushes, there have been booms and busts. PokerStars and Steve Wynn – bust. PokerStars and Atlantic Club – trending bust. Full Tilt and Fertitta Interactive – bust. MGM, Boyd and bwin.party – boom. Caesars Interactive and 888 – boom. 888 and Scientific Games in Delaware – boom. And like any landgrab, the competition is fierce and the knives are out. Ultimate Poker became the first online poker room to operate in Nevada with a Nevada license on April 30. And color Caesars Interactive not impressed with Ultimate Poker. Caesars, which operates the World Series of Poker brand and WSOP.com, which will be competing with Ultimate Poker, made that clear during a media conference call in late May. “I think the market is ready for a first-class prod- uct,” said Senior Vice President Caesars Interactive Ty Stewart as he announced the impending sum- mer launch of WSOP.com in Nevada. So how do two of the biggest players in the gam- ing world navigate the gold rush and landgrab environment of the American online gaming world? Very carefully. In late April, the Mashantucket Pequot Tribal Nation (MPTN) and GameAccount Network an- nounced their partnership to bring online gam- ing to the U.S. The MPTN operates Foxwoods Resort Casino, the largest resort casino in North America. GameAccount is one of Europe’s lead- ing independent privately owned Internet gam- ing system and software providers. And the scope of the deal was enough to set tongues wag- ging at the Global iGaming Summit and Expo (GiGse) in San Francisco, where land-based and online gaming executives from throughout the industry were meeting in the days after the an- nouncement. Anytime America’s biggest casino makes a deal, particularly with a company as respected as GameAccount, people take notice. The deal has two basic components – one B2C and one B2B. On the B2C side, GameAccount will provide Foxwoods.com – which averages 1 million The anatomy of a deal