GPWA Times Magazine - Issue 25 - June 2013

And that’s what we thought about at great length. And that’s what we implemented. Q: So the partnership with Aristocrat and the subsequent working relation- ship with Maryland Live! built you an enormous amount of street credibility in the U.S. SMURFIT: I think the marketplace and the group of technology executives who work for land-based casinos in the U.S. understood our approach. They thought we were pragmatic individuals. And they knew we understood how to build it. I think we have technical credibility in the U.S. with the people who we think are important – the thought leaders in de- termining which technology solution and which technology provider to nominate – and the relationship with Foxwoods deliv- ers something else. Q: Before we get into the relationship with Foxwoods, I think it would be help- ful to understand Foxwoods’ journey to this point. Just in terms of its history, when did you start saying, “We need to start looking at this online gambling thing?” And why did you make that de- cision to even begin the exploration? COLEBUT: Well, in the beginning, Vin, Foxwoods wasn’t looking at Internet gam- ing. Foxwoods Development Company had entered into a joint venture deal with a media company – Goodson Gaming, which was Jonathan Goodson. He had a concept for doing a game show that included an Internet gaming com- ponent with the casino – he wanted to tie lottery, casino, Internet and television all into one kind of package. And he thought that you could do a game show where folks would win their way onto the game show by playing at an online casino or through second chance in a lottery. We thought it was a unique business plan that could prove to be profitable. PRACUKOSWKI: The goal of that busi- ness, which was called Velocity Gaming, was when South Africa opened up the regulation of casino games, we’d launch. At that point we had an agreement – and we still have the agreement in effect to- day. I believe, once that regulation opens up, we’ll have a very successful business model there with Velocity Gaming. And, hopefully, GameAccount – and I have all the faith in the world – will be partners there with us, too. Right now, we’re only contemplating the United States, though. COLEBUT: Right. We found ourselves talking to a lot of people who were in the Internet gaming business – some of the folks that Dermot just mentioned – Lottomatica, Intralot, folks in Italy. We weren’t looking to do business in the U.S. As a matter of fact, it specifically was designed to operate outside the U.S. For us to be involved – for Foxwoods Development Company – it couldn’t be within the U.S. And so we were looking in South Africa and Italy. I spent time in Italy, and we were starting to learn some of the business and talk to some of the people who were involved in the Internet gaming space there. And then Black Friday happened and that made all the U.S. operators start thinking about Internet gaming. We actually went in front of the tribal council and talked to them about the in- evitability or the likelihood of Internet gaming, and that we ought to start putting a strategy together and begin thinking about what it is that we wanted to get out of this space if it became big. Foxwoods Development, along with the Foxwoods executive team and Foxwoods CEO Scott Butera, started talking about what it was we wanted to get out of this space. Did we just want to put up a web- site that only our customers would access? And the conclusion of the Foxwoods exec- utive team and the tribal council was that the space would be wide open in the U.S. and we wanted to take our brand and get customers from all over the world and all over the country. We thought we ought to have a real foot- print in the Internet gaming space, and so we endeavored to try and put together a partnership with somebody in the space where we could do that. It was about expanding the brand. It was very important to us that we could con- verge the offline with the online. And we wanted an exclusive deal with our partner. We talked to all the suppliers and all the operators. But our criteria were clear from the beginning: We wanted an exclusive deal, we wanted to build our brand, and we wanted to be in this space for the long haul. If it’s interstate and everybody’s in this space, what would that look like? Well, we thought it would be very, very competitive. And we wanted to prepare ourselves to compete with whatever happens in this space. Q: In terms of competing, how important were the B2B considerations and how important were the B2C considerations? COLEBUT: Well, Foxwoods Development Company is the tribe’s commercial arm. So it was very important to Foxwoods Development and the tribe that we see if there was a place for us in the B2B space and to find a partner that would see it the same way we saw it, who would like the opportunity to not only supply B2C – or supply content and software – but the op- portunity to offer that to other operators in the space. Q: This was a fairly long search. How long has this process been going on? COLEBUT: We started around two years ago. We didn’t do a formal RFP. We did an informal RFP, where we had about 15 suppliers and operators come in and see Foxwoods Development Company’s exec- utive team and our tribal council. It was all hands on deck. Everybody was involved. We narrowed that down to about 10. Then we narrowed that down to about three. GameAccount was not one of those com- panies – I’ll tell you right now. Then we landed on one and came very close to signing a deal with that company. But they were an attractive business in the market and got acquired. Q: Do you want to identify them? Because I think pretty much everyone knows who they are. COLEBUT: Yeah, everyone knows. It was Sportingbet. Sportingbet is an Internet sports betting and Internet gaming opera- tor with a lot of experience in operations. They’ve been doing it for a long time. We found that very attractive. So when they got acquired (by William Hill), we went back to square one and started over. But the field was a lot small- er. It’s like everybody had been picking the pretty girls (laughter), and so… COVER STORY The anatomy of a deal