COMING TO
AMERICA
also launched its own brand into New Jersey and
PokerStars will clearly be trying to do the same.
However, finding a route to market has been a
complex and expensive process for most. When
Nevada regulated a series of partnerships were
formed; however, its limited product – just
poker – and player pool saw the spotlight switch
immediately to New Jersey when the latter legalised
egaming. The Garden State might have offered a
larger opportunity, but there were just eight landbased licences through which European operators
could gain entry to the market. A mad scramble to
form a partnership ensued, leaving some such as
Sportech and Paddy Power, to date anyway, left on
the sidelines.
MODEL BEHAVIOUR
Some casinos, primarily those who have been
preparing for online gaming the longest, have
instigated a strategy to bring as much of the
operational processes in-house as possible. That
is clearly a more expensive and risky model than
STATE
NEW JERSEY
STATUS:
POPULATION (M)
GDP PER CAPITA (000s)
9M $55.2
MARKET SIZE
800
700
600
500
400
300
200
100
0
www.egrmagazine.com
$405
SOURCE: EILERS RESEARCH, LLC
outsourcing platform and services, but one which
will likely reap benefits in the long-term.
Take Station Casinos, for example, which,
through its Fertitta Interactive business, acquired
game developer CyberArts in October 2011 and
has since launched the Ultimate Gaming and
Ultimate Poker brands in New Jersey and Nevada
respectively. Caesars, too, has formed its own
specialist egaming team and marketing capabilities,
albeit using 888’s software for the time being. A less
successful example is that of South Point casino in
Nevada, which despite claiming it would be the first
to launch real-money poker in Nevada with its own
proprietary software, has yet to emerge with any
kind of licensed product.
Many land-based casinos, however, recognise
they do not want, or cannot afford either the time
or money to go it alone. They simply have had no
choice but to look for a more experienced online
partner, not only for the games and platform but
to manage the related services such as customer
service, fraud, payments and KYC.
In some cases, land-based casinos have shown
a desire to retain control of marketing in order to
push customers online and into physical casinos,
while leaving the operational aspects of running
a gaming site to their more experienced online
partner.
But between the two basic models lie a plethora
of options for European operators to form a
commercial venture with a casino. One is to act
as mainly a B2B supplier, providing the casino
with online marketing and CRM capabilities
they cannot build themselves. Another, for those
without a gaming or poker platform, has been
to act as a full service supplier in tandem with a
third party provider, in which they would offer a
complete egaming solution in exchange for a share
of revenues, such as Betfair and GameAccount
Network’s deal with Trump Plaza.
That leaves either leasing the casino’s licence for
an upfront cost and an ongoing revenue share in
order to operate everything themselves, or a more
typical joint venture deal whereby all costs and
returns are shared.
It’s important to remember in all of this that just
4% of the US has been regulated. The competition
in New Jersey, a market similar to that of Sweden
in terms of population, was fierce for reasons that
belied its size. Most importantly, it was the first
state, other than Delaware, which has less than a
million residents, to legalise casino games. Secondly,
Atlantic City is home to some of the biggest players
on a national level – Caesars Ent ertainment has four
properties there, Boyd Gaming has one and Landry’s
has the Golden Nugget. It could therefore be looked
at as a microcosm and testing ground of how the
larger US market might pan out.
“Gaming operators rightly look upon New Jersey
as the first meaningful state to regulate online
gaming and therein it is a litmus test for the viability
35