Spectrum SIGHT White Paper Spectrum SIGHT White Paper June 2017 final | Page 9

When we developed SIGHT, we added a critical corollary to our message: Online gaming
in the United States would have to create a new business model, one that would rest on the
foundation of a land-based, brick-and-mortar gaming industry that today boasts more than
1,000 casinos generating more than $70 billion in annual revenue. Clearly, there is no one
European model; the models vary from country to country, market to market, and operator to
operator. Nor will there be one US model, as it has to adapt to different markets and rules.
The smart European operators and the smart US operators will be the ones to adapt and
profit, and we suggest that adaptation must take into account that the business model in the
United States would more likely succeed if it follows the general terms of the Atlantic City
model: Leverage online for the benefit of land-based operators.
While our core thesis is that land-based operators have a vital policy role to play in
online gaming, we are not suggesting a protectionist sentiment, nor do we believe the Atlantic
City model is well-suited for all jurisdictions.
In any scenarios, providers and suppliers from Europe and elsewhere can bring their
experience to bear in multiple ways, ranging from serving as white-label providers to providers
of stand-alone online sites, which various states have expressed an interest in pursuing.
Lotteries: Competition or Convergence?
One wild card in this evolution will be the role of lotteries, which have a presence in 44
states, as well as the District of Columbia, Puerto Rico and the US Virgin Islands. In some states,
such as Delaware and Maryland, lotteries also regulate brick-and-mortar casinos, while in most
states – New Jersey being one example – lotteries and casinos have historically operated within
their own silos, with little overlap in either their marketing pursuits or their regulatory
regimens.
Massachusetts offers a special challenge in that it is home to the nation’s most
successful lottery on a per-capita sales basis and is also developing a significant casino industry.
The two entities are not only separately regulated, but the Lottery is under the direct purview
of the Massachusetts Treasurer, who is independently elected from the Governor, who has
oversight responsibilities of the Gaming Commission.
In 2012, Spectrum produced a groundbreaking report for the Massachusetts Lottery as
to whether that lottery should pursue online gaming and, if so, how. Our report noted:
Casino gambling is regulated by the Massachusetts Gaming Commission. If the casino industry is
authorized in the future to conduct any form of online gambling, that would clearly fall under
the full purview of the Gaming Commission. We are not suggesting that the Massachusetts State
Lottery Commission should regulate the casino industry. If, going forward, different entities –
including the Lottery – are authorized to conduct online wagering, we recommend that
marketing efforts be coordinated in an effort to optimize the overall benefit to the
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Observing 15 Anniversary of SIGHT
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