Gamblit’s Recipe to Woo New Players

It’s no secret that younger adult visitors to Las Vegas and other gaming resort destinations are spending more of their dollars on poolside cabanas and nightclubs than in the casino, and nowhere is that more evident than on the slot floor.

A recent Las Vegas Convention and Visitors Authority report shows the average age of visitors is trending younger, and slot revenues are flat or down in many jurisdictions. That demographic shift has caused a lot of handwringing among operators and gaming developers about how to make slot games more attractive to not only core slot players but also younger players, many of whom don’t want to go anywhere near one.

Glendale, Calif.-based Gamblit Gaming may have the answer: Instead of taking a slot game and trying to add for-play gaming entertainment features, the company’s plan is to take great entertainment games and “gamblefy” them, according to Gamblit CEO Eric Meyerhofer, who previously served as chief executive officer of FutureLogic, which makes ticket printer solutions for gaming and other markets.

“Everybody’s observing this demographic shift and how it’s starting to play out in numbers, and if you play it out over the next 10 years, at the same rate it’s going, it doesn’t look pretty,” Meyerhofer said. “There’s an urgency there for certain, and indeed some of the more progressive operators are taking active steps now to look at how they’re going to transform their floors for the future.”

Gamblit will showcase examples of its games and technology at the upcoming Global Gaming Expo later this month. In June, the company received approval from the Nevada Gaming Commission to manage, manufacture and distribute gaming devices and interactive gaming systems in the state.

The seeds for Gamblit came at an earlier G2E when Meyerhofer and a representative of investor American Capital observed that while they saw a lot of new gaming machines on display, they all seemed to be not much more than creative iterations of a conventional slot product.

“We started talking about wouldn’t it be great if you could actually do something more like ‘gamblefy’ an entertainment game. We began thinking about that, and one thing led to another and we actually started coming up with a lot of detailed ideas around it and started to file patents on it,” Meyerhofer said. Shortly after, American Capital became more interested and Hard 8 Games, of which Gamblit is a wholly owned subsidiary, was formed.

“What we had to work out first was a meaningful way to actually join the two mediums because one is really a skill and entertainment game that people play for fun and then wagering is something a certain segment of the population enjoys so joining the two in a meaningful way was really where the challenge was,” said Meyerhofer, who was CEO of both FutureLogic and Hard 8 before deciding to step down from FutureLogic and devote his efforts to Gamblit and Hard 8. “We managed to work through that, but it took about two years of ideation and patent filing and thinking about it.”

Initially, the plan was to build a new patent portfolio around the subject matter, have some exemplary proving technology and look to sell that to a larger company that could bring it to fruition. More recently, the company decided to move forward to operate it as a going business.

The timing seems right for Gamblit to gain traction, as industry executives are recognizing the need for new types of products and regulators are more willing to look at new technology. Meyerhofer recalled a casino executive with one of the larger casino operators telling him that casino operators knew a shift was occurring but how surprised they have been at how fast it’s happening.

One contributor to that shift is the increasing use of smartphones and tablets among the 20- to 55-year-old demographic. “And when you look at that, they’re predominantly playing games on the tablets and phones, more than they are using it for email or social networking or any other use,” said Meyerhofer, who noted that adults in their 50s and 60s are more comfortable than ever using smartphones and tablets, exceeding expectations.

“You have a public that is still interested in the traditional wagering products, yet there’s a whole new overlay market that’s interested in a lot of entertainment games and rich high fidelity entertainment experiences, and that’s what we seek to deliver,” he said. “We’re really coming at this as a games company that is appending into a regulated wagering offering rather than a regulated wagering game and then presenting it in an entertaining way.”

One Gamblit game that the company showed to regulators is called Lucky Words and resembles a Words With Friends-type game.

“Looking at it from an entertainment game perspective, people play those [kinds of] games because there is a challenge in the games,” he said. Typically, such games operate under a freemium model—to play the games you can often download them for free, but then you can make in-app purchases to buy digital goods that make you better at the game. “That market is a proven market, and that’s how all these games companies typically make their money.”

What Gamblit does, Meyerhofer said, is to drop a “wagering construct” into a game that already offers interesting, engaging play. “There is a skill rewards system that folds into this so there’s incentive to perform well at the game in addition to the wagering excitement and the enjoyment of the play of the game,” he said.

For instance, with Lucky Words, “the game is ‘gamblefied’ in a manner in which your wagering is related to the words you’re playing on the board and also based on the outcome of those wagers,” he said. “You might get feedback into the game through in-game currency you can use to buy a blank tile or a double word score that you can actually place on the board and improve your score on the game.” In the case of this initial game, players are playing for the skill benefits of the game; it does not affect your real money play, he noted.

Gamblit also is preparing an EGM-style gaming device that it intends to submit for regulatory approval. “It would allow you to play these types of games inside the casino but you could also, of course, let people play online,” so players could effectively play those games online, build up points and a casino could encourage them to return to the casino for a tournament.

Meyerhofer was pleased by the reaction of Nevada regulators to Gamblit’s products and technology. “I thought in the earliest days of the founding of this company that the greatest risk would be regulatory acceptance of the product. You just don’t know if it is going to be too far ahead of its time,” he said.

It turned out the regulators were comfortable with the technology to the extent that they believe its initial iterations would fall under existing regulations. Meyerhofer also noted that Nevada is moving forward to consider a new proposal from the Association of Gaming Equipment Manufacturers to permit games with skill-based bonuses that offer a variable payback percentage feature that would allow players to potentially increase a game’s payback percentage by several percentage points through skillful play.

“They’re moving in their own way to a more contemporary view, so where I thought we might have to possibly pull this along and do a lot of selling, what I’m finding is they’re already in motion themselves so our technology lines up very nicely with those movements,” he said.

Over the next five to seven years, Meyerhofer predicted, casinos will start to see a transition from 100 percent of the floor devoted to the traditional clientele to increments of the floor dedicated to more interactive gaming products that are attractive to a younger demographic of player. Meyerhofer envisions the potential for casinos to offer specialty gaming areas that would be more attractive to younger players, perhaps with an edgier, high-energy feel, games offered on Surface tables and potentially on mobile devices. “There is a variety of ways that land-based operators can actually tie down into and help support their floors by bringing a younger demographic onto the casino floor than is there today,” he said.

He also questions the notion that younger players don’t have enough disposable income to make good gamblers. Meyerhofer said it’s a fallacy to think this age group does not have money to spend, because they often avail themselves of amenities such as poolside cabanas and nightclubs. “Last I checked a full-blown cabana and drinks is three grand, so they have some kind of money. They’re just not choosing to spend it on the casino floor,” he said.

Meyerhofer noted that he expects to see signs that traditional slot manufacturers are changing the nature of their offerings as well. “My belief is we’ll probably see more of that at G2E this year. I’ll be interested to see what products they’re coming up with.”

G2E marks the formal unveiling of the company, and Meyerhofer said he expects to have plenty of conversations with potential partners. “We certainly have our own standalone business model in the U.K., but we seek to grow in other markets through other partnerships, so those companies are very important to us.”

Meyerhofer stressed that Gamblit doesn’t see itself as a hardware manufacturer. “What we’ve wanted to do is most likely partner with one of those companies, and we very much want to seek ways to get our content onto those products,” he said. “We do believe our content stands out and that’s our strong suite so we’re actually building a Class III EGM for the purposes of demonstrating the technology, proving we can get allowance, regulatory approval on it, but then we would seek to bring to market with a partner.”

Gamblit’s proprietary platform gives game developers access to real money gaming capabilities to enhance their games, tap into the lucrative online gaming and land-based casino markets and attract new consumers, according to its website. Developers can integrate a single SDK into their existing games or design new, original real money games with Gamblit Gaming’s development kit. The company provides the technology, operations, account management, security, gambling licenses, regulations and compliance elements needed.

Games being created out of Gamblit’s internal studio are meant to prime the pump and show the company’s capabilities, but the company also will focus on partnering with outside developers to bring their games to market, Meyerhofer said.

“We wanted to show people examples of what we’re talking about to give them that aha moment,” he said. “I’ve had people say, ‘A lot of people have been talking about this sort of stuff, but you’re the first guys I’ve seen to actually make it actionable.’”

Gamblit’s business model includes building a complete iGaming wagering platform, which the company plans to launch in the United Kingdom with its own “B2C” site as a remote operator. This allows Gamblit to get the product in front of players, collect data and operate it as a profitable business. He noted that the U.K. market is a mature one, “but we’re confident the product is so different that we think it will have its own customer base.”

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