U.S. Online Gaming Market Shows Challenges, Opportunities

A few things are clear about the fledging online gaming market in the United States.

It shows incredible promise. Plenty of companies and states are interested in joining the party. And opposition forces are ramping up efforts to slow or stop its advancement.

Casino operators, major slot manufacturers, small gaming and technology providers are all eyeing the market or testing the waters in the three states—Nevada, New Jersey and Delaware—that now allow some form of online wagering.

Aristocrat Technologies, for instance, has taken a two-pronged approach for free-to-play and for-pay gaming, said Kelly Shaw, vice president of system sales and marketing for Aristocrat. The company offers a product called nCube as its remote gaming platform that allows its content to be integrated with multiple platform providers of online gaming.

“For us, that is a strategy that we are deploying in New Jersey as an example because there are so many different operators and platform providers, and we want our content in that market, and the way to get our content into that market is really through the integration of our content through a remote gaming platform,” she said.

In the free-to-play realm, Aristocrat Technologies has had much success with its nLive product offered through its Oasis system solution. “We’re really concentrated on the kind of success we’ve had at Maryland Live and then some of our other accounts that have our nLive product,” she said. “nLive is really our strategy of building a tighter integration between the Oasis CMS and the online player, and that’s in a free-to-play environment.”

That, she said, is all about extending the brand marketing integration and the power of the Oasis system to learn more about the player and how to deliver the right offers to cement loyalty and drive play at the brick-and-mortar casino. It delves deeper to offer a logistical view of the player when he or she is in the casino, on a mobile device or at home on the computer. “And then how am I getting a deeper understanding of their behavior so I can provide them with good offers and reward them as my VIP players at the brick-and-mortar casino?” she asked.

These are important steps, she noted, as the industry continues to evolve, and the U.S. market for online gaming takes shape. Shaw noted, however, that, “It’s still really early days right now.” The first few months of online gaming in the three states are just starting to reveal more about the realities of the online space, she added.

Stephen Murphy, vice president of business development for High 5 Games, a company that creates games for land-based, online gaming and social gaming markets, said he is optimistic about the U.S. market, even in its infancy.

“I think there’s still a question mark about just how it’s going to roll out in the U.S.,” he said. “I think we know that especially on the slot side of the equation it may be slow opening up in various jurisdictions so every jurisdiction that opens up we’re going to play a role in.”

Murphy noted that the European market is becoming a more mature market, and fewer small competitors can get in there because it’s become expensive to run online casinos. “A lot of that has already shaken out, and I think there will be more mergers, and people dropping out,” he said.

It’s a different situation in the United States, where Murphy said he expects powerhouse operators from the land-based side to battle it out for online market share along with other interested parties. “I think you’ll see these guys really going after it because there’s a lot that hasn’t really been figured out yet in the U.S.,” Murphy said.

High 5 Games has been creating games for companies such as IGT and Bally Technologies for the land-based side of the industry since 1995 and has branched out into the online and social gaming space.

“In the past we have worked with IGT Interactive to get out our games” in other legal online jurisdictions, he said. “Now we’re going independent, and we have our own remote gaming server called The Vault that we’re offering to online casinos.”

The company showcased The Vault, which features more than 100 games, at the ICE Totally Gaming show held last month in London. High 5 recently reached a deal to partner with Caesars Interactive to offer its slot games online in New Jersey.

“Anywhere globally where there is a legal and regulated market, we plan on having a role there,” Murphy said. “There are a lot of online casinos that need our content, and we’re doing our best to deliver it.”
One aspect remains true no matter what market, he said, and that is that content is king. “There’s nothing that can beat having great content. It’s the foundation that everything is built on,” he said. “You can have great marketing efforts, but if your games don’t perform well, it doesn’t matter.”

Having games online or in a social gaming space provides tremendous feedback on what players want and what game features work, he said. That can—and has—streamlined game development for the company’s games, including those destined for land-based casinos, Murphy said.

Meanwhile, at least 10 states are exploring bills to legalize or expand Internet gambling, according to Gambling Compliance, an organization that tracks gaming-related legislation. Among the states the group said may consider bills for new or expanded gaming include California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, New Jersey and Pennsylvania.

If any of the proposals are pursued, they will likely face opposition from The Coalition to Stop Internet Gambling, which is financially backed by Las Vegas Sands Corp. Chairman Sheldon Adelson, an opponent of online gaming.

The coalition recently announced it has gained support from 39 faith-based and conservative organizations and also released an anti-online gaming ad on YouTube.

Another group, the Coalition for Consumer and Online Protection, recently formed in direct response to the Adelson-backed coalition. That group, backed by the American Gaming Association (AGA) and others, formed to stop any congressional effort to ban online wagering.

Murphy noted that, while he holds great respect for Adelson and the Las Vegas Sands Corp, he disagrees with him on online gaming. “We view that as a matter of personal liberty.”

He also noted that states that now offer online gaming have taken strong steps to ensure consumer protection. “I think we owe [it] to ourselves as an industry to go above and beyond to install consumer protections to ensure that things are as good as they can possibly be,” Murphy said. “No system will be 100 percent solid, but I’m actually pretty bullish on the ability to control that environment.”

Leave a Comment