CM Comment: Great example of the coming convergence between loyalty marketing and extended game-play engagement.
August 17, 2009: summarized from Marketwire -- Harrah's Entertainment, Inc.'s Total Rewards members can now unlock Star Trek™ Episode Four on more than 100 WMS™ slot machines available in 29 of 36 Total Rewards casino resorts across the country, an additional four casinos will have Episode 4 available later this year.
First introduced in late 2008, the WMS Star Trek game is the first personalized slot experience that integrates directly into a player loyalty program. Guests use their Total Rewards card to save their progress and can resume their game on any WMS Star Trek machine in a Total Rewards casino resort. Additionally, Total Rewards members can earn exclusive "bonus" achievement medals for their Harrah's play to gain access to each episode.
"Only Total Rewards members can earn the bonus achievement medals while enjoying this unique and personalized gaming experience, featured exclusively on WMS Star Trek slot machines. In today's casino gaming environment, guests demand these personalized experiences. Harrah's Entertainment is on the forefront of delivering this," said Katrina Lane, senior vice president and chief technology officer of Harrah's Entertainment. "Thousands have tried their luck on our Star Trek slot machines, and more than 2,500 have unlocked Episode 3 in less than six months."
"We worked closely with the technology-forward Harrah's team to integrate -- for the first time -- a customer loyalty program directly into the slot machine player experience," said Orrin J. Edidin, president of WMS. "Our category creating Adaptive Gaming® technology platform enables players to experience unique gaming entertainment through new game episodes released over time. We're confident that Harrah's Total Rewards members will enjoy these new personalized gaming experiences made possible by the release of Episode 4 of the Star Trek series."
Since the initial launch there has been over 150,000 unique logins established across the country and player engagement continues to grow.
Read more at: http://bit.ly/WpDCc
Tuesday, August 25, 2009
Mobile Marketing At The M Resort
CM Comment: Some insight to those looking to implement their own mobile marketing solution.
August 21, 2009: summarized from mobile-financial.com -- A short while back, I had the opportunity to meet with Raquel Rodriguez, the VP of Marketing at The M Resort in Las Vegas. The M Resort launched their mobile marketing initiative for the purpose of improving loyalty and frequency of visits to the casino from their target customers. The initiative is tied to their Imagine Rewards loyalty program and is already experiencing better than expected results.
M-F.com: Raquel, can you describe the solution that the M-Resort has implemented?
R.R: The M’s challenge was to build a database of numbers with which we could communicate with our customers immediate and effectively. To build that database we created M Call. Every customer can make the call everyday and win a guaranteed prize of points in our Player’s Club system. To claim those points, they have to come into the casino and earn 1 point, and then those points belong to the caller. They can call everyday for 30 days and at the end of 30 days, we expect to have a very large database of mobile number that we can text offers to anytime we want. For example, yesterday, we created a new promotion for today and we sent via text message to the 9000 people who have already enrolled in our M Call program. In the old days, you had design a piece of collateral, you had to proof it, you had to go to press with it, and then you had to send it out. It’s a 2-week turn-around. With a text message it’s today.
M-F.com: Are there any other casinos in the Las Vegas area that have similar programs?
R.R: There are other casinos that are dabbling in mobile marketing. Nobody is doing anything like what we are doing, with a give-away to capture numbers. They’re generally sending messages to saying “Come on in and spend $50 on a room and we’ll give you $25 in free slot play”. Our program is a little different and our goals are a little different. We’re trying to build a database and we’re also trying to drive frequency because we are a local casino.
M-F.com: So that’s a key differentiator for you then. The program gives you access to those individuals and you can market to them quite frequently. What benefits are you deriving?
R.R: What we are going to see is increased frequency. With M-Call the players have to come in everyday, and players coming into a casino everyday translates to dollars to the bottom line. But because we can reach our customers anytime we want once we’ve built this database, if I have availability in my restaurants, I can text out a message. If I have a room available, I can text send a message. I can reach the local customer right now.
M-F.com: What made you want to go mobile vs. using the more traditional channels
R.R: Because it’s immediate, it’s inexpensive, it’s personal. A text message feels very personal. In a local market, we call our customers the board of directors. This casino is personal to the customers.
M-F.com: Have you been able to measure response rates, and are you reaching your expectations at this point?
R.R: This program has been live since June 1, and it has exceeded our expectations. We took 4500 phone calls on day 1 and we had projected to take 1500 calls. We’re hitting 5000 calls /day now.
M-F.com: How do you plan to evolve the program? Do you have a strategy for the next 6 months?
R.R: Right now, that strategy is evolving based on what we are seeing. But the basic plan is to simply build the database and then communicate our programs and promotions to our local player via mobile instead of by direct mail or email.
M-F.com: How have you educated your consumer with the mobile aspect?
R.R: It was actually a very simple concept. They simply call a number, enter their Imagine Rewards Club number, and win a prize. So communication was very easy. We did a direct mail campaign 3 weeks ago. We added outdoor billboards, we ran a newspaper ad, we have several radio and TV commercials going. So it’s been a very smooth process for customers to learn. I just had lunch with 6 customers, and all 6 of them at noon picked up their cell phone and made their M Call. They get it. It’s very simple for them.
M-F.com: There is a notion in the industry that customers don’t want to receive promotions via text message. Did you have any of these concerns when planning this project?
R.R: The casino industry is unique. Junk mail from any other industry is junk mail. Mail from a casino is valued. I had absolutely no fears that anybody would not want a text message from a casino. Customers like to receive phone calls from casinos, they like to receive mail from casinos, and now they like to receive texts from casinos
M-F.com: Why do you say that is?
R.R: When you’re getting an offer from something you’re truly interested in, and people who play at casinos are interested in taking what the casino is offering, that message is exciting to them.
Read more at: http://bit.ly/YNXwn
August 21, 2009: summarized from mobile-financial.com -- A short while back, I had the opportunity to meet with Raquel Rodriguez, the VP of Marketing at The M Resort in Las Vegas. The M Resort launched their mobile marketing initiative for the purpose of improving loyalty and frequency of visits to the casino from their target customers. The initiative is tied to their Imagine Rewards loyalty program and is already experiencing better than expected results.
M-F.com: Raquel, can you describe the solution that the M-Resort has implemented?
R.R: The M’s challenge was to build a database of numbers with which we could communicate with our customers immediate and effectively. To build that database we created M Call. Every customer can make the call everyday and win a guaranteed prize of points in our Player’s Club system. To claim those points, they have to come into the casino and earn 1 point, and then those points belong to the caller. They can call everyday for 30 days and at the end of 30 days, we expect to have a very large database of mobile number that we can text offers to anytime we want. For example, yesterday, we created a new promotion for today and we sent via text message to the 9000 people who have already enrolled in our M Call program. In the old days, you had design a piece of collateral, you had to proof it, you had to go to press with it, and then you had to send it out. It’s a 2-week turn-around. With a text message it’s today.
M-F.com: Are there any other casinos in the Las Vegas area that have similar programs?
R.R: There are other casinos that are dabbling in mobile marketing. Nobody is doing anything like what we are doing, with a give-away to capture numbers. They’re generally sending messages to saying “Come on in and spend $50 on a room and we’ll give you $25 in free slot play”. Our program is a little different and our goals are a little different. We’re trying to build a database and we’re also trying to drive frequency because we are a local casino.
M-F.com: So that’s a key differentiator for you then. The program gives you access to those individuals and you can market to them quite frequently. What benefits are you deriving?
R.R: What we are going to see is increased frequency. With M-Call the players have to come in everyday, and players coming into a casino everyday translates to dollars to the bottom line. But because we can reach our customers anytime we want once we’ve built this database, if I have availability in my restaurants, I can text out a message. If I have a room available, I can text send a message. I can reach the local customer right now.
M-F.com: What made you want to go mobile vs. using the more traditional channels
R.R: Because it’s immediate, it’s inexpensive, it’s personal. A text message feels very personal. In a local market, we call our customers the board of directors. This casino is personal to the customers.
M-F.com: Have you been able to measure response rates, and are you reaching your expectations at this point?
R.R: This program has been live since June 1, and it has exceeded our expectations. We took 4500 phone calls on day 1 and we had projected to take 1500 calls. We’re hitting 5000 calls /day now.
M-F.com: How do you plan to evolve the program? Do you have a strategy for the next 6 months?
R.R: Right now, that strategy is evolving based on what we are seeing. But the basic plan is to simply build the database and then communicate our programs and promotions to our local player via mobile instead of by direct mail or email.
M-F.com: How have you educated your consumer with the mobile aspect?
R.R: It was actually a very simple concept. They simply call a number, enter their Imagine Rewards Club number, and win a prize. So communication was very easy. We did a direct mail campaign 3 weeks ago. We added outdoor billboards, we ran a newspaper ad, we have several radio and TV commercials going. So it’s been a very smooth process for customers to learn. I just had lunch with 6 customers, and all 6 of them at noon picked up their cell phone and made their M Call. They get it. It’s very simple for them.
M-F.com: There is a notion in the industry that customers don’t want to receive promotions via text message. Did you have any of these concerns when planning this project?
R.R: The casino industry is unique. Junk mail from any other industry is junk mail. Mail from a casino is valued. I had absolutely no fears that anybody would not want a text message from a casino. Customers like to receive phone calls from casinos, they like to receive mail from casinos, and now they like to receive texts from casinos
M-F.com: Why do you say that is?
R.R: When you’re getting an offer from something you’re truly interested in, and people who play at casinos are interested in taking what the casino is offering, that message is exciting to them.
Read more at: http://bit.ly/YNXwn
Tip For Web-Savvy Marketers: Get In The Game
August 23, 2009: summarized from tennessean.com -- Singer/songwriter Joe South wasn't thinking about "Super Mario" or "Madden NFL" when he wrote "Games People Play," but he was certainly on target with the line that said people play games "every night and every day now
There's no doubt that computer and video games are entrenched in the American lifestyle.
Don't assume that game playing is limited to boys and young men wearing out their thumbs on PlayStation, Xbox and Nintendo. The gaming universe actually is almost two-thirds of all online Americans ages 12 to 64.
A study done by Parks Associates, a market research and consulting firm, found that 34 percent of U.S. Internet users play online games weekly. That makes online gaming more popular than social networking and online video.
"Gaming isn't just for kids, and it's not limited to boys and men. For instance, half of women 45 to 54 say they play some sort of electronic game at least once a week," Mike Vorhaus reported in a recent edition of Advertising Age.
Advertisers have taken note of this large number of eyeballs, and many have added "advergaming" to their marketing arsenal. The tactic is working.
A recent Nielsen Games survey found that 36 percent of video game players have acted on advertising they have seen in a game, and 83 percent of Web gamers reported a positive association with companies that sponsor free online games.
"Games remain one of the biggest untapped opportunities for marketers, for the simple fact that they are, indeed, engaging, immersive, interactive and entertaining," said Tim Zuckert, president and CEO of Shift Control Media, a creator of branded games such as those for Coca-Cola's "Happiness Factory."
Advergaming takes many forms. Orbitz puts games in its banner ads, and those games have become a leading source of site traffic for the online travel agency. Magazines such as Good Housekeeping and Redbook have added female-friendly game titles to their Web sites. In addition to customizing games such as mah-jongg, Sudoku or solitaire to promote traffic, they offer game popularity rankings, reviews and leader boards to promote return visits.
Progressive Insurance uses games to drive brand awareness. Progressive's logo is part of the environment in the racing game "Electronic Arts Need for Speed: Undercover" and "2K Sports Major League Baseball."
Tactics for all successful advertising in the game environment include:
Start early: Online video that appears before the game starts gets 85 percent viewership.
Keep it quick: Fifteen-second creative units outperform longer versions.
Product placement: Get your product integrated into the game.
Above all, know your audience and the types of games they play. Then you can build an advergaming strategy and become part of your customers' game life.
More at: http://bit.ly/z2BXG
There's no doubt that computer and video games are entrenched in the American lifestyle.
Don't assume that game playing is limited to boys and young men wearing out their thumbs on PlayStation, Xbox and Nintendo. The gaming universe actually is almost two-thirds of all online Americans ages 12 to 64.
A study done by Parks Associates, a market research and consulting firm, found that 34 percent of U.S. Internet users play online games weekly. That makes online gaming more popular than social networking and online video.
"Gaming isn't just for kids, and it's not limited to boys and men. For instance, half of women 45 to 54 say they play some sort of electronic game at least once a week," Mike Vorhaus reported in a recent edition of Advertising Age.
Advertisers have taken note of this large number of eyeballs, and many have added "advergaming" to their marketing arsenal. The tactic is working.
A recent Nielsen Games survey found that 36 percent of video game players have acted on advertising they have seen in a game, and 83 percent of Web gamers reported a positive association with companies that sponsor free online games.
"Games remain one of the biggest untapped opportunities for marketers, for the simple fact that they are, indeed, engaging, immersive, interactive and entertaining," said Tim Zuckert, president and CEO of Shift Control Media, a creator of branded games such as those for Coca-Cola's "Happiness Factory."
Advergaming takes many forms. Orbitz puts games in its banner ads, and those games have become a leading source of site traffic for the online travel agency. Magazines such as Good Housekeeping and Redbook have added female-friendly game titles to their Web sites. In addition to customizing games such as mah-jongg, Sudoku or solitaire to promote traffic, they offer game popularity rankings, reviews and leader boards to promote return visits.
Progressive Insurance uses games to drive brand awareness. Progressive's logo is part of the environment in the racing game "Electronic Arts Need for Speed: Undercover" and "2K Sports Major League Baseball."
Tactics for all successful advertising in the game environment include:
Start early: Online video that appears before the game starts gets 85 percent viewership.
Keep it quick: Fifteen-second creative units outperform longer versions.
Product placement: Get your product integrated into the game.
Above all, know your audience and the types of games they play. Then you can build an advergaming strategy and become part of your customers' game life.
More at: http://bit.ly/z2BXG
Social Media Is Dead; Film At 11
CM Comment: Commentary on the future of popular social media sites like Twitter.
August 17, 2009: summarized from InfoWorld -- The death of social media is upon us. How do I know this? I read it on the InterWebs.
Let's start with a report by the BBC about a study of random tweets by Pear Analytics, which shows some 40 percent of all content on Twitter is "pointless babble."
To which the obvious reply: Only 40 percent?
Pear conducted this study by dipping into the tweet stream every 30 minutes over a two-week period, and then placing each tweet into one of six categories. Number two behind "babble" was "conversational" (37.5 percent), as in the "I just had a tuna melt and it sure was yummy"; in the third slot at just under 9 percent were tweets containing useful info or links, followed by self-promotional (6 percent) tweets and spam (4 percent).
Think about it, though. Compared to every other communications channel in your life -- phone conversations, email, SMS texts, newspaper articles, blogs, TV newscasts, political speechifying, and so on -- Twitter's pointless babble ratio isn't that bad. Can you honestly say that almost 10 percent of any of those things contains useful info? (If so, maybe you hang out with smarter people than I do.) And who wouldn't kill for a spam rate of only 4 percent? I'm sure that won't last.
Still, I hear from a lot of Cringesters who say they find Twitter 100 percent pointless. I maintain it's something you have to use for a while before you understand it.
Just today I was talking to an analyst at Forrester who covers CRM and customer service issues. She told me what a lot of people have told me about Twitter: At first she pooh-poohed it, thinking it a stupid waste of time. Then she realized she had to start using Twitter because the companies she's been analyzing all were relying on it for customer service. Now tweeting is an essential part of her day. She doesn't think it's stupid any more.
My sermon to the residents of Cringeville today is, if you don't use social media tools like Twitter and Facebook, you're falling behind. You are at least two steps closer to the junk heap than everyone else who does. You're like the crotchety old folks who refused to use touchtone number pads on their phones because, dammit, a dial was good enough.
Read more at: http://bit.ly/QdeJX
August 17, 2009: summarized from InfoWorld -- The death of social media is upon us. How do I know this? I read it on the InterWebs.
Let's start with a report by the BBC about a study of random tweets by Pear Analytics, which shows some 40 percent of all content on Twitter is "pointless babble."
To which the obvious reply: Only 40 percent?
Pear conducted this study by dipping into the tweet stream every 30 minutes over a two-week period, and then placing each tweet into one of six categories. Number two behind "babble" was "conversational" (37.5 percent), as in the "I just had a tuna melt and it sure was yummy"; in the third slot at just under 9 percent were tweets containing useful info or links, followed by self-promotional (6 percent) tweets and spam (4 percent).
Think about it, though. Compared to every other communications channel in your life -- phone conversations, email, SMS texts, newspaper articles, blogs, TV newscasts, political speechifying, and so on -- Twitter's pointless babble ratio isn't that bad. Can you honestly say that almost 10 percent of any of those things contains useful info? (If so, maybe you hang out with smarter people than I do.) And who wouldn't kill for a spam rate of only 4 percent? I'm sure that won't last.
Still, I hear from a lot of Cringesters who say they find Twitter 100 percent pointless. I maintain it's something you have to use for a while before you understand it.
Just today I was talking to an analyst at Forrester who covers CRM and customer service issues. She told me what a lot of people have told me about Twitter: At first she pooh-poohed it, thinking it a stupid waste of time. Then she realized she had to start using Twitter because the companies she's been analyzing all were relying on it for customer service. Now tweeting is an essential part of her day. She doesn't think it's stupid any more.
My sermon to the residents of Cringeville today is, if you don't use social media tools like Twitter and Facebook, you're falling behind. You are at least two steps closer to the junk heap than everyone else who does. You're like the crotchety old folks who refused to use touchtone number pads on their phones because, dammit, a dial was good enough.
Read more at: http://bit.ly/QdeJX
Why Casinos In Nevada Won’t Go Online (For Now)
August 20, 2009: summarized from Las Vegas Sun -- While Nevada officials pass on an opportunity to pursue Internet gambling for state residents, gambling interests in California, the nation’s most populous state and one of the world’s largest regional economies, are pushing legislation to allow online wagering in that state.
California’s efforts, made possible by a loophole in federal law, come as the federal government begins a comprehensive crackdown on offshore Web casinos by taking down the middlemen who pay gamblers from American bank accounts.
Many Internet gambling experts think California, rather than Nevada, will emerge as the online gambling leader.
That possibility springs from the federal loophole, which allows states to opt out of congressional efforts to regulate online gambling and, instead, regulate it for their own state residents — and generate tax revenue.
California is at the forefront in pursuing in-state Internet gambling.
By preventing online operators elsewhere from tapping California residents, California — struggling under a crippling budget deficit — wouldn’t have to share tax revenue with the feds or other states.
That’s OK with Nevada regulators and legislators, who are more intent on bringing gamblers to Nevada than allowing intrastate online gambling.
In California, a bill draft proposed by a coalition of casino tribes and card rooms has emerged alongside a similar bill introduced in Congress this month by Sen. Robert Menendez, D-N.J. The Menendez bill, which expressly legalizes Internet poker nationally, follows a companion bill introduced by Rep. Barney Frank, D-Mass., to legalize Internet casinos.
Both federal bills give states 90 days to “opt out” of the federal regulatory system — a potentially lucrative opening for states to regulate and tax local Web casinos.
In Nevada, authority to legalize Internet gambling rests with the Gaming Control Board and Gaming Commission, which would have to adopt online betting regulations.
Three major hurdles established in state law stand in the way.
Nevada regulators would need the blessing of the Justice Department — an agency that has been adamantly opposed to Internet gambling for more than a decade.
(The Justice Department told the Control Board in 2002 that all forms of Internet gambling are illegal.)
Second, regulators would have to determine that Web gambling technology provides “reasonable assurance” that minors or people in places where Internet gambling is illegal can’t take part.
Third, regulators would need to determine that online gambling is consistent with Nevada’s public policy of fostering “the stability and success of gaming.”
The last finding is perhaps the most problematic.
In 2001 the Nevada Legislature passed a law authorizing the state to explore Internet gambling regulations. At the time, legislators envisioned gamblers nationwide betting in Web casinos operated by Nevada companies, with the state collecting millions in tax revenue. It would be hard to justify Internet gambling for state residents only, given how much gambling exists, Gaming Control Board Chairman Dennis Neilander said.
That wouldn’t expand the market so much as cannibalize it, with business potentially siphoned from smaller casinos — the majority of Nevada’s operators — to bigger casinos and chains that are best positioned to create Web gambling empires.
Even if regulators could jump all these hurdles, they won’t — at least not for some time.
They cite a 2008 survey by UNLV’s International Gaming Institute indicating Nevadans had little interest in either gambling online or regulating the activity.
“I was surprised at the results of that study, but gaming is so convenient in Nevada that maybe that’s why there’s not much appetite for it,” Neilander said.
While Nevada stands back, California is moving forward.
The Unlawful Internet Gambling Enforcement Act of 2006, pushed by conservative Republicans in Congress, further criminalized Internet gambling by making it illegal for banks and other financial institutions to process online bets. But it also opened the door for states to legalize Web casinos within their borders.
The law was widely criticized by offshore casinos seeking to operate legally in the United States, as well as online gambling advocates including Nevada legislators who have supported federal bills to regulate Web casinos. While overseas operators of Web gambling sites have been affected, U.S. companies, including Nevada casino giants, remain poised to capture Internet gambling business under a future regulatory scheme.
The law has moved offshore Web casinos further into black market territory while allowing bets that are “initiated and received ... within a single state.”
Meanwhile, the government has stepped up efforts to crack down on offshore Web gambling operators, clearing the playing field for U.S. gambling companies to set up shop on the Web.
This month, the U.S. attorney for the Southern District of New York indicted Douglas Rennick on multiple charges including bank fraud, money laundering and illegal gambling operations — part of an ongoing sting operation that has involved the FBI for at least the past three years.
The government contends that Rennick opened accounts with multiple banks under false pretenses, then transferred Web casino winnings from a Cyprus bank account to U.S. bank accounts used to pay American gamblers. Authorities are demanding the forfeiture of $566 million in Internet gambling receipts — the largest amount ever sought by the Southern District in an Internet gambling case. If found guilty, Rennick, who could be used to ensnare other middlemen or Internet operators, faces a maximum penalty of 55 years in jail and $1.8 million in fines.
Abdicating the opportunity for Internet gambling might seem an unusual move for Nevada, but the state’s small population doesn’t offer much return on investment, observers say.
By contrast, California — 14 times more populous than Nevada — could become a $2 billion market for online poker sites licensed there, said Tony Cabot, a Las Vegas gaming attorney specializing in Internet gambling.
Efforts by more populous states to legalize Internet gambling could lead to its acceptance as a mainstream activity and, ultimately, federal regulation, he said.
Regulations are more likely to pass on a state-by-state basis than on a federal level, Cabot said. Legalization efforts in Congress have significant support but are too easy for special interests — including competing gambling operators and industry opponents — to short-circuit.
There’s still a chance that Nevada could capture Internet gambling action from more populous states.
If a state like California fails to opt out within the time frame specified in the Frank and Menendez bills, then Nevada operators, should such federal legislation become law, could operate licensed online poker games aimed at states “that can’t get their act together,” said I. Nelson Rose, a California-based Internet gambling attorney.
Read more at: http://bit.ly/l2qU9
California’s efforts, made possible by a loophole in federal law, come as the federal government begins a comprehensive crackdown on offshore Web casinos by taking down the middlemen who pay gamblers from American bank accounts.
Many Internet gambling experts think California, rather than Nevada, will emerge as the online gambling leader.
That possibility springs from the federal loophole, which allows states to opt out of congressional efforts to regulate online gambling and, instead, regulate it for their own state residents — and generate tax revenue.
California is at the forefront in pursuing in-state Internet gambling.
By preventing online operators elsewhere from tapping California residents, California — struggling under a crippling budget deficit — wouldn’t have to share tax revenue with the feds or other states.
That’s OK with Nevada regulators and legislators, who are more intent on bringing gamblers to Nevada than allowing intrastate online gambling.
In California, a bill draft proposed by a coalition of casino tribes and card rooms has emerged alongside a similar bill introduced in Congress this month by Sen. Robert Menendez, D-N.J. The Menendez bill, which expressly legalizes Internet poker nationally, follows a companion bill introduced by Rep. Barney Frank, D-Mass., to legalize Internet casinos.
Both federal bills give states 90 days to “opt out” of the federal regulatory system — a potentially lucrative opening for states to regulate and tax local Web casinos.
In Nevada, authority to legalize Internet gambling rests with the Gaming Control Board and Gaming Commission, which would have to adopt online betting regulations.
Three major hurdles established in state law stand in the way.
Nevada regulators would need the blessing of the Justice Department — an agency that has been adamantly opposed to Internet gambling for more than a decade.
(The Justice Department told the Control Board in 2002 that all forms of Internet gambling are illegal.)
Second, regulators would have to determine that Web gambling technology provides “reasonable assurance” that minors or people in places where Internet gambling is illegal can’t take part.
Third, regulators would need to determine that online gambling is consistent with Nevada’s public policy of fostering “the stability and success of gaming.”
The last finding is perhaps the most problematic.
In 2001 the Nevada Legislature passed a law authorizing the state to explore Internet gambling regulations. At the time, legislators envisioned gamblers nationwide betting in Web casinos operated by Nevada companies, with the state collecting millions in tax revenue. It would be hard to justify Internet gambling for state residents only, given how much gambling exists, Gaming Control Board Chairman Dennis Neilander said.
That wouldn’t expand the market so much as cannibalize it, with business potentially siphoned from smaller casinos — the majority of Nevada’s operators — to bigger casinos and chains that are best positioned to create Web gambling empires.
Even if regulators could jump all these hurdles, they won’t — at least not for some time.
They cite a 2008 survey by UNLV’s International Gaming Institute indicating Nevadans had little interest in either gambling online or regulating the activity.
“I was surprised at the results of that study, but gaming is so convenient in Nevada that maybe that’s why there’s not much appetite for it,” Neilander said.
While Nevada stands back, California is moving forward.
The Unlawful Internet Gambling Enforcement Act of 2006, pushed by conservative Republicans in Congress, further criminalized Internet gambling by making it illegal for banks and other financial institutions to process online bets. But it also opened the door for states to legalize Web casinos within their borders.
The law was widely criticized by offshore casinos seeking to operate legally in the United States, as well as online gambling advocates including Nevada legislators who have supported federal bills to regulate Web casinos. While overseas operators of Web gambling sites have been affected, U.S. companies, including Nevada casino giants, remain poised to capture Internet gambling business under a future regulatory scheme.
The law has moved offshore Web casinos further into black market territory while allowing bets that are “initiated and received ... within a single state.”
Meanwhile, the government has stepped up efforts to crack down on offshore Web gambling operators, clearing the playing field for U.S. gambling companies to set up shop on the Web.
This month, the U.S. attorney for the Southern District of New York indicted Douglas Rennick on multiple charges including bank fraud, money laundering and illegal gambling operations — part of an ongoing sting operation that has involved the FBI for at least the past three years.
The government contends that Rennick opened accounts with multiple banks under false pretenses, then transferred Web casino winnings from a Cyprus bank account to U.S. bank accounts used to pay American gamblers. Authorities are demanding the forfeiture of $566 million in Internet gambling receipts — the largest amount ever sought by the Southern District in an Internet gambling case. If found guilty, Rennick, who could be used to ensnare other middlemen or Internet operators, faces a maximum penalty of 55 years in jail and $1.8 million in fines.
Abdicating the opportunity for Internet gambling might seem an unusual move for Nevada, but the state’s small population doesn’t offer much return on investment, observers say.
By contrast, California — 14 times more populous than Nevada — could become a $2 billion market for online poker sites licensed there, said Tony Cabot, a Las Vegas gaming attorney specializing in Internet gambling.
Efforts by more populous states to legalize Internet gambling could lead to its acceptance as a mainstream activity and, ultimately, federal regulation, he said.
Regulations are more likely to pass on a state-by-state basis than on a federal level, Cabot said. Legalization efforts in Congress have significant support but are too easy for special interests — including competing gambling operators and industry opponents — to short-circuit.
There’s still a chance that Nevada could capture Internet gambling action from more populous states.
If a state like California fails to opt out within the time frame specified in the Frank and Menendez bills, then Nevada operators, should such federal legislation become law, could operate licensed online poker games aimed at states “that can’t get their act together,” said I. Nelson Rose, a California-based Internet gambling attorney.
Read more at: http://bit.ly/l2qU9
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