Declaration of interdependence


If – or when – the US gets a legitimate online-gaming market, its sheer size will attract big players from outside the sector, writes Barnaby Page


I


Payments companies like PayPal will want a slice of the pie, as will telecom firms, and Google


t seems to be a winning bet that online gambling will once again be permitted in the US, and sooner rather than later, though it’s surely too early to break out the champagne: Congressman Barney Frank’s proposals are perhaps the best-


known, but they’re not the only route to legalisation, and despite the positive developments we reported last month they still have a long way to go before anyone in the gaming business can rely on them forming the framework for regulation.


All the same, it’s not too early for casinos – both


those already online, and those currently land-based but looking to add clicks to their bricks – to start considering the implications of opening up the US market.


Assuming that whatever shape the rules eventually


take there is not too much variance among individual states, and that is a large assumption, the US market will not be quite like any other: it will be so dramatically bigger, a behemoth in terms of both population and spending power. (The EU could potentially rival it, but Brussels has made it quite clear that it doesn’t have a problem with member states regulating their own way, as long as they don’t over-favour local firms.)


This raises a number of interesting possibilities.


The cost of entry into online being so much lower than that of getting into the land-based casino business with any scale, it might become tempting for major leisure-oriented but non-gaming companies to launch their own operations, although potential negative fallout on their existing brands means this group is likely to be limited to adult-oriented brands: more likely Playboy than Nintendo, Philip Morris than McDonald’s. Media companies will be especially interested, more of which below.


It is also probable that online-payments outfits like


PayPal will want a slice of the pie, as will mobile- phone carriers, and Google will want one too on the


26 OCTOBER 2010 But the sudden appearance of such a very large


market is a rare occurrence and it will be felt far beyond what we currently think of as the gaming sector.


Consider, for example, the advertising media – TV,


radio, print, outdoor, online, mobile. “If the bill becomes law, media companies will benefit financially. As it is now, major media companies have turned down many highly profitable ads close to the gambling line for fear they would be deemed aiders and abettors of illegal gambling activity,” says Selena Shen, a spokesperson for Manatt, Phelps & Phillips, a law firm specialising in marketing and media.


This could make the advertising of gaming,


currently close to non-existent, a major revenue category for some US media groups. Or you can look at it the other way round, as Shen observes: “Brands would also find new outlets for advertising on gambling sites that will likely be heavily trafficked by interested consumers.” In other words, while gaming firms are spending heavily on advertising, they’ll also find that their Websites themselves have the chance to generate significant ad revenue. Who knows what deals and partnerships all this could provoke?


It’s premature to bring out the champagne, then,


but a good time to fetch another coffee and give some hard thought to what happens when a market of unprecedented scale gets switched on overnight.


principle that it wants slices of every pie going, not to mention second helpings.


Of course, existing gaming specialists won’t be


knocked out of the market by these interlopers: they’ll have the advantage of knowing what they’re doing, and the technology platforms and business practices in place to move quickly. Indeed, the smarter newcomers will doubtless try to form partnerships with the gaming sector rather than reinvent the virtual roulette wheel.


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