Land-based casinos and lottery companies are increasingly looking at capitalising on their presence in the land-based gaming business by setting up a successful online gaming operation.
New entrants to the online gaming market require a technology platform and also expertise in setting up operations.
This segment of the industry definitely holds a lot of promise. Bullet Business’ Ritesh Gupta spoke to executives from Dragonfish, Parlay Entertainment and GTECH G2 about the current status. Excerpts:
To what extent do you think land-based gaming operators have been successful in tapping online gaming opportunities via white label arrangements?
Dragonfish’s MD Gabi Campos: Online gaming only represents 6.7% (H2 Gambling Capital 2008) of the total gaming turnover worldwide so we are only scratching the surface. We need the land-based operators to build successful online propositions and educate their customer base that online is great entertainment because this will help widen the market for all of us.
Bingo is ahead of casino in taking their brands online but there have been some harsh lessons learnt on the way. That said, now is not the time to talk about ‘how successful’ as this movement has only just begun in casino.
Dragonfish’s recent deals with Tsogo Sun Gaming Group, one of the largest hotel and entertainment groups in South Africa and Harrah’s have been well documented over the past month and we have spent considerable time and resource building the correct structure internally to service clients of this stature. Not only that, the offline casino business represents a key part in our strategic growth.
As the regulatory system opens up more exciting opportunities you will see more land-based gaming operators entering the online gaming market and they will require white label propositions like Dragonfish’s Total Gaming Services in order to hit the ground running. The winning solution is to develop the ultimate cross-sell vehicle so that the customer can access your brand in the casino, online and on the phone.
We believe our experience in CRM through the provision of retention tools, cross-selling activities, building VIP clubs and developing unified packages of bonuses and promotions can play a key role in driving successful offline / online casino partner growth.
GTECH G2’s commercial director Leigh Nissim: The smaller bingo clubs who typically use a white label solution have had a mixed experience. Many have chosen inappropriate suppliers and found themselves tied in to unfavourable contracts.
Others have taken the path to online gradually, learning their way cautiously, which is sensible in the interests of protecting their land based business which has faced unparalleled challenges (smoking ban, tax regulations, AWP restrictions etc). I think you’ll find this group increasingly present as the online market grows as they have a natural understanding of player dynamics and can lend this to online environment as they focus on growing revenues from this channel.
The larger land-based operators have built their own operations in-house rather than white-labelling.
Their trading numbers are pretty impressive, but the overhead of managing this is high and how much is deflection of budget that would have been spent in land-based clubs in any case? I think you’ll also see some of these operators starting to struggle with technology developments and growth as they begin to run out of land-based players to migrate online.
The larger land-based operators have built their own operations in-house rather than white-labelling. Considering that the overhead of managing this is high, do you think some of these operators are going to struggle with technology developments and growth?
Parlay Entertainment’s CEO Scott White: Yes. This is always the challenge when determining whether to buy or build. Generally speaking, the large brands run their businesses with a view of having complete control over the business and the intellectual property. We have spent the better part of 10 years learning from our mistakes.
A fully scalable Internet bingo product is a difficult technology offering to develop – primarily because of its multi-player nature. The road is littered with companies that have attempted to build their own technology offerings and have failed. There is no question that some operators will face challenges in the years to come.
